The Tata group on Thursday got a one-year breather, with the New Delhi Municipal Council (NDMC) taking a ‘majority decision’ to extend the lease of Taj Mahal Hotel, popularly known as Taj Mansingh, for another year.
The 33-year lease of the iconic five-star hotel, run by the Tata group’s Indian Hotels Company (IHC), had expired in October last year and been extended for a year.
The council was expected to decide on the modalities for an auction on Thursday, but it ended up extending the lease. Earlier this month, Additional Solicitor General of India Rakesh Kumar Khanna had advised that NDMC go for auction, ruling out any case for lease extension.
Speaking to Business Standard, Karan Singh Tanwar, BJP MLA and NDMC standing council member, said: “The auction will be held within a year and the first right will be given to the Taj group to match the highest bid.” He added the property would be given to the highest bidder if the Taj group was not able to match the highest bid.
BJP members opposed the majority decision to extend the lease and demanded auction be conducted within two months, said Tanwar. “If auctioning takes place within two months, it will lead to greater transparency... There is no need to give Taj the first right to match the highest bid, as the property should go to the highest bidder,” he added.
The biggies of the Taj group of hotels, including Managing Director Krishna Kumar, were in the capital in the run-up to the NDMC meeting.
In case of an auction, the Oberoi group, Sahara, Accor and ITC, among many others, are the probables looking at managing the Mansingh property.
When contacted, IHC said it was aware of the developments but did not want to comment.
Taj had been paying NDMC 10.5 per cent of its gross revenue annually as rent, but it had been asked to pay 17.5 per cent of its gross revenue for the extended one-year period since October 2011. The revenue-share rate for the next one year will remain the same. It is expected the proposed auction would result in a substantial increase in this figure.
Tanwar had earlier told this newspaper that Delhi Chief Minister Sheila Dikshit, who presided at the NDMC Council meetings, was of the view that Taj’s lease should be extended. “But it will be illegal, because there are no terms and conditions to extend the lease,” he had said. Touching upon the current sentiment of maximising value through auctions, he said: “The government will get more money from the auction.”
Besides Dikshit and Tanwar, Congress nominee Tajdar Babar is also a member of NDMC. Although his name has figured as an NDMC member, Sports Minister Ajay Maken clarified he did not take oath as a member of NDMC. “I am not attending any of its meetings and, so, I am not its member,” Maken said.
NDMC had appointed Ernst & Young as the consultant to advise on the future course of action on the Taj Mansingh lease. It recommended that the Tatas be given the right to match the highest bid in an open auction. Harish Salve is the legal counsel for the case.
