Delhi HC clears decks for auctioning of Taj Mansingh hotel by NDMC

On September 25, a single judge had dismissed the suit by the current operator IHCL, to renew its licence and upheld the NDMC's decision to go for auction.

Written by Aneesha Mathur | New Delhi | Updated: October 28, 2016 2:18 am
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The iconic Taj Mansingh hotel on Delhi’s Man Singh road is set to be put to public auction with a division bench of the Delhi High Court dismissing a plea by the Indian Hotels Company Limited (IHCL) against the proposed auction. “IHCL has no right under the licence for a renewal thereof and therefore no further issue needs to be considered and decided,”the bench of Justice Pradeep Nandrajog and Justice Pratibha Rani in its judgment on Thursday.

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IHCL had earlier approached the single judge bench seeking a decree of permanent injunction restraining the NDMC from interfering in any manner with the possession, right to operate, run and maintain the hotel premises at the prime location of 1, Man Singh Road in Lutyen’s Delhi. It had also sought a direction to restrain the NDMC from conducting an auction for running the hotel premises.

On September 25, a single judge had dismissed the suit by the current operator IHCL, to renew its licence and upheld the NDMC’s decision to go for auction. The company had filed an appeal before the division bench. The company had also claimed that it hsould be granted “first right of refusal” for the property. The bench has however dismissed all arguments and held that the NDMC was “bound”to hold a public auction.

“Keeping in view clause II (2) of the License Deed as interpreted by us hereinabove, while considering the request (sans a right) from IHCL to renew the licence, the NDMC would be bound to secure the price which would be fetched at a fair competition and the fair competition would be the one contemplated by the Supreme Court in Centre for Public Interest Litigation case (supra) i.e. an auction. It being settled law as per said judgment that unless there is a social or a welfare purpose or any other public interest which is served an asset held for the benefit of the public, if commercially exploited should be by way of an auction or an open competitive bidding because it would then fetch the maximum revenue,” the bench held.

“As regards contention of IHCL that even if the fair consideration is determined at a public auction it must be with right of first refusal to it, it overlooks that such a negative stipulation qua the right of the highest bidder would obviously have an adverse impact on the bid amount for the reason the right of the highest bidder would be subject to a right created in favour of IHCL and common sense and logic dictates that why would a person bid for something which he is told is to be his subject to somebody else not matching his bid price,” the court has held.

The property, owned by NDMC, was given to IHCL on a lease for 33 years. The lease had ended in 2011 and the company has been given nine temporary extensions since then on various grounds, with three of them granted last year itself. NDMC had in January this year said it was in the process of assessing the assets of the hotel in preparation for the much-delayed auction of the property.

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