The dispute between the Mumbai Port Trust and the Tata-owned Indian Hotels Company over the rental dues of Mumbai’s iconic Taj Mahal Palace Hotel has taken a new turn. IHCL said it has received demand notices for an additional differential amount to the tune of ₹764 crores for the period October 2012 to October 2022.

IHCL informed the exchanges that Mumbai Port Authorities (the lessor) has revised rates for all lessees in the entire Mumbai city effective October 2012, including in respect of plots provided to the Company by the lessor under a lease agreement, on which the company has constructed the hotel, Taj Mahal Palace & Tower, Mumbai.

“The Company has received demand notices for an additional differential amount to the tune of ₹764 crores for the period October 2012 to October 2022. The Company believes these claims to be exorbitant and untenable. This is consistent with the stand it has taken on the ongoing matter before the Honourable High Court of Judicature at Bombay. The Company is preparing to challenge the additional differential demand based upon legal advice, by filing a legal proceeding in the Honourable High Court of Judicature at Bombay.”

The iconic Taj Mahal Palace was inaugurated in Bombay in 1903. The hotel stands on a 4,000-sq-m plot belonging to the Mumbai Port Trust. The 99-year-old lease came to an end in 1999-2001 and had not been renewed. The rent was fixed in 1975 and revised in 1981, but many tenants refused to pay more and moved to the courts.

Related Stories
IHCL has become a zero debt company: Puneet Chhatwal
Target achieved ahead of the earlier announced deadline of April 2023 

In 2012, the Mumbai Port Trust sent an eviction notice to the hotel, but the latter moved to the High Court in February 2013 seeking renewal of the lease. Indian Hotels is expected to pay a rent of ₹1 crore every year on the leased land.

Meanwhile, IHCL had said in its annual report for FY22 that in respect of the plot of land provided to the Company under a lease agreement, the lessor has made a claim of ₹577.43 crores to date, (13 times the previous annual rental) for increase in the rentals with effect from 2006-07. The Company believes these claims to be untenable. 

The Company has contested the claim based upon legal advice, by filing a suit in the Honourable High Court of Judicature at Bombay on grounds of the lessor’s inconsistent stand on automatic renewal of lease, levy of lease rentals, and method of computing such lease rent, within the terms of the then existing lessor’s policy as also a Supreme Court judgement on related matters. Even taking recent enactments into consideration, in the opinion of the Company, the computation cannot stretch beyond ₹163.56 crores (excluding interest/penalty), and this too is being contested by the Company on merit.

Further, a “Notice of Motion” has been filed by the Company before the Honourable High Court of Judicature at Bombay, inter alia, for a stay against any further proceedings by the lessor, pending a resolution of this dispute by the Honourable Bombay High Court, and the Company has obtained a stay order from the court.

Related Stories
Acquisition of Fortis was transformational for IHH in India, says Dr Kelvin Loh, MD and CEO
Disappointing that Daiichi targeted coming after Fortis while in trying to redress their claims against former promoters: Fortis Chairman
social-fb COMMENT NOW