New Delhi, March 2: The iconic Taj Mansingh hotel in the heart of Lutyen's Delhi will be auctioned.

The move is likely to result in an 8 per cent drop in the revenues of the Tata group's Indian Hotels, which runs the Taj Mansingh.

The decision to finally auction Taj Mansingh was announced by Delhi chief minister Arvind Kejriwal through a tweet soon after the New Delhi Municipal Corporation (NDMC), which owns the property, took the decision today.

Kejriwal tweeted: "Important decisions (in) today's NDMC meeting - open auction of Taj Mansingh, cancel Le Meridian Hotel licence."

A spokesperson for the Tatas said: "The matter is sub-judice as far as we are concerned and we will not be able to comment."

A hearing on a plea by the Tatas against the auction is slated to come up before the Supreme Court tomorrow.

The Tatas have been keen to retain their control over the property as it alone contributes about 8 per cent to the Rs 4,706-crore turnover of Indian Hotels.

The stock price of the hotel chain fell Rs 2.20 to Rs 123.30 on the BSE today as news of the NDMC decision came in.

However, today's price was far higher than the year's low of Rs 88.80, which the stock hit on November 21, nearly a month after losing the case to retain the property in the Delhi high court.

In November, the Tatas had moved the Supreme Court for a stay after a Delhi high court bench dismissed Tata's plea against an auction of the hotel on Mansingh Road.

The high court bench had upheld an earlier September ruling by a single judge bench dismissing a legal case by Indian Hotels seeking the renewal of its licence to run the hotel.

The high court implicitly told the Tatas that it would have to participate in the auction planned by owners NDMC.

The Tatas received the plot, at the junction of Man Singh Road and Motilal Nehru Marg, in 1976. They had the right to build a hotel and run it for 33 years or till 2009.

The Tata group arm, however, went on running the iconic hotel even after 2009 by gaining several extensions. The lease on the property ended in 2011. NDMC and Indian Hotels fell out when NDMC revealed that it wanted to hold an auction of the property to raise money.

In 2013, Indian Hotels Company filed a civil suit against the civic body in the Delhi high court. IHCL claimed that the original licence agreement with NDMC as the licensor and IHCL as the licensee later became a joint venture with two equal partners. The high court, however, rejected these claims and upheld NDMC's stand that it was the rightful owner of the property.

Le Meridien

Le Meridien, whose licence was cancelled by NDMC, was set up by Charanjit Singh, the owner of the Campa Cola brand of soft drinks which was popular in India in the 1970s and 1980s.

The hotel's licence fee has been a bone of contention with allegations of irregularities against the civic body in the recovery of the licence fee from the five-star property.

It is alleged that NDMC officials allowed a settlement of pending licence fee dues towards the civic body by the hotel by accepting a one-time fee of over Rs 150 crore.