"We will finalise our response to the show cause notice in its next meeting of the council which will be held by end of the month," a senior NDMC official said.
The Home Ministry, which is the administrative ministry of the civic body, had issued a notice to NDMC asking why it has been delaying the auctioning of the Taj Mansingh hotel for the last two years.
In September last year, the municipal body had decided to give one-year extension to the Tatas besides giving the first right of refusal in an auction to be conducted within one year.
Sources said the Home Ministry was concerned that the "provision of the first right of refusal will result in a lower bid in the public auction."
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Following this, IHCL had approached the High Court in April to get a stay on the auction of its property.
Though the land belongs to NDMC, IHCL has invested in the construction of the hotel's building.
Officials said the NDMC had then decided to seek legal opinion from Solicitor General on the auction process.
The Urban Development Ministry had also earlier suggested that NDMC should go for open bidding for the property but after the IHCL approached the court, the ministry asked the body to follow the legal course.
"The council is waiting for the opinion of the Solicitor General. This matter is now caught up in bureaucratic juggernaut. Both the Home Ministry and Urban Development Ministry have contrasting views on the issue," they said.
Acording to reports, the Home Minsitry had asked NDMC to reply to show cause notice by August 6. But NDMC officials said they still have "some time" to respond to it.