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Indian Hotels Company May Face Stiff Competition to Retain Taj Palace

Delhi Development Authority (DDA) May Conduct Open Bid for Eligible Chains
Once 30-year Lease Expires Next Year

By Gaurav Choudhury, Hindustan Times, New DelhiMcClatchy-Tribune Regional News

Sept. 17, 2012--The Tatas' Indian Hotels Company (IHC) may have to face stiff competition to retain the iconic Taj Palace Hotel in Delhi's Sardar Patel Marg if the Delhi Development Authority (DDA) decides to put it up for auction after the 30-year lease with IHC expires on March 31 next year. With barely six months to go, a company spokesperson told HT: "IHC has the option to seek an automatic renewal of the existing licence for the hotel." But DDA maintains that a final decision has not yet been taken, and sources did not rule out the option of conducting an open bid for eligible hotel chains, including IHC.

Under the original terms of the lease, IHC has the option of seeking a renewal for another 25 years for running the hotel, only if there is no pending issue over payment or if the two sides are not locked in any form of arbitration.

DDA and IHC, however, have been battling it out for the past 15 years over the terms of payment. DDA contends that the hotel chain's accounts do not show revenues earned from various streams such as the shopping arcade, telephone recoveries, banquet income and other service charges in overall gross receipts.

DDA is of the view that the IHC carried out such an accounting exercise with the sole purpose of artificially keeping the licence fee low and minimising its payouts.

Former Chief Justice of India YK Sabharwal currently heads the arbitration panel, which includes S K Kandhari, an IHC veteran of 29 years, and Sushil Jain of the DDA.

"There is difference of opinion over certain payment issues that need to be sorted out," a DDA spokesperson said.

IHC is also locked in a battle to keep control over Taj Mahal Hotel, located in Lutyen's Delhi's plush Mansingh Road, after its 33-year old lease agreement with New Delhi Municipal Council (NDMC) expired last year. It has since been given a one-year extension.


(c)2012 the Hindustan Times (New Delhi)

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Distributed by MCT Information Services

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