NDMC eyes big bucks from hotel chains

Landlord of some of the prominent hotels in the capital, New Delhi Municipal Council (NDMC), is trying to recover Rs 456 crore from Le Meridien as rent. The matter is under litigation.

The five-star hotel had, after an open tender, signed a 99-year lease agreement with NDMC in 1982. According to NDMC officials, the Meridien owners argue the licence fee was not viable and the then council chairman had agreed to bring down the annual payment.

According to the lease agreement, the hotel had to pay 21 per cent of the gross turnover or Rs 2.68 crore per annum, whichever is higher.

“Since 1983, the rent payment has not been made and the matter is being heard in the high court,” a senior NDMC official told Business Standard. The next date of hearing is on January 25.

Tarun Thakral, chief executive officer, Le Meridien, said, “There is a difference of opinion in the way the rent is being calculated. We have been paying a rent of Rs 12 crore per annum according to the directions of the high court.”

Le Meridien is not the only one to owe money to the government body. While Bharat Hotels' Lalit property in Delhi has not defaulted on its annual rent payment of Rs 1.45 crore per annum, it owes an interest of Rs 11.83 crore, according to the NDMC official.

Lalit, however, has denied any such arrear. “We do not owe any amount to NDMC. This money may be what NDMC is supposed to pay to the land and development office. So it is between the two government bodies and we are out of it,” said Jyotsna Suri, chairperson, Lalit Hotel. Lalit has a 99 year lease agreement for the property signed in 1981.

The arrears of Delhi’s Connaught Hotel go up to Rs 101 crore. The matter is under litigation in the Tees Hazari court since four years after the lease was signed in 1981. NDMC is also fighting a legal battle with the Asian Hotels owned by Girdhari Bhagat and Company for not evacuating the property after the expiry of lease in 2008 and defaulting on a payment of Rs 25 crore. Asian Hotel had got a stay order against the eviction notice in 2008.

The high profile list of defaulters, along with the issue of renewal of lease for Delhi's Taj Mansingh, has led to apprehensions within NDMC regarding the modalities of bidding for the prime hotel property. People might be very enthusiastic while bidding, but shy away from paying, an NDMC official said.

“Tatas have never defaulted on the payment,” an official clarified. While NDMC is clear it wants to get the correct market rate for the property, it is still uncertain over whether Taj would be given the first opportunity to match the market rate estimated by the financial advisory body IDFC.

NDMC is also keen to bid its property in Chanakyapuri, the Grand Forte. Situated close to the luxury hotel Leela, the lease period for Grand Forte comes in the end of July this year.