New Delhi: The Delhi high court is set to rule on the auction of the iconic Tata group-owned Taj Mahal Hotel on New Delhi’s Mansingh Road on Thursday.

Here’s what to know about the dispute.

Why is the Taj Mahal hotel important?

The Taj Mahal Hotel is run and managed by Indian Hotels Co. Ltd (IHCL), a subsidiary of the Tata group.

The ousted chairperson of Tata Sons Ltd, Cyrus Mistry, in a letter to the board of directors, said that IHCL, owing to poor acquisition strategies, has written down its net worth.

Investors will keenly follow what happens in the case.

The hotel is also a five-star one in a prime location in central Delhi.

What will the high court decide?

A two-judge bench comprising justices Pradeep Nandrajog and Pratibha Rani will decide the appeal filed by IHCL against a 5 September verdict of justice V. Kameshwar Rao, which denied any right to extension of the licence to IHCL over the property. Accordingly, the hotel was to be put up for auction to receive a fair and competitive price for the right to run it.

What are the facts of the case?

The NDMC or New Delhi Municipal Committee (as then called) entered into an agreement with the IHCL a subsidiary of Tata Sons Ltd, on 18 December 1976 to construct and run a five-star hotel in one of the prime locations in Central Delhi—1, Mansingh Road.

The hotel became functional on 10 October 1978. According to IHCL, the original licence agreement—with NDMC as the licensor and IHCL as the licencee—later became a joint venture with two equal partners. The high court rejected these claims.

The original licence operated for a period of 33 years from late 1976 and concluded in 2010. Thereafter, several ad hoc extensions were granted.

Justice Rao decided that IHCL was not entitled to an automatic extension as the NDMC Act required any transfer of rights in the property at a “value at which such immovable property could be sold, leased or otherwise transferred in normal and fair competition".

Will this be final?

No. The decision of the two-judge bench of the high court can be appealed in the Supreme Court.

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