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SC cancels lease of Lahore’s elite club, gives it to railways

Updated June 29, 2019

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ISLAMABAD: Federal Minister for Railways Sheikh Rashid Ahmed presents sweets to Prime Minister Imran Khan after the Supreme Court gave a verdict in favour of the Ministry of Railways in its legal battle with Royal Palm Country Club.—APP
ISLAMABAD: Federal Minister for Railways Sheikh Rashid Ahmed presents sweets to Prime Minister Imran Khan after the Supreme Court gave a verdict in favour of the Ministry of Railways in its legal battle with Royal Palm Country Club.—APP

LAHORE: The Supreme Court has declared the 2001 lease agreement of the Royal Palm Golf and Country Club as void ab initio (unlawful from very beginning), giving its possession back to the Pakistan Railways with directive to run the club through a team of its officers or independent professionals.

Through a detailed judgement announced at the Lahore registry of the apex court on Friday, a three-judge bench directed a chartered accountancy firm already looking after the affairs of the club as the court-receiver to transfer management of the club to the PR in seven days.

The bench comprising Justice Sheikh Azmat Saeed, Justice Faisal Arab and Justice Ijazul Ahsan had reserved the verdict in April.

Procedure was tainted with nepotism to award the project to a pre-determined party, apex court observes

The judgement authored by Justice Ahsan directed the Auditor General of Pakistan to conduct a detailed forensic audit of the club to determine the scope and extent of the work done under the agreement.

Ishaq Khan Kakwani, a former parliamentarian, was one of the main petitioners against the lease awarded in a controversial manner to the Mainland Hussain Pakistan Limited (MHPL)/Husnain Construction Company.

The petitioners contended that the land belonging to the railways was leased out in a highly non-transparent manner without following settled procedure in vogue in the country for such purpose.

Initially, the area which was to be given to the lessee was spread over 103 acres but, subsequently it was increased to 141 acres, the petitioners said. Similarly, the lease period of 33 years was also increased to 49 years.

According to the petitioners, the agreement was executed on July 26, 2001 between a consortium namely Maxcorp-Husnain (pvt) Ltd and the PR. However, Maxcorp later left the consortium through a shareholder buyout by the Husnain Construction Company in 2003 after building first nine holes of the golf course although subsequently it was given a subcontract by the later to build the remaining nine holds.

Thereafter the name of the Maxcorp Husnain (pvt) Ltd was changed to the Mainland Husnain Pakistan Limited (MHPL).

The Pakistan Railways during the stint of Khwaja Saad Rafiq as railways minister on May 26, 2016 terminated the lease agreement as the MHPL defaulted on timely payments, failed to send audited statements and construct a five-star hotel and carried out unauthorised construction. This led to a fresh round of litigation between the railways and the management of the club.

On the lease agreement’s legality, the SC judges ruled, “We are in no manner of doubt that the entire process was tainted with mala fide and nepotism and no feasible resolution of the disputes between the parties is possible in the foreseeable future.”

The ruling says the procedure adopted for the award of the agreement was tainted with mala fide and nepotism in order to award the project to a pre-determined party to the exclusion of others and was therefore devoid of transparency, fairness and openness.

It requires the federal minister for railways to float an international tender in accordance with the laws pertaining to public procurement for a fresh lease of the club.

“Such process including the final award of the new lease shall be completed within three months or such further time as may be allowed by this court. The ministry is required to submit weekly progress reports in this regard before an implementation bench,” the judgement says.

It rules that a National Accountability Bureau (NAB) reference against the lease will continue to be heard by an accountability court of Islamabad as per law. However, the bureau has been asked to submit monthly progress reports before the implementation bench comprising Justice Arab and Justice Ahsan.

NAB filed the reference in the accountability court in 2018 against several suspects, including Lt Gen (retd) Javed Ashraf Qazi who had served as secretary/chairman of railways and federal minister for railways during the rule of then military ruler retd Gen Pervez Musharraf.

Those nominated in the reference included former PR chairman Lt Gen (retd) Saeeduz Zaman and members of the PR board Maj Gen (retd) Hamid Hassan Butt; Brig (retd) Akhtar Ali Baig, Iqbal Samad Khan, Khurshid Ahmed Khan and Abdul Ghaffar, former divisional superintendent Ramzan Sheikh, and Pervaiz Qureshi and other sponsors of the club.

PR set to take over club

Following the apex court’s verdict, the PR administration is likely to take administrative and functional control of the club in three days.

“A team comprising senior legal and administrative officials held a meeting on Friday and discussed the court verdict directing the PR to nominate its officers or independent professionals to take over and run the club,” an official told Dawn. “Hopefully, the PR will nominate its officers by Saturday (today) and take over the club by Sunday (tomorrow) or Monday,” he added.

Meanwhile, the decision has pleased Railways Minister Sheikh Rashid and senior officials of the PR. “After taking over the club, we will float international tenders for short-listing an eligible firm to run the affairs of the club... It will help us in reducing financial deficit the PR has been facing since long,” the minister said in a press release. “The decision has helped us in getting rid of the land grabbers occupying the precious PR land worth billions,” he added.

The minister said the club housed a state of the art golf club, wedding halls, marquees and other facilities. “We will get this club run in a professional way,” he said.

Khalid Husnain also contributed to this report

Published in Dawn, June 29th, 2019