IHC backs lease cancellation of One Constitution Avenue project

The Islamabad High Court (IHC) has upheld the cancellation of the lease of the One Constitution Avenue project, ruling that the developer failed to comply with financial conditions set by the Supreme Court.

In a detailed judgment issued on Monday, IHC Chief Justice Sardar Muhammad Sarfraz Dogar dismissed petitions filed by M/s BNP (Pvt) Limited, investors, and other stakeholders against the Capital Development Authority’s (CDA) decision to terminate the lease.

The court said the developer defaulted on obligations requiring payments of Rs17.5 billion over eight years through structured instalments backed by bank guarantees, as mandated by the Supreme Court in its January 2019 order restoring the lease after its initial termination in 2016.

According to the ruling, BNP failed to make timely instalment payments and did not provide bank guarantees in a form acceptable to the CDA, establishing a pattern of non-compliance that constituted material default.

The IHC held that the Supreme Court’s framework was binding and required strict adherence, adding that administrative delays cited by the developer did not justify prolonged non-performance.

It said the doctrine of reciprocal obligations could not be invoked where the defaulting party had not taken concrete steps to meet its commitments.

On due process, the court found that the CDA had issued the required notices and provided sufficient opportunity to remedy the default, concluding that the lease termination was lawful and not arbitrary.

The dispute originates from a 2005 lease agreement for a five-star hotel project, later converted into a high-end residential and commercial development known as One Constitution Avenue in a prime area of the federal capital.

Addressing claims by apartment buyers, the court ruled that their rights were contingent on the validity of the developer’s lease. With the lease lawfully terminated, no independent ownership rights could accrue, though investors may pursue legal remedies against the developer to recover their funds.

The court also rejected allegations of mala fide intent, stating that the CDA acted within its statutory powers and in line with the Supreme Court’s directives.

It added that the case involved public land and therefore carried broader public law implications, requiring decisions to be assessed on legality and compliance with judicial orders.

Separately, reports last week indicated that residents were served eviction notices, with videos on social media showing a heavy police presence at the site and claims of forced entry into apartments.

Apartments in the project are reportedly owned by prominent individuals, including former prime minister Imran Khan, Chaudhry Aitzaz Ahsan, Shandana Gulzar Aurangzeb, former minister Burjees Tahir, and former caretaker prime minister Nasirul Mulk.

Last week, the IHC had also upheld the CDA’s action over the developer’s failure to clear multi-billion-rupee dues. On the same day, Prime Minister Shehbaz Sharif formed a high-level committee to review the matter and directed authorities to halt further action.