RSM International to inspect accounts of Hotel Wildflower Hall

The HP High Court has appointed RSM International as Chartered Accountant to inspect and reconcile the accounts of Mashobra Resort Limited (MRL), a Joint Venture Company formed by East India Hotel (EIH) & the State government for running the Hotel Wildflower Hall.

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Justice Jyotsna Rewal Dua passed this order while dealing with the application filed by the state government with regard to financial rights and obligations of both the parties.

According to the applicant/state, certain financial and other obligations have been fastened under the Arbitral Award upon the EIH and EIH not only disputes several claims made by the state but also puts forth its own claim. Hence, a dispute has arisen concerning financial rights and obligations of the respective parties under the arbitral award passed on July 23, 2005.

While passing the aforesaid order, Justice Jyotsna Rewal Dua directed the Chartered Accountant Company to inspect and reconcile the accounts of the MRL in light of observations made, conclusions drawn and directions issued in this judgment.

It further directed both the sides to render meaningful cooperation to RSM International in furtherance of above objective.

The court further clarified in its order that the company through its authorised officer would also be at liberty to inspect the record of the case vis-à-vis the amount deposited by the parties under different heads in the Registry of the Court for the purpose of reconciliation of accounts.

The court further ordered that compliance report by the aforesaid Chartered Accountant Company be placed before the court on July 14, 2025. The court further ordered that the cut-off date for settling the disputed accounts of the MRL has to be taken as December 7, 2023 i.e. when state exercised option to resume the property. It is pertinent to mention here that the possession of joint venture property (Hotel Wildflower Hall) has been taken over by the state on March 31, 2025.

It is worthwhile to mention here that a Joint Venture Agreement (JVA) was executed between East India Hotels Limited and the State of Himachal Pradesh on October 30, 1995 with object to construct and run a luxury hotel commonly known as Hotel Wildflower Hall. The executants had certain rights as well as obligations under the JVA. Pursuant to the JVA, the EIH & State formed a Joint Venture Company by the name of Mashobra Resort Limited for running the hotel.

Dispute arose between the parties. According to the state, not only the EIH failed to make the hotel fully commercially operational in the manner and time frame provided under the JVA but also illegally and unauthorisedly reduced the shareholding of the state in MRL in violation of JVA and was conspiring to continue to reduce it further. The state terminated the JVA on March 6, 2002. The termination was confirmed by the Board of Directors’ resolution on March 7, 2002 removing EIH’s Directors from the Board of MRL and forfeiting EIH’s shares in MRL. The arbitral award pertaining to the dispute was passed on July 23, 2005.