Feb 15, 2017 08:27 AM IST | Source: Moneycontrol.com

Hotel Leela plans to sue Airport Authority over eviction notice

Following the eviction notice served by Airport Authority of India (AAI) against The Leela Mumbai last week, Hotel Leela Venture has said that it is taking legal recourse over the notices issued against the iconic property.

Hotel Leela plans to sue Airport Authority over eviction notice

Swaraj Baggonkar
Moneycontrol

Hotel Leela Venture plans to move court over the eviction notice served by Airport Authority of India (AAI) against The Leela Mumbai last week.

“We confirm that the company has received notices from the eviction officer, Airports Authority of India, Mumbai for eviction of the company from land of 18,000 sq m as well as 11,000 sq m. The company is taking legal steps to defend the said notices”, the company said in a statement on Tuesday.

The Nair-family promoted Hotel Leela Venture, which owns and runs the Mumbai property located close to the Chhatrapati Shivaji International Airport, defaulted on paying arrears to the tune of Rs 258 crore to AAI. As a result, AAI has terminated the land contract with the hotel company.

Regarding the 18,000 sq m land — on which Hotel Leela Venture has built the hotel — the company had received a communication from AAI notifying their intention not to renew the lease asking the company to surrender the same by October 31, 2016.

“The company invoked the arbitration agreement between the parties on the ground that there was an enforceable agreement for renewal of the lease. Since AAI did not respond the company has filed an application before the Bombay High Court for appointment of an arbitrator”, said Hotel Leela Venture in a statement.

Regarding the 11,000 sq m of land — on which Hotel Leela Venture wanted to build a hotel — a division bench of the Delhi High Court has dismissed the appeal filed by the company against the judgement of a single-judge bench setting aside the award passed by the sole arbitrator in relation to a dispute with AAI regarding payment of minimum guarantee amounts in respect of the lease. The company is contesting the judgement. According to AAI, the amount due is Rs 258 crore.

Operational since 1986,  The Leela is built on an 18,000 sq m land leased from the AAI and 7,525 sq m plot leased from a promoter company. This 931-room property is the biggest in Leela’s portfolio of owned hotels.

in FY16, this property had an average room rate (ARR) of Rs 7,246 with an occupancy of 69 percent.

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