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Informist, Thursday, Feb. 26, 2026

 

NEW DELHI – The Delhi High Court Thursday issued notice to the New Delhi Municipal Council on a plea from The Indian Hotels Co. Ltd. seeking exemption from paying INR 462 million in monthly licence fees for the period between 2020 and 2022. The company said it was unable to run the Taj Mahal and The Connaught hotels in the national capital in that period on account of the COVID-19 pandemic and restrictions to curb pollution. The court asked the parties to explore the possibility of mediation and listed the case for hearing on Apr. 23.

 

Indian Hotels had entered into an agreement with the New Delhi Municipal Council to operate, maintain, and manage the two hotels owned by the civic body. Under the force majeure clause in the agreement, a party would be excused from performing its obligations in exceptional circumstances, including an epidemic and extremely adverse weather.

 

As a direct consequence of the pandemic and the restrictions imposed on the movement of people and goods and the conduct of business, Indian Hotels said it was prevented from performing its obligations under the agreement. At various junctures, the two hotels remained closed. Even when they were opened, they functioned under several restrictions imposed by the government, affecting normal operations and, consequently, revenues. Further, guests did not visit or stay at the hotels at the time. The hotels were also directed by the state to be used by Sir Ganga Ram Hospital, New Delhi, to accommodate COVID-19 patients, it said.

 

Later, because of restrictions imposed to counter severe pollution in the national capital, construction activities were wholly barred or severely restricted, Indian Hotels said. This resulted in halting or considerably slowing work to upgrade the hotels, it said. Various measures implemented by the Commission for Air Quality Management in the National Capital Region to curb pollution resulted in shortage of bookings as well as cancellations, causing a substantial loss, it said. The company argued that this amounted to a force majeure event and excuses it from performing its obligation of paying the licence fees.

 

Over and above the expenses incurred, including towards salaries to employees, community outreach expenses by way of medical facilities, food, and consumables distributed across the country amounted to more than INR 750 million in the relevant period, the petitioner said.

 

It said the civic body, while acknowledging the COVID-19 pandemic as a force majeure event, claimed that the company did not make enough efforts to earn from the hotels during the pandemic and thereby mitigate the losses and damage, and so cannot be excused from performing its obligation to pay the monthly licence fees.

 

The company said the council was placing undue reliance on minuscule earnings from some rental income and service exports scheme. These earnings were insufficient even to cover the losses on account of expenditure at the hotels during the pandemic, it said.

 

For the December quarter, the hospitality company had reported a rise of over 55% on year in net profit to INR 9.03 billion on a revenue of INR 28.42 billion. Thursday, shares of Indian Hotels Co. ended 0.6% higher at INR 680.95 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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