IHCL ready to pay market lease rates for Taj Mansingh

NEW DELHI: The Tata group-run Indian Hotels Company Ltd (IHCL) told the Supreme Court on Tuesday that it was ready to pay NDMC the market price of Taj Mansingh hotel in Delhi to renew the lease to run the iconic hotel.

Appearing before a bench of Justices P C Ghose and Rohinton F Nariman, IHCL’s counsel Harish Salve said that the property should not be auctioned as it would prop up the price. He said that the company had been paying 10.8% of gross revenue every year to NDMC.

“The company has paid above Rs 250 crore upto 2011 as per the arrangement with NDMC. It is the only hotel which has been paying regularly to the civic body while others have defaulted. It is a unique public-private project which has been running successfully over the years and the NDMC would suffer a financial loss if the hotel is handed over to someone else,” he said.

IHCL had completed construction of the hotel building, consisting of approximately 300 rooms, with all other allied facilities and started the commercial operation of the hotel with effect from October 10, 1978. The agreement period of 33 years is reckoned from the said date and the company had incurred an expenditure to the tune of Rs 461.61 lakh.

NDMC had decided to auction the property, hoping to fetch a better price for granting the lease of the property. The company then approached the Delhi High Court which dismissed its plea in October and allowed the civic body to auction the property.

The HC had held that IHCL had “no right under the licence” for renewal of its lease or even the right to first refusal and said that NDMC was “within its power” to secure maximum consideration for grant of licence for the property at the prime location of 1, Man Singh Road in Lutyens’ Delhi. The HC had held that collaboration between NDMC and IHCL for the hotel was not a joint venture, as claimed by the company and had said that the company had no right under the licence for a renewal thereof.

Challenging the HC order, the company contended that NDMC must get a fair price and the company was agreeable to pay as per the market price. It said that HC erred in passing the order for putting the property under the hammer. The argument remained inconclusive and hearing would resume on Wednesday.

The apex court had earlier directed the parties to maintain status quo and allowed the company to operate the hotel.

Credits ET Realty

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