Himachal Pradesh HC dismisses appeal against automatic reversion of Wildflower Hall

SHIMLA: The Himachal Pradesh high court on Thursday dismissed an appeal filed by East India Hotels Limited, the flagship company of the Oberoi Group, against the Himachal government in the dispute over the ownership of luxury resort Wildflower Hall at Chharabra near Shimla.
The high court found that the appellant (EIH Limited) had failed to make the resort fully commercially operational by May 3 2002, which resulted in the automatic reversion of the property to the Himachal government.
A division bench of Justice Tarlok Singh Chauhan and Justice Chander Bhusan Barowalia, found no merit in the appeal by EIH Limited under the Arbitration and Conciliation Act and accordingly dismissed it.
The Himachal government was the owner of the property Wildflower Hall at Chharabra, near Shimla, from where HP State Tourism Development Corporation ran a hotel. In or around 1993, a devastating fire broke out in the hotel and it was completely burnt down. The HP government decided to explore various possibilities for reviving the heritage property. The HP government floated global tenders inviting offers to build and run a five-star hotel at the site. The state government decided to partner with the Oberoi Group and they incorporated a joint venture company, Mashobra Resorts Limited (MRL) to run Wildflower Hall. As per the joint venture agreement (JVA), the HP government would have a shareholding of not less than 35% and EIHL would have a share of not less than 36% but not more than 55%. As per the deal, the HP government was entitled to terminate the JVA if the hotel was not made fully commercially operational within four years of handing over of land.