Blow to Indian Hotels as SC okays e-auction of Taj Mansingh

The Supreme Court on Thursday allowed the New Delhi Municipal Council to e-auction the five-star hotel Taj Mahal, popularly known as Taj Mansingh, currently being run by the Tata group firm Indian Hotels Company (IHCL), in the heart of the national capital.

A bench comprising Justices P C Ghose and R F Nariman allowed the NDMC plea that IHCL cannot have the right of refusal in the auctioning of the hotel.

The bench, however, asked the civic body 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 IHCL may be taken into account by NDMC while auctioning the iconic property.

The civic body had on March 3 told the apex court that it wants to e-auction the hotel.

The court had earlier asked IHCL, which challenged a Delhi high court order allowing the hotel’s auction, to file objections, if any, within a week.

IHCL had told the apex court that it was "not clear" why NDMC wanted to auction the prime property which gave the "best revenue" to it.

The company had submitted that an NDMC expert report suggests that the council would "lose revenue" if the hotel was auctioned to other players.

The apex court had on November 21 last year directed that status quo be maintained in the NDMC's auctioning process of Taj Mansingh Hotel.

IHCL had on November 8 last year approached the apex court against the Delhi high court's order clearing the decks for the auction.

The apex court had asked NDMC to reconsider its decision to auction the five-star hotel in the wake of the attorney general and solicitor general's opinion to not initiate any such process.

It had noted that the opinions of both top law officers against the auctioning of the hotel was not placed before the ministry of home affairs for consideration.

The bench had also taken note of the fact that there was an internal opinion of top NDMC officials against the auctioning process.

When the bench had asked additional solicitor general Sanjay Jain, who was appearing for NDMC, whether the body agreed to reconsider the decision of going ahead with the auctioning process, he had replied, "No".

To this, the bench had said, "Why are you not agreeing to reconsider the decision? It is not a matter of right. Do you not want to be fair to the party who has been paying the rent continuously for 30 years?"

A division bench of the high court had on October 27 last year dismissed IHCL's plea challenging the move by NDMC to auction the property, saying the company has "no right" for renewal of the licence period and NDMC was "within its power" to secure maximum consideration for grant of licence for the property located at the prime Mansingh Road location in Lutyens’Delhi.

IHCL had moved the division bench of the high court against the judgement on September 5 last year of a single judge who had not acceded to the firm's request for renewal of licence for a further period, saying it was not entitled for the extension.

The property, owned by NDMC, was given to IHCL on a lease of 33 years. The lease ended in 2011 and the company was given nine temporary extensions since then on various grounds, three of them granted last year itself.

The NDMC had earlier said it was in the process of assessing the assets of the hotel in preparation for the much-delayed auction.

Image: Hotel Taj Mahal, New Delhi. Photograph: Courtesy, Hotel Taj Mahal, New Delhi.