Shimla, Feb 21 (IANS) Oberoi Group's Wildflower Hall, a luxury spa on the outskirts of this popular hill resort, has been caught in spot again, as the state government has decided in favour of the audit of the hotel by the Comptroller and Auditor General (CAG) of India, say officials.
"The government has decided to entrust the audit of Wildflower Hall since 1995 to the CAG," a state government official told IANS Thursday.
He said the cabinet, which met here Tuesday, gave its nod in this regard.
Wildflower Hall, sought-after by high-end tourists and celebrities, is a joint venture of Mashobra Resorts, the Oberoi Group company that runs the hotel, and the state government. It has long been under litigation between the two partners.
The state government, a stakeholder, suspects financial wrongdoings in the heritage hotel that has been running into losses since March 2001.
Sources said the previous Bharatiya Janata Party (BJP)-led government in 2011 had requested the CAG for an audit review of the company. The national auditor agreed to conduct the audit.
The hotel was handed over to the Oberoi Group under a joint venture in 1995 by the then Congress government.
Previous chief minister Prem Kumar Dhumal, who entrusted the hotel's audit to the CAG, had said: "It's strange that the Oberoi's other two ventures in Shimla - Clarke's and Cecil - are making profit. Only Wildflower Hall is running into losses, that too for years together."
British-era Wildflower Hall was once the residence of Lord Kitchener, Field Marshal in the British Army who played a significant role in the early part of World War I.
After India's Independence, the building was handed over to the Himachal Pradesh Tourism Development Corporation for running a hotel. The building was gutted in a fire in 1990.
The government then approached prominent hoteliers and finally shortlisted the Oberois.
It was handed over to the hospitality group to set up a five-star hotel. At that time, the cost of constructing the 85-room hotel was pegged at Rs.40 crore (Rs.400 million) and the state government's share was fixed at 35 percent.
Subsequently, the Oberois raised the cost of the project to over Rs.990 million, which reduced the government's equity to 21 percent, government officials said.
The government scrapped the joint venture agreement with the Oberois in 2002, pointing out serious irregularities in the construction cost. The Oberois challenged the government decision in the Himachal Pradesh High Court, which appointed an arbitrator.
The arbitrator in his award in 2005 said the partnership was irreconcilable and asked for converting the agreement into a leasehold property.
The Oberois, who were told to pay Rs.940 million to the government as rent for a period of 40 years from 1995, again moved the high court against the decree.
The case is now pending in the court.
Wildflower Hall is located at Charabra at a height of 8,300 feet, and commands a breathtaking view.
Congress party chief Sonia Gandhi and her daughter Priyanka are regular guests at the hotel.