HC issues stay order on Himachal govt’s takeover of Oberoi Hotels’ resort

The Himachal Pradesh high court also ordered the state to refrain from interfering in the day-to-day management and possession of the hotel till further orders.

The state’s tourism department, in a media statement, earlier on Saturday said it had been involved in an ongoing tussle with Oberoi Hotels’ EIH, and that the Himachal Pradesh government was acting on the high court’s order to claim possession of the property.

The move comes days after the company’s doyen and chairman PRS Oberoi passed away. The company had taken a stay order restraining any interference in the affairs of EIH’s subsidiary, Mashobra Resort Limited, a joint-venture it has with the government. The legal dispute dates back 20 years.

The court ruled that the state must first decide whether it wants to take possession of the property or not. The state has been given until 15 December to decide. 

Himachal Pradesh industry minister Harsh Wardhan Chauhan told the media that the hotel had unpaid dues worth ₹120 crore. He said though the tourism department and its employees had taken over the accounts of the hotel on Saturday, its operations would run normally.

EIH, which runs Oberoi Hotels and Resorts, in its FY23 annual report said about 79% of Mashobra Resort’s shares were held by the listed entity.

In a filing with the BSE, EIH said that the court has mandated that the state government refrain from involvement in the day-to-day management and possession of the hotel until an official execution order is sanctioned by the court.

The hotel is nestled in Chhabra on the outskirts of Shimla and has tariffs starting ₹33,000 a night. The joint venture reported a profit after tax of ₹28.46 crore in FY22 versus ₹12.77 crore a year ago, according to the latest report.

According to EIH, in a recent report in FY23, the land on which Mashobra Resort Limited is built was originally classified as freehold and the government of Himachal Pradesh had terminated the agreement with MRL and sought to take possession of the land in 2005.

As per earlier media reports, the government had terminated its contract with Mashobra Resort following an arbitrator’s orders. The order said that while this will continue to be land owned by the state’s tourism department, it would have a new 40-year-old lease for a sum of ₹95 crore agreed upon in 2005. Back then, the company had also paid ₹12 crore to the government for the transfer of the state’s equity shares.

Mint has sent queries to Oberoi Hotels spokespersons and is awaiting a reply. The story will be updated if a response is received.

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Updated: 19 Nov 2023, 12:54 PM IST