Setback for EIH, Himachal HC Orders Handover of Hotel Wildflower Hall to HPTDC

In a major setback for East India Hotels (EIH) of the Oberoi group, the Himachal Pradesh High Court passed an order directing EIH to surrender possession of Hotel Wildflower Hall to the Himachal Pradesh Tourism Development Corporation (HPTDC) within two months.

The court’s decision follows the rejection of EIH’s review petition against the November 17, 2023, court order. Justice Satyen Vaidya, a single bench of the high court, had previously granted the order of “warrant of possession” filed by HPTDC on December 15, 2023.

Following the November 17 order, the government moved swiftly to take possession of the hotel. However, EIH obtained a stay from the high court, instructing the government to maintain the status quo until the next hearing.

Hotel Wildflower Hall, originally the residence of Lord Kitchener, the former Commander of the British Army, suffered a fire on April 5, 1993. Subsequently, it was handed over to EIH to be operated as a joint venture, ‘Mashobra Resorts Limited.’

An agreement between the state government and EIH on October 30, 1995, led to the creation of a joint venture company, Mashobra Resorts Limited, for constructing and operating the hotel. The agreement specified that the state government’s share in the company should not be less than 35%, and EIH’s share should not be less than 36%. Shares of the company were also reserved for a public issue.

Amidst frequent issues, the state government terminated the agreement on March 6, 2002, citing “breach of terms.” In December of the previous year, the Himachal Pradesh government informed the high court of its intention to reclaim Wildflower Hall from East India Hotels of the Oberoi group.

Retired Supreme Court judge RP Sethi, appointed as the sole arbitrator in the dispute, determined that the joint venture agreement was legally valid and binding. He recorded that the relationship between the disputing parties was “damaged beyond repair,” and the only solution was to part ways.

EIH contested the arbitrator’s award, but the high court dismissed the plea in October 2022, stating that there was no merit in the appeal. The responsibility for constructing and operating the hotel was assigned to EIH, and the state government had the right to terminate the Joint Venture Agreement if the commercial operation did not commence within four years of taking possession of the land.