Proving a temporary reprieve to the Tata group’s Indian Hotels Company Limited (IHCL), the New Delhi Municipal Council (NDMC) extended the lease of Taj Mahal Hotel, which also called Taj Mansingh, for another year.

The iconic five-star hotel is on land that was leased to IHCL for 33 years, which came to an end last October. The NDMC extended the lease but declared that an auction was inevitable.

NDMC Chairperson Archana Arora said in a telephone interview, “We are extending the lease of Taj Mansingh for a year or till the time the auction takes place, whichever is earlier.”

Analysts didn’t show surprise at the NDMC’s decision to extend the lease as they believed that NDMC had little choice but to extend the lease, considering controversies and sentiments.

Ms. Arora added that the owner of the Taj chain, IHCL, would be provided with the first right of refusal.

Under the original agreement of the lease of the land, the company was paying 10.5 per cent of its total annual revenue to NDMC, but after the end of the lease it was asked to pay 17.25 per cent of gross turnover for the extended period of lease.

A Taj official said that IHCL could go to court if an auction was held, as the company has a very strong case against NDMC in reference to the original agreement.