kochi: Kerala high court on Friday upheld a single bench order quashing the Kovalam Palace (taking over by resumption) Act, 2005.

A division bench comprising acting Chief Justice Ashok Bhushan and Justice A.M. Shaffique passed the order while considering an appeal filed by the state.

A single bench while considering a petition challenging the Act filed by Hotel Leela Venture and Kovalam Hotel Ltd had held that the Act was unconstitutional, void and inoperative.

“A sudden decision to take possession of the property without payment of compensation is arbitrary,” the court said.

Taking possession of the property by an enactment with retrospective effect is unreasonable, the court observed.

The state itself through Kerala Tourism Department has been running hotel business since 1964. The state suddenly after three decades had decided to take possession of it stating it as a heritage property,” the court observed.

Hotel Leela Venture and Kovalam Hotel Ltd argued that Kovalam Palace was not a heritage site and that even if it were a heritage site, the government had no power to take it over.