Taj Mansingh auction: Indian Hotels appeals against HC order

Indian Hotels Company, the operator of Delhi’s iconic Taj Mahal hotel (also known as Taj Mansingh), has challenged the single-judge order of Delhi High Court that allowed auctioning the property and declined requests to renew the chain's licence.

The court on Tuesday directed the New Delhi Municipal Council (NDMC) not to any take "precipitative action" against Taj Mansingh, which is considered among the few money spinners for the group, and allowed the company to strengthen its appeal.

The company’s stock did not suffer by the Monday order of the single-judge bench. Rather, it opened in the green and closed at Rs 133.55 on the BSE, up six per cent from the previous day. The BSE Sensex gained 1.56 per cent on Tuesday. Fixing the matter for September 15, the court assured that no immediate action would be taken against the hotel.

“The Indian Hotels Company will vigorously protect its interests in the Taj Mahal Hotel, New Delhi and will pursue all legal options," said a Taj spokesperson. Filing an appeal against the single-judge order, the group on Tuesday sought intervention of the division bench in the matter.

The Taj Mahal Hotel is an iconic property that has served the city of Delhi for more than 35 years, the spokesperson said. ''We are committed to our guests, employees and partners and remain invested in the future of the hotel."

The Tata group company was seeking renewal of licence on grounds of the equity investment it had made in the property.

The initial cost incurred by the company before the hotel became operational in 1978 was Rs 4.61 crore. Additional investments would have gone to modernise and upgrade the property.

Indian Hotels was also supposed to enjoy the right of first refusal with regard to the hotel. This was, however, cancelled.

Taj Mansingh is a 294-room property, located in Lutyens’ Delhi. It is a key asset operated by the company and is estimated to bring annual revenues of Rs 150 crore.

Indian Hotels clocked revenue of Rs 2,274 crore in FY16.

The Taj group pays NDMC 10.5 per cent of its gross revenue annually as rent and a change of ownership after auction could result in a substantial increase in revenue for NDMC.

NDMC has in the past won legal battles against top Delhi hotels such as Le Meridien on issues of licence fee revision.

Indian Hotels had got the property on lease from NDMC for 33 years.

The lease ended in 2011 and saw several extensions on various grounds.

The company was given nine temporary extensions since then on various grounds with three of them being in the last year itself.

The current extension is valid till September 30. However, the auction process could take a longer time. NDMC has roped in SBI Cap, a subsidiary of State Bank of India, as the transaction advisor for the auction.

HOW IT ALL UNFOLDED

• 1978: Taj Group inaugurates Taj Mansingh hotel in Delhi
   
• October 2011: Taj Mansingh’s 33-year lease ends
   
• 2012/13: NDMC decides to go for auction of the hotel
   
• 2013: Indian Hotels approaches Delhi High Court against auction
   
• September 5, 2016: Single-judge bench at Delhi High Court allows NDMC to proceed with auction
   
• September 6: Indian Hotels appeals against the order before a Division Bench at Delhi High Court