HC clears decks for auctioning of Taj Mansingh hotel by NDMC

Clearing the decks for auctioning of the iconic Taj Mansingh Hotel here, Delhi High Court today dismissed Indian Hotels Company Ltd's (IHCL) plea challenging the move by the New Delhi Municipal Council, saying the firm has "no right" for renewal of the licence period.
A bench of Justices Pradeep Nandrajog and Pratibha Rani observed that NDMC was "within its power" to secure maximum consideration for grant of licence for the property at the prime location of 1, Man Singh Road in Lutyen's Delhi.
"To put it pithily, IHCL (which runs the hotel) has no right under the licence for a renewal thereof and therefore no further issue needs to be considered and decided," the bench said while dismissing IHCL's appeal in which it had challenged a single judge order dismissing their suit seeking to restrain NDMC from auctioning the property.

"It is the inherent right of every proprietor to secure maximum consideration for his property in all transactions, apart from transactions where the law limits consideration that can be charged by the proprietor, for any public purpose or in public interest," the bench noted in its judgement.
"In the case of governmental bodies like the NDMC, the implicit right of a proprietor to maximise consideration for its property is also a duty since these bodies own and transact property in a fiduciary capacity for the general public," the court said.
It further said, "in exercising its right/discharging its duty to secure maximum consideration for grant of licence in relation to property bearing No.1, Man Singh Road, New Delhi, NDMC is within its power to ensure that such measures are adopted by it which fetch the maximum revenue."

IHCL had moved the division bench against the September 5 judgement of a single judge who had not acceded to the firm's request for renewal of licence for a further period, saying it was not entitled for the extension.

The property, owned by NDMC, was given to IHCL on a lease of 33 years. The lease had ended in 2011 and the company was given nine temporary extensions since then on various grounds, with three of them granted last year itself.
In its verdict, the division bench referred to a Supreme
Court judgement and said that "...Unless there is a social or a welfare purpose or any other public interest which is served, an asset held for the benefit of the public, if commercially exploited should be by way of an auction or an open competitive bidding because it would then fetch the maximum revenue."

The bench also dealt with IHCL's contention that even if the fair consideration was determined at a public auction, it must be with right of first refusal to it.
"It overlooks that such a negative stipulation qua the right of the highest bidder would obviously have an adverse impact on the bid amount for the reason the right of the highest bidder would be subject to a right created in favour of IHCL and common sense and logic dictates that why would a person bid for something which he is told is to be his subject to somebody else not matching his bid price," the bench said.

"Thus, NDMC would be entitled to the stand that it is entitled to determine the value of its property for purposes of grant of a licence by way of a fair competition," it said.
IHCL had earlier approached the single judge bench of high court seeking a decree of permanent injunction restraining the NDMC from interfering in any manner with the possession, right to operate, run and maintain the hotel premises.