Taj Mahal Hotel, Mansingh Road, New Delhi
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Says NDMC Not Fair In Approach Towards IHCL
Observing that New Delhi Municipal Council (NDMC) had not been fair in its approach towards Tata grouprun Indian Hotels Company Ltd (IHCL) while deciding to auction the iconic Taj Mansingh hotel, the Supreme Court asked the civic body to review its decision.
A bench of Justices Pinaki Chandra Ghose and Rohinton FNariman said the opinions given by the top two legal officers of the country--the attorney general and the solicitor general--were not considered by the authority while taking a decision to auction the property and the NDMC must review its decision in light of that.
The law officers had suggested that NDMC hold negotiations with the Tata group to determine the market price to grant lease to the company to run the hotel and opined against putting the property under the hammer. IHCL had constructed the hotel building and started commercial operation of the hotel from October 10, 1978. The agreement period of 33 years is reckoned from the said date.
The agreement expired in 2011 and NDMC decided to auction the property , hoping to fetch a better price for the lease.The company approached high court which dismissed its plea in October last year and allo wed the civic body to auction the property .
Challenging the HC order, the company told the SC bench that it was ready to pay the market price but insisted that the hotel should not be auctioned as it would prop up the price to an artificial level. Senior advocate Harish Salve, appearing for the company , said that the AG, the SG and even an independent consultant had advised NDMC against auction.
Additional solicitor general Sanjay Jain, however, said the civic body was not against the company and it could participate in the bidding process.He said auction was the best way to fetch a good price for the property . “We considered the plea of the company forlease extension but came to the conclusion that auction is the best way to go forward,“ he said. The court, after hearing th sides, said the NDMC deci both sides, said the NDMC decision needed to be reviewed and granted six weeks time to the civic body to take a fresh decision after considering opinions given by the law officers.
The HC had held that IHCL had “no right under the licence“ for renewal of its lease or even the right to first refusal and said that NDMC was “within its power“ to secure maximum consideration for grant of licence for the property . The HC had held that collaboration between NDMC and IHCL for the hotel was not a joint venture, as claimed by the company .
Challenging the HC order, the company moved the apex court which had directed the parties to maintain status quo and allowed the company to operate the hotel till it adjudicates the dispute.
2017/ SC allows auction of Taj Mansingh
The iconic Taj Mahal Hotel will go under the hammer as the Supreme Court allowed New Delhi Municipal Council (NDMC) on Thursday to auction the property , bringing the legal battle between the civic body and Tata group-run Indian Hotels Company Ltd (IHCL), which has been running the hotel since 1978, to an end. A bench of Justices P C Ghose and R F Nariman granted green signal to NDMC to go ahead with the e-auction. It though asked NDMC to keep in mind and consider the good track record of its 33-years of association with the company while taking a final call on granting lease of the property .It also directed the civic body to grant six months' time to IHCL to vacate the premisses in case it lost the race in the bidding process.
The court passed the order on a plea of IHCL seeking direction to NDMC to renew its lease and restrain it from auctioning the property . It had on the first date of hearing on November 21 last year directed the civic body to maintain status quo and allowed IHCL to operate the hotel till it adjudicated the dispute.
The property , owned by NDMC, was given to IHCL on lease. The company had completed construction of the hotel building, consisting of app roximately 300 rooms, with all other allied facilities and started commercial operations from October 10, 1978. It had incurred an expenditure to the tune of Rs 461.61 lakh and the lease was granted to it for 33 years which expired in 2011, after which IHCL had got several temporary extensions.
After NDMC refused to renew the lease and decided to go for auction of the property to fetch a better price, IHCL approached court challenging its decision. It contended that the company was ready to pay the market price of the property and it should not be auctioned as it would prop up the price. It said there was no “finishing line“ in its agreement with NDMC and the company was entitled for renewal of lease.
NDMC, however, said the company had no right over the property and all construction, building and land were owned by the civic body and it had the right to take a decision on how to deal with its property .
Additional Solicitor General Sanjay Jain, appearing for NDMC, told the court that the civic body was not against the company and it could also participate in the bidding process. He said auction was the best way to fetch good price for the property . He said that auction was the most transparent method and there was no ulterior motive behind it. “We have considered the plea of the company for extension of lease but came to the conclusion that auction is the best way to go forward,“ he said.
Agreeing with his plea, the bench allowed NDMC to go ahead with the auction process. The ASG said all preparations for e-auction had been done and the process could be initiated within a fortnight.
2018: Tatas get Taj Mansingh for another 33 years
ITC Loses Auction; NDMC’s Monthly Revenue To Go Up 79%
The Tatas have finally retained the iconic Taj Mansingh hotel in Lutyens’ Delhi for another 33 years. Following a successful e-auction of the property on Friday, New Delhi Municipal Council (NDMC) will now get a monthly revenue of over Rs 7 crore from the Tatas’ Indian Hotels Company Ltd (IHCL) for Taj Mansingh, 79% up from the previous Rs 3.94 crore.
IHCL, which till now shared 17.25% of the hotel’s gross turnover with NDMC, will now give the civic body 32.5% of the same. The Tatas outbid the sole other bidder, ITC Group, to keep the 292-room Taj Mansingh, a key property for IHCL.
NDMC struck gold after three unsuccessful auction bids this year. A senior NDMC official said the agency got the “best price as (determined) by market forces in the e-auction. It got about 79% increase in the licence fee and the increased resources will help us implement moves for public welfare”.
The move paves the way for fresh investments in the property that opened its doors on October 11, Dussehra of 1978. The lease for 33 years ended in 2011, followed by a protracted legal battle between the Tatas and NDMC.
“We look forward to investing in the hotel and taking it to new heights of Indian hospitality. The Taj legend will continue to serve Delhi with elegance and charm,” Puneet Chhatwal, IHCL’s managing director and CEO, said. This will mean an improved experience for patrons at the property that houses iconic restaurants like Machan and House of Ming.
Friday’s auction brings the curtains down on a long wait. Once the licence period got over, there was a protracted legal battle, which finally ended with NDMC getting the nod to auction the property.
The auction was carried out in the fourth attempt after NDMC had relaxed the terms by allowing the process with two bidders — instead of three earlier — with a gross turnover of Rs 350 crore each, instead of the previous Rs 400 crore.
The auction was first supposed to take place in January. But strict eligibility norms made it a non-starter. The second auction was then scheduled for June 19, but only one eligible bid was received from the Tatas. The third date was July 18, but this time only two bids — from ITC and Taj — were received.
An elated Chhatwal said, “We are delighted that the iconic Taj Mahal, New Delhi, which has been an important part of the cultural and historic fabric of the national capital, will continue to remain part of the IHCL family. We would like to thank our customers for their enthusiastic support and our employees, who have always offered exceptional service to our guests for over 40 years.”