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Petitioner: BNP PVT. LTD. and others VS Respondent: CAPITAL DEVELOPMENT AUTHORITY
Court Name: Islamabad High Court Judge(s): Athar Minallah Title: BNP PVT. LTD. and others vs CAPITAL DEVELOPMENT AUTHORITY Case No.: Writ Petition No,3043 of 2016 Date of Judgment:2017-03-03 Reported As: PLD 2017 Islamabad 81, PLJ 2017 Islamabad 249 Result: Petition dismissed
JUDGMENT
JUDGMENT ATHAR MINALLAH, J.---Through this consolidated judgment, I shall decide and dispose of the instant writ petition along with the petitions listed in "Annexure-A", attached hereto, as common questions of law and facts are involved. 2. The petitioners in all the petitions have invoked the jurisdiction of this Court under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 (hereinafter referred to as the "Constitution"), assailing the decision of the Board of the Capital Development Authority (hereinafter referred to as the "Authority') taken in its 13th Board Meeting, whereby the plot allotted on the basis of lease to M/S BNP (Pvt) Limited (hereinafter referred to as the "Petitioner/Company') has been cancelled. The instant petition has been filed by the latter, while the petitions listed in Annexure-A, attached hereto, by petitioners who have paid sale consideration for the purchase of respective apartments (hereinafter referred to as the "Purchasers') in the building which is under construction at the site. Collectively they shall be referred to as the "Petitioners". 3. The controversy raised through these petitions stems from the cancellation of the plot measuring 13.5 Acres (65098 square yards), situated at the end of the Constitution Avenue, adjacent to the Convention Centre, Islamabad (hereinafter referred to as the "Plot"). In order to understand the controversy in its correct perspective, it would be pertinent to briefly refer to the facts involved, particularly the background of the creation of the Plot and its status. The facts in chronological order are as follows:- "The Plot is situated in one of the most prime areas of the Capital of the Islamic Republic of Pakistan. The Master Plan of Islamabad did not provide for the construction of a building on the site where the Plot is situated, nor had the sanctioned scheme prepared under the Capital
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Development Authority Ordinance, 1960 (hereinafter referred to as the "Ordinance of 1960') proposed this site for raising a building. The initial proposal was conceived for the first time in the context of the 50th Anniversary of the Independence of Pakistan." 08.01.1996. The Cabinet, in its meeting, gave approval for the construction of a monument and a Convention Centre, which was to be completed by January, 1997. Approval was also accorded to modify the Master Plan of Islamabad to permit the right of way of Shahra-e-Kashmir to be restricted for the construction of the monument and the Convention Centre. The Convention Centre was inaugurated in 1997. 03.04.1997 The Cabinet decided to privatize the Convention Centre and in this regard directed the Authority to advertise it for sale as a package site for a 'Five Star Hotel'. Moreover, the Authority was directed to cancel the allotment of plots for hotels on which the allottees had failed to construct a building within the prescribed time. It is evident from the record that neither a formal proposal was prepared and placed before the Cabinet nor the Master Plan and the sanctioned Scheme prepared under the Ordinance of 1960 was modified or amended in the prescribed manner. 06.05.1997. Pursuant to the decision of the Cabinet taken on.08 01.1996, the Master Plan for the specified area was partially modified by making a provision for the construction of the Convention Centre. This area was earmarked in the original Master Plan for the Kashmir Highway and the Murree Road. 02.07.1997. A proposal was placed before the Cabinet for the modification of the Master Plan of Islamabad by including the construction of a 'Five Star Hotel', Shopping Mall etc along with the Convention Centre. The Federal Cabinet, however, did not give its approval and, rather, reiterated its earlier decision of 30.04.1997. May, 1998. The Cabinet Committee on Privatization constituted a Committee to negotiate with M/S Daewoo Corporation in connection with the privatization of the Convention Centre. 31.05.1999. Pursuant to the negotiations with M/S Daewoo Corporation, the Board of the Authority, in its meeting held on 10.11.1997, approved Bye-laws for the construction of a 'Five Star Hotel' having 20 storeys. The terms in this regard had been approved by the Committee of the Privatization Board on 26.02.1999. The matter was referred to the Cabinet for approval. 23.06.1999. The Authority raised objections regarding the proposed increase in the height of the building for construction of a hotel on the Plot from 65 feet to 180 feet i,e, 20 storeys. It was objected on the ground that the zoning of the area did not permit the same. The Negotiating Committee of the Privatization Commission agreed with the Authority. Earlier the Cabinet in its meeting held on 11.12.1995, had taken a decision that the maximum height of a building in Islamabad would be 150 feet. 18.02.2004. The Chairman and other senior officials of the Board of the Authority gave a presentation to the Secretary, Ministry of Interior. It was, inter alia, proposed to invite bids for the construction of a 'Six Star Hotel' adjacent to the Convention Centre. It was decided that a summary in this regard be initiated for consideration of the Prime Minister. 27.02.2004. The Authority held a meeting with the Minister for Interior and the minutes unambiguously refers to a proposal for the construction of a 'Six Star Hotel' on the Plot.
