We may auction Hotel Leela land in Mumbai, says AAI chief

With the Airports Authority of India (AAI) terminating the land lease contract of Hotel Leela Venture in Mumbai, the state-run body is now planning to monetise the land and building belonging to the hospitality company to shore up its non-aeronautical revenues.

Speaking to BusinessLine , Guruprasad Mohapatra, Chairman, Airports Authority of India, said, “We have had a lease agreement with Leela Venture since 1982 and now they have no option but to pay up the outstanding dues since an eviction notice has been given and proceedings have started. The Leela hotel which sits on 29,000 sqm of land is a gold mine for us since we already have the mandate to increase our non aeronautical revenues. Once Leela has vacated the land our next step would be either keep it unused or auction it to the highest bidder.’’

AAI has to recover dues of ₹258 crore that the Delhi High court had ordered Leela Venture to pay to the airport regulator for possession of its landed property.

“We usually calculate the amount to be paid based on the minimum lease rental and a percentage of the revenue share for most land lease deals,’’ added Mohapatra.

Following the AAI board decision of August 11, 2016, Hotel Leela Venture was served notices to surrender the plot by October 31, 2016. However, instead of honouring the High Court of Delhi judgement to surrender the land, Hotel Leela Venture requested AAI for appointing an arbitrator for adjudicating disputes.

However, since letters conveying the agency to surrender AAI land in view of the decision of terminating the leases were already served and action for appointing an arbitrator by AAI was not possible. Hotel Leela Venture then moved an application to the Bombay High court for appointing an arbitrator. Subsequently show cause notices on February 16, 2017 were sent to Hotel Leela Venture.

“Leela Venture has already lost in the High Court and now the matter is in the Supreme Court. It might go to quasi judicial bodies and NGOs to fight its case but will have to make the payments and vacate according to the judicial decision,’’ added Mohapatra.

Meanwhile the government is already in the process of amending the AAI act to monetise its land bank of around 55,000 acres but the Leela case is independent of this act.

“The Leela case is a statutory process, independent of the intention to amend the AAI act. We want to increase our non aeronautical revenues which is currently at 25 percent of the total revenues to take it to 45 per cent, which is the ideal global standard,’’ he added.

The debt-ridden Hotel Leela Venture has been selling its hotels and its stressed assets are currently under JM Financial Asset Reconstruction Company.

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