One Constitution Avenue: IHC asks investors to approach relevant forums

• IHC rules company failed to comply with SC conditions.
• Company defaulted on Rs2.91 billion instalment: IHC.
• Company did not avail "opportunity" by top court: IHC.

The Islamabad High Court (IHC) on Monday issued its written verdict in the One Constitution Avenue case, asking investors to seek relief from relevant forums.

In a detailed judgment of the hearing conducted on April 30, the IHC upheld the cancellation of the lease of the multi-storey building by the Capital Development Authority (CDA).

In the judgment, IHC Chief Justice Sardar Muhammad Sarfraz Dogar dismissed a set of petitions filed by the developer and disposed of petitions filed by the investors.

The court ruled that the developer failed to comply with financial conditions set by the Supreme Court, particularly the non-payment of the 2022 instalment.

It declared the CDA's March 8, 2023 lease cancellation order lawful, noting that the developer did not avail the "lifeline opportunity" granted by the apex court in 2019.

It highlighted that although the company deposited the 2021 instalment, it defaulted on Rs2.91 billion due for 2022.

The court also disposed of the petition filed by investors, observing that sub-lessees claiming to be bona fide purchasers could not be granted relief under Article 199, as such claims require evidence.

"They have to sink or sail with the petitioner," the judgment stated, adding that investors may approach a court of competent jurisdiction.

"The sub-lessees also have the remedy against the petitioner/BNP which they may agitate before court of competent jurisdiction," the IHC said.

The court, however, expected that the CDA and the third parties will make "earnest efforts" to arrive at a mutually agreeable arrangement.

The court also rejected the developer's objection regarding the 30-day notice period, terming it legally incorrect and weak in equitable principles. The petitioner had argued that February’s shorter duration meant the notice period was incomplete, a stance the court dismissed.

The court also found a Rs500 million cheque submitted by the private company insufficient and dismissed its execution petition.

The IHC said that the Supreme Court, in its 2019 order, had restored the lease subject to payment of Rs17.5 billion over eight years.

Following repeated reminders, the CDA issued a notice on February 7, 2023, before cancelling the lease a month later, it added.

The issue stems from a long-standing dispute over the project. In 2005, the CDA allotted 13.5 acres of land to a private developer for construction of a five-star hotel, according to The News.

The company secured the lease for Rs4.8 billion and was granted possession after making an initial 15% payment. However, it subsequently defaulted on payments, leading to prolonged rescheduling and litigation.

In 2019, the Supreme Court of Pakistan ordered the developer to pay Rs17.5 billion to restore the lease. The company has so far paid only Rs2.9 billion and remains in default of approximately Rs14.5 billion, resulting in cancellation of the lease in 2023.