SC allows e-auction of Taj Mansingh
In a setback to Tata Group, the Supreme Court on Thursday rejected the company’s plea to renew its lease to operate the iconic Taj Mansingh hotel and permitted New Delhi Municipal Council (NDMC) to e-auction the property, currently run by Tata Group’s Indian Hotels Company (IHCL).
A bench comprising Justices PC Ghose and RF Nariman agreed with NDMC’s argument that IHCL cannot have the first right to refusal in the auctioning of the hotel.
However, the court asked the civic agency to grant six months “breathing time” to the company to vacate the premises if it loses the auction.
IHCL’s blemish-free record may be taken into account by NDMC while auctioning the hotel, the court said. “NDMC’s process to auction hotel lease is not arbitrary,” held the bench.
Appearing for NDMC, additional solicitor general (ASG) Sanjay Jain said IHCL was open to participate in the e-auction after which the court said there was no reason for it to put the process on hold. Jain said preparations were done and the NDMC will auction the property within two weeks.
The property, owned by NDMC, was given to IHCL on a lease of 33 years, which ended in 2011. Nine temporary extensions were given to the company on various grounds with three of them granted last year itself. According to IHCL, it had incurred expenditure to the tune of ₹461.6 lakh in constructing the hotel.
The agreement expired in 2011, following which the NDMC decided to auction the property in the hope to get a better price for granting lease. This move was assailed by IHCL that moved the Delhi high court, which dismissed the plea in October 2016, paving way for the civic agency to auction the property.
IHCL then approached the top court and argued that it was not clear why NDMC wanted to auction the prime property that gave it the “best revenue.” It submitted an expert committee’s report before the court, claiming auctioning the hotel to other players would entail a revenue loss for the civic body.
Appearing for the IHCL, senior counsel Harish Salve told the court that the proposed auction was not right as the company had certain contractual rights for lease renewal.
Pressing for the right of first refusal if Taj Mansingh was to go under hammer, Salve said: “We must get renewal opportunity as our track record has been unblemished.”
In an official statement IHCL said it respected the SC order and will participate in the auction.
An NDMC official told HT that has been called on Saturday to finalise the details regarding the auction.