Unearned incremental value of natural resources must reflect market rates despite contrary contractual price caps.

The New Delhi Municipal Council (NDMC) challenged a Single Judge's order quashing a demand notice and a termination letter issued to Bharat Hotels Ltd (Respondent No. 1).

In 1982, NDMC executed a 99-year license deed for a five-star hotel at Barakhamba Lane with an initial fee of ₹1.45 Crore per annum

Clause 48 stipulated a fee enhancement every 33 years, capped at 100% of the previous fee

In 2020, following the enactment of the NDMC Act 1994, NDMC issued a demand for ₹1,063 Crore, calculating the fee at a market rate of ₹98 Crore per annum w.e.f. 2014, far exceeding the 100% cap

Simultaneously, NDMC terminated the license, alleging a fundamental breach because a sub-licensee executed "Sale/Transfer" agreements for shop spaces in the World Trade Centre block without NDMC's consent

1. Whether Clause 48 of the License Deed, which capped fee increases at 100%, survives the enactment of the NDMC Act, 1994, or is rendered inoperative due to inconsistency with Section 141(2) of the Act.

2. Whether the communication dated 13.02.2020 terminating the license agreement for breach of terms (unauthorized transfer) was lawful.

Section 141(2) of the NDMC Act, 1994, which mandates that consideration for the transfer of immovable property must not be less than the value fetched in normal and fair competition

Section 416(2)(a) and (b) regarding repeal and savings; sub-section (a) saves licenses/permissions only insofar as they are not inconsistent with the NDMC Act, while sub-section (b) saves contracts generally

Aggarwal & Modi Enterprises (P) Ltd. v. NDMC, which held that Section 141(2) applies to licenses and requires the state to maximize revenue for public property

Natural Resources Allocation, IN RE, emphasizing that disposing of natural resources for commercial profit without competitive value is arbitrary under Article 14

The Court determined that the 1982 instrument was a "license or permission" under Section 416(2)(a), not a mere "contract" under 416(2)(b), because it granted rights to use land without transferring title

The Court found the cap inconsistent with Section 141(2), as it prevented NDMC from realizing the market value (₹98 Crore) while NDMC was obligated to pay the L&DO high ground rents (₹15.45 Crore), thus burdening the public exchequer

Regarding termination, the Court found that the sub-licensee's execution of "Sale and Transfer" deeds constituted a fundamental breach of Clause 29 and 11

The Court rejected the Respondent's plea of ignorance, noting that Respondent No. 1 had participated in stamp duty proceedings related to these transfers

Finally, the Court invoked its discretionary power under Article 226, stating that equitable considerations and public interest must prevail over rigid legal formulations when a private entity profits at a massive loss to the public body

The termination of the License Deed was valid due to the fundamental breach of non-transferability clauses by the creation of unauthorized third-party rights

The High Court allowed the appeals and set aside the Single Judge’s judgment; the demand notice and termination letter dated 13.02.2020 were upheld