The long-running dispute over a prime hotel property at Barakhamba Lane in New Delhi has taken a decisive turn after an appellate court upheld the New Delhi Municipal Council’s (NDMC) demand of over ₹1,063 crore and restored the termination of Bharat Hotels’ 1982 licence agreement.
The land, originally allotted to NDMC by the Government of India in 1973 for redevelopment, included a portion earmarked for a five-star hotel project. In 1982, NDMC entered into a 99-year licence agreement with Bharat Hotels for the development and operation of a hotel and commercial towers on the site at an annual licence fee of ₹1.45 crore. The agreement provided for a revision of fees after 33 years.
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Following a valuation exercise, NDMC issued a demand notice in February 2020 seeking ₹1,063.74 crore to be paid in instalments within 90 days. It simultaneously terminated the licence and directed Bharat Hotels to hand over possession, alleging breaches of contractual conditions, including issues related to sub-licensing.
A single judge had earlier set aside both the demand and termination. However, the appellate bench disagreed, stating that it could not find itself in agreement with that ruling. The court emphasised that land in central New Delhi is a scarce public resource and must be managed to ensure maximum public benefit. It further observed that any arrangement resulting in significant financial loss to a public body like NDMC would be contrary to constitutional principles, including Article 14.
The court also highlighted that Bharat Hotels had committed fundamental breaches of the licence conditions. It noted that revised ground rent assessments by the Land and Development Office exceeded ₹162 crore annually, making the original contractual cap of ₹2.90 crore untenable in the present legal and economic context.
Concluding that Clause 48 of the licence deed was inconsistent with prevailing law on public assets, the court held that NDMC’s demand and termination were valid. With this ruling, NDMC’s recovery action stands revived, while Bharat Hotels retains the option of appealing to the Supreme Court.
