Indian Hotels to appeal against Delhi HC's decision on Taj auction in SC

Indian Hotels Company on Friday said it will challenge the dismissal of its plea on Taj Mahal Hotel at the Supreme Court. The Delhi High Court on Thursday dismissed the company’s plea that challenged the court’s single judge verdict allowing New Delhi Municipal Council (NDMC) to auction the hotel. In effect, the court cleared the hurdles to auction the iconic Taj Mahal Hotel in the capital.

The company proposes to challenge the dismissal of appeal in the Supreme Court, Indian Hotels informed BSE in a statement on Friday. The company’s stock today ended in the green at Rs 115.40, up 0.40%. It cracked over 5% on Thursday.

The dispute relates to a 1976 collaboration agreement between Indian Hotels and NDMC for the development and operation of the five-star property. Though the initial agreement expired in 2011, the Taj group was given extensions. The NDMC's decision to auction the property at the end of the last extension period, which expired on September 30, lead to Indian Hotels challenging the move before the high court.

After hearing arguments by both sides, the high court had on September 5 declined the chain’s requests for renewal of the agreement. Indian Hotels appealed the decision before a division bench of the court the very next day.

While admitting the appeal, the court had directed NDMC not to take any precipitative action against the group until further determinations were made.

Appearing on behalf of Indian Hotels, senior advocates Harish Salve and Rajiv Nayar pleaded against the decision of the single judge bench, stating their agreement with NDMC was similar to a joint venture and had required the company to undertake significant costs in developing the property. They also said the undertaking involved the investment of the Taj brand name, which could not be dissociated from the hotel.

Additional Solicitor General Sanjay Jain, representing NDMC, refuted Indian Hotels’ submissions saying the group had benefited greatly, both monetarily and in terms of its reputation, from the agreement. Jain also said according to Section 141(2) of the NDMC Act 1994, the rate for any property transferred by the government, should not be lower than what could be obtained through fair and natural competition.

Taj Mahal, also known as Taj Mansingh Hotel, 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.