By Quaid Najmi

Kolhapur, June 22 (IANS) A sprawling and lavish home for Kolhapur's erstwhile rulers and then a school before becoming Maharashtra's only heritage palace hotel, the Shalini Palace Hotel faces the prospect of being auctioned because of financial problems.

Spread over 12 acres of lush greenery on the banks of the Rankala Lake in the city, the hotel is currently owned and managed by the Chougule Group.

The Saraswat Bank and the United Bank of India are understood to have extended a loan of Rs.60 crore to the hotel management a few years ago, but it has defaulted on the repayment.

"There is still an outstanding amount of around Rs.45 crore. Since the management is unable to clear the dues, we have initiated proceedings to auction the property," Saraswat Bank chairman Eknath Thakur told IANS.

The auction will be held any time after July 7 and Thakur is optimistic that the two banks would manage to recover their complete dues from the new buyer.

A hotel official also confirmed the developments, which have become a matter of debate in the historic city.

"For the past few years we have faced financial difficulties owing to the economic slowdown and related issues," the official, who did not want to be quoted, told IANS.

An auction notice published in the local media June 9 shocked most people of the city, famous for its Kolhapuri brand of footwear and unique spicy cuisine.

Hotel Shalini Palace boasts of a rich history and tradition that dates to the era of the Chhatrapati families of Maharashtra.

Construction work on the palace - on an area of nearly 6.5 acres, plus another six acres of gardens - started in 1928 and was completed in 1932. The final cost was a king's ransom - Rs.800,000 - in those days. Today, the amount would barely suffice for a one-bedroom partment in Kolhapur!

The edifice was named after Princess Shaliniraje, the daughter of then rulers of Kolhapur - Chhatrapati Shahaji II Puar Maharaj and Queen Pramilaraje.

Nestling on the picturesque Rankala Lake with tall palm trees swaying all around, the grand three-storeyed palace was noted for its breathtaking tall arches and a prominent clock tower, all made of richly-carved black stone.

The interior was richly opulent with windows decorated with Italian stained glass, smooth Italian marble flooring, gigantic chandeliers in the public areas and smaller ones in the rooms where its royal inmates once resided.

The walls are decorated with rare and expensive paintings, murals and exotic artefacts from India and abroad.

The royal family lived in Shalini Palace on and off for several decades before handing the palace over to the Mahatma Phule Education Society in the 1960s. The society started a college there but, with its meagre resources, could ill-afford the huge maintenance expenses.

In 1971, to tide over the immediate financial crisis plaguing the society, the Kolhapur Municipal Council (KMC) explored a bail-out package, including clearing the Rs.14 lakhs due to the Kolhapur District Cooperative Bank.

After this, the KMC would have gained control over the palace premises, plus another three acres of land adjoining the palace.

Unfortunately, as old timers recall, there was no consensus on the proposal for over a year. While some groups wanted the palace to be taken over by the KMC and converted into a museum, others said it would prove to be a huge drain on the civic body's resources.

The following year, in 1972, the KMC was upgraded to a municipal corporation bringing with it a different set of priorities. The palace proposal was shunted into cold storage.

Meanwhile, the college had moved to a new, modest building in the city and the bustling palace remained virtually deserted.

It was in the late 1980s that the Chougule Group decided to buy the property and convert it into the state's first - and till date only - heritage luxury hotel.

The royal dwelling became Hotel Shalini Palace, with 50 rooms. It was patronised by business travellers, foreign tourists and VVIPs who visited or stayed at the place to get a slice of a regal luxury life style.

"We had an average 75-80 percent occupancy rate and touched 100 percent during festivals and vacations when hordes of domestic and foreign tourists trooped to Kolhapur and its surroundings," the hotel official said.

Hotel Shalini Palace faces an uncertain future as nobody knows if it will continue to be run as a luxury hotel after the auction or become out of bounds if bought over by a private party.