The Himachal Pradesh High Court stayed a single-judge order to close nine hotels of the Himachal Pradesh Tourism Development Corporation (HPTDC) due to low occupancy. The interim order was passed on Monday by a division bench comprising Justices Vivek Singh Thakur and Rakesh Kaithala after hearing the appeal of the Corporation challenging the order of the single bench. The next hearing has been fixed on January 3.
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SHIMLA: The Himachal Pradesh High Court issued a stay on a single-judge directive ordering the closure of nine hotels operated by the Himachal Pradesh Tourism Development Corporation (HPTDC) due to low occupancy rates.
This interim relief was granted on Monday by a division bench comprising Justices Vivek Singh Thakur and Rakesh Kaithala after hearing an appeal filed by the Corporation challenging the earlier order of the single-judge bench.
The matter is scheduled for its next hearing on January 3.
On November 19, a single-judge bench led by Justice Ajay Mohan Goel had instructed the closure of 18 HPTDC hotels by November 25, citing underperformance and poor occupancy as the primary reasons.
However, on November 22, the court allowed the state’s tourism department to continue managing nine of these properties until March 31, 2025.
The HPTDC subsequently filed an application seeking either the recall or modification of the November 19 order. The Corporation stated that it is making earnest efforts to ensure optimal utilization of its properties.
The counsel representing the HPTDC argued that several properties slated for closure have existing obligations, including room and event bookings. The Corporation has already received advance payments for these commitments, making their immediate closure impractical.
BACKGROUND
The Himachal Pradesh government, the Himachal High Court previously ordered the closure of 18 state-run loss-making hotels. Justice Ajay Mohan Goel, presiding over a single-judge bench, directed that the hotels operated by the Himachal Pradesh Tourism Development Corporation (HPTDC) cease operations by November 25, 2024.
The court termed these properties “white elephants” and noted their continued operation is a significant drain on the state exchequer.
Highlighting the financial strain, Justice Goel stated,
“The continuation of functioning of these properties…is nothing but a burden on the exchequer of the State.”
The court also pointed out the state’s ongoing financial crunch, evidenced in various cases involving government finances.
The order emphasized that public resources should not be wasted on properties with low occupancy and poor revenue generation.
“To ensure that public resources are not wasted by the Tourism Development Corporation in the upkeep of these white elephants, it is hereby ordered that the following properties of the Tourism Development Corporation shall be closed forthwith w.e.f. 25.11.2024.”
Hotels Ordered to Shut Down
The list of hotels slated for closure includes:
- The Palace Hotel, Chail
- Hotel Geetanjali, Dalhousie
- Hotel Dhauladhar, Dharamshala
- Hotel Kunal, Dharamshala
- Hotel Chandrabhaga, Keylong
- Hotel Bhagsu, McLeodganj
- Hotel Apple Blossom, Fagu
- Hotel The Castle, Naggar Kullu, and others.
The court has held the Managing Director of HPTDC personally responsible for ensuring compliance with this directive.
This ruling comes amid the state’s worsening fiscal situation. Earlier this week, the High Court attached Himachal Bhavan in Delhi due to unpaid electricity dues amounting to Rs 150 crore. Located in a prime area at Mandi House, the property highlights the financial challenges the government faces.
Reacting to the High Court’s decision, Chief Minister Sukhvinder Singh Sukhu announced plans to challenge the ruling in the Supreme Court. However, clarity on how the government intends to address its debt repayments remains elusive.
Himachal Pradesh Revenue Minister Jagat Singh Negi voiced concerns over job losses and suggested that alternative steps could be explored.
“If these hotels were not doing financially well, then we should work on it,”
-Negi said, adding that the prerogative to operate or close these properties lies with the state government.
Negi further emphasized that some of these properties are located in prime locations, which could potentially be leveraged for alternative purposes.
The closure of these hotels may lead to job losses and impact local tourism. However, it also presents an opportunity for the state to reallocate resources and prioritize financially viable projects. The court’s directive reinforces the need for fiscal accountability in managing public assets.
As Himachal Pradesh grapples with its financial crisis, the closure of these “white elephants” may mark a step toward economic recovery, albeit with significant challenges ahead.TT
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