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High Court Of Delhi
C.J.INTERNATIONAL HOTELS LIMITED - Appellant
Versus
NEW DELHI MUNICIPAL CORPORATION - Respondent
Interim Application 3075 of 2000
Decided On : 05/18/2001
Certainly. Based on the provided legal document, here are the key points summarized:
The case involves a dispute between C. J. International Hotels Limited (the plaintiff) and the New Delhi Municipal Corporation (the defendant) regarding the payment of license fees for a hotel property situated at Windsor Place, New Delhi (!) (!) .
The hotel is operated under a license agreement that was originally executed in 1982, with subsequent supplementary agreements allowing the plaintiff to pay license fees in installments. The primary obligation under the original agreement was for the plaintiff to pay 21% of the hotel’s gross turnover as license fee (!) (!) (!) .
The plaintiff contends that the license fee was to be calculated based on the gross turnover certified by their auditors, including certain deductions like franchise fees, taxes, and expenses related to telecommunication and bank interest, among others. They argue that their liability is limited to 21% of this certified gross turnover (!) (!) (!) .
The defendant asserts that the license fee at 21% of the gross turnover as per the balance sheets is the correct basis for calculation, and that the supplementary agreements did not modify this fundamental term. They also contend that the plaintiff had full knowledge of the terms when participating in the auction and entering into the agreement (!) (!) .
The plaintiff alleges that the defendant had promised to reconsider the license fee based on representations and a note from the Lieutenant Governor, who suggested forming a committee to examine the issue. The plaintiff claims that the defendant failed to act on this promise or to give a detailed reasoned decision, which they argue is a violation of principles of natural justice (!) (!) (!) .
The defendant argues that the Lieutenant Governor's note was merely an internal official opinion not binding on the parties and that the defendant was within its rights to reject the plaintiff’s representations after examining the matter. They also contend that the note was not communicated to the plaintiff and thus did not constitute a binding decision (!) (!) (!) (!) .
The court observed that the defendant was not exercising judicial or quasi-judicial powers in dismissing the plaintiff’s representations and was entitled to decide without detailed reasons, especially when the matter involved contractual rights rather than statutory or administrative powers (!) (!) .
The court emphasized that the primary rights and obligations of the parties are rooted in the contract, and any rights claimed must flow from the contractual terms. The court also noted that the supplementary agreements only allowed for installment payments but did not alter the core obligation to pay 21% of the gross turnover (!) (!) .
The court considered the evidence regarding the calculation of gross turnover, including the auditors’ certificates and the method of deductions, and found that the plaintiff was prima facie liable to pay license fees based on 21% of the certified gross turnover, after appropriate deductions (!) (!) (!) .
The court acknowledged the public interest and the defendant’s need for funds for municipal functions, which favored the defendant’s claim. It granted the defendant’s application to recover license fees in installments and restrained interference with the plaintiff’s possession and amenities, provided the plaintiff deposits the calculated license fee (!) (!) (!) .
The court clarified that the order was interim and not a final determination of the case’s merits, and any observations made should not be construed as such (!) .
Please let me know if you require further analysis or specific legal advice related to this case.
(May 18, 2001) 2001 (TLS)125171
2001-DLT-92-621 :: 2001-AD (Del)-5-886
C. J. INTERNATIONAL HOTELS LIMITED Vs. New Delhi Municipal Corporation
S. K. MAHAJAN
( 1 ) PLAINTIFF No. 1 is the owner of a five star hotel being run under the name and style of Hotel Le Meridien. The hotel is constructed on a plot of land bearing No. 8, windsor Place, New Delhi. The land on which the hotel is constructed was taken from the defendant-NDMC on licence basis for which a licence agreement dated 16/04/1981 was executed between the NDMC and M/s. Pure Drinks New Delhi limited. This agreement was substituted by another licence agreement dated 14/07/1982 between the plaintiff No. 1 and the NDMC. The parties are governed by the licence agreement dated 14/07/1982. Though it is the stand of the plaintiff in the suit that this agreement has been modified by few subsequent agreements, however, according to the defendant-NDMC, the parties continued to be governed by the agreement dated 14/07/1982 and by the subsequent agreements only an indulgence was shown to the plaintiffs to make payment of the licence fee in instalments.
( 2 ) IN or about 1989, a sum of more than Rs. 6 crores had become due from the plaintiffs to the NDMC and a notice dated 7/12/1989 was, therefore, sent by the NDMC to the plaintiffs to make payment of the arrears of licence fee amounting to Rs. 6,84,091,331. 89 paise. Plaintiffs were also called upon to show cause as to why the allotment/licence of the hotel site in question be not cancelled due to non-payment of the licence fee besides dis-connection of electricity supply and taking action under the provisions of the Public Premises (Eviction of Unauthorised Occupants.) act. By still another letter dated 6/03/1990 the NDMC called upon the plaintiffs to stop the use of the plot of land alongwith construction raised thereon for any purpose whatsoever and to hand over vacant possession of the same to the NDMC and further to pay the amount of more than Rs. 13 crores being the arrears of licence fee and other charges.
( 3 ) UPON the aforesaid threats being given, the plaintiffs filed a suit being Suit No. 1193/90 under Section 20 of the Arbitration Act, 1940 for appointment of an arbitrator. An application was filed in this suit for an ad-interim injunction. This application was dismissed by d. P. wadhwa ,j. on 16/10/1990. while dismissing the application, the learned Judge observed as under:-
"now in the present case before me, offers had been invited and that of the petitioner being the highest, was accepted. The licence agreement with Pure Drinks is dated 16. 4. 1981, and that with the petitioner 14. 7. 1982. It was much after the licence agreement with the Bharat Hotels Ltd. had been entered into. Then as noted above, many meetings had been held by NDMC with for construction of hotel project and those meetings had been attended by representatives of Bharat hotels Ltd. as well as the petitioner. As far back as in 1981 the petitioner was well aware of the licence fee paid by Bharat Hotels Ltd. and yet it had agreed to offer at a higher rate. The land of the petitioner hotel is far better located than that of the Bharat Hotels Ltd. Rights of the parties even otherwise arise out of contractual obligations and any comparison with bharat Hotels Ltd. is not only misplaced but thoroughly inappropriate. In the circumstances, ndmc, can t be restrained from exercising its rights under the licence agreement, on the failure of the petitioner to abide by the terms of the licence agreement in making payments. Court would be loathe to exercise any discretion in favour a party in the grant of interim stay when it seeks to back out from its solemn obligation undertaken in a mutually agreed upon contract. The Court also cannot start with any presumption that a solemn obligation need not be adhered to on account of some specious plea. Here are two parties bargaining on equal termed. They have agreed to certain terms which deemed to them to
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