HC stays state govt orders to take over possession of Kufri luxury hotel

The Himachal Pradesh High Court on Saturday stayed the orders of the state government to take over the possession of a luxury hotel in Kufri and directed that the state not interfere in the hotel’s day-to-day management.

The court had earlier asked the government to tell whether it wants take over the Wildflower Hall of East India Hotels (EIH) of the Oberoi group by December 15.

“While deciding the objections of the parties vide its orders on November 17, the court had specifically asked the state to reveal its option that whether it intended to resume the possession in terms of the award of the arbitrator or not and granted time till December 15, 2023, for this purpose…,” Justice Satyen Vaidya said.

But state officials are stated to have taken action by issuing an executive order and also initiating action by visiting the premises on Saturday morning, he said, while hearing the matter.

The court said the award of the arbitrator had to be executed on the directions issued by the it and not by the parties themselves, and stayed the execution of the orders of the government.

The EIH’s counsel Rakeshwar Lal Sood said the orders passed by the government are illegal and in violation of procedure to be followed before eviction.

He said that court had asked the government to give its option by December 15 to tell whether it wants to resume the possession but it sent its officials in the morning to take over the possession.

Staffers of the hotel were surprised as state government officials along with police reached the hotel to take over its possession and the hotel management moved an application for the stay, the counsel said.

The advocate general submitted that Dhruv Mehta, a senior advocate, has been engaged to represent the government in the case but he was not immediately available.

The case was adjourned till November 21 for the next hearing.

The EIH had filed an 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) 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.

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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 heritage Wildflower Hotel, run by the Himachal Pradesh Tourism Corporation, were destroyed in a devastating fire in 1993.

In order 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 responsibility for constructing, running and managing the hotel was entrusted to the EIH and 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.

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