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14.04.2004. The Authority proposed to the Ministry of Interior that approval of the Prime Minister be sought for disposal through auction of the Plot for the construction of a 'Five Star Hotel-cum-Conference Centre' without 'Shopping Mall'. This proposal was pursuant to a summary initiated by the Ministry of Foreign Affairs dated 27.01.2004, wherein, construction of a 'Hotel-cum-Conference Centre Facility' was proposed for hosting the 'Extra-Ordinary Summit Conference of the Organization of Islamic Countries' (hereinafter referred to as the "OIC") 12.04.2004. The Ministry of Interior gave its approval to the Authority for advertising the Plot for construction of a 'Five Star Hotel'. 13.04.2004. The Authority published an advertisement in leading daily newspapers, inviting requests for pre- qualifications from interested parties for the construction of a 'Five Star Hotel'. A copy of the advertisement is attached with W.P. No, 3043 of 2016 at page-37. The advertisement unambiguously described that the Plot was offered for the construction of a 'Five Star Hotel'. 22.05.2004. The date for submissions of R.F.Q's was extended to 05.06.2004 through an advertisement published in various daily newspapers. A copy of the advertisement is attached at page 38 of W.P. No,3043 of 2016, explicitly mentioning that 'Plot offered in Islamabad for 5 Star Hotel'. Pursuant to the said advertisement, nine entities pre-qualified to participate in the bidding process. The published By-laws clearly describe the Plot for the construction of a 'Five Star Hotel cum Convention Centre' (copy at page-42 of W.P. No, 3043 of 2016). The maximum number of rooms mentioned in the By- laws was 500 rooms including 20 V.V.I.P. Suites. 09.07.2004. The Authority held a pre-bid meeting with the pre-qualified parties. It is noted that the Petitioner/Company had not participated in the bidding process. 30.07.2004. The Chairman of the Authority was informed that only two entities, namely M/S Pakistan Services Limited and M/S Hashwani Hotel Limited, could qualify and that it was not conducive to proceed with the bidding process. 31.07.2004. The Chairman of the Authority decided not to proceed further with the bidding process. The participants of the bidding process were informed that due to administrative reasons bids were cancelled. 28.09.2004. An advertisement was published in daily newspapers inviting fresh applications from interested parties for pre-qualification (Copy of the advertisement is attached with W.P. No 3043 of 2016 at page 48). The advertisement unequivocally mentioned that the applications were being invited from parties interested to construct and operate a 'Five Star Hotel' at the Plot. 22.10.2004. The date for submission of bids was extended and the last date fixed was 02.12.2004. The said advertisement, besides referring to the construction of a 'Five Star Hotel', also referred to a separate advertisement which had been published on 07.10.2004 in respect of a 'Shopping Mall'. The bidders were provided with bidding documents (Copy placed at pages 50 to 56 of W.P. No, 3043 of 2016). The documents titled 'Invitation to submit Qualifications' expressly described the scope i,e, construction of a 'Five Star Luxury Hotel' near the Convention Centre with a target opening date in the fall of 2008. The terms and conditions relating to payment were also mentioned therein. It is evident from the record that separate bids were submitted for a "5 Star Hotel" and "Shopping Mall'.
