New Delhi: The Supreme Court, on Thursday, permitted the New Delhi Municipal Council to e-auction the Taj Hotel on Mansingh Road in the capital following the expiry of the licence granted to the Tata group to run the hotel.
A bench of Justices P.C. Ghose and Rohinton Nariman also accepted the plea of the NDMC that the Tata Group cannot have the right of refusal in the auctioning of the hotel. The bench, however, asked the NDMC to grant six months “breathing time” to the company in vacating the hotel in case they lose out in the e-auction. The court also said that the “blemish-free” record of Tata Group firm IHCL may be taken into account by the NDMC while auctioning the property.
On March 3, the NMDC had informed the bench that it wanted to e-auction the hotel. The court had earlier asked the IHCL, which challenged a Delhi high court order allowing auction of the hotel, to file objections, if any, within a week. The IHCL had told the apex court that it was “not clear” why the NDMC wanted to auction the prime property which gave the “best revenue” to it. The company had submitted that the NDMC expert report suggests that the council would “lose revenue” if the hotel was auctioned to other players.
The Delhi high court had dismissed the plea of Indian Hotels Company (IHCL), Tata Group’s hospitality arm, which has been running the five-star hotel at Mansingh Road for 33 years.
The IHCL has sought renewal of licence on grounds of the equity investment it had made in the property. The HC had held that the NDMC was “within its power” to secure maximum consideration for grant of licence for the property in the Lutyen’s Delhi and the IHCL had no right under the licence for a renewal thereof.
The property, owned by the NDMC, was given to the IHCL on a lease for 33 years, which ended in 2011. The IHCL has been managing the property since then through several extensions. The municipal body had entered into an agreement with the IHCL, a subsidiary of Tata Sons, in December 1976 to construct and run the 11-storey hotel. The NDMC had served eviction notice to the IHCL to “clear all applicable dues and handover the possession of the said property immediately”.
After expiry of the IHCL’s licence in 2011, a committee of senior government officials was set up to look into the company’s proposal for a 30-year extension to manage the hotel. However, the council decided to opt for a public auction of the hotel despite the earlier assurance in 2012 that an extension would be granted. On Thursday, the court allowed e-auction of the property.
