The Himachal Pradesh government has informed the high court that it wants to take possession of a luxury hotel in Kufri, presently owned by the East India Hotels (EIH) of the Oberoi group.
The court, on Saturday, had issued a stay on the state government’s orders to take over the hotel and instructed that the state refrains from intervening in the day-to-day management of the establishment. The hearing on the matter is scheduled for Tuesday.
Justice Satyen Vaidya, on November 17, through a single-judge bench, had specifically requested the state to clarify its position on taking possession of the property by December 15. However, the state government attempted to take control of the property the following day. As government officials arrived at the luxury hotel Wildflower Hall, the EIH sought legal recourse, leading to the court’s intervention and the suspension of the government’s takeover order.
The court, in its ruling, suspended the execution of the government order, emphasizing that the arbitrator’s award must be implemented in accordance with the court’s directives and not by the involved parties. The next hearing is scheduled for November 24.
In a written communication to the court, the state government has communicated its desire to assume possession of the property, as stated by Advocate General Anup Rattan. The counsel for EIH, Rakeshwar Lal Sood, refrained from commenting on Tuesday’s hearing, citing the subjudice nature of the matter.
EIH had previously challenged the arbitrator’s award through a plea, which the high court dismissed in October 2022, citing a lack of merit. Retired Supreme Court judge RP Sethi, appointed as the sole arbitrator in the dispute, had deemed the joint venture agreement (JVA) between the parties legally valid and binding. The arbitrator, in a settlement award issued on July 23, 2005, acknowledged the irreparable damage to the relationship between the disputing parties and recommended parting ways as the only viable solution.
The history of the property traces back to a devastating fire in 1993 that destroyed the state government’s property and the Wildflower Hall, a heritage hotel operated by the Himachal Pradesh Tourism Corporation. In the pursuit of establishing a five-star luxury hotel at the site, the Himachal Pradesh government partnered with the Oberoi Group after global tenders were invited. A JVA was signed in 1995 between the state government and EIH to form a joint venture company, Mashobra Resorts Limited, for the construction and operation of the hotel. The terms specified that the state government’s share in the company would be no less than 35 percent, while EIH’s would be no less than 36 percent. The responsibility of constructing and managing the hotel was entrusted to EIH, with the state government retaining the right to terminate the JVA if the commercial operation of the hotel did not commence within four years of land possession.