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Reference in this regard may be made to the copy of a letter of the Authority dated 7-12-2004, attached as Annexure K, at page 70 of Volume III of C.M.A. No, 4934/2016 filed in W.P. No, 3043 of 2016. It is noted that the Federal Cabinet had turned down the proposal for the construction of a "Shopping Mall", nor had the Master Plan or the sanctioned Scheme been amended in the prescribed manner for this purpose. Bidders were pre-qualified by the Authority. The Petitioner/ Company as a juridical person had not offered a bid. However, four distinct juridical persons had collectively submitted a bid under the name of 'BNP Group' and was pre-qualified. The four juridical persons who had offered the bid as a group were as follows: (I) Bismillah Textile Pvt. Ltd. (II) Niagara Mills Pvt. Ltd. (III) Paragons City Pvt. Ltd, (IV) Belhasa International Company LLC. The above bidders' shall hereinafter be referred to as the "Consortium", The juridical persons of the Consortium had executed a 'Memorandum of Understanding' dated 01.12.2004. 16.02.2005. One of the pre-qualified bidders, namely M/S Hashwani Hotels Limited, sought certain clarifications from the Authority, inter alia in relation to the size of rooms / apartments. 25.02.2005. The Authority, in response to the queries raised by M/S Hashwani Hotels Limited, sent letters to all the bidders, including the BNP Group, wherein it was unequivocally clarified that the 'Serviced Apartments' shall form an integral part of the hotel property, to be operated by the hotel management, but they shall not be for sale. Moreover, regarding the shops it was also unambiguously stated that they would also not be for sale. 07-02-2005 A letter was issued by the Direct Staff to the Chairman of the Authority along with the copy of a document titled 'Conditions and Bylaws' (Copy placed at pages 62 and 63 of W.P. No,3043 of 2016). It was clearly mentioned that the Plot was for the purposes of construction of a 'Five Star Hotel' along with 'serviced apartments' and related facilities. 01.03.2005 One of the bidders requested for extension of time in submitting the bid. 05.03.2005. One of the bidders filed W.P. No, 586 of 2005 before the Lahore High Court, Rawalpindi Bench, Rawalpindi. 27.04.2005. W.P. No, 586 of 2005 was dismissed. 25.05.2005. Intra Court Appeal No, 64 of 2005 was filed assailing the order dated 27.04.2005, but the said appeal was later dismissed for non-prosecution. 15.06.2005. A proposed lease deed was placed before the Chairman of the Authority for his consideration and it was approved on the same date, as is evident from the copy of official internal nothings placed at page-86, Volume-II of C.M. No, 4934 of 2016 filed in W.P. No, 3043 of 2016. 16.06.2005 A bid dated 09-03-2005 by the Consortium for Rs,75,000/- per square yards was accepted by the Authority and declared as the successful bidder. The total consideration required to be paid in 15 years installments was Rs,4,888.235 million. The acceptance of the bid, inter alia, was subject to
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furnishing of an irrevocable bank guarantee, and a performance guarantee. The Consortium was required to pay 15% of the bid amount within 45 days. 28.07.2005. A lease deed was executed by the Petitioner/Company and the Authority. It is noted that the Petitioner/Company was not one of the partners of the Consortium. It is asserted that the name of another juridical person i,e, Elite Home Fashions (Pvt). Ltd, which was part of the Consortium, had changed its name to the Petitioner / Company on 02.05.2005. The Petitioner/Company asserts that it was incorporated pursuant to the 'Memorandum of Understanding' executed by the Ply juridical persons who were partners in the Consortium. However, there is nothing on the record of the Authority to indicate how and under what authority a distinct juridical person, which was not part of the Consortium nor had participated in the bidding process, had executed the lease deed. The recitals, of the lease deed unambiguously mentioned that it was executed pursuant 'to the advertisements published in the newspaper inviting bids the construction and operation of a "Five Star Hotel' on the Plot. Clause 2.6 of the lease deed provides that the Petitioner/Company, without prior notice or permission from the Authority, had full and unrestricted right and power to transfer, assign, mortgage, or sub-lease its rights to any third party. The other terms and conditions, inter alia, included revocation due to default in payment or use of the property for illegal activities. 08.10.2005. An earthquake jolted Pakistan and a multi storey building in Islamabad collapsed. 