Himachal Pradesh High Court Orders Closure Of Non-Profitable HPTDC Hotels, Calls Properties A Burden On State Exchequer

Justice Ajay Mohan Goel remarked that the continuation of such properties is akin to "white elephants," draining public resources with minimal return on investment.

The case arose from a petition filed by one Jai Krishan Mehta against HPTDC, seeking judicial intervention regarding the corporation's financial mismanagement. During proceedings, the Court had earlier directed HPTDC to provide occupancy data for 56 hotels under its management.

The report submitted for 2022 to 2024 painted a grim picture, revealing alarmingly low occupancy rates for most properties, including flagship hotels like The Palace Hotel, Chail, and Hotel Geetanjali, Dalhousie.

Delving deep into the report the Court was surprised to note that even high-profile properties such as Hotel Holiday Home in Shimla recorded a declining trend, with a mere 40.44% occupancy in 2024 compared to 49.28% in 2022.

Emphasising the dire need for efficient resource management Justice Goel obseved,

"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."

Expressing disappointment over HPTDC's failure to propose viable strategies to augment revenue despite multiple opportunities provided by the Court the court stressed that these measures were essential to alleviate the financial stress on the state and redirect resources toward more productive avenues.

In view of the same the Court added,

"In order 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, as running of these properties is apparently not financially viable as of now."

The Court listed 18 properties, including Hotel Baghal (Darlaghat), Hotel Sarvari (Kullu), and Hotel Kunzum (Manali), among others, for immediate closure.

To preserve the properties, the Court directed that only essential staff be retained for upkeep, while the remaining employees should be reassigned to meet staffing requirements at other HPTDC locations. It clarified that these reallocations should align with an application already filed by the corporation detailing its staffing needs.

"Skeletal staff which is necessary for the upkeep of the property be retained in the premises of the properties which have been named hereinabove and the Tourism Development Corporation shall be at liberty to transfer the remaining of its employees so that its need in other places...are duly met.", the court recorded.

Directing the Managing Director of HPTDC to ensure strict compliance with the order the court has asked for a compliance affidavit detailing the implementation status is to be filed by December 3, 2024. The affidavit must also include information on dues recovered from government and private entities to compensate retired employees and families of deceased workers, the court concluded.

Case Title: Sh. Jai Krishan Mehta Vs. The Himachal Pradesh Tourism Development Corporation Ltd. and another

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