No auction before Delhi polls, Tatas to run Taj Mansingh for next 3 months

With the Taj Mansingh lease set to expire on 10 October, the Tatas have reportedly been allowed to operate the Taj Mahal Hotel for another three to six months.

According to a report in the Business Standard, the proposal for an extension till March 2014 would be discussed at the next Delhi Municipal Council meeting on October 7 since the muncipal body has not received the opinion of the solicitor general of India on whether the Tatas should be given the right of first refusal during the auction.

The council was forced to seek legal opinion partly because IHCL had filed an injunction in the Delhi High Court in April this year seeking to protect its position and stall a possible public auction. IHCL has claimed part ownership of the property in the injunction, saying the company built a permanent structure and spent a large amount of money on development of infrastructure in the area.

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Following the injunction, the Delhi High court had restrained the civic agency from taking any “coercive step” against IHCL and said the company will be at liberty to approach court if the council did so.

Secondly, NDMC cannot holdauction during the Delhi Assembly elections due to certain clauses in the Election Commission’s code of conduct and is hopeful of kickstarting the auction by the year end after the Delhi polls.

“The election code of conduct for the Assembly polls in Delhi is likely to be in place in a few days and it will become difficult to auction the property during that time,” an official told PTI.However, according to NDMC chairperson Jalaj Srivastava, the agency can approach the election commission for a “special permission” to auction the property in that case.

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“If the agency gets the solicitor general’s opinion during the time when the code of conduct is in place, we can seek special permission from the Election Commission to allow us to auction the hotel,” Srivastava said.

The iconic property was originally given to the Tata Group-owned Indian Hotels Company Limited (IHCL) on lease for 33 years by NDMC. When the lease ended in 2011 and NDMC was about to renew it, the Urban Development Ministry intervened and asked it to auction the property. But since time was running out, NDMC gave IHCL a year’s extension. While the company expected the lease to be renewed in October 2012, the process was stalled temporarily as NDMC could not take a final call and the property’s lease was again extended by a year.

To expedite the auction process, the council is prepared with bid documents for two possible scenarios (Taj being given the first right of refusal, or otherwise), the Business Standard report said.