The iconic Taj Mansingh Hotel in Lutyens' Delhi will finally go on the block with the Division Bench of the Delhi High Court (DHC) dismissing its plea against a proposed auction.
The Bench of Justices Pradeep Nandrajog and Pratibha Rani upheld the September 5 order by a single judge, of the same court, who ruled against the extension of the lease and permitted the auction of the hotel.
The Bench upheld the view that "the NDMC (New Delhi Municipal Corporation) would be bound to secure the price which would be fetched at a fair competition and the fair competition would be the one contemplated by the Supreme Court (SC) in the Centre for Public Interest Litigation case (supra) i.e. an auction."
Thursday's 52-page judgment is not only a blow for the Tatas, but also for the residents of Delhi, for whom the hotel has been a landmark for over three decades. The hotel, a stone's throw from the tony Khan Market, is one of the rare examples of Mughal architecture in the city. Set amidst a garden and constructed entirely out of pink Dholpur sandstone, the Taj Mansingh, a signature property of the Tatas, is the epitome of luxury and indulgence.
Diners of Delhi would have to bid adieu to award-winning restaurants like Machan, Vark, House of Ming, Wasabi by Morimoto, Ricks Bar, among others.
The Agreement
In 1978, Indian Hotels Company Ltd (IHCL) and NDMC signed an agreement for the 11-storey hotel, under which the cost of land and construction was borne by NDMC, while the operation and maintenance were taken care of by the IHCL. The agreement was signed for 33 years from the date the first paying guest checked in. This lease expired in 2011, though various ad-hoc extensions were granted till January 31, 2016. The NDMC submitted that IHCL had no vested right to claim an extension either under the Collaboration Agreement dated December 18, 1976 or under the License Deed dated December 18, 1976.
The case of IHCL was that the relationship between itself and the NDMC was in the nature of a "Joint Venture", and, as a consequence, IHCL had a long-term interest in the hotel building and the land. Under the terms and agreement, as interpreted by the Tatas, it was entitled to "an extension of the License Deed."
In 2011, a committee of senior government officials was set up to look into IHCL's proposal to run the NDMC-owned hotel for another 30 years. However, the council opted for a public auction of the hotel despite an earlier assurance in 2012 where NDMC would grant an extension.
It is unclear when the 3.78-acre property will go up for auction, though sources close to the case have claimed that the Tatas will approach the SC. Speaking to DNA, NDMC chairman Naresh Kumar, said: "We are yet to read the complete order. The procedure for the auction will take some time as we will have to make sure we get value for money."
