Published: Fri, April 21, 2017
Economy | By Annette Adams

SC allows NDMC to e-auction Taj Mansingh hotel

SC allows NDMC to e-auction Taj Mansingh hotel

Delhi's iconic Taj Mansingh hotel will go under the hammer as the Supreme Court on Thursday morning allowed the New Delhi Municipal Corporation (NDMC) to auction the property located at the prime location of 1, Man Singh Road in Lutyens' Delhi. The auctioning the Taj Mansingh Hotel property was stiffly opposed by Tata group-run Indian Hotels Company Ltd which manages the hotel.

In an earlier hearing, the SC had asked NDMC to reconsider its decision as the IHCL had approached the apex court against a Delhi High Court ruling allowing the auction of the Taj Mansingh.

IHCL had then moved the division bench of high court, but lost again.

The Tata group and the NDMC had 33-year lease agreement to run the five-star hotel. The hotel, which is now run by the Tata Group, will be given given six months as "breathing time" to vacate if its bid in the online auction is not the winning offer, added the apex court. The contract ended in 2011.

Last month, the civic body had approved the auction of the iconic property while cancelling Le Meridien Hotel's licence over uncleared dues of Rs 523 crore.

However, the court refused to buy Tata's argument and said that NDMC was within its power to go for an auction. Right of first refusal is a contractual right that gives its holder, in this case Taj, the option to enter a business transaction with the owner, in this case NDMC, before the owner is entitled to enter into that transaction with a third party. It would be an open auction.

The IHCL in its response had said that it was not clear why NDMC wanted to auction the property when it was giving them the maximum revenue.

IHCL claimed that the original licence agreement-with NDMC as the licensor and IHCL as the licencee-later became a joint venture with two equal partners; the high court rejected this claim. On Thursday, the court allowed e-auction of the property.

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