Delhi high court asks Hotel leela venture to pay royalty to AAI

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Hotel Leela Venture asked to pay a royalty of Rs. 258 Crores.

In a recent judgment, Delhi High Court again directed the Hotel Leela Venture to pay the aforesaid amount as a royalty. The royalty was on the grounds of the hotel’s location besides Mumbai International Airport. The bench of Justice Pradeep Nandrajog and Pratibha Rani stated “We affirm the destination reached by the single judge notwithstanding the route taken not being reflective of the journey undertaken by the parties before the single judge. Correcting the path, we reach the same destination,”. The bench further stated “The award is perverse and is liable to be set aside”

The Delhi High Court upheld the decision taken by the single judge bench earlier. The Leela Venture won the arbitration in the year 2012. However, Hotel Leela had moved the division bench challenging the single judge’s July 15 this year and set that arbitration aside.

The dispute is owing to Hotel Leela’s location near Mumbai International Airport. Airport Authority of India has been demanding a royalty from the hotel for the same.  Airport Authority of India has a 29,000 square meters landmass near the Mumbai International Airport. Two landmasses of 9000 Square Meters each were allotted on lease to different parties.  Two parties namely Leela Scottish Lace Ltd. and Leela Ventures took the lease of these landmasses. The whole issue is regarding an 11,000 square meter of land which was leased to Leela in 1996. AAI leased the land for the construction of a full-fledged 150 rooms wing of the hotel building. The lease period was 30 years duration.

As per the arbitration award, the situations have become impossible for Leela to pay the royalty of the said amount and so now both the parties are free to enter a new contract regarding the possession of the land amounting to 11,000 square meteres.

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