Delhi HC dismisses IHCL plea to quash tender for auction of Taj Mansingh
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Delhi HC dismisses IHCL plea to quash tender for auction of Taj Mansingh

Ashutosh Gambhir

The Delhi High Court yesterday dismissed the plea by Indian Hotels Company Ltd. (IHCL) against the tender issued by the New Delhi Municipal Corporation (NDMC) for the auction of Delhi’s iconic Taj Mansingh Hotel.

Tata Group-owned IHCL complained that an essential condition, with respect to its “unblemished track record”, had not been properly factored into the eligibility conditions and therefore, the tender contravenes an earlier order of the Supreme Court.

IHCL had entered into a collaboration agreement with NDMC for the construction of the hotel and had also executed a license agreement which was to be in force for 33 years commencing from 1978. After the expiry of the said period, an extension was given until the end of 2012.

Thereafter, NDMC proceeded to auction the hotel with the right of first refusal to IHCL. The company sought reconsideration but upon not receiving any response, approached the Court with a suit for permanent injunction.

The suit was dismissed by both the Single Judge Bench as well as the Division Bench. IHCL then, approached the Supreme Court which also dismissed its appeal. However, the apex court directed the NDMC that while holding the auction, it must take into account the “unblemished track record” of IHCL as well as its capability.

Representing IHCL, Senior Advocate Abhishek Manu Singhvi argued that there was complete vagueness (in the impugned tender) with respect to the unblemished track record which had to be an essential condition for apt comparison of the bidders with the quality of services that the Indian Hotels all the while tendered, rendering the impugned tender untenable.

Appearing for NDMC, former ASG Sanjay Jain submitted that the bidders were informed that one of the factors while evaluating the rival bids, would be the nature of the unblemished track record and the quality of services provided by the Indian Hotels which would be taken as the guiding principle.

Jain stated that the nature of details which have been factored in, ensure that NDMC weighed in all the eventualities and has ensured that only serious bidders with full capacity to render quality service in fact, participate and no other.

It was also submitted that the question of unblemished track record and nature of services is an inherent part of the tender process which would have to be evaluated after the rival bid unfolds and cannot be articulated in the manner that the petitioner wishes it.

The Division Bench of Justices S Ravindra Bhat and AK Chawla observed that the issue was whether NDMC has accurately reflected the requirement spelt out by the Supreme Court in its final order, that the “unblemished track record of the petitioner – Hotel as well as its capability” should be taken note of.

The Bench held that that the complex nature of eligibility conditions that NDMC has insisted upon while considering tenders for the hotel plot, were based on thought and deliberation.

The Court also held that they would not like to interfere in policy matters.

“As held by the Supreme Court, time and again, that the wisdom of a particular policy cannot be considered, but its legality or procedural fairness is only subject to review.”

While dismissing the petition, the Court observed that,

“the fact that some conditions could have been better phrased, or that some more conditions could have been introduced is not sufficient to conclude that the conditions that have been prescribed are arbitrary and unreasonable.”

Read judgment:

taj-judgment-watermark.pdf
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