Tata Group runs into legal obstacle on Taj Mahal Hotel

New Delhi's high court has struck a major blow to the Tata Group and the group’s Indian Hotels Company in running the Taj Mahal Hotel, colloquially known as the Taj Mansingh.

As the Financial Express reports, the high court "cleared the decks" for auctioning off the hotel, saying IHCL has “no right” of renewal of the license period, which ended in 2011. IHCL has been managing the property since then through several extensions.

In making its ruling, the court dismissed the plea of the group, which has been running the luxury hotel under a 33-year lease.

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The property is owned by the New Delhi Municipal Council (NDMC).

Justice Pradeep Nandrajog said that NDMC was “within its power” to secure maximum consideration for grant of license for the property. “To put it pithily, IHCL has no right under the license for a renewal thereof and, therefore, no further issue needs to be considered and decided,” he said.

The high court added that “…unless there is a social or a welfare purpose or any other public interest which is served, an asset held for the benefit of the public, if commercially exploited should be by way of an auction or an open competitive bidding because it would then fetch the maximum revenue”.

“It is the inherent right of every proprietor to secure maximum consideration for his property in all transactions, part from transactions where the law limits consideration that can be charged by the proprietor, for any public purpose or in public interest,” the judgment stated.

IHCL reportedly had challenged a September 5 single-judge order that permitted the auction of the hotel on the grounds that the Tata group company was not entitled to an extension to run the hotel.

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