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Petitioner: Public Interest Law Association of Pakistan VS Respondent: Federation of Pakistan & 08 JUDGMENT
Court Name: Lahore High Court Judge(s): Abid Hussain Chattha Title:Public Interest Law Association of Pakistan vs Federation of Pakistan & 08
JUDGMENT
Reported As: 2023 LHC 3403, 2023 CLC 1535 Result: Order Accordingly Judgment JUDGMENT ABID HUSSAIN CHATTHA, J: This Judgment shall decide the titled and four (04) connected W. P. Nos. 20457, 27115, 28283 and 23256 of 2023 involving identical questions of law and facts. In essence, common challenge is posed to an arrangement between the Government of the Punjab (the "GOP") and the Pakistan Army, a branch of the Armed Forces of Pakistan that envisages the transfer of more than one million Acres of State land vested in the Province of the Punjab or its Departments to the Pakistan Army to venture into Corporate Agriculture Farming (the "CAF") on profit sharing basis. The plan after passing through legal processes during the period of caretaker government was accorded approval by the caretaker Cabinet of the Province of the Punjab (the "Caretaker Cabinet" or the "Caretaker Government" as the context may admit) on 09.02.2023 and formal notification No. 197-2023/0334-CS.II(IX) dated 20.02.2023 (the "Notification") was issued under Section 10 of the Colonization of Government Lands (Punjab) Act, 1912 (the "Colonization Act"). Pursuant thereto, a Joint Venture Management Agreement dated 08.03.2023 (the "JVA") was executed between the GOP and the Pakistan Army. The process of bestowing State land by the Caretaker Government to the Pakistan Army for CAF culminating into the Notification, the JVA and subsequent developments were assailed before this Court. I FACTS 2. The unfolded story revealed by the GOP suggests that in order to address the challenge of food insecurity, the GOP conceived the proposal to initiate CAF in the year 2021. The concept of CAF connotes large scale, systematic and organized farming to maximize production with improved quality. It is not limited to the management of farm and agriculture alone but also includes
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distribution, marketing, export, research and development, better utilization of water resources through innovative irrigation techniques, growth of livestock and preservation of biodiversity. The adverse and detrimental effects of climate change heightened the need to initiate CAF to bring maximum land under cultivation and optimize crop productivity through economy of scale and transfer of technology with the ultimate objective to ensure food security. 3. The Colonies Department of the Board of Revenue, Punjab (the "BOR") submitted a summary to the elected government headed by the then Chief Minister, Punjab on 25.06.2021 proposing Statement of Conditions (the "SOCs") for CAF. Subsequently, the summary was placed before the elected Cabinet of the Province of Punjab (the "Elected Cabinet" or "Elected Government" as the context may admit) in its 51st meeting held on 28.02.2022 under Agenda No. 19 titled as, "Terms & Conditions for Corporate Farming under CPEC". The term CPEC is an abbreviation of 'China Pakistan Economic Corridor' and refers to a long-term initiative between the Federation of Pakistan (the "FOP" or the Federal Government as the context may admit) and People's Republic of China involving multiple projects. The Senior Member, Board of Revenue, Punjab (the "SMBR") briefed the Elected Cabinet that the GOP had decided to promote CAF on accessible cultivable / fellow State wasteland. Accordingly, the matter was examined by the BOR and following SOCs were proposed:- (Emphasis supplied) (i) LEASE State land shall be granted on lease to the applicant / company. In case of more than two applicants / companies, land shall be given on lease through open auction. (ii) RENT The current market rent assessed by District Rent Assessment Committee approved by Provincial Price Assessm ent Committee shall be applicable. In case of more than two applicants / companies, the base rent for auction shall be assessed by District Rent Assessment Committee and approved by Provincial Price Assessment Committee. (iii) INCREASE IN RENT The rent shall be increase @ 10% after every year. In case of barren state land, increase shall be made subject to the recommendation of District Collector concerned and approved by the BOR. (iv) PERIOD The tenancy granted on these conditions shall be for a period of 20 years. (v) RENEWAL OF LEASE The lease may be renewed on the recommendations of District Collector concerned and approved by the BOR subject to satisfactory performance according to the terms and conditions. (vi) PURPOSE OF LEASE The land shall be used for the following purposes:- i. Import substitution ii. Food security iii. Standardization & maximization of seed productivity iv. Any other purpose relating to the Agricultural Sector as deemed appropriate by the GOP from time to time. (vii) SIZE OF TENANCY The ceiling of land shall be five hundred acres or above. (viii) EQUITY The companies will be allowed to invest 100% foreign, 100% local or mix equity with foreign or local sharing both. (ix) INCORPORATION IN PAKISTAN The companies shall be incorporated in Pakistan under Companies Ordinance, 1984 Or
