Sanjiv Khanna, J.

1. M/s. Asrani Inns and Resorts Private Ltd.-petitioner No. 2, has purchased two adjacent hotel plots measuring 7220.40 sq.mt. (hereinafter referred to as plot No. 1, for short) and 7030 sq.mts (hereinafter referred to as plot No. 2, for short) at Wazirpur District Centre, Delhi for Rs. 1,27,00,00,000.00 (One hundred and twenty seven crores only) and Rs. 1,02,40,00,000.00 (Hundred and two crores and forty lacs only) respectively in the auction held on 4th May, 2006. The permissible built up area or Floor Area Ratio on plot No. 1 is 15,500 sq.mt. and 14,500 sq.mts. on plot No. 2. One of the terms and conditions of allotment is that the petitioners will construct two hotels, one on each plot, within a period of 42 months. The petitioners have given two bank guarantees of Rs. 6,35,00,000.00 and Rs. 5,12,00,000.00 for plot No. 1 and plot No. 2 respectively, which can be invoked in case of delay in construction beyond the agreed period. Two separate Conveyance Deeds dated 3rd November, 2006 have been executed in favor of the petitioners.

2. The petitioner-Company in December, 2006 approached Delhi Development Authority (hereinafter referred to as DDA, for short) for amalgamation of the two plots. A letter dated 14th December, 2006 was written. It is the case of the petitioners that they are entitled to amalgamation of the two plots in view of the Resolution No. 7 dated 7th Jan.,1991 of DDA permitting amalgamation of commercial plots read with the letter dated 29th Jan.,1992 of the Union of India, subject to payment of 10% of the bid amount or on payment for additional FAR, whichever is higher. It is the case of the petitioners that initially the officers of the DDA were agreeable and on this basis the petitioners started their project with excavation work. Plans were submitted for construction of a single hotel on the two plots. A number of letters were written after December, 1996 till April, 1997, but there was no response from the respondent-DDA. Thereupon, the petitioners filed Writ Petition (Civil) No. 4521/2007 and by Order dated 29th May, 2007, this Court directed DDA to consider the application/representation dated 14th December, 2006 of the petitioners for amalgamation and communicate their decision within 15 days. By letter dated 13th June, 2007, the petitioners were informed that their request for amalgamation of plot No. 1 with plot No. 2 was under examination and for consideration of queries raised by the Finance Department. It was further stated that after calculation of the amalgamation charges, the file would be put to the competent authority, i.e.; Lt. Governor for approval. It was also clarified that amalgamation would be allowed as per the policy and subject to payment of amalgamation charges as under:

Flat rate of 10% of the market value prevalent at the time of application, or the market value of the extra floor space generated by virtue of amalgamation, whichever is greater be recovered. This will be charged for the actual area of plot involved.

3. Subsequently, DDA informed the petitioners that the request for amalgamation had been rejected vide order dated 30th July, 2007 passed by the Lt. Governor. The reasons recorded by the Lt. Governor are as under:

The proposal of DDA to allow amalgamation of two hotel plots sold independently, is in contradiction to the conditions mentioned in auction document at 3.10(vii). If the decision was taken to auction the plots as smaller size plots, there should not be an occasion to allow post-auction amalgamation of two plots particularly when it violates the auction conditions. The proposal is rejected.

V.C. may also conduct an inquiry and fix responsibility at the supervisory level, as to how this case was processed for approval.

4. The petitioners have impugned the said rejection in the present Writ Petition. The contention of the petitioners is that in terms of Resolution No. 7 dated 7th January, 1991 and letter dated 29th January, 1992, the p