A beaming Suri, also a Congress MP, said the Great Eastern would be run as a heritage hotel.

It would be given a facelift at the cost of Rs.1.2 billion ($261 million) and would become fully operational in two years.

Suri said the hotel would be restored to its old glory when it was known as the jewel of the East. The hotel, built in 1840, was wilting under financial losses.

"There would be seven directors in the new board, including a nominee of the West Bengal government," Suri said.

With the new acquisition, Suri's company now has eight hotels.

"We had taken up a hotel in Bangalore in similar condition and gave it a complete facelift."

The 400-odd hotel employees have been asked to accept a separation package arranged by the state government.

The sale had been opposed by trade unions, which had threatened that the new owner would not be allowed to take possession till the employees were paid their dues.

West Bengal Chief Minister Buddhadeb Bhattacharya said the sale would send positive signals to the investors.

Industry Minister Nirupam Sen said the hotel was sold to Suri's company on the basis of its financial strength.

Suri's Bharat Hotels Ltd pipped two other bidders - Ramuk Scan AB and the Unitech Group.

To maintain transparency in the process, the state government had entrusted PricewaterhouseCoppers as consultants to handle the sale.

A move by the Transport Minister Subhas Chakraborty to sell the hotel to the French chain Asia Accord Pacific in the late 1980s had met with resistance from trade unions.

The hotel was built by David Wilson, an Englishman who owned a confectionery shop in Cossitola, now known as the Bentinck Street of Kolkata.

It was then named Auckland Hotel after Lord Auckland, the then governor general of India. Later, its name was changed to the Great Eastern.