EIH gets full control of Shimla hotel

The Himachal Pradesh (HP) High Court has directed that all the 85 rooms of the Hotel Wildflower Hall at Shimla would become operational. This ends a long-drawn legal battle between the Oberoi-promoted East India Hotels (EIH) and the Himachal government over the ownership of the property and to secure permission to operate all its 85 rooms.

Pointing out that all the 85 rooms of the hotel, which is a joint venture between EIH and the state, was ready for occupation since April 2001, the company said in a statement that the it had contented before the court that the state tourism department has wrongfully withheld permission to operate 57 rooms and permitted the use of only 28 rooms.

The problem between the partners arose when the property was "physically" taken over by the state government pointing out that EIH failed to comply with the joint venture agreement. The government had said that a decision to this effect was taken at the company's board meeting in 7 March 2002.

The state government claimed that when the joint venture was formed in 1995, it was agreed that the Oberois will complete the hotel within the next 4 years and if required, an extension would be given for another 2 years with a penalty clause of Rs 2 crore every year. In case the Oberois fail to complete the hotel within six years, the agreement would stand canceled.

EIH had moved the Company Law Board (CLB) requesting it to declare the board meeting held on March 7 as invalid because the quorum was not completed and appointed R.S. Pathak, the former chief justice of the Supreme Court of India, as the arbitrator for the case.