Thiruvananthapuram, Sept. 15: The Kerala government has decided to reclaim the Halcyon Palace in Kovalam from the Gulfar Group which came in possession of the seaside resort when it bought the adjoining Ashoka hotel during the earlier central coalition?s divestment drive.

With this decision the Congress-led government in the state has accepted a key demand of the Opposition. Yesterday, V.S. Achuthanandan of the CPM, which supports the Congress-led coalition at the Centre but is the principal opposition to the alliance led by the party in Kerala, had asked the government to take immediate steps to get back the castle.

Gulfar, which bought all the shares of the palace for Rs 44 crore and rechristened it Kovalam Hotels Pvt. Ltd, claims its ownership of the palace is legal.

Today, Oommen Chandy, who recently succeeded A.K. Antony as chief minister, said the government has resolved to take over the nearly 75-year-old palace taking into consideration the interest of the state and popular demand.

Chandy said the decision came in the wake of a report of a high-level committee, headed by the chief secretary, which looked into all aspects of ownership of the palace, the only completely granite structure on the beachfront. A single-day occupancy of any of its four suites costs Rs 15,000 plus taxes.

?The government wants to maintain an investment-friendly climate in the state. But at the same time the government would protect the state?s and people?s interest. The government would take legal steps to safeguard its interest if the hotel group challenges the issue in court,? the chief minister said at a cabinet briefing.

Achuthanandan, the leader of Opposition in the Assembly, said as the state cabinet had not cleared the transfer of the palace along with the hotel to Gulfar, it was illegal on the group?s part to claim possession of the palace. He also said the state should ask the Centre to order a probe into the handing over of the Ashoka hotel and the attached property to the private group for what he claimed was a meagre Rs 44 crore.

Three months ago, the CPM leader had led a protest at the palace. ?This is very much a part of Kerala?s heritage, which cannot be sold to private individuals. The government should immediately claim it back from the group that?s holding it illegally,? he had said in June.

The palace was built in 1930 by the regent of Travancore principality, Sethu Parvathi Lakshmi Bayi. Royals later quarrelled over its possession, resulting in the state taking it over. There is no title deed to show who the palace?s previous owners were.

When Karan Singh was Union tourism minister, he developed the entire seafront into a resort. The palace then came to be seen as part of the project and the ITDC as its custodians. The controversy flared up when the Indian Tourism Development Corporation facility changed hands.

Chandy maintained that the palace had not been transferred to the group by the state. The palace came into the possession of the group after it purchased the Ashoka hotel from ITDC, he said.