Tata's Taj Group can keep Mansingh, no need to even bid: Solicitor General

Apr 24 2014, 08:39 IST
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Solicitor general says calling for bids, and giving Taj RoFR violates CVC guidelines as it means ‘post-tender negotiation’ Solicitor general says calling for bids, and giving Taj RoFR violates CVC guidelines as it means ‘post-tender negotiation’
SummaryLand on which Taj Mahal hotel is located belongs to NDMC, which was leased to Indian Hotels Co.

gross revenue. The lease is on a temporary extension since October 2011. In October 2012, NDMC decided to conduct an auction by giving the Tatas the RoFR. Subsequently, IHCL moved the Delhi High Court which though did not stay the auction, but gave IHCL the liberty to come back to it if it felt any coercive action has been taken against it.

The SG's view was sought since there were divergent views on giving the first right of refusal to IHCL.

While the NDMC was was in favour of giving the RoFR, the home ministry was against it arguing that it may attract lower bids. When the home ministry asked NDMC not to give IHCL the first right of refusal while auctioning the property, the civic body went to the Solicitor General to seek his opinion on the matter..

Elaborating on the beneficial relationship between the NDMC and the IHCL, the SG has noted that the increase in the overall turnover of the hotel from Rs 8.96 crore in 1979-80 to Rs 194.29 crore in 2010-11 has also benefitted the NDMC by increasing its share of the gross revenue by way of licence fee per annum which increased from Rs 94 lakh to Rs 20.40 crore during the period, thus taking the NDMC's earnings cumulatively to Rs 237.78 crore, against NDMC's total original investment of Rs 6.26 crore. “Therefore, from the NDMC's own records and resolution, it appears that the association with IHCL has been financially very fruitful owing to the financial success of the hotel itself,” the opinion said.

Parasaran has also said that the fact that the road on which the hotel stand has obtained secondary meaning and also generically referred to as the Taj Mansingh Road is “testament to its popularity” and NDMC will be within its statutory, constitutional and contractual obligations and mandate if it chooses to renew the licence in favour of the Taj Group”.

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