The union government has revised the annual ground rent for land leased to several prominent five-star hotels in New Delhi — from thousands or lakhs of rupees a year to crores each — leading to at least two such hotels, The Imperial and The Claridges, to challenge the move in the Delhi High Court, The Indian Express has learnt.
The Land and Development Office under the Union Ministry of Housing and High Court Reviews Ground Rent Hike for Delhi Hotels the Urban Affairs Ministry issued demand notices in March this year to The Imperial and Claridges hotels. These notices demanded Rs 177.29 crore from The Imperial and Rs 69.37 crore from Claridges, recalculated from 2002 and 2006, respectively, up to the present day. According to an official from the Land & Development Office (L&DO), the revised rates were calculated at Rs 8.13 crore annually for The Imperial and Rs 3.85 crore annually for Claridges. This represents a significant increase from the previous rates of Rs 10,716 and Rs 8.53 lakh per year, respectively. These new rates were determined to be 5% of the property value of the plots as of 2002 and 2006, respectively, according to L&DO notices.
The lessees of both plots have challenged the retrospective application of the revised rates, terming it arbitrary, and have taken the matter to the High Court. The cases, heard in May, have been scheduled for a subsequent hearing on 22nd July. The historical context of these leases dates back to when the British were developing New Delhi as the capital. The 7.938-acre plot on Janpath Lane, housing The Imperial, was leased perpetually to S B S Ranjit Singh from April 8, 1932, with the annual ground rent set to be revised every 30 years. The current joint-lessees, Hardev Singh Akoi, Gobind Singh Akoi, and Raidev Singh Akoi, argue that the recent demand notice issued on March 28 was abrupt and lacked a show-cause notice. They assert that the last revision in 2006 covered the period up to 2032, making another revision premature. Similarly, the 2.94-acre plot on Dr A P J Abdul Kalam Road, where Claridges stands, was leased to Lala Jugal Kishore on November 12, 1936. Claridges Hotel Pvt Ltd, which acquired the property in 1972, contends that the March 27 demand notice contradicts lease clauses stipulating a 30-year revision cycle and limiting the ground rent to one-third of the plot’s letting value. They highlight that the last revision, effective from January 15, 2016, should have set the next revision date at January 14, 2046.
The L&DO justifies the new rates by citing an ad-hoc policy from December 24, 1983, intended to address delays in determining letting values, but insists this was only for the initial revision. They claim the 30-year period for both properties expired in 2002 and 2006, necessitating the revised rates at 5% of the land value. The notices issued by the L&DO gave the hotels 30 days to comply, warning of a 10% annual interest for non-payment. Ministry sources indicate that the previous revisions in 2006 and 2016 for The Imperial and Claridges were also ad-hoc measures. In their May hearings, the High Court directed the L&DO to conduct hearings with the lessees before finalising the ground rent. Subsequent rounds of hearings are scheduled, and similar demand notices have been issued to other five-star hotels in Delhi, according to sources familiar with the matter.
