( 1 ) THE respondent, New Delhi Municipal council (hereinafter referred to as `the NDMC ) is having land/site of about 13 acres in Chanakyapuri, New Delhi. In the year 1965, two projects were envisaged thereon, namely, (i) construction of an air-conditioned 11 storeyed (in addition to two basements) 212 rooms five star hotel and (ii) 1000 seats capacity cinema fully air- conditioned with a large restaurant and a number of shops in the premises. Sealed tenders were invited vide NIT dated 14th November, 1965 to grant lease in respect of these two projects described as `tender for hotel and `tender for cinema . The appellants were the successful bidder for the cinema and this culminated into the execution of the licence agreement dated 3rd October, 1967 between the parties whereby the appellants were granted licence to use the proposed building housing a cinema, which was to be constructed by the NDMC, with all the fittings and fixtures for a term of 10 years. The agreement provided renewal clause whereby option was given to the appellants to get the licence renewed for another 10 years `on the terms and conditions to be mutually agreed between the parties at the time of renewal. The NDMC constructed the cinema hall and possession was handed over to the appellants. The appellants started running the said cinema popularly known as `chankya cinema. The licence period of 10 years was to expire on 30th September, 1980. The appellants exercised their option of renewal vide letter dated 11th January, 1980. On exercise of this option the ndmc renewed the licence for another 10 years with effect from 1st October, 1980 to 30th September, 1990. Agreement dated 23rd September, 1980 was also executed. Clause (i) of this licence agreement containing renewal clause was reproduction of the clause from the previous lease. The appellants again exercised their option for renewal vide letter dated 3rd September, 1990. This time, however, the NDMC refused to renew the licence and instead sent cancellation notice dated 14th September, 1990 to the appellants.

( 2 ) IT may be noted at this stage that after the second licence deed dated 23rd September , 1980 was executed, the appellants had filed the Suit No. 295/1981 on 9th April, 1981 for injunction, inter alia, on the ground that the licence deed dated 23rd September, 1980 was executed under coercion and was not binding. Injunction order was granted in favour of the appellants in the said suit by the Sub-Judge First Class. The NDMC went in appeal which was allowed by the Senior Sub-Judge vide order dated 10th May, 1982 and injunction order was vacated. However, the appellants filed Civil Revision no. 1054/1982 and order was passed by this court in the said petition directing the NDMC to charge only 30 per cent additional licence fee till the disposal of the matter. After the matter was remitted to the Sub-Judge, stay was again granted which led to filing of appeal by the NDMC and then civil revision No. 206/1985 in this court. Order dated 14th January, 1987 was passed in the said revision petition directing that interim orders were to continue till the disposal of the suit. Status quo regarding possession and carrying on of business was given subject to payment of 30 per cent extra licence fee.

( 3 ) THUS inspite of cancellation notice dated 14th September, 1990, the NDMC could not take further steps due to this status quo order. On the other hand, the appellants sent a representation dated 12th november, 1990.

( 4 ) IT appears that the NDMC constituted a sub-Committee thereafter to examine various grievances of the appellants contained in the representation dated 12th november, 1990. Minutes of the meeting of this Sub- committee held on 13th May, 1991 would show that having regard to prolonged litigation going on between the parties pending for last 10 years resulting into recurring financial loss to the NDMC, the Sub-Committee took certain decisions, to reach an out of court sett