The high elevation shola-grassland vegetation types of the Western Ghats apparently remained in a stable equilibrium for many decades, implying that both vegetational types are highly developed and attained stability under the same climatic regime. Several authors considered these two distinct vegetation formations occurring in juxta-position, as climax formations. According to the Clementsian view of climatic climax, however, two distinctly different vegetation types cannot form climatic climaxes under the same regional climate. Possibly some edaphic or biotic factors are responsible for rendering stability to the grassland in this system. We tested the following three hypotheses in this context. (1) The physico-chemical properties of the soil such as depth, organic matter, nutrient status and water holding capacity are more favourable in the depressions than in the exposed surfaces, which in turn might be responsible for the development of the woody vegetation in the depressions. (2) The shola forests exhibits similar structural attributes and a higher floristic diversity compared with the medium and low elevation wet evergreen forests of the Western Ghats region. (3) The shola trees are characterized by a low regeneration capacity, thus probably making it a shrinking resource base. With its characteristic deep fertile soil and high moisture holding capacity, the shola forests may remain in the same steady climax state, provided anthropogenic and other catastrophic disturbances do not destroy them. The grasslands were, however, characterised by generally shallow soils, low water holding capacity and low site nutrient capital. Hence, the assumption that grasslands are steady state vegetations maintained by edaphic factors, holds good. Structural and floristic elements of the shola forest revealed a very high floristic richness and diversity, probably the highest in the Western Ghats region. A total of 942 stems of at least 10 cm girth at breast height (GBH) and belonging to 53 species were encountered in the 5000 m 2 sampling area (basal area 48 m 2 ha −1). Contrary to the widely held dogma that shola forest does not possess adequate regeneration potential, the present study reveals that under the forest cover, profuse regeneration of almost all of the overstorey species occur. However, regeneration characteristics were different along the margins and in open grasslands, possibly as a result of differences in ecological conditions.