Delhi High Court Rejects NDMC Plea To Dismiss Taj Mahal Hotel Operator's ₹38.35 Crore COVID-19 Licence Fee Suit

The Delhi High Court has rejected the New Delhi Municipal Council's (NDMC) plea to dismiss a suit filed by Indian Hotels Company Limited (IHCL), which operates the Taj Mahal Hotel in New Delhi.

The company is seeking exemption from ₹38.35 crore in licence fees for the COVID-19 pandemic period and an extension of the licence by 272 days.

Justice Subramonium Prasad was hearing NDMC's application to dismiss the suit, which seeks relief under the force majeure clause of the leave and licence agreement for the hotel.

IHCL entered into the agreement with NDMC on April 11, 2019, to operate, manage and maintain the hotel. The company claimed that COVID-19 restrictions, hotel closures, reduced guest visits and labour shortages affected its operations between 2020 and 2022. It argued that these circumstances entitled it to relief under the agreement's force majeure clause.

Apart from seeking exemption from ₹38.35 crore in licence fees, IHCL sought an extension of the licence period by 272 days. It also wants ₹1.24 crore paid for March 19 to 31, 2020, to be adjusted against future dues.

NDMC argued that IHCL had not served the mandatory notice required under Section 385 of the New Delhi Municipal Council Act, 1994. It also contended that the suit was barred by limitation and that the Public Premises (Eviction of Unauthorized Occupants) Act, 1971, barred the civil court from entertaining the dispute. NDMC further argued that IHCL could not seek a declaration without consequential relief under Section 34 of the Specific Relief Act.

IHCL countered that its notice dated November 14, 2025, issued under Section 80 of the Code of Civil Procedure (CPC), met the requirements of Section 385 of the NDMC Act. It also argued that efforts to resolve the dispute continued until May 2025, when NDMC reiterated its refusal to grant relief under the force majeure clause.

On the notice requirement, the court held that IHCL's notice satisfied Section 385 of the NDMC Act, even though it was issued under Section 80 CPC.

“Had the notice not mentioned Section 80 of the CPC, it could still have been construed as one under Section 385 of the NDMC Act. It is well settled that Courts look at the form and not the label and the courts must not be too technical when the label is wrong and therefore, the entire notice cannot be discarded,” the court observed.

It refused to return the plaint to enable IHCL to serve a fresh notice under Section 385 of the NDMC Act.

On limitation, the court noted that NDMC had rejected IHCL's request for force majeure relief in 2022. However, it also took note of subsequent communications between the parties, including letters dated March 11 and May 20, 2025.

Whether these communications gave rise to a fresh cause of action would have to be examined at trial, the court observed.

“Whether these two letters give rise to a fresh cause of action or not, would be seen at the stage of trial. It is well settled that limitation is mixed question of law and fact and therefore, this Court at the moment, is not opining one way or the other whether any fresh cause of action has arisen or not,” it ruled.

The court also noted that the suit had been filed within six months of the notice dated November 14, 2025. However, whether IHCL could claim the benefit of time spent in pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, would also be examined at trial.

Rejecting NDMC's objection under the Public Premises Act, the court held that the suit concerned enforcement of contractual terms and was not an eviction proceeding. The Act's provisions were therefore not attracted.

On the objection regarding consequential relief, the court observed that the amounts payable were yet to be crystallised following a declaration on IHCL's entitlement to the force majeure clause. It also noted that NDMC had not issued a demand notice under the NDMC Act for which consequential relief was necessary.

The court consequently held that the proviso to Section 34 of the Specific Relief Act did not apply.

The court rejected NDMC's application, holding that the suit could not be dismissed on the grounds raised at this stage. It did not decide whether IHCL was entitled to the licence fee waiver or the extension of the licence period.

The suit will be listed before the bench on November 2, 2026, for further consideration.

For Plaintiff: Senior Advocate Saurabh Kirpal, Advocates R.A Iyer, Aaliya Waziri and Rajat Chaudhary

For Defendant: Advocates Saurabh Seth, Sumer Dev Seth, Abhiroop Rathore, Kabir Dev and Sukhvir Singh