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At least one Joint Venture (JV) shall be registered in Pakistan, Or Land shall also be transferred on G 2 G basis. (x) LOAN FACILITY The companies may avail loan facility from the scheduled banks for CAF. The leased State land shall not be pledged for the loan purposes. (xi) INCENTIVE The GOP will request the FOP for grant of relief / reduction on custom duty, sales tax for agricultural machinery and equipment. (xii) OBSERVANCE OF LAWS The lessees / companies shall abide by Federal and Provincial laws relating to land, agriculture, farming and labour, etc. (xiii) PAYMENT OF TAXES The lessees / companies shall be responsible for all local, provincial and federal taxes including the Agriculture Income Tax. (xiv) TRANSFER / ALIENATION OF LEASED LAND The lessee shall not be allowed to sub-lease, alienate or transfer the leased State land. (xv) SPECIAL PROVISOS i. No proprietary rights shall be granted to the lessee in respect of the leased land. ii. The lessee shall furnish an undertaking to the extent that terms and conditions shall be abided in letter and spirit. (xvi) CANCELLATION OF LEASE i. In case of mis-statement, concealment of facts and violation of terms and conditions, lease will be cancelled. ii. The District Collector concerned, after affording an opportunity of hearing and if he is satisfied, shall cancel the lease. iii. The land shall be resumed and superstructure (if any) shall be forfeited. iv. The loan shall be recovered from the lessee under the law. (xvii) DISPOSAL OF CANCELLED LAND After cancellation, the land shall be leased out afresh under these terms and conditions. The ex- lessee shall not be eligible for lease of land. (Emphasis supplied) 4. The Elected Cabinet was further apprised that the Chief Minister was pleased to approve the placement of proposed SOCs before the Standing Committee of Cabinet on Legislative Business (the "Standing Committee") who considered the same in its meeting held on 30.09.2021 and in principle approved the same under the CPEC. It was importantly recommended by the Standing Committee that the matter be placed before the Elected Cabinet for consideration after legal vetting of the draft terms and conditions by Law & Parliamentary Affairs Department and in addition, the same may also be placed before the Provincial Assembly for discussion subsequently. During the process of discussion, the SMBR clarified that the proposal included barren State land only which will be included in the schedule and the purpose of the proposal was to attract foreign investment with special focus on transfer of technology, enhancement in productivity and local employment. The proposal was not limited to CPEC only. The Elected Cabinet considered the proposal and in principle approved the SOCs subject to their placement before the Ministerial Committee consisting of the following members for finalization:- (Emphasis supplied) (i) Minister for Law & PA (ii) Minister for Agriculture
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(iii) Minister for Finance (iv) Minister for Livestock (v) SMBR (vi) Secretary, Agriculture Department (vii) Secretary, Law & PA Department (viii) Secretary, Finance Department (ix) Secretary, Livestock Department 4. Statedly, meeting of Ministerial Committee was held on 14.10.2022 but admittedly, no minutes of the meeting were recorded. To address the Court query, reliance was placed on file noting coupled with an attendance sheet dated 14.10.2022 to demonstrate that such a meeting had in fact taken place. However, it was claimed that SOCs were approved in the Ministerial Committee, whereafter, the draft of SOCs was forwarded to Secretaries of Agriculture, Livestock and Law Departments of the GOP for their input and further necessary action. Admittedly, only one Minister attended the meeting as per attendance sheet dated 14.10.2022. The image of the same is pasted as under:- 6. After dissolution of the Provincial Assembly of the Punjab, the Caretaker Cabinet was installed on 22.01.2023. On 08.02.2023, the Director General, Strategic Projects, Pakistan Army, General Headquarters, Adjutant General's Branch, Rawalpindi (the "DGSP") (represented in the titled and connected Petitions through the Ministry of Defence, Islamabad) directly wrote a letter to the SMBR claiming that the Pakistan Army has rich experience of developing waste barren land placed on military schedule and has developed a comprehensive land development strategy. Accordingly, an offer was made to take land for CAF and proposed a joint meeting with the concerned Departments to discuss its modalities. The text of the proposal contained in paragraph No. 3 of the said letter is as under:- "3. Agreed Operational Modalities can be mutually worked out with Punjab Government, as main stakeholder, in the best interest of the country. However, suggested timeline to Initiate the project is as under- a. Pilot Project - Immediately (10,000 - 15,000 Acre), the earmarked land should be in following categories:- (1) Irrigated by canal. (2) TW Irrigated. (3) Pond irrigated. b. Main Project-1 March 2023 (1 Lac Acre) c. Identification and Lease of 1 Million Acre in Cholistan Development Authority area of responsibility-April 2023." 