Must have strong qualification criteria for bidders: Sitesh Mukherjee

SC often held selection criteria for govt auction are left to discretion of administrative authority

The Delhi High Court has held that IHC does not have the right to a renewal of the licence for the Taj Mansingh hotel. The High Court has also rejected IHC’s contention of the right of first refusal to match the bid price of the highest bidder, as it felt it would adversely affect the bid process. In this order, the Supreme Court has not interfered with the Delhi High Court judgment, which has directed auctioning the property. 

The Supreme Court has only added that given the peculiarities of this case, namely the iconic nature of the property and its brand value, the NDMC should exercise its powers in a manner that ensured that the selected bidder was capable of taking forward the goodwill of the hotel. The rationale behind this addition by the Supreme Court was to ensure the selection of a bidder who enhances the value of the property just as IHC has done over the years.

While the Supreme Court has often held that the selection criteria for government auction are left to the discretion of the administrative/ executive authority, the apex court has ample powers of judicial review to ensure that public assets are allotted in a way that enhances their value and serves the public interest. In this instance, the Supreme Court, it seems, may have indicated that the NDMC should not solely focus on choosing the highest bidder but should exercise its powers to ensure that there is no diminution in the commercial value of the public asset, i.e. the hotel. 

One way for the NDMC to comply with the Supreme Court order is to have strong qualification criteria for bidders to ensure that only serious players with a proven track record of running five-star hotels are eligible to apply for the bid process.

(The writer is partner, Trilegal)