PRADEEP NANDRAJOG, J.

1. Since the documents exhibited at the trial have been admitted by the appellant and the respondent, save and except letter dated November 09, 2011 which has been denied by the NDMC, we shall be referring to the documents with reference to their caption and recording the date of the document and not with reference to the exhibit number put on the document.

2. The dispute in the present lis revolves around land bearing No.1, Man Singh Road, New Delhi ad-measuring 3.78 acres and the hotel building constructed thereon : ‘Taj Man Singh Hotel’. The land had been allotted on a perpetual lease by the Government of India, L&DO (Land and Development) office vide allotment letter dated July 13, 1976 to the then New Delhi Municipal Committee now renamed as New Delhi Municipal Council (hereinafter referred to as ‘NDMC’)for the purpose of setting up a hotel.

3. Pursuant to an offer to construct a hotel building on the land by the Indian Hotels Company Limited (hereinafter referred to as ‘IHCL’), vide letter dated March 31, 1976, which was accepted by the NDMC vide resolution dated April 02, 1976, the NDMC and IHCL entered into a written agreement, which the parties christened : ‘Collaboration Agreement’, on December 18, 1976 containing the terms on which a hotel building would be constructed. According to the terms of the Collaboration Agreement, NDMC was to bear the cost of the construction of the hotel building up to a sum of Rs.425 lakhs and IHCL was to bear costs of construction beyond Rs.425 lakhs. Additionally the costs towards furnishing and equipping the hotel building to make it fit for running a five star hotel and landscaping surrounding the hotel building had to be borne by IHCL. On December 18, 1976, the parties executed another agreement, christening it : ‘License Deed’, by which the NDMC granted a licence to IHCL to operate the hotel to be constructed pursuant to the Collaboration Agreement dated December 18, 1976 for a period of 33 years from the date of the first paying guest occupying the hotel. The terms and conditions of the licence are enumerated in the License Deed. It is the admitted position that the period of licence commenced on October 10, 1978 on the occupation of the hotel by the first paying guest.

4. On September 25, 1979, an agreement christened :‘Supplemental Agreement’, was executed by the parties by which the total contribution of the NDMC to the project was enhanced to Rs.626 lakhs which included the cost of construction in the sum of Rs.475 lakhs, the cost of acquiring land bearing No.1, Man Singh Road, New Delhi, which was valued at Rs.106.64 lakhs, which sum included the cost of land in the sum of Rs.91.48 lakhs, and a sum of Rs.10.66 lakhs as arrears of ground rent and a sum of Rs.4.5 lakhs as depreciated value of the building on the property which had been demolished to construct the hotel under the Collaboration Agreement dated December 18, 1976.

5. Clause (ii) of this Supplemental Agreement provided that the IHCL would pay the NDMC a sum of Rs.12 lakhs per annum in lieu of house tax payable in respect of the hotel building. The Supplemental Agreement dated September 25, 1979, also changed the basis to calculate the licence fee from ‘Gross Receipts’ to ‘Gross Income’.

6. The licence period of 33 years as per the License Deed dated December 18, 1976, which commenced on October 10, 1978, expired on October 10, 2011. It is the admitted position that on February 15, 2010, IHCL sought an extension of the licence granted to operate the hotel, which was well within the period of 60 days before the expiry of the licence period, as was required by the License Deed dated December 18, 1976. It is also the admitted position that thereafter, the NDMC constituted an Internal Committee as contemplated by Section 9 of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as ‘ND