One Constitution Avenue project: IHC upholds CDA’s cancellation of lease
ISLAMABAD: The Islamabad High Court (IHC) on Monday upheld the Capital Development Authority (CDA)’s cancellation of the lease for the multi-billion-rupee project, One Constitution Avenue, built in the federal capital.
The IHC Chief Justice Sardar Muhammad Sarfraz Dogar announced the 30-page detailed judgment of the court’s short order. It dismissed a set of petitions filed by M/s BNP (Pvt) Limited — the developer of the project — along with investors and other stakeholders, challenging the Capital Development Authority’s (CDA) decision to terminate the lease.
The IHC said that the record of the case depicts that the petitioner failed to discharge financial obligations and to comply with the order of the Higher Court, while reaping the benefit of the prime commercial project.
The judgment said that the petitioner (BNP) has not come to the Court (IHC) with clean hands, which unequivocally disentitles it from the relief it prayed for. It also said that the record reflects that the petitioner’s acknowledged default in respect of the 2022 instalment alone amounts to Rs2.916 billion, while the cumulative outstanding liability extends into several billions of rupees.
It noted that in the totality of circumstances, the proposed deposit appears less an act of genuine rectification and more an attempt to secure interim advantage without addressing the substantive default. “By defaulting, the petitioner has not only harmed the State but has also compromised the interest of the very sub-lessees/allottees it now claims to protect. Hence, the petitioner, being itself a defaulter, cannot take advantage of this stance.
“The petitioner’s admitted failure to remit Rs2.916 billion instalment, due for the year 2022, and its failure to provide the enhanced security instruments constitute a ‘material and wilful default.’
The judgment said that the CDA’s subsequent action of terminating the lease was not an act of arbitrary administration, but a direct fulfilment of the right of termination granted to it by the apex court. The petitioner’s technical objections regarding the notice period calculation are found to be unsubstantiated and insufficient to override the substantial breach of a Court-mandated obligation.
The petitioner’s inability to comply with the financial conditions of its own revival leaves it with no ‘existing right’ to be enforced through writ jurisdiction.
The judgment said that, so far as the writ petitions filed by the third parties, who claim to have acquired interest based on sub-lease(s) executed by the petitioner in their favour, are concerned, it is reiterated that they have to sink or sail with the petitioner. It has been argued that they are bona fide purchasers for value without notice.
This argument is not sustainable in a jurisdiction under Article 199 of the Constitution, as it requires evidence, and the sub-lessees may agitate the matter in the court of the competent jurisdiction. The sub-lessees also have the remedy against the petitioner/BNP, which they may agitate before the court of competent jurisdiction.
The petitioner and CDA had signed the Lease Deed on 28-07-2005 for One Constitution Avenue. The CDA on 03-08-2016 terminated the Lease Deed, which was challenged by the petitioner before the Islamabad High Court, which upheld the CDA decision. However, the Supreme Court on 09-01-2019 revived the Lease Deed, subject to modified financial terms. The amount payable by the petitioner was enhanced to Rs17.5 billion to be discharged in eight equal annual instalments.
A three-member bench of the Supreme Court, headed by ex-CJP Saqib Nisar and comprising Justice Ijazul Ahsan and Justice Faisal Arab, on 9th January, 2019, ruled, “In case BNP commits default in furnishing a guarantee or payment of any instalment on its due date, CDA shall have the right, after giving 30 days’ notice, to terminate the lease.”
The petitioner challenged the increase by more than three times in the lease rentals from Rs4.882 billion to Rs17.5 billion, and the reduction of almost half of the time available for making the payment from 15 years to 8 years. The petition, however, did not challenge the revival of the Lease Deed. On the other hand, the respondent (CDA) challenged the revival of the Lease Deed.
The petitioner alleged that the CDA, after having the Lease Deed terminated on 8 March 2023, took over the possession of the Project and proceeded to act illegally and without lawful authority in relation to the Project and the holders of the third-party rights therein.