Tug of war over Wildflower Hall

The Himachal Pradesh government on Tuesday, 21 November, told the high court that it wants to take possession of a luxury hotel in Kufri, presently with the East India Hotels (EIH) of the Oberoi group.

The court had on Saturday stayed the state government's orders to take possession of the hotel and directed that the state not interfere in the hotel's day-to-day management. It had fixed the hearing for Tuesday.

On 17 November, the single-judge bench of Justice Satyen Vaidya had specifically asked the state to clarify whether it intended to take possession of the property or not by 15 December.

But the state government tried to take possession of the property the next day.

As government officials reached the luxury hotel Wildflower Hall, the EIH moved the court, which stayed the government order on taking over the hotel's possession.

The bench stayed the execution of the government order, saying the award of the arbitrator had to be executed on the court's directions, and not by the parties themselves.

The court on Tuesday fixed the next hearing for November 24.

The state government has informed the court in writing that it wants to take possession of the property, Advocate General Anup Rattan said.

The counsel for EIH Rakeshwar Lal Sood refused to comment on Tuesday's hearing saying that the matter is subjudice.

The EIH had filed a plea against the award of the arbitrator but the high court had dismissed its plea in October 2022, observing there was no merit in the appeal.

Retired Supreme Court judge RP Sethi, who was appointed as the sole arbitrator to the dispute found that the joint venture agreement (JVA) between the two was legally valid and binding on all parties and recorded that the relationship between the disputing parties was "damaged beyond repair and parting of ways was the only solution". The arbitrator had handed out a settlement award on July 23, 2005.

Nestled in the lap of a thick deodar forest at Chharabra near Kufri at an altitude of more than 8,000 feet, a property of the state government and the Wildflower Hall, a heritage hotel run by the Himachal Pradesh Tourism Corporation, were destroyed in a devastating fire in 1993.  To set up a five-star luxury hotel at the site, the Himachal Pradesh government decided to partner with the Oberoi Group after inviting global tenders.

A JVA was signed between the state government and EIH on October 30, 1995, to incorporate a joint venture company -- Mashobra Resorts Limited -- for constructing and operating the hotel with terms that the state government's share in the company would be not less than 35 per cent while the EIH's not be less than 36 per cent. Shares were also reserved for a public issue.

The construction of the hotel and managing it was given the responsibility of the EIH, while the state government was entitled to terminate the JVA if commercial operation of the hotel did not start within four years of handing over possession of the land.