J.R. Midha, J.:--

1. The appellant, NDMC, has challenged the impugned judgment and decree dated 22nd November, 2013 whereby the Trial Court has decreed the respondent‘s suit for declaration, permanent and mandatory injunction.

2. Factual matrix

2.1. NDMC invited tenders for licence of plot No. 37, Shaheed Bhagat Singh Marg, New Delhi measuring 0.66 acres for the construction and commissioning of a youth hostel to meet the 56 requirement of ASIAD games in 1982.

2.2. M/s P.S.J. Housing Enterprises Pvt. Ltd. submitted the highest bid, which was accepted by NDMC and a licence deed dated 4th November, 1981 was executed by NDMC in favour of M/s. P.S.J. Housing Enterprises Pvt. Ltd. In terms of clause 22 of the licence deed dated 4th November, 1981, M/s. PSJ Housing Enterprises Pvt. Ltd. incorporated a public company, M/s.Prominent Hotels Ltd. with the object of taking over the youth hostel.

2.3. On 16th July, 1982, NDMC executed a licence deed dated 16th July, 1982 in favour of M/s Prominent Hotels Ltd. (hereinafter referred to as Licensee‘) for running an international youth hostel for a period of 99 years with effect from 4th November, 1981 subject to increase in licence fee after every 33 years.

2.4. The Licensee constructed a luxurious hotel, instead of a youth hostel, on the licensed plot which was completed in September, 1987.

2.5. In September, 1987, the management of the Licensee changed by the sale of the project by H.R. Sabharwal group to Hari Ram Kakkar, an Afgan national of Indian origin who invested in this project.

2.6. The licence deed provides for a minimum guaranteed licence fee of Rs. 21,08,040/- or 23% of the annual gross turnover of the Licensee, whichever is more, from the date of handing over of the possession, i.e. 4th November, 1981.

2.7. Clause 5 of the licence deed dated 16th July, 1982 requires the Licensee to furnish the annual audited reports to NDMC to enable the NDMC to compute the licence fee. However, the Licensee defaulted in furnishing the annual audited reports for the years 1991-92 to 1993- 94 and therefore, NDMC issued a show cause notice dated 15th June, 1994 to the Licensee to show cause why legal action be not initiated for violation/breach of the licence deed in pursuance of which the Licensee furnished the annual reports to NDMC whereupon NDMC computed dues of Rs. 3,05,67,355.20 towards the licence fee and interest upto period ending July 1994.

2.8. Vide show cause notice dated 09th September, 1994, NDMC called upon the Licensee to pay Rs. 3,05,67,355.20 towards the arrears of licence fee and interest upto July, 1994.

2.9. Vide show cause notice dated 23rd December, 1994, NDMC called upon the Licensee to show cause as to why the licence be not cancelled on account of non-payment of Rs. 3,05,67,355.20.

2.10. On 01st February, 1995, NDMC cancelled the licence due to non-payment of Rs. 3,05,67,355.20 and vide letter dated 21st February, 1995, NDMC intimated the cancellation of the licence to the Licensee and notified the Licensee that their occupation, after the cancellation of the licence, was unauthorised and therefore the Licensee should stop the use of the premises.

2.11. NDMC initiated proceedings against the Licensee under Sections 5 and 7 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 for eviction of the Licensee and recovery of licence fees and damages before the Estate Officer which are pending.

2.12. Licensee’s suit for declaration, permanent and mandatory injunction

On 28th February, 1995, the Licensee instituted the suit for declaration, permanent and mandatory injunction. The Licensee pleaded inter alia that the Licensee completed the construction of a building on the licensed plot in 1987. During the course of construction, the Licensee found that the project was economically unviable as the Licensee was obliged to pay licence fee at the rate of 23% of the gross turnover with a minimum guaranteed amount of Rs. 21,08,040/- which was grossly excessive whereas the