Shahid Balwa being escorted out of a Mumbai court in February

Srinagar, April 6: The CBI is probing a controversial deal that gave the company of spectrum scandal accused Shahid Balwa the management rights over a premier five-star hotel in Srinagar that is co-owned by the state government.

BD and P Hotels (India) Private Limited, a subsidiary of Balwa’s DB Realty group, bagged 30-year management rights to the famed Lake View Centaur Hotel on the Dal lake’s banks last September. The deal was signed with the hotel’s other co-owner, Hotel Corporation of India (HCI), a subsidiary of Air India.

Jammu and Kashmir High Court stayed the deal in February after a group of lawyers filed a public interest litigation. The civil aviation ministry later put the deal on hold.

Officials at Centaur said a CBI team recently visited the hotel to inquire about the details of the deal as part of the agency’s investigations against Balwa in the spectrum case. “We handed over the documents,” an official said.

The state government and the HCI had jointly built the 252-room hotel and the Sher-i-Kashmir International Convention Conference (SKICC), housed under the same roof over 13 acres of prime land, in 1982.

The state and the HCI bore the investment in a 40:60 ratio. The state provided the land against a nominal rent. The state government runs the SKICC while the HCI ran Centaur.

Under the September 2010 agreement, a copy of which is with The Telegraph, the HCI “unilaterally” granted the “management rights” for 30 years to BD&P hotels against an annual rent of Rs 2 crore, to be increased by 25 per cent after every five years.

The hotel’s employees said the deal was sealed at the peak of last year’s agitation. It led to protests from the employees and civil rights groups. The employees feared the deal would leave around 300 of them jobless while the rights groups criticised the HCI for “selling state land to outsiders”.

Ghulam Mohiuddin Mehdi, the general secretary of the Centaur Hotel Coordination Committee (an employees’ organisation), said the hotel had been “leased” for peanuts.

“We earn Rs 7 crore to Rs 8 crore a year despite the troubled situation here,” Mehdi said.

The state government has come off the worst from the deal. The government had leased the land to the HCI in 1982 for 99 years at an annual rent of Rs 3,200 per acre, to be increased by up to 40 per cent after the first five years and 60 per cent after the next 20 years.

“The state government gets less than Rs 1 lakh a year for the land, which is worth more than Rs 100 crore,” an official said.

Official documents reveal that the state government is against any “sub-leasing” or “subletting” of the property, and wants to acquire the hotel entirely.

“The lease agreement dated March 10, 1982, (between the state and the HCI) does not provide for such arrangement,” read the minutes of a meeting held in October 2010 by the state tourism minister.

Government sources declined comment.