A landmark address in Delhi’s luxury circuit is now at the centre of a high-stakes legal battle. The Delhi High Court has cleared the way for the New Delhi Municipal Council to pursue over ₹1,063 crore in alleged licence fee dues from Bharat Hotels, the operator of The Lalit, marking a setback for the hospitality group over its Barakhamba Road property.
A division bench led by Chief Justice D.K. Upadhyaya and Justice Tushar Rao Gedela, in an order dated April 22, set aside a December 2023 single-judge ruling that had earlier quashed both the demand notice and the termination of the licence agreement.
Demand revived, licence termination reinstated
The NDMC had issued a notice on February 13, 2020, seeking ₹1,063.74 crore from Bharat Hotels as arrears of licence fee. The calculation was based on an annual fee of ₹98 crore, applied retrospectively from March 2014. On the same day, it also terminated the licence granted in April 1982 for a 6.058-acre plot on Barakhamba Lane.
The original agreement, signed for 99 years to enable construction of a five-star hotel ahead of the Asian Games, fixed the annual licence fee at ₹1.45 crore. It allowed revisions every 33 years, with each increase capped at 100 per cent. This would have taken the fee to a maximum of ₹2.9 crore per year from 2014.
However, the NDMC’s higher demand followed a separate notice from the Ministry of Housing and Urban Affairs through its Land and Development Office, which held that the Union government was entitled to recover ground rent at ₹98 crore annually since the land had been allotted to NDMC in 1983.
Court leans on public interest
While restoring the NDMC’s claim, the court pointed to the large gap between the contracted fee and the revised demand.
It observed that land in New Delhi is a scarce resource and said that allowing such a disparity would shift the financial burden onto taxpayers. The bench held that such an arrangement could not be sustained, noting it would run contrary to Article 14 of the Constitution.
Violations and sub-licensing concerns
The demand followed alleged breaches of licence conditions. One instance cited was a 2016 attempt by a sub-licensee to sell office space within the premises to the Indian Wind Power Association. These agreements were later withdrawn in 2018 after the issue came to the government’s notice.
The court also treated the 1982 arrangement as a licence rather than a conventional contract, allowing the NDMC greater authority to enforce its terms.
With the division bench restoring both the demand and the termination of the licence, the NDMC can now proceed with recovery steps and consider further action on the property. Bharat Hotels still has the option to challenge the ruling before the Supreme Court.