New Delhi, April 20: The Tata-run Indian Hotels today said it will participate in the e-auction of the iconic Taj Mahal Hotel which they have been running for the last 41 years - after the company lost its legal challenge to stall the auction before the Supreme Court in the morning.
Indian Hotels' opposition had so far delayed moves by the owners NDMC to auction the prestigious property at the heart of Lutyen's Delhi.
An Indian Hotels spokesperson said: "We respect the decision of the Supreme Court and intend to participate in the e-auction when it is held."
Today's decision was the final one in a four-year long series of legal cases, first before the Delhi high court and since November last year before the apex court, between the Tata arm and NDMC for the control of the hotel.
In case IHCL is unable to win back the hotel through the auction, it will lose out on a hotel that contributed 8 per cent to its balance sheet.
"We stay committed to our colleagues and guests, whose loyalty and trust remains our biggest asset," the IHCL spokesperson added.
In today's judgment, the Supreme Court bench of Justices Pinaki Chandra Ghose and Rohinton Fali Nariman said Indian Hotels will have "breathing time" of six months to vacate the building - popularly called Taj Mansingh - in case it does not win in the e-auction to be conducted by the municipal authorities.
Earlier, senior counsel Harish Salve, who pleaded on behalf of the Tatas, had sought the first right of refusal in the auction. "We must get renewal opportunity as our track record has been unblemished," he had said. Till now the Tatas had been seeking an order against the auction of the property.
The hotel chain's scrip fell 1.9 per cent to Rs 126.05 on the BSE today as news of the Supreme Court decision came in. However, this was higher than the year's low of Rs 88.80, which the stock had hit on November 21, nearly a month after losing the case to retain the property in the high court.
In November, the Tatas had moved the Supreme Court for relief after the high court bench dismissed Tata's plea against the auction of the hotel.
The high court bench had upheld an earlier September ruling by a single judge bench dismissing Indian Hotels' plea for renewal of its licence to run the hotel.
The high court had implicitly told the Tatas that it would have to participate in the auction planned by owners NDMC.
The plot, at the junction of Man Singh Road and Motilal Nehru Marg, was given to the Tatas in 1976 which gave them the right to build a hotel and run it for 33 years or till 2009.
At that time NDMC and IHCL entered into a pact, under which NDMC was to bear the construction cost of the hotel up to a sum of Rs 4.25 crore and IHCL was to bear the remaining cost.
On September 25, 1979, another "Supplemental Agreement" raised NDMC's contribution to the project to Rs 6.26 crore.
The Tata group arm, however, went on running the iconic hotel by gaining several extensions. However, NDMC and Indian Hotels fell out when NDMC revealed it wanted to hold an auction of the property to raise money.