NDMC meeting this week to take up Taj auction issue

New Delhi Municipal Council (NDMC) is all set to discuss the matter of auctioning the Taj Mahal hotel, Mansingh Road, in its next council meeting on June 27. NDMC had earlier decided to convene a special meeting to discuss this issue after Indian Hotels Company (IHCL), which operates the Taj Mahal hotel,  filed an injunction suit in the Delhi High Court against the impending auction after its two-year lease extension comes to an end in October 2013.

 

NDMC has to give its reply to IHCL’s plea in the court on July 18.

 

The civic body is yet to clear its stand on whether it plans to go ahead with the finalization of the auction details or stop all action till the matter remains sub-judice. Senior officials said that the first right of refusal would be given to IHCL, which is enough to protect its interest in the property.

 

IHCL, in its plea, has claimed to have equity in the property because of which it cannot be treated as any other lessee. Indian Hotels, in its plea, has cited its long relationship with NDMC for grant of a stay in the auction process.

 

It has also said that the company shares its revenue with NDMC as rent every year for managing the property built on the civic body’s land. Indian Hotels said that it has a right to seek an extension of the lease because it "built a permanent structure" and invested in development of the area.

 

The 33-year lease agreement ended in October 2011, post which NDMC decided to go for an auction instead of renewing the lease of IHCL. Thereafter, the civic body had given one year’s lease extension to the company.

 

The Taj group pays NDMC 10.5 % of its gross revenue annually as rent and it is expected the proposed auction could result in a substantial increase in the figure. The NDMC had appointed Ernst & Young as consultant to advise on the course of action in lease renewal.