The Union Government has increased the annual ground rent for land leased to several major five-star hotels in New Delhi to crores of rupees. The Imperial and Claridges hotels are fighting the verdict in the Delhi High Court. The Land and Development Office (L&DO) issued demand notices for INR 177.29 crore for The Imperial and INR 69.37 crore for The Claridges, calculated at a 5% rate of the property value. Both hotels argue that the adjustments are arbitrary and retrospective. The court has ordered hearings before finalising the ground rent, with additional hearings set for July.
The Union Government has revised the annual ground rent for land leased to several prominent five-star hotels in New Delhi, significantly increasing the rates from thousands or lakhs of rupees to crores each. This move has prompted at least two hotels, The Imperial and The Claridges, to challenge the decision in the Delhi High Court.
In March 2024, the Land and Development Office (L&DO) of the Ministry of Housing and Urban Affairs sent demand notices to The Imperial and The Claridges, claiming INR 177.29 crore and INR 69.37 crore, respectively. The new ground rent was computed at INR 8.13 crore annually for The Imperial and INR 3.85 crore annually for The Claridges, representing a significant increase from their current prices of INR 10,716 and INR 8.53 lakh, respectively. The L&DO predicated its revision on 5% of the plots' property values in 2002 and 2006, respectively.
Both hotels have filed applications in the Delhi High Court, calling the revision arbitrary and disputing the L&DO's demand for ground rent at the revised amount retrospectively. The cases were heard in May, and the next hearing is slated for July 22.
The Imperial Hotel is located on a 7.938-acre tract on Janpath Lane, which the British leased to S. B. S. Ranjit Singh on April 8, 1932, with a lease dated July 9, 1937. The annual ground rent was meant to be adjusted every 30 years. The present joint-lessees, relatives of the original lessee, said in their petition that the March 28 demand letter was issued hurriedly and without show-cause notice. They stated that the most recent revision was completed in 2006, spanning the years 2002 to 2032, and that the next modification should be forthcoming in 2032.
In the case of The Claridges, the hotel is located on a 2.94-acre plot on Aurangzeb Road, now known as Dr A. P. J. Abdul Kalam Road, leased to Lala Jugal Kishore on November 12, 1936. The property was later purchased by the current lessees, Claridges Hotel Pvt Ltd, in 1972. The petitioner argued that the March 27 demand notice contradicted the lease clauses, which stipulated that ground rent would be revised every 30 years and would not exceed one-third of the letting value of the site, without the building, on the date of revision. They noted that the last revision for The Claridges was effective from January 15, 2016, when the ground rent increased from INR 2.13 lakh to INR 8.53 lakh, meaning the next revision should not occur before January 14, 2046.
The L&DO's notices claimed that due to "challenges" and "delays in ascertaining the letting value," an ad-hoc policy was issued on December 24, 1983, for calculating the letting value, which included the one-third formula. This policy, however, was limited to the first revision of ground rent. The L&DO stated that since the ground rent was last revised in 1972 for The Imperial and in 1976 for The Claridges, and the 30-year period had lapsed in 2002 and 2006 respectively, it was decided to revise the ground rent at the rate of 5% of the prevailing land value.
The L&DO gave the hotels 30 days to pay the revised amounts, warning of a 10% annual interest penalty for nonpayment. According to Ministry sources, the 2006 and 2016 changes to The Imperial and The Claridges were ad hoc measures. In May, the high court ordered the L&DO to give the hotels a hearing before determining the ground rent. A round of hearings is set for this week. The L&DO has also sent updated ground rent notices to other five-star hotels in Delhi.
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