Explainer: The Wildflower Hall saga

After a legal battle stretching over two decades, the Himachal Pradesh Government has finally gained control of Hotel Wildflower Hall, a premier five-star resort run by the Oberoi Group at Mashobra, 12 km from Shimla. With the deadline of March 31 set by the Supreme Court for takeover of the prime property from East India Hotels (EIH) Limited, the flagship company of the Oberoi Group, the transition process has already begun.

Himachal’s Director, Tourism, has been appointed the administrator. The state government has agreed to the Oberoi Group running the luxury hotel for another three months, by which time the process for leasing it out to a hospitality company through global tenders is expected to be completed.

PRIME PROPERTY

The 123-year-old property has 86 rooms and is listed among the most coveted hotels run by the Oberoi Group. For cash-strapped Himachal Pradesh, gaining control of the property is seen as a major revenue-generation exercise. The Congress government, which came to power in 2022, is keen to draw substantial revenue from leasing Wildflower to another chain of hotels.

Given the limited revenue-generating options in the state, optics are important too — ensuring that luxury accommodation comes at a price and the money so earned by the government is put to use for public welfare.

PAST AND PRESENT

Built by Lord Kitchener, a commander of the British army, in 1902, Wildflower Hall is spread over 100 hectares amid a pristine deodar forest atop a hill. After Lord Kitchener returned to England in 1909, the property was bought by a British couple, who ran it as a hotel. After Independence, the property was taken over by the Centre and an agriculture school functioned here. In 1973, it was handed over to the HP Tourism Development Corporation (HPTDC) to run a hotel.

JOINT VENTURE

The HPTDC-run hotel was gutted in a devastating fire in 1993. Following this, the then Congress government entered into an agreement with EIH and a joint venture, Mashobra Resorts Ltd, was floated for rebuilding it as a five-star hotel. The agreement was terminated by the BJP government on March 6, 2002, for breach of trust. The alleged loss to the exchequer in the deal initiated by the Virbhadra Singh-led Congress government was also considered a factor behind the Prem Kumar Dhumal-led BJP government’s move.

LEGAL BATTLE

The termination of the agreement led to a long-drawn legal battle over the control of the hotel. The government contended that in violation of the agreement, the EIH failed to construct the hotel even after six years, incurring a penalty of Rs 2 crore for each year.

The Himachal Pradesh High Court appointed retired Justice RP Sethi as the arbitrator to settle the dispute in December 2003. The arbitration award was given in favour of the state government on July 23, 2005, directing the EIH to pay Rs 12 crore and the cost of the land within three months, failing which the state would be entitled to take back the property.

The EIH challenged the arbitration award on February 25, 2016, in the High Court, which was dismissed by a single-judge Bench. The EIH filed an arbitration appeal before a Division Bench, which dismissed it on October 13, 2022.

The state government on June 30, 2023, filed an appeal in the High Court seeking control of the hotel. On November 17 that year, the High Court ordered handing back the property to the state government, against which the EIH filed a review petition.

It was on January 5, 2024, that the High Court dismissed the review petition and ordered that Wildflower Hall be handed over within two months. In February last year, the EIH moved the Supreme Court, which too ruled in favour of the state government.