7. The following day, in furtherance of claimed purported approval of SOCs by the Ministerial Committee, the matter was placed before the Caretaker Cabinet in its 4th meeting held on 09.02.2023 under Agenda No. 3. The SMBR apprised the Caretaker Cabinet that in the light of approval of Ministerial Committee and feedback of Agriculture, Livestock and Law Departments, SOCs were proposed for approval. Accordingly, the Caretaker Cabinet considered and approved the proposed SOCs mentioned at para 3.3 with the following amendments: "Under the heading of "lease through single source" (i) Para 5(1)(c): The provision of having one local company as a partner by the foreign companies were deleted. (ii) Para 5(2)(e): The Government share shall not be less than thirty-three (33%) percent." (Emphasis Supplied) 8. The BOR following the approval of the Caretaker Cabinet issued the Notification incorporating the SOCs approved by the Caretaker Cabinet. The SOCs approved by the Elected Cabinet and the
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Caretaker Cabinet shall hereinafter be referred to as (the "original SOCs" and the "new SOCs"), respectively. The Notification is reproduced in verbatim as under:- "GOVERNMENT OF THE PUNJAB COLONIES DEPARTMENT Dated 20th February 2023 NOTIFICATION
No.197-2023/0334-CS.II(IX).- In exercise of the powers conferred under section 10 of the Colonization of Government Lands (Punjab) Act, 1912 (V of 1912), Governor of the Punjab is pleased to issue the following Statement of the Conditions for lease of specified State land for corporate agriculture farming, with immediate effect: 1. Objectives.- The specified State land may be leased out for agriculture research and farming, import substitution, food security, standardization and maximization of seed productivity, livestock research, breeding and farming, and, for any other purpose relating to the agricultural or livestock sector as deemed appropriate by the Government from time to time. 2. Definitions.- For the purpose of this Statement of the Conditions, unless there is anything repugnant in the subject or context: (a) "Act" means the Colonization of Government Lands (Punjab) Act, 1912 (V of 1912); (b) "barren land" means the kind of land recorded in revenue record as barren and is not cultivable; (c) "Board of Revenue" means the Board of Revenue established under the Punjab Board of Revenue Act, 1957 (XI of 1957); (d) "Cabinet Committee" means a Cabinet Committee notified by the Government for the purpose; (e) "company" means a company as defined in the Companies Act, 2017 (XIX of 2017) and includes a foreign company; (f) "Government" means Government of the Punjab; (g) "lessee" means the person to whom the State land has been leased out under this Statement of the Conditions; (h) "State land" means any land owned by the Government either under the administrative control of the Collector or in use of any department of the Government; (i) "District Rent Assessm ent Committee" means a committee duly notified as such; (j) "Provincial Rent Assessm ent Committee" means a committee duly notified as such. 3. General.- (1) All leases under this Statement of the Conditions shall be subject to the provisions of the Act and to: (a) the Federal and Provincial laws relating to land, agriculture, farming, livestock, forest, labour and other relevant laws; and (b) such instructions as may be issued by the Government for carrying out the purposes of this Notification. (2) The Government may notify the Cabinet Committee for approval of size of the lot, schedule, base rent etc. and to take decision regarding export of yield, products and by-products. 4. Lease through open auction.- (1) The specified State land shall be leased out through an open auction for a minimum piece of State land as decided by the Cabinet Committee subject to this Statement of the Conditions for any individual or consortium or company. (2) Any individual or a company or consortium may participate under this Statement of the Conditions having at least five years' experience of agriculture farming. 5. Lease through single source.- (1) The Government may grant a lease of State land placed on the schedule on a single source basis, without any auction proceedings, to the following:
