Govt revises ground rent for 5-star hotels, sends notices worth crores

This, the L&DO said, was calculated with the rate of Rs 8.13 crore for The Imperial and Rs 3.85 crore per year for Claridges, an increase from the current rate of Rs 10,716 and Rs 8.53 lakh, respectively. The rates were 5% of the property value of the plots in 2002 and 2006, respectively, the L&DO notices said.

The lessees of the two plots have moved the High Court, terming the revision arbitrary and challenging the L&DO’s claim of ground rent on the revised rate retrospectively. Both cases were heard in May and the next hearing is scheduled on July 22.

The plots were leased by the British for construction of hotels when the development of New Delhi as capital was underway.

The 7.938 acre-plot on Janpath Lane on which The Imperial is situated was given on perpetual lease by the British to S B S Ranjit Singh with effect from April 8, 1932, with the lease dated July 9, 1937. The annual ground rent was to be revised after 30 years. The descendants of the original lessee, current joint-lessees Hardev Singh Akoi, Gobind Singh Akoi and Raidev Singh Akoi, argued in their petition that the March 28 demand letter had been “issued arbitrarily in haste”, without any show-cause notice issued to them. They said the last revision was carried out in 2006 for the period of 2002 to 2032, so the next revision was due in 2032.

In the case of Claridges, the 2.94 acre-plot of land on Aurangzeb Road, now known as Dr A P J Abdul Kalam Road, was given to Lala Jugal Kishore on November 12, 1936 on perpetual lease. The property was then purchased by the current lessees and petitioner, Claridges Hotel Pvt Ltd in 1972.

The petitioner argued that the March 27 demand notice was against the clauses of the lease, which said the ground rent would be revised every 30 years and that the rate would not be more than 1/3 the letting value of the site, without the building, on the date of the revision. They said the last revision for the Claridges land was done by L&DO with effect from January 15, 2016, when the ground rent was increased to Rs 8.53 lakh from Rs 2.13 lakh, so the next revision had to be after January 14, 2046.

In its notices, the L&DO said since there had been “challenges” and “delays in ascertaining the letting value”, it had issued an ad-hoc policy on December 24, 1983 for calculating the letting value, which included the 1/3 of the letting value formula. “The same was limited to the first revision of ground rent,” it said.

The L&DO said since ground rent was last revised with effect 1972 for The Imperial and 1976 for Claridges and the 30-year period was up in 2002 and 2006, respectively, it was decided to revise the ground rent “at the rate of 5% of the land value” prevailing.

In its notices, the L&DO gave the hotels 30 days to pay the amount, failing which a 10% per annum interest would be charged. According to ministry sources, the revision of ground in 2006 and 2016 for The Imperial and Claridges, respectively, had been an ad hoc measure.

Hearing the petitions on May 21 for The Imperial and May 30 for Claridges, the High Court ordered the L&DO to give the two a hearing before fixing the ground rent.

Sources aware of the developments said a round of hearings has taken place, with more hearings planned for this week. The L&DO has issued demand notices with revised ground rent to other five-star hotels in Delhi as well, they said.