Poll code may extend Tata Group’s lease to run Taj Mansingh

Mar 05 2014, 01:16 IST
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The six-month lease extension given to the hotel in October will expire on March 31. Reuters The six-month lease extension given to the hotel in October will expire on March 31. Reuters
SummaryThe six-month lease extension given to the hotel in October will expire on March 31...

The Tata Group-owned Indian Hotels Company (IHCL) is likely to get a lease extension for the fourth time to run the Taj Mahal Hotel at Delhi's tony Mansingh Road as the New Delhi Municipal Council (NDMC), the land-owning agency, cannot hold an auction once the model code of conduct for the general elections kicks in.

The six-month lease extension given to the hotel in October will expire on March 31 and NDMC is likely to give the hotel a four-month lease as it won't be able to go ahead with the global tender till the end of Lok Sabha polls.

“The indecision over the lease row since 2011 with the model code of conduct coming into force any time soon will result in the extension of the lease till the parliamentary polls are over. The direction from the home ministry with regard to auctioning of the property is also awaited,” an NDMC official told FE.

However, in matters of urgency, the NDMC can seek a special permission of the Election Commission to auction the hotel but officials said it is unlikely that the council would do so.

The NDMC has been waiting for the home ministry's directions on whether to give IHCL the first right of refusal after the ministry raised objections to this. The ministry has to give NDMC the directions based on the solicitor-general’s opinion.

The council had decided to auction the property in 2011 on expiry of the 33-year lease held by IHCL.

But it could not do so because the IHCL moved the Delhi HC to get the stay on auction. The next date of hearing is April 16. IHCL has held that the lease should be renewed for another 30 years on revised commercials for which it is agreeable and even approached NDMC.

In the newly-extended period, NDMC is not expected to revise what the company would have to share with it, which is 17.5% of gross revenue. This was revised in 2011 when the lease expired and was extended by a year. Prior to it, IHC paid 10.5% of its gross revenue to NDMC.

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