The Tata Group-run Indian Hotels Company Ltd (IHCL) decided to pay NDMC the market price of Taj Mansingh Hotel, Delhi, as informed to the Supreme Court. In order to run the luxurious hotel the lease was decided to be renewed.

IHCL’s counsel Harish Salve has opined, appearing before the justices P C Ghose and Rohinton F Nariman, that the hotel should not be placed for auction, as it may prop up the price. According to his report, the company itself had been paying 10.8% of gross revenue/year to NDMC.

As per the agreement with NDMC, the company has spent Rs 250 crore upto 2011. Whilst other companies have pointed as defaulted, this is the only hotel that has been paying to the civic body on a regular basis. This is the only public-private project that has been running successfully for years. Therefore, if the hotel is now taken over by someone else, then NDMC will face a great financial loss.

The construction of the hotel had been completed by IHCL. Well, it consists of approximately 300 rooms. Each room will provide the clients with all kind of luxurious facilities. However, the commercial operation had already started, with effect from 10th October, 1978. Also, the 33 years agreement period is calculated from the date it was effected from. It is reported that the company had incurred lump sum expenditure to the tune of Rs. 461.61 lakhs.

NDMC had expected to receive a better price if they grant the leases for this property. Hence, they had decided to go for an auction. After listening to their decision, Tata group approached the Delhi High Court. But, the plea was dismissed in October and the civic body was allowed to auction the property.

On the other hand, the High Court had expressed that IHCL was not allowed to get a renewal of its lease property. Also, they are not permitted with the right of first refusal. Additionally, NDMC could highly considerate the license for the hotel at its prime location 1, Man Singh Road in Lutyens’ Delhi.

Collaboration between IHCL and NDMC for the hotel was held by the HC, though it was not a joint venture, as stated by the company. Thereof, the company was not permitted with the access so that they could opt for a renewal.

Well, the company accepted the condition as a challenge and at last it agreed to pay as per market price. It stated that the HC did an error in placing the property under the hammer. Nonetheless, the argument did not reach any conclusion and the hearing was suggested to resume on Wednesday. The parties, however, were directed to preserve status quo by the apex court and also the company had been allowed to operate the hotel.