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(a) Departments of the Federal or Provincial Governments, their attached departments, semi- attached department, autonomous bodies, and institutions; (b) companies having sole ownership of the Federal or Provincial Governments; and (c) Foreign Governments, through their entities, provided their Embassies in Pakistan certify that such entity is solely owned by the Government concerned: Provided that the foreign company shall sell its produce in Pakistan and any export shall not be allowed without prior approval of the Cabinet Committee and fulfillment of codal formalities including necessary permission from departments concerned. (2) In the case of lease through single source, the Board of Revenue shall submit the case to the Government for approval with the following terms and conditions: (a) details of the State land; (b) a draft joint venture agreement with the concerned entity; (c) a draft proposal for the Board of Management for each joint venture with a minimum one-third representation from the Government; (d) net profit sharing mechanism and modalities; and (e) profit share of the Government shall not be less than thirty three percent in the proposed mechanism. 6. Schedule.- (1) The Collector may identify and recommend suitable piece of State land to the Board of Revenue which shall be placed in the schedule under this Statement of the Conditions after approval of the Cabinet Committee constituted for the purpose. (2) The Board of Revenue may also include or exclude any piece of State land, being used by any department, in the schedule of this Statement of the Conditions. 7. Assessm ent.- (1) The Collector shall seek the valuation report of rent of the proposed State land from three valuers approved by State Bank. The District Rent Assessment Committee shall assess the base rent of the land keeping in view the valuers' assessment and the other parameters and recommend the case to the Provincial Price Assessment Committee. (2) The Provincial Price Assessm ent Committee shall consider the proposal of the District Rent Assessm ent Committee and place its recommendations before the Cabinet Committee for approval. (3) The Cabinet Committee may consider the recommendation so received and grant the approval of the base rent. 8. Grant of Lease.- (1) The lease shall be made through open auction on rent which shall not be less than the base rent approved by the Cabinet Committee. (2) The Collector shall approve the bid and grant the lease within thirty days of the date of the auction. (3) A single bidder, if fulfilling the Statement of Conditions, may participate in the open auction and qualify on rent equal to or exceeding the base rent. In such case, the approval of the bid shall be granted by the Commissioner concerned within thirty days from the date of auction. 9. Period of lease.- (1) The State land shall be leased out for a period of twenty (20) years, extendable for another period of ten (10) years, subject to the satisfaction of the Collector regarding fulfillment of this Statement of the Conditions. (2) The lease shall be non-extendable or non-renewable on completion of thirty (30) years. 10. Purpose of lease.- The lessee shall utilize the leased State land for the sole and specific purpose for which the lease has been granted. 11. Rent.- (1) The rent for the first year shall be paid in advance within ninety (90) days of the approval of the lease. (2) The rent for the subsequent years shall be paid in advance before the 30th of June of each year by the lessee.
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(3) The rent shall be increased at the rate of ten (10) percent annually, applicable on the 1st of July of each year. (4) In case of barren land to the extent of this category of State land as certified by the Collector on the recommendation of District Rent Assessment Committee, no rent shall be charged for the initial three years. A valid bank guarantee, equivalent to three years of rent shall be furnished by the lessee which shall be released on the payment of rent for the fourth year. The guarantee shall be forfeited in case of failure to cultivate and develop the leased land in three years. 12. Equity.- (1) The company shall be allowed to invest hundred percent foreign or hundred percent local or mix equity with foreign and local sharing both. 13. Loan facility.- The company may avail of a loan facility from the scheduled banks for corporate agriculture farming; however, the leased State land shall not be pledged for loan purposes. 14. Payment of taxes.- The lessee shall be liable to pay all local, Provincial and Federal taxes including the agriculture income tax. 15. Special provisions.- (1) If the whole leased State land or any part of it is required for a research institute of Agriculture, Livestock or for public purpose, it shall be surrendered by the lessee to the Government i.e. Board of Revenue. The resumption order may be made after providing reasonable opportunity of being heard. (2) The lessee will be required to undertake agriculture and livestock research and give access to the functionaries of agriculture and livestock departments to observe the usage of technology, agricultural and livestock practices, and for research & development activities. (3) No proprietary rights shall be granted to the lessee in respect of the leased State land. (4) The lessee shall furnish an undertaking to the extent that terms and conditions shall be abided by in letter and spirit. 