Why did the court agree to Bahria Town's settlement offer?

Schemes of this nature establish their legality through non-compliance in order to enforce formal recognition.
Published April 8, 2019

Last year, in a 2-1 majority decision, the three-member bench of the Supreme Court ruled against Bahria Town.

The apex court held that the grant of land by the Sindh Board of Revenue to the Malir Development Authority (MDA), and the MDA's subsequent exchange of land with Bahria Town for the Malir District Housing Project (Project), were all illegal and a result of collusion amongst all stakeholders.

Nonetheless, the apex court ruled that “since a great deal of work has been done by the Bahria Town and a third-party interest has been created in favour of hundreds of allotees [sic] [for the Project], the land could be granted to the Bahria Town afresh” through revised terms and conditions.

This year, the apex court accepted Bahria Town’s offer of Rs460 billion as payment for 16,896 acres it illegally acquired for the Project. Critics have rightly pointed out that the settlement is not a fair reflection of the market value of land allotted.

What happened and why?

It is evident that the development of the Project was always the end-game, and the means to accomplish it (legal transfers) were a mere afterthought, hence why the legal processes underlying the transfers were fraught with procedural lapses, along with blatant disregard for the law.

This whole incident is not novel, though. Often times, the legal framework is too cumbersome, regressive and even antithetical to a developer’s imminent drive for commercial gain.

In this case, the MDA was prohibited under the law from transferring the land, as the land granted to the MDA under the provisions of the Colonization of Government Lands Act, 1912 was in tenancy only.

The legislative rationale of MDA’s tenancy was that the land granted on lease by the government would become a perpetual source of income for the MDA, without loss of title. Instead, MDA “exchanged it with Bahria Town through its henchmen” at great financial loss to itself.

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In the case of the Project, under the existing laws, the developer was at best empowered to coordinate with the MDA to launch an “incremental housing scheme” to facilitate low-middle income residents.

The developer would have had little autonomy, insignificant title/ownership and incentive to launch a massive commercial venture under the existing regulatory laws.

So what happened instead? The developer launched a housing scheme and started development work before even purchasing lands from the MDA (implied terms existed beforehand).

Subsequently, the MDA gave away its land to the developer at a favourable rate to the latter, and so began the development of commercial plots, under the thin veil of a “public purpose” (acquisition of land for developing a township or residential or commercial plots is a public purpose, as per the apex court).

The stakeholders realised, either consciously or subconsciously, that there simply did not exist favourable development laws to facilitate the Project, and the state lacked familiarity with both business and law-making to make the Project on the terms and conditions that benefitted the developer.

Facts on the ground

This all led to fait accompli: which is when a thing has already happened or been decided before those affected hear about it, leaving them with no option but to accept it (the apex court acknowledged that the same happened here).

Development schemes of this nature often attempt to establish their legality through a series of non-compliances and eventual adaption to the law in order to ultimately enforce formal recognition by the latter.

Who suffers? Private landowners, for one.

Since the whole Project has become institutionalised, any private owner wanting to challenge it will have little bargaining power, and legal rights to challenge would be fraught with legal, administrative, security-related and monetary challenges.

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Also, state organs suffer, not only because of losing their writ, but also because the whole Project has led to a "colossal financial loss to MDA", since the MDA has no title, ownership or interest left anymore and had it all exchanged for a paltry price.

The doctrine of fait accompli for wanton land acquisition extends universally, albeit more so with state actors. The United States’ federal government taking Native American lands as recently as 1949 was presented to the tribes as fait accompli as engineers began to construct dams before opening formal negotiations with tribal leaders.

Consequently, the tribes realised that resistance was futile and resigned themselves to making the most of whatever menial compensation was offered.

The International Court of Justice has also analogised Israel’s actions of constructing walls within settlements as creating a “'fait accompli' on the ground that could well become permanent.”

Market as true arbiter?

The idea that “market price” becomes a flagbearer for a standard of restitution is inherently flawed, as these kinds of lands are seldom assessed, exchanged or valued, therefore there is no real “market price.”

Records are often hampered, as records of sales and purchases of lands and registers of title are not kept accurate or up to date.

Furthermore, the assessment of the settlement can be a process that is adjudicated by those with vested interests anyway, doing little to ensure equity.

State housing development bodies, such as the MDA, have been grossly negligent in their obligation to plan, develop and execute housing schemes in their controlled area. Perhaps a vacuum spanning decades was going to be filled in this manner.

Private developers and business tycoons are here to stay. They are able to act quietly and quickly, as opposed to legislative bodies, which are often slow, unimaginative and corrupt.

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New laws and regulations that take into account fact-patterns such as the Project need to be drafted and enacted, in line with existing realities, to prevent such scenarios from happening again.

In India, the Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation And Resettlement Act, 2013 provides for a number of social development measures in the event of land being acquired by private entities for infrastructure projects such as housing and development.

The state adopts an administrative role in overseeing the just transfers of land (e.g., 80pc consent of affected persons prior to acquisition, compensation for loss of property and livelihood by the private company).

Similar measures need to be taken in Pakistan, not only to ensure that this form of exploitation is halted, but to also streamline the private sector within the legal framework, instead of outside it.

Equity, social welfare and commercial development can coexist — but for that, the legislature needs to wake up.

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