HC rejects Indian Hotels plea to stay Taj Mansingh auction

The Delhi High Court today rejected Tata Group's Indian Hotel's plea to stay auction of its prime property Taj Mansingh Hotel, reports CNBC-TV18. Following the news, the stock fell 0.30 percent and was trading at Rs 54.75 with volumes of 52,416 shares, compared to its five day average of 41,674 shares, an increase of 18.40 percent.

The stock has touched an intraday high of Rs 55.90 and an intraday low of Rs 54.50. Currently, it is trading 23.62 percent below its 52-week high and 3.89 percent above its 52-week low.

In its ruling Delhi HC said that it can not stop New Delhi Municipal Corporation from taking coercive step against Indian Hotels as the former owns the property. However, it added that Indian Hotels was free to make an appeal in the court if coercive action is taken by the municipal body.

Indian Hotels had to file a suite against New Delhi Municipal Corporation (NDMC) after the municipal body decided to auction the property on which the Taj Mansingh hotel is built. The land is owned by NDMC and it had leased it to Indian Hotels for 33 years in 1976.

The lease for Taj Mansingh hotel ended in October 2011, after which it was twice extended for a period of one year. However, meanwhile NDMC appointed Ernst & Young to find out the property value and also explore other options like getting another partner or auctioning the property.

In its reports last September, E&Y recommended auctioning the property by giving the first right of refusal to Taj Hotels. Tata Group has been keen on retaining the property, which earns revenues of close to Rs 150 crore annually. According to media reports Indian Hotels pays a revenue-share of 17.5 percent as rent to the municipal body.

NDMC is likely to have a meet ing tomorrow to discuss and finalise the terms for the tendering process of the auction. According to media reports, EIH, Oberoi group of hotels, Sahara and Accor group are interested in the property which is located in central Delhi.