Asked about his chances of retaining the hotel after the yearlong temporary lease expires, the chief executive officer of Indian Hotel Company, which operates the Taj properties, Raymond Bickson, said: "It was a bare shell project that was stopped (by NDMC) and we had put in all the money to build it. I guess over the long term, we will get it straightened out."

IHCL's 30-year lease with NDMC for the hotel ended in October 2011 after which the civic body decided to extend the lease with the same operator for one more year.

During this period, the civic body appointed Ernst & Young to value the property and to find the way forward. E&Y, in its report, suggested auctioning the property, with the first right of refusal resting with Taj.

Now NDMC is going ahead with its auction process as was decided in its council meeting in September last year when it had also extended IHCL's lease for the hotel by another year up to October 2013 as per an ET report.

"The auction will happen. Why will it not happen?" said Archna Arora, chairperson of the NDMC. "We are in the process of preparing the RFP and will come out shortly."

NDMC had said that Taj will be allowed to match the highest bid at the auction and if it does not, it will be given a notice to vacate the property as soon as the auction is completed. Taj is keen on retaining this property, which has been its flagship for over 30 years and from which it gets revenues upwards of Rs 150 crore annually.

Originally, it paid 10.5% of the gross turnover of the property to NDMC for the life of the lease and was asked to pay 17.5% of gross turnover for the first year of extension it got, from October 2011 to October 2012.