In a major blow to the Tata Group, the Delhi High Court on Thursday cleared the decks for auctioning of the iconic Taj Mahal Hotel on Mansingh Road here, popularly called the Taj Mansingh, saying it has “no right” of renewal of the licence period, reports fe Bureau in New Delhi.
It dismissed the plea of the group’s Indian Hotels Company Ltd (IHCL), which is running the five-star hotel in one of the prime locations in central Delhi. The property, owned by NDMC, was given to IHCL on a lease for 33 years, which ended in 2011. IHCL has been managing the property since then through several extensions.
A bench led by justice Pradeep Nandrajog said that NDMC was “within its power” to secure maximum consideration for grant of licence for the property in Lutyens’ Delhi. “To put it pithily, IHCL (which runs the hotel) has no right under the licence for a renewal thereof and, therefore, no further issue needs to be considered and decided,” it said.
Referring to a Supreme Court judgment, the HC said “…unless there is a social or a welfare purpose or any other public interest which is served, an asset held for the benefit of the public, if commercially exploited should be by way of an auction or an open competitive bidding because it would then fetch the maximum revenue”.
“It is the inherent right of every proprietor to secure maximum consideration for his property in all transactions, part from transactions where the law limits consideration that can be charged by the proprietor, for any public purpose or in public interest,” the judgment stated.
“In the case of governmental bodies like NDMC, the implicit right of a proprietor to maximise consideration for its property is also a duty since these bodies own and transact property in a fiduciary capacity for the general public,” the bench observed. “Thus, NDMC would be entitled to the stand that it is entitled to determine the value of its property for purposes of grant of a licence by way of a fair competition,” it said.
IHCL had challenged a September 5 single-judge order that permitted the auction of the hotel on the grounds that the Tata group company was not entitled to an extension to run the hotel. The Tata group company had sought renewal of licence on grounds of the equity investment it had made in the property.
After expiry of IHCL’s licence, a committee of senior government officials was set up to look into the company’s proposal for a 30-year extension to manage the hotel. However, the council decided to opt for a public auction of the hotel despite the earlier assurance in 2012 that an extension would be granted. The municipal body had entered into an agreement with IHCL, a subsidiary of Tata Sons, in December 1976 to construct and run the 11-storey hotel.