Want to take possession of Oberoi Hotels' resort in Kufri: Himachal govt tells HC

The Himachal Pradesh government on Tuesday told the high court that it wants to take possession of Oberoi Hotels' resort in Kufri, presently with the East India Hotels (EIH Ltd) 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. This row erupted days after death of legendary hotelier Prithvi Raj Singh Oberoi, Chairman Emeritus of the Oberoi Group.

On Wednesday at 1500 hours, EIH's scrip on BSE was trading 1.2% lower at Rs 237.1.

On November 17, 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 December 15.

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.

On Saturday, Himachal Pradesh's Industry Minister Harsh Wardhan Chauhan said Hotel Wildflower Hall was supposed to pay dues of nearly Rs 120 crore to the Himachal government and that "in the last 25–30 years, they have not given anything to the Himachal government in terms of revenue or equity".

Himachal Pradesh's Industry Minister Harsh Wardhan Chauhan said, "Hotel Wildflower Hall used to be the property of Himachal Tourism. An agreement was made with the Oberoi group of hotels in partnership. But in the last 25–30 years, they have not given anything to the Himachal government in terms of revenue or equity. This case was in court for a long time. Some time ago, the Himachal government won the case. Yesterday, the high court gave permission to take over the Hotel Wildflower Hall.

"In the morning today, officials of Himachal Pradesh took possession of Hotel Wildflower Hall. The hotel will continue to run normally, and further bookings will be continued in a normal way. The rights of Himachal Pradesh were protected by the efforts of Chief Minister Sukhvinder Singh Sukhu. Hotel Wildflower Hall was supposed to pay dues of nearly Rs 120 crore to the Himachal government. It is one of the best properties in the world. The Himachal government has done as per the orders of the High Court."

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.

"The state government illegally attempted to take possession of the hotel. There was no order of the High Court authorising or entitling it to take possession of the hotel. Even the arbitrator had not ordered that they should take possession of the hotel. The arbitrator had given us a conditional award to say that in case EIH (East India Hotels) does not express its intention to take the property on lease. In that case, the property will revert to the state of Himachal Pradesh. The property means the building of the hotel- Hotel Wildflower Hall, which had been built by EIH (East India Hotels), not by the government. However, since the arbitrator had said that in case within 3 months of the finality of the award, in case  EIH (East India Hotels), hotels decide to take the property on lease, there is no question of the property reverting back to the state," said Advocate Arjun Lal Sood.

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. 

With inputs from PTI