New Delhi Municipal Council’s (NDMC) seven-year battle to auction the premier Taj Mansingh Hotel in Lutyens’ Delhi finally ended Friday, with the Tata group retaining the right to run the property, albeit at a much higher rate.
“The Tata group’s Indian Hotels Company Limited (IHCL) has retained the property at a license fee of Rs 7.03 crore per month, including GST or 32.50 per cent of the gross turnover of the property. Earlier, they were paying Rs 3.94 crore per month as license fee,” a senior NDMC official said.
The civic body had been trying to auction off the property since 2011, when the 33-year lease given to IHCL ended, and after which it was given nine extensions between 2001 and 2017. During this period, NDMC’s revenue share was around 17.5% of the gross revenue. Prior to it, IHCL paid 10.5% of its gross revenue to NDMC.
Taj Mansingh was a unique joint venture between NDMC and IHCL, where land and construction cost was borne by NDMC, and IHCL was responsible for operating and maintaining the hotel.
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The 11-storey premier property is spread across three acres and was constructed in 1978 to house delegates of the Pacific Area Travel Association Conference.
IHCL moved the Delhi High Court in April 2013, asking that NDMC be restrained from the property after an NDMC committee refused to renew the hotel’s license for another 30 years.
IHCL had sought weightage in the e-auction process for its unblemished record in running the hotel. NDMC, however, wanted a higher revenue share. The order of the single judge in Delhi High Court was challenged and placed in front of a division bench, which did not give any relief to IHCL either. In June this year, the Supreme Court finally gave NDMC the final go-ahead for the auction.
The process of auction, however, was not smooth and had to be put off twice as the civic body did not get minimum three bids required to go ahead with the auction.
After the first auction, held on January 30, failed to attract the requisite number of bidders, NDMC floated a tender with less stringent technical conditions — scheduling an auction for June 19.
This, too, attracted only one bidder, IHCL, and had to be annulled on June 14. However, there was no further relaxation on the conditions in the current tender.
After the failed attempts, NDMC last month relaxed the eligibility criteria for bidders, reducing the minimum number of bidders from three to two, and the turnover eligibility from Rs 400 crore to Rs 350 crore. The decision was taken at a council meeting presided over by Chief Minister Arvind Kejriwal.
“The auction was fought with a rival group, ITC, also bidding for the hotel. It was retained by the same group on a higher rental, as per market determined price, in an e-auction,” said an NDMC official responsible for the process.
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