Taj doesn't have automatic right of renewal: NDMC

Says Indian Hotels has made enough profit on Mansingh property

The New Delhi Municipal Corporation (NDMC) has cited the NDMC Act, 1994, to justify the decision to auction the iconic Taj Mansingh hotel in New Delhi and said Indian Hotels could not get benefit of renewal, merely on the ground that it had incurred expenses to develop the property.

On Monday, additional solicitor general (ASG) Sanjay Jain argued before a division Bench of the Delhi High Court that the property had allowed Indian Hotels to amass large profits, justifying the investment and leaving the group at an advantageous position in the prospective auction. Jain also said the rate for transferring a corporation property should not be lower than what can be obtained through natural and fair competition.

Justices Pradeep Nandrajog and Pratibha Rani were hearing the arguments by NDMC after Indian Hotels filed an appeal before the division Bench. Earlier, a single judge had dismissed the company’s petition on September 5.

The corporation has announced that it would auction the property after the end of the current extension period, which expires on September 30.

The present dispute arises out of a 1976 collaboration agreement between Indian Hotels Company and the NDMC for the over 35-year-old 5-star property. Though the initial agreement had expired in 2011, several extensions were allowed to the operators since.

On Monday, the ASG was responding to the earlier submissions put forth by the company against the single judge’s decision. According to Jain, the opportunity had allowed the Taj name to travel beyond Mumbai in its fledgling days and led to the significant development of the brand’s goodwill. He also negated previous submissions made by senior advocate Harish Salve regarding the inherent association of the ‘Taj’ name with the Mansingh property, by citing examples of other properties that have successfully acquired evolved identities.

The court has listed the matter for further consideration on October 24. It had earlier directed the NDMC not to take any precipitative action against the operators of the Mansingh hotel until further determination of the issue.