Shimla: The Himachal Pradesh High Court Tuesday ordered the closure of 18 out of 56 hotels owned by the Himachal Pradesh Tourism Development Corporation (HPTDC) on account of the financial losses incurred by these properties, which the court deemed an unsustainable burden on the state exchequer.
The establishments set to be shut down include iconic properties, like The Palace Hotel in Chail, The Castle in Naggar (Kullu), and others across the state.
Justice Ajay Mohan Goel, in the order, criticised the HPTDC’s inability to make these properties profitable, noting: “The continuation of the functioning of these properties but natural is nothing but a burden on the exchequer of the State and the Court can take judicial notice of the fact that there is a financial crunch, which is daily being propagated by the State in the matters being listed before the Court involving finances.”
The court directed the closure of these properties effective 25 November, emphasising that the ongoing operations were financially unviable. “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…,” the order read.
This is the second major decision by the high court this week related to the state government’s assets. The same bench had Monday ordered the attachment of the Himachal Bhawan in New Delhi in the Seli Hydro Project case over unpaid dues by the Himachal government.
Unpaid dues
Justice Goel also addressed the delay in payment of post-retirement benefits to former HPTDC employees, which had led to the petition by one Jai Krishan Mehta against the corporation. As of 31 August, 2024, the dues to retired employees exceeded Rs 35 crore.
The court instructed the corporation to prioritise releasing funds for retired Class-IV employees and families of deceased employees using resources freed from the closure of these properties.
The judge further observed the lack of progress in improving HPTDC’s financial health. Reviewing affidavits submitted by the managing director of HPTDC, Justice Goel observed: “This Court firstly took up the issue and passed a detailed order on 17 September, 2024. It expected the respondents to come up with something cogent and concrete, to augment the resources of the Tourism Development Corporation, but till the time of dictation of this order, not even a small pebble has been moved/turned by the Tourism Development Corporation in said direction.”
Missed opportunities
The court also noted the corporation’s failure to improve occupancy rates and operational efficiency. During previous proceedings, it was noted that failure to take corrective measures would compel the court to order the closure of underperforming properties.
The decision underscores the urgent need for financial discipline and resource optimisation within HPTDC, which has struggled to manage its extensive portfolio of hotels amid mounting operational losses.
“As the government grapples with the implications of the court’s order, the closure is expected to have ripple effects across the state’s tourism sector, which relies heavily on public and private hospitality infrastructure,” said Akshay Sood, a Shimla-based tourism sector expert.
Hotels facing closure
The hotels ordered to be shut down by the court include: The Palace Hotel in Chail; Hotel Geetanjali in Dalhousie; Hotel Baghal in Darlaghat; Hotel Dhauladhar, Hotel Kunal and Hotel Kashmir House in Dharamshala; Hotel Apple Blossom in Fagu; Hotel Chanderbhaga in Keylong; Hotel Devdar in Khajjiar; Hotel Giriganga in Kharapatthar; Hotel Meghdoot in Kiarighat; Hotel Sarvari in Kullu; Hotel Log Huts in Manali; Hotel Hadimba Cottage and Hotel Kunzum in Manali; Hotel Bhagsu in McLeodganj; Hotel The Castle in Naggar; Hotel Shivalik in Parwanoo.
In a previous hearing, the Himachal Pradesh High Court had adopted a firm stance against both government departments and private entities that had defaulted on payments owed to the Himachal Pradesh Tourism Development Corporation (HPTDC).
The court was apprised that while some recovery efforts had yielded results, substantial dues remained unpaid. As of 7 November, a total of over Rs 2 crore had been deposited, including Rs 1.68 crore recovered from government departments and Rs 47 lakh from private entities.
(Edited by Mannat Chugh)