Islamabad High Court upholds cancellation of One Constitution Avenue lease

In a significant ruling, the Islamabad High Court (IHC) has affirmed the Capital Development Authority's (CDA) decision to revoke the lease of the prestigious One Constitution Avenue skyscraper. This landmark judgment, announced by IHC Chief Justice Sardar Mohammad Sarfraz Dogar, dismisses the appeals lodged by M/s BNP (Private) Limited and the building's occupants, bringing a close to a long-standing dispute over multi-billion rupee defaults.

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The Islamabad High Court (IHC) on Thursday upheld the Capital Development Authority (CDA) decision, canceling lease of iconic skyscraper One Constitution Avenue owing to the multi-billion rupees default.

The case, which has been under scrutiny for nearly two decades since the project was awarded to BNP Group, centers on the failure to adhere to the original terms. The CDA contended that BNP Group neglected its financial commitments, despite the passage of 21 years. The auction terms stipulated full payment of the land cost, yet only a fraction of the Rs 17.5 billion liability was paid. The authority's argument was bolstered by Supreme Court orders, including a conditional order from January 9, 2019, which indicated that BNP had failed to comply with the stipulated conditions.

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The court in February this year had reserved its verdict in the high-profile case concerning the cancellation of the lease of Grand Hyatt building located in the Red Zone near Constitution Avenue.

Further complicating BNP's position was its own admission in a letter dated July 25, 2022, acknowledging an inability to continue the project or meet payment obligations due to adverse economic conditions and Pakistan's negative country ratings. The company explicitly stated that completing the project and paying the December 2022 installment had become 'impossible.' This admission, the CDA argued, estopped BNP from challenging the lease cancellation. The skyscraper, intended as a five-star hotel, was controversially converted into residential apartments and commercial spaces, reportedly owned by prominent figures, adding another layer of public interest to the legal battle.

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The CDA contended that despite the lapse of 21 years, BNP failed to fulfil its financial obligations. It said under the auction terms, ownership rights were contingent upon 100 per cent payment of the land cost. Out of the assessed Rs17.5 billion liability, only Rs2.9 billion, around 16.6 per cent, have been paid.