16. Incentive.- The Government may request the Federal Government for grant of relief or reduction on custom duty, sales tax for agriculture and livestock machinery and equipment. 17. Transfer or alienation of leased land.- The lessee shall not be allowed to sub-lease, alienate or transfer the leased State land. 18. Arbitration.- In case of any dispute between the lessee and the Collector / Commissioner / Government, the Member (Colonies) of the Board shall be the Arbitrator, whose decision shall be final. 19. Cancellation and resumption.- (1) In case of misstatement or concealment of facts or violation of any Statement of the Conditions, the Collector concerned shall be authorized to cancel the lease after giving the opportunity of being heard. (2) In case of cancellation of the lease, the State land shall be resumed and superstructure, if any, shall be forfeited in favour of the Government. (3) The arrears or loan, if any, shall be recovered from the lessee under the law for the time being in force. (4) In case of cancellation and resumption, no compensation shall be granted to the lessee. 20. Disposal of resumed land.- After cancellation and resumption, State land may be leased out afresh and the ex-lessee shall not be eligible for lease of such State land in future. 21. Compensation.- The lessee shall not, at the expiry of the lease deed, be entitled to any compensation, whatsoever, for un-cut and un-gathered crops, buildings, superstructures, installation and tube wells, etc. existing on the leased State land. MEMBER/SECRETARY GOVERNMENT OF THE PUNJAB COLONIES DEPARTMENT"
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(AHMAD RAZA SARWAR) SECRETARY Government of the Punjab Law and Parliamentary Affairs Department" (Emphasis Supplied) 9. In the meanwhile, after approval of the new SOCs by the Caretaker Cabinet and before the date of issuance of the impugned Notification, the Chief Secretary, Punjab pursuant to the request of the DGSP vide letter dated 08.02.2023 referred above held a meeting on 15.02.2023 for discussion on draft framework provided by the latter and survey teams were constituted. The draft framework was accordingly finalized and decisions were taken. 10. After issuance of the Notification, the matter was placed before the Caretaker Cabinet under Agenda No. 3 in its 7th meeting held on 25.02.2023. The Caretaker Cabinet was apprised that the Director Lands, Pakistan Army had requested for provision of one million Acre land to ensure food security. The Pakistan Army would prepare a tentative framework for obtaining State land under CAF. A formal request from DGSP had been received on 08.02.2023 with the proposal to convene a meeting with different heads of the Departments of the GOP. The framework forwarded by the Pakistan Army indicates that it has a fleet of well-trained manpower which relies on latest farming techniques, technology and tools to focus on greater yield, seed quality, water management and organic farming. CAF will be a partnership project between the Pakistan Army and the GOP incorporating all the concerned Departments. The State land was lying in various districts with illegal occupants or in utilized condition which would be handed over to the Pakistan Army by the GOP after a joint survey. All the initial funding would be provided by the Pakistan Army and profit sharing with the GOP will be done on agreed terms. Another meeting was held on 15.02.2023 under the Chairmanship of the Chief Secretary, Punjab which was attended by the SMBR and other Departmental heads including the representative of the Pakistan Army, wherein, certain decisions were taken pursuant to the Notification. It was apprised that the new SOCs approved by the Caretaker Cabinet provide for single source lease and in this respect, approval was sought to proposal contained in paragraphs No. 3.7, 3.8 and 3.9 of the summary reproduced below for ready reference which was readily granted by the Caretaker Cabinet:- (Emphasis supplied) "3.7 Furthermore, Pakistan Army had proposed 12,221- Acres of land, for Pilot Project in five districts namely Sahiwal, Khushab, Layyah, DG Khan and Muzaffargarh and 84,350-Acres for main project in remaining districts. Director General Land, Pak Army dated 20.02.2023 had forwarded its proposal which had been examined in the Colonies Department, Board of Revenue, Punjab in the light of the SOCs and submitted to the Chief Minister through a summary: Parameters of SOCsProposed Arrangements ADetails of the State LandPakistan Army authorities had identified: (i) 12,221 acres' land in 5 districts for pilot project. (ii) 84,350 acres' land in other 13 districts for main project. (iii) Additional state land will be identified in Cholistan through Joint Survey Teams.
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BA draft joint venture agreement with the concerned entityThe Pakistan Army…
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