05.05.2006. The Petitioner/Company requested for rescheduling of the installments. 22.02.2007. The Chairman of the Authority sent a summary for approval of the Economic Coordination Committee in relation to the request for rescheduling of payments. 26.02.2007. The Economic Coordination Committee considered the summary and opined that the Board of the Authority was competent to take a decision regarding the rescheduling of payments. However, by no stretch of the imagination could this decision be construed as giving approval of rescheduling. 07.04.2007. The Architect of the Petitioner/Company submitted plans/drawings. 28-05-2007. The Authority explicitly informed the Architects of the Petitioner/Company that luxury apartments were not allowed and that only 'serviced apartments' were permissible within the approved parameters. 16.08.2007. The Board of the Authority approved the rescheduling of payment. 04-10-2007 An amended lease deed was executed having the effect of modifying the payment clause of the earlier executed lease deed, dated 28.07.2005. 20.11.2006. The Petitioner/Company submitted its plans and designs for approval. 29.03.2008. Building plans of the Petitioner/Company were approved. It is important to note that the building plans included 'Hotel Tower Apartments' and 'Service Apartments'. The total number of apartments approved was 200. The approval was valid for a period of five years. 23.04.2008. The Petitioner/Company requested the Authority to issue a 'No Objection Certificate' in respect of the banks and prospective third parties for assigning and sub-leasing parts of the project pursuant
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to clause 2.6 of the lease deed. The Authority declined the request on the ground that no portion could be sub-leased to third parties. 26.08.2008. The Petitioner/Company sent a letter to the Authority and the contents explicitly show that the sale of 'service apartments' was denied. It was unambiguously mentioned in the letter that there was a false impression in the market created by certain people that they are constructing and selling "residential apartments". Moreover, it was clarified that only 'serviced apartments' were being constructed as per the approved drawings. An assurance was also given to abide by the terms and conditions of the lease deed. 10.11.2008. The Civil Aviation Authority raised an objection and informed the Petitioner / Company that the latter could not construct more than a 33.40 feet tall building. The approved building plans of the Petitioner / Company allowed construction up to 725 feet in height. 12.01.2009. The Ministry of Defence confirmed the stance of the Civil Aviation Authority and an objection to this effect was also raised by the Pakistan Air Force. 02.10.2010. The Petitioner/Company filed a suit i,e, C.S. No, 1194 of 2010, before the learned Senior Civil Judge. 08-12-2011 It appears that for the first time the Authority realized that the Petitioner/Company was not part of the Consortium which had participated in the bidding process and thus a clarification was sought in this regard. The same was reiterated vide letters dated 16.05.2012, 21.05.12 and 13.06.2012. There is nothing on record to show that the Petitioner/Company had given a plausible explanation. It appears that the Authority also did not pursue the matter. 07.12.2012. A settlement was reached between the Authority and the Petitioner/Company and pursuant thereto the Board of the Authority approved new terms whereby the payment clause was amended yet again. The suit filed by the Petitioner/Company was withdrawn. 07.01.2013. The second amended lease deed was executed, having the effect of extending the payment of instalments till 2026. The height of the proposed building was reduced from 45 storeys to 23 storeys. 05.04.2013. The Commission, appointed pursuant to an order passed by a learned Single Judge of this Court in W.P. No, 3515 of 2011, submitted its report wherein it was observed that rescheduling in the case of the Petitioner/Company had prolonged the period of payment by eight years. 2014 Audit para No, 2.4.8 was made part of the Audit Report for 2011-2012, prepared by the Auditor General of Pakistan. It was alleged that the Authority had illegally altered the terms of the lease deed since the terms of a contract once entered into could not have been varied, as mandated under Rule 19(iv) of the General Financial Rules of the Federal Government. 14.05.2014. The Departmental Accounts Committee considered the audit para but the same was not settled. 29.05.2014. The audit para was placed for discussion before the Public Accounts Committee of the National Assembly of Pakistan. 29.05.2014. The Public Accounts Committee issued directives in relation to the audit para.
