‘SC’s appreciation can buy Indian Hotels Company more time’
The NDMC wanted to auction the lease, as was the mandate under the New Delhi Municipal Act, 1994. IHC unsuccessfully sought an automatic extension and a right of first refusal before the Delhi High Court and the Supreme Court. What it ultimately got was a pat on the back from the Supreme Court, which asked the NDMC to “take into account the unblemished track record of the petitioner hotel [IHC] as well as its capability” while auctioning the lease. It is probably unprecedented that in a direction calling for fresh unbiased auctions, the court gives a window to one party, more so, for the reason that the party concerned has contested the auctions. When the bidders are eyeing to claim stakes on the property from all corners of the globe, such a small window may (or may not) make all the difference.
So what would the “unblemished track record” entitle IHC to? Strictly construing, it is nothing more than an open-ended line of appreciation that IHC’s lawyers can use to buy time — the Supreme Court has granted six months to IHC to vacate the property in case it does not succeed in the auction. But can it help IHC in the auction process? May or may not. Ideally, an auction process will proceed on set terms and conditions outlined in the bid document. The need for a levelplaying field means that IHC cannot be shown any favours during the auction process, irrespective of its “unblemished track record”. In fact, if such favours are shown, the other bidders could take the matter to court, which would delay the execution of the new lease and perhaps allow IHC to stay in place. After all any court would prefer the continuance of a successful hotel rather than the maintenance of an empty edifice while legal battles are fought. All in all, the open-ended statement made by the Supreme Court is a vague and off-the-cuff remark that could lead to further litigation.