LAHORE: The Lahore High Court has ruled that a public authority cannot unilaterally cancel property rights decades after allowing owners to remain in possession and construct buildings on the land.
Justice Anwaar Hussain passed a judgment, dismissing a revision petition filed by the Lahore Development Authority (LDA) against concurrent findings of two lower courts in favour of the legal heirs of two real brothers -- Abdul Hameed Chaudhry and Abdul Majeed Chaudhry.
The predecessors of the respondents (the Chaudhry brothers) had purchased the property through a registered sale deed in 1958. The land was later acquired by the then Lahore Improvement Trust (LIT), predecessor of the LDA, for the New Muslim Town Scheme.
The LIT offered them an exemption plot under an agreement executed on April 13, 1964. Under the agreement, the owners were required to pay development charges and price for excess land amounting to Rs57,495 in installments.
The LDA maintained that only the first installment was paid and, despite notices and reminders, the remaining amount was not cleared.
It argued that the agreement was rescinded and the exemption plot cancelled through a letter issued in April 1965.
However, the respondents asserted that the cancellation came to their knowledge only decades later during efforts to subdivide the property, after which they challenged the action.
The trial court had decreed the suit in favour of the respondents in 2016, holding that the agreement itself contained a clause imposing six percent annual interest on delayed payments, therefore, cancellation of the plot was unjustified.
An appellate court also upheld the decree in 2017 and the LDA moved the high court.
Advocates Ahmad Qayyum and Syed Ishtiaq Hussain represented the legal heirs of the Chaudhry brothers, while Barrister Hamza Shehram Sarwar argued on behalf of the LDA.
In his detailed judgment, Justice Hussain observed that Clause 4 of the agreement specifically dealt with delayed payment by prescribing a compensatory mechanism in the form of six percent annual interest, whereas Clause 10, relied upon by the LDA for cancellation, was a general provision dealing with breach of conditions.
The judge said that under settled principles of contractual interpretation, a specific clause overrides a general clause.
“A construction that allows forfeiture, despite a stipulated compensatory mechanism, would render the interest/surcharge clause otiose,” the judge said.
The judge further held that cancellation of a contract under Section 39 of the Contract Act, 1872, did not operate automatically and required lawful exercise and adjudication through a court of law.
Justice Hussain observed that if the LIT intended to rescind the agreement, it was required to seek a declaration from a court and determine restitution and adjustment of rights, rather than relying upon a unilateral cancellation letter.
The judge highlighted the conduct of the LIT, noting that despite the alleged default, it approved the owners’ building plan in 1964 and permitted construction on the plot.
The judge observed that the owners remained in uninterrupted possession of the property for decades with utility connections and all incidents of ownership, which demonstrated that the authority itself had not treated the agreement as void at the relevant time.
The judge asserted that a public authority is held to a higher standard of fairness and due process and could not deprive citizens of property without adjudication.
Apart from merits, the judge also found the LDA petition barred by limitation for being filed with a delay of 69 days without any application seeking condonation.
Published in Dawn, May 27th, 2026
