Hashim Yeop Sani CJM:

[1] To appreciate fully the real issues raised in this appeal it is best that the background facts of the case be set out first. In their chronological order they may be stated briefly as follows.

[2] The disputed property (hereinafter referred to as the "said property") is premises No 55 on Lots 366 and 368, TS 19, NED Penang on which stands an 11-storey building. The appellants proprietors of Hotel Ambassador entered into possession of the said property to commence the business of a hotel called Hotel Ambassador. The appellants went into possession of the said property pursuant to a lease and annexure dated 2 January 1967 executed between the appellants and the proprietors of the said property.

[3] The annexure to the lease provided for the rental to be paid by the appellants at RM11,000 per month. Clause 4(e) of the annexure contained provisions for renewal after determination of the first ten years for a further period of ten years on monthly rental of RM12,000 and a further period of ten years at monthly rental of RM13,000. The first initial period of ten years expired on 21 March 1976.

[4] The option for extension of the lease subsequent to the initi