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28.08.2014 The Petitioner/Company filed W.P. No, 3755 of 2014, challenging the proceedings before the Public Accounts Committee. 29-01-2015. Writ Petition No,303 of 2015 was filed but the same was dismissed as withdrawn on 09-07-2015. 13-08-2015 The National Accountability Bureau addressed a letter to the State Bank of Pakistan and a separate inquiry was initiated by the Federal Investigation Agency. 03.03.2016. Writ Petition No, 3755 of 2014 was decided by this Court and vide para-19 thereof directions were given, inter alia, to the Authority for convening a meeting of the Board and affording an opportunity of hearing to the Petitioner/Company. 08.03.2016. The Board of the Authority held its meeting and constituted a Committee to afford an opportunity of hearing to the Petitioner / Company and, thereafter, submit a report. 22.03.2016. The Authority filed an Intra Court Appeal No, 229 of 2016, assailing the order dated 03.03.2016. The Intra Court Appeal is pending. 01.07.2016. The Committee constituted by the Board of the Authority submitted its report to the latter. 01-07-2016 The Board of the Authority held its meeting and pursuant to Agenda Item No,11.6 considered the report submitted by the Committee. 02.07.2017. The Petitioner/Company filed W.P. No, 2734 of 2016. The Court was informed that pursuant to order, dated 03.03.2016, passed in W.P. No, 3755 of 2014, the Board of the Authority had convened a meeting on 29.07.2016 in order to afford an opportunity of hearing to the Petitioner/Company. 29.07.2016. The Petitioner/Company, through its authorized representative, appeared before the Board and explained its position. 29.07.2016. The Board, in its meeting, decided to cancel the lease deed of the Petitioner/Company for violating the by-laws and the Regulations. 03.08.2016. A formal letter was issued to the Petitioner/Company informing the latter of the decision taken by the Board in its meeting held on 29.06.2016. 4. A plain reading of the above facts show that the Cabinet had not given its approval at any stage for amending the Master Plan and the sanctioned Scheme made and prepared under the Ordinance of 1960 for the creation of a plot for a hotel, let alone a plot meant for the construction of 'residential apartments'. At no stage was any approval given by the Board for the creation of a plot at the site for construction of a multi storey building meant for residential apartments. The distinction between a plot created for the construction of a '5 Star Hotel' and a 'multi storey building meant for residential apartments' is critical for adjudication of the instant petitions, as will be discussed later. The record clearly shows that all the advertisements published in the newspapers, inviting response from interested parties, had explicitly described the Plot as being offered for the construction of a '5 Star Hotel'. Not a word in the published advertisements can be construed as even remotely suggesting that the Plot was being offered for any other activity or business, let alone the construction of residential apartments for sale. The Petitioner/Company, since executing
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the lease deed has paid an amount of Rs,1227.253 million to the Authority and Rs,3654.998 million is outstanding. The advertisements had prescribed a period of 15 years for payment of the total consideration. 5. During the proceedings before this Court, it was inquired from the learned counsel for the Petitioner/Company regarding the number of apartments which have been sold to members of the general public. The latter submitted the details, according to which 240 apartments have been sold for an amount of Rs,7,191.101 million, out of which Rs,5398.050 million has been, admittedly, received by the Petitioner/Company. Document showing details of the Purchasers submitted by the Petitioner/ Company lias been made an integral part of this judgment and attached hereto as Annexure-B. The possession of the Plot after cancellation has been taken over by the Authority. 6. The cancellation of the Plot has led to the filing of the present petitions by invoking the jurisdiction of this Court under Article 199 of the Constitution, challenging the cancellation of the lease deed. 7. Mr. Aitzaz Ahsan, senior ASC appearing on behalf of the Petitioner/Company has contended that; the latter was part of the Consortium in the name of 'Elite Home Fashions (Pvt) Ltd'; the Petitioner/Company was incorporated pursuant to the 'Memorandum of Understanding' between the partners; the partners had tendered the bid; the lease deed was witnessed by the partners; the partners of the Consortium did not raise any objection nor the Authority objected to the execution of the lease deed by the Petitioner/Company; the Authority is estopped from questioning the change of the name of the Petitioner/ Company; it is an established practice in such large projects that the successful bidder executes the lease deed in a name different than the partners; the same was also the case relating to auction of the plot where Centaurs has been constructed; it is misconceived that the construction of 'residential apartments' was not allowed and only 'service apartments' managed by the hotel administration was part of the prescribed terms; the apartments constructed by the Petitioner/Company are 'service apartments' since facilities such as cooling, heating, cleaning, maintenance, etc are provided by the Petitioner/Company; all 'residential apartments' in Islamabad provide services and are thus 'service apartments'; the learned counsel has placed on record copies of international and national practice of the industry and copies of emails and brochures in support of the description of 'service apartments' ; the Authority is misinterpreting the expression 'service apartments'; the lease deed has express reference to apartments and the expression 'service apartments' and 'apartments' have been used interchangeable i,e, 3rd and 4th recital, clause 3.3; the Petitioner/Company, had informed the Authority that it was constructing 'service apartments'; it was informed that the character of the building was not being changed; another hotel namely 'Serena Hotel' includes a commercial office building; the contention of the Authority that apartments could not have been sold or…
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