ISLAMABAD: The under-construction Grand Hyatt Hotel on Friday lost a legal battle with the Capital Development Authority (CDA) over land ownership as the Islamabad High Court (IHC) dismissed petitions against the cancellation of the lease of the land on which the five-star hotel and luxury apartments were being constructed.

Justice Athar Minallah issued the 48-page judgment reserved on January 27 on the petitions filed by M/S BNP, the builder of Grand Hyatt and high-rise twin residential towers, and the buyers of the residential apartments against the cancellation of the lease of 13.5 acre plot adjacent to the Convention Centre.

In July 2016, the CDA Board, comprising the then chairman Maroof Afzal and members Amir Ali Ahmed, Shahid Sohail and others, had cancelled the lease.

IHC dismisses petitions filed by builder of five-star hotel and purchasers of high-rise apartments against CDA’s decision to cancel lease

The court decision may affect the investment of about 240 people, including PTI Chairman Imran Khan, SBP Governor Mohammad Ashraf Wathra, Pemra Chairman Absar Alam, former CJP Nasirul Mulk, ex-LHC chief justice Iftikhar Hussain Chaudhry, Minister Jam Kamal Khan, former naval chief Mohammad Asif Sandila, former foreign secretary Salman Bashir and retired Lt Gen Ahsan Azhar Hayat, who had purchased apartments.

Justice Minallah held that the “construction of the residential apartments on the plot and the purported sale thereof was illegal, void and in flagrant abuse and violation of CDA Ordinance 1960 read with the Zoning Regulations, Building Regulations and the Building Control Regulations.”

The court order noted, the “Authority placed on record copies of the internal official notes relating to the plot. It is a reflection of how the officials have been bending over backwards by extending undue benefits to the petitioner/company in complete disregard of the mandatory regulations, thus causing loss to the exchequer on the one hand and enabling the petitioner/company to defraud and deceive members of the general public on the other.”

The judgment said the case had brought to surface the most conspicuous example of undermining the rule of law by one of the most important regulatory authorities established under the 1960 ordinance.

The federal government also cannot ignore its statutory duty mandated under section 5 of the ordinance.

The documents placed on record by both the parties have brought to surface the urgent need to enforce the law in letter and spirit.

It is a challenge for the federal government, the authority, concerned standing committees of the parliament and all other organs of the state to work in unison to enforce the provisions of the ordinance of 1960 and make the capital territory a bastion of the rule of law.

In response to the petitions of the buyers, the bench observed: “This court definitely sympathises with the victims who have been made to suffer either because of complicity or regulatory capture of the authority as a regulator. Rights cannot be claimed on the basis of an illegality. No right had accrued in favour of the purchasers since the title of the petitioner/company was contingent upon obtaining a completion certificate under the provisions of the ordinance read with the Building Regulations and the Building Control Regulations.”

It, however, said the “purchasers would not have fallen in the trap of the petitioner/company if the federal government and the authority had not been negligent or complicit.

It is, therefore, the duty of the federal government to ensure that the victims i.e. the purchasers do not suffer due to its own wrongful actions and omissions, particularly when the regulatory failure of the authority stands admitted.

The federal government is also expected to take immediate and appropriate measures to ensure that the members of the general public do not suffer in future at the hands of developers.

Counsel for the CDA Iftikhar Gillani and Kashif Ali Malik had argued that the petitioner (the builder of the hotel) was also in litigation with the Bank of Punjab from where it had obtained a Rs7 billion loan.

An inquiry into the project is also pending with the Federal Investigation Agency (FIA).

The CDA counsel said the petitioner neither deposited Rs4.1 billion bank guarantee nor performance guarantee to the CDA. It has also not paid the annual ground rent. On account of the principal amount, the petitioner is yet to pay Rs3.6 billion despite the fact it had earned around Rs6 billion from the sale of the apartments.

On the other hand, legal counsel for the BNP argued that the CDA had adopted a discriminatory attitude toward his client. The civic authority did not take any action against Centuras, Eden Housing Society and Bahria Enclave and singled out the BNP.

However, the CDA counsel said the Centuras plot was auctioned for a mixed usage for Rs190,100 per square metre while BNP plot was auctioned at the rate of Rs75,000 per square metre with a total difference of Rs8 billion.

“We have also issued notices to the Centuras for illegalities.”

Published in Dawn, March 4th, 2017