IHC upholds Capital Development Authority’s decision of canceling One Constitution Avenue lease

IHC Chief Justice Sardar Mohammad Sarfraz Dogar announced the decision on the appeals filed by M/s BNP (Private) Limited and the occupants of flats in the skyscraper.

The court in February this year had reserved its verdict in the high-profile case concerning the cancellation of the lease of Grand Hyatt building located in the Red Zone near Constitution Avenue.

Counsel for the CDA Kashif Ali Malik advanced arguments on behalf of the civic agency.

IHC in February this year had reserved the verdict in the high-profile case

The case pertains to the controversial five-star hotel project, which was awarded to BNP Group nearly two decades ago. However, instead of functioning as a five-star hotel, it was converted into residential apartments and commercial areas.

Apartments in the building were also reportedly owned by prominent personalities, including PTI founder Imran Khan, Chaudhry Aitzaz Ahsan, Shandana Gulzar Aurangzeb, former minister Burjees Tahir, former caretaker prime minister Nasirul Mulk and Kashmala Tariq.

The CDA contended that despite the lapse of 21 years, BNP failed to fulfil its financial obligations. It said under the auction terms, ownership rights were contingent upon 100 per cent payment of the land cost. Out of the assessed Rs17.5 billion liability, only Rs2.9 billion, around 16.6 per cent, have been paid.

The civic body relied heavily on the Supreme Court’s conditional order dated January 9, 2019, authored by the then chief justice Mian Saqib Nisar, arguing that BNP failed to comply with the stipulated conditions.

Reference was also made to the subsequent review order of the Supreme Court, which observed that the 2019 order had been “overtaken by time events” and was no longer of material significance.

On this basis, the CDA asserted that the 2018 division bench judgement of Islamabad High Court, authored by Justice Amir Farooq, stood revived, resulting in the vesting of the land and superstructure in the authority.

The CDA also cited BNP’s letter dated July 25, 2022, wherein the company admitted its inability to continue the project or pay annual installments of Rs2.92 billion due to adverse economic conditions and negative country ratings by Moody’s and Fitch.

The letter acknowledged that completing the project and paying the December 2022 installment had become ‘impossible’.

The authority argued that BNP, having unequivocally admitted default and financial incapacity, was stopped from challenging the lease cancellation, regardless of whether the notice period was 28 or 30 days.

During the earlier hearing, Chief Justice Dogar questioned whether former Supreme Court judge Ijazul Ahsan, who had earlier represented BNP, was the same individual who later sat on the bench in related proceedings.

The CDA counsel confirmed that an objection had been raised at the time by then CDA lawyer Munir Paracha but was declined, adding the former chief justice had expressed displeasure over the objection.

The court was further informed that the matter had been investigated by the FIA, leading to registration of an FIR against BNP’s CEO and former CDA officials.

The case was subsequently transferred to the National Accountability Bureau, where proceedings remain pending.

The Public Accounts Committee has also examined the issue.

Regarding third-party purchasers, CDA relied on paragraph 37 of the 2018 judgement, which held that sub-lessees ‘sink or sail with the appellant’.

It was argued that claims of bona fide purchase involved disputed questions of fact not amenable to adjudication under Article 199 of the Constitution and must be pursued before a competent forum.

CDA emphasised that Islamabad had been deprived of a planned five-star hotel for nearly two decades, causing logistical challenges during high-level state visits and diplomatic events.