The urban development ministry has opposed the bid of Hotel Excelsior Private Ltd, which runs the five-star Shangri La Hotel in the Capital, to get its property converted from leasehold to freehold.
The company took over Kanishka Hotel during the disinvestment scheme under the NDA regime.
According to government policy, the hotel was given to the company on a 99-year lease. However, the company had approached the Delhi High Court two years ago, seeking conversion of the property from leasehold to freehold, thereby confirming its ownership rights of the land as well.
This permission was granted by a single-judge Bench. The ministry has now challenged the singe judge’s order and filed an appeal before the Division Bench of the high court.
With crores of rupees at stake, this will be a heavily contested litigation for the government because at the time of disinvestment, the government had not taken into account the market value of the hotel land while fixing the reserve price.
Only the business was sold and not the land. The land value assessed at that time was also much lower than the pre-determined commercial rate.
This vaguely reminds me of the privatisation in Russia, when state owned assets were sold to businessmen at throwaway price. Conversion of the property from leasehold to freehold - without compensating the government - would amount to just that, it seems to me.
At the sametime, i wonder what's the point in these kind of limited privatisations. May be it's a step forward - or is it half a step?
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