Indian Hotels moves Delhi HC against auction of Taj Mansingh Hotel

Tata Group-owned Indian Hotels has moved the Delhi high court against the proposed auction of its marquee Taj Mansingh Hotel in the national capital even though its extended lease expires only in October. The injunction suit comesjust days ahead of a New Delhi Municipal Corporation (NDMC) meeting to finalise the auction terms of the hotel.

In a statement a Taj spokesperson says, “Indian Hotels Company Limited on behalf of Taj Mahal Hotel, Delhi, has filed an injunction suit in the high court in order to protect its position. We would like to reassure our guests, employees and business partners that we are committed to delivering the highest quality of service at all times and it is business as usual.”

The NDMC Board was planning to meet next week to finalise the terms and conditions of the open auction. IHCL will have the first right of refusal but will have to match the highest bid in the auction. According to media reports, rivals like the PRS Oberoi-led EIH, which owns the Oberoi Group of hotels, Sahara and Accor groups have shown interest in the property should there be an auction.

Taj’s lease with NDMC for the hotel ended in October 2011 after which it was extended for one more year. However in September 2012, NDMC one again extended the lease by a year, during which it appointed E&Y to determine the valuation of the property and explore other options such as finding another partner or even auctioning the landmark hotel. NMDC owns the land on which the hotel stands while IHC manages the property and pays a revenue-share fee of 17.5 percent as rent. According to a report in the Business Line , IHC earns Rs 150 crore annually in revenues from the property, which is located at a prime spot in Lutyens Delhi.