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ITDC hotels in trade at par with private: HC

It dismisses petitions by tenants seeking 'largesse', says they are in business to earn profit

Krishnadas Rajagopal - New Delhi

Five-star Hotel Ashoka and its two cousins - Samrat and Janpath - run by India Tourism Development Corporation (ITDC) is hardly in the business for charity, or so realised the shopowners and occupants of office spaces at the three hotels facing eviction under a 1971 law called the 'Public Premises (Eviction of Unauthorised Occupants) Act' for resisting the payment of an enhanced licence fee or rent.

"ITDC does not enjoy monopoly and is in open and direct competition with privately run hotels, which are in abundance in Delhi. Letting of shops and offices is part of the business and constitutes a portion of its profits and commercial activity," the Division Bench of the Delhi High Court led by Chief Justice A P Shah observed. It dismissed 23 separate petitions for quashing of eviction proceedings filed by the hotels' tenants. The Bench also advised ITDC to shed the baggage of a government organisation and run its hotels like a "market-driven commercial venture".

The occupants, who had also sought damages, had complained in court of the ‘exorbitant’ increase in fee for rental space in the hotels. As per their petitions, ITDC had in 2006-end enhanced the fee for Hotel Ashoka to Rs 250 per square feet, Rs 225 per square feet for Hotel Samrat and Rs 176 to Rs 220 per square feet for Hotel Janpath. Some occupants alleged the revised fee was 450 per cent higher than the earlier one. "ITDC being a public entity cannot act as a private landlord and demand an exorbitant fee," they had submitted in court.

The Bench, however, found that the rents levied by the ITDC were on the same slabs as those paid by occupants of other five-star hotels in the city, and further declined to interfere in the 2006 commercial policy decision of the corporation. The court, in fact, went on to hint that the corporation does have the rights of a "private landlord" and evict tenants for "commercial motives".

The court also observed that the tenants were there to earn profits, and so could hardly expect low-cost accommodation at the hotels, which could only be perceived as "state largesse".

"ITDC as a corporation is not performing any public function or duties. It is operating and maintaining hotels as a commercial venture. ITDC is a business venture in which commercial considerations and profit motive are the primary and guiding factor," the court ruled. The court, however, advised the corporation to "form a uniform policy guided by reason" for the benefit of its tenants. It further gave the occupants liberty to make fresh offers to ITDC for allotment of space at the hotels.