How one word changed the fate of Grand Hyatt Hotel case

Building advertised as ‘serviced’ apartments, not a ‘residential’: IHC verdict

ISLAMABAD : For many, it is beyond comprehension that a high-visibility under-construction project which was in full view of key institutions, including the Presidency and the Prime Minister Secretariat, could possibly be illegal; and that too because of omission of just one word in the lease dead.

Inadvertent or deliberate but the omission of the word ‘serviced’ from the lease dead of the One Constitution Avenue’s under-construction building that was meant for the Grand Hyatt Hotel in the heart of the capital has changed the purpose for which the plot was to be used.

The details emerged from the detailed judgment of the Islamabad High Court (IHC) that last week dismissed the Intra-Court Appeals (ICA) of the BNP (Private) Limited, incumbent Prime Minister Imran Khan and others against the judgment of March 3, 2017, declaring the 23-storey twin towers’ land lease illegal.



PM Khan and 27 other purchasers had approached the court against the decision of IHC’s single bench, comprising Justice Athar Minallah, who had upheld the Capital Development Authority’s (CDA) decision of terminating the contract of land lease and sealing of the building for violation of bylaws etc.

“The recitals in the lease deed make reference to the newspaper advertisement and bidding by the BNP Group; however, the word ‘serviced’ has been omitted there from, which could be inadvertent or deliberate [omission] on part of CDA officials,” IHC’s September 3, 2018 judgment read.

The judgment of the IHC’s division bench, comprising Justice Aamer Farooq and Justice Mohsin Akhtar Kayani, noted that all along in the advertisement as well as in the conditions for sale and bylaws, it was emphasised that a five-star hotel and ‘Serviced Apartments’ are to be constructed.

“The notable omission of the word ‘Serviced’ in the lease deed shows that appellant along with the CDA has flouted the purpose for which, the plot was to be used,” the bench noted. The judges observed that “the lease agreement could not deviate from the purpose, for which, the property was leased out”.

Therefore, they said, the construction and sale of