Takeover of Wildflower Hall stalled
S.P.Sharma
Shimla, March 12
The takeover of the Rs 100-crore Wildflower Hall by the Himachal Pradesh Government today took a new turn, with, East India Hotels Ltd (EIH) of the Oberois describing the action as "illegal" and the General Manager of the hotel, Mr Andrew Saldanha, filing a report with the police against "unauthorised and illegal trespassing" into the property by the government appointed Executive Director, Mr S.K. Baldi, and seven other officers.
The efforts of the government to dislodge the EIH from Wildflower Hall also received a setback, with the United Bank of India refusing to freeze the accounts of the hotel.
In another development, Mr P.R.S. Oberoi, Vice-Chairman and Managing Director of the EIH, has complained to the Jalandhar-based Registrar of Companies that the termination of the joint venture agreement with them by the Himachal Pradesh Government was "illegal" and no further action should be taken on the basis of the "purported" resolutions of March 7,2002, which were passed without the presence of any of the four directors of the EIH. He has said the EIH is initiating appropriate action against these "illegal" acts of the government.
He has also pointed out that the state government, holding 21.22 per cent share, could not dislodge the EIH which was holding 78.78 per cent shares of the hotel.
In his report filed in the Dhalli police station here, Mr Saldanha has complained that the officers of the state government, Mr Baldi, Mr Rajesh Sharma, SDM (Shimla rural), Mr Ajay Thakur, AGM, HPTDC, Mr Kamal Arora, Company Secretary, HP State Civil Supplies corporation, Mr B.R. Chauhan, Assistant Manager, HPTDC, Mr U.S. Bhandari, Mr N.K. Bali and Mr Anil Sharma had been unauthorisedly and illegally trespassing into their property and attempting to disturb their possession and control of the hotel.
Copies of the complaint have also been sent to the Home Secretary, DGP, SSP, Shimla, the Divisional Commissioner and others.
The management of the hotel foiled the attempt of the government to appoint its own general manager and questioned as to under which rules it was trying to do so.
Mr Oberoi, in his letter to the Registrar of Companies, has pointed out that the joint venture agreement between the state government and the EIH was still in force and binding between the two parties as the due procedure had not been followed by the government while terminating it.
No notice of the board meeting of March 7 was sent to any of the four directors of the EIH in accordance with the provisions of the Article of Association of the Company and the Companies Act 1956. The Article has been violated as there were only three directors, all nominees of the state government, at the board meeting which recommended termination of the agreement. No director-representing the EIH was present.
Mr Oberoi has also contested the removal of all four directors of the EIH on the Mashobra Resorts which was running "Wildflower Hall" and has pointed out that no director can be removed without the approval of the shareholders at a general meeting.
He has also pointed out that the minority shareholder holding 21.22 per cent equity capital has endeavoured to remove the majority shareholder which holds 78.78 per cent equity capital in the company.
Mr Oberoi has informed the Registrar that in the seven-member Board of Directors, Mr Arjun Oberoi, Mr P.R.S. Oberoi, Mr S.S. Mukherji and Mr T.K. Sibal, were the nominees of the EIH, while Mr Harsh Gupta, Chief Secretary, Mr Ashok Thakur, Secretary, Tourism, and Mr S.K. Sood, Finance Secretary, were nominees of the state government.
Under Clause 10.1(i)(a) of the joint venture agreement, the Himachal Pradesh Government has to give due notice to the EIH to correct the default, if any, within 15 days of serving the written notice of such default.
However, the agreement was terminated without following the procedure and the government claimed to have removed the directors of the EIH and also claimed to have transferred the shares of the EIH to the Himachal Pradesh Government.
The Chief Manager of the Delhi-based United Bank of India yesterday sent a communication to Mr Ashok Thakur, Secretary (Tourism), expressing his inability to freeze the accounts of the hotel as the relevant papers had not been furnished to him.
He has pointed out that the agreement provided that no board meeting shall proceed unless at least one of the directors from each group was present and it has been reported that no director from the EIH was present at the meeting of March 7.
The bank has also pointed out that under the agreement, it was stipulated that the agreement can be terminated after giving notice by the government and no copy of the notice has been furnished.
Meanwhile, the hotel sources today alleged that the representatives of the state government had said at the board meetings that the government was not in a position to invest towards the cost escalation and the EIH was free to put the money.
He accused the government of intentionally putting hurdles in the completion of the hotel by delaying providing of water and electricity connections and this was pointed out in all the 28 meetings of the Board of Directors.
He alleged that operation of 56 rooms was not allowed by the government with the intention of invoking the clause of the EIH not completing construction of the hotel within the stipulated period and enable them to terminate the agreement.
On the other hand, the state government has claimed that the agreement automatically stood terminated as on October 30, 2001, as the EIH failed to make the hotel fully commercial operational within the stipulated period of six years, including the penal period of two years. The Cabinet formally approved the termination on March 4.
A spokesman of the government said that the EIH increased the project cost from the stipulated Rs 40 crore in the agreement to Rs 99 crore and "illegally and unauthorisedly" reduced the equity percentage of the state government from 35 to 21. The EIH also failed to provide the information pertaining to accounts of the company when the state government deputed a team of auditors.
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