Taj Palace's fate hangs in balance as lease expiry nears

The fate of the iconic Taj Palace Hotel at Delhi's Sardar Patel Marg hangs in balance as its lease with the Delhi Development Authority (DDA) expires next month. Sidhartha Roy reports.

The fate of the iconic Taj Palace Hotel at Delhi's Sardar Patel Marg hangs in balance as its lease with the Delhi Development Authority (DDA) expires next month.

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The Taj Palace Hotel, which is run by the Tata Group's Indian Hotels Company (IHC), has a 30-year lease with the Delhi Development Authority (DDA) that expires on March 31. The IHC had written to DDA in September last year, saying that it is interested in renewing the lease. The DDA, however, is yet to make up its mind.

"The contract with IHC has a clause that allows it to seek an automatic renewal of the lease. However, that might not happen if there is any default on their part during the tenure of the lease," said a senior DDA official who didn't wish to be named.

According to the original terms of the lease, IHC can seek a renewal for another 30 years.

"We are carefully scrutinising all the documents to find any loopholes or default on their part or violation of contract. If we don't find any, the lease would be renewed or else we would go for fresh bidding," the official said.

If DDA goes for auctioning, IHC might face stiff competition from rival hotel chains.

"No final decision has been taken on the issue as yet," said DDA spokesperson Neemo Dhar.

When contacted, IHC didn't wish to comment on the issue.

The DDA and IHC have been fighting out for more than 15 years and arbitration is still going on over the terms of payment and calculation of gross revenues.

The IHC is also fighting to keep control over the Taj Mahal Hotel, Mansingh Road, which stands on land belonging to the New Delhi Municipal Council (NDMC).

IHC's 33-year lease with NDMC expired in 2011 but was extended first up to 2012 and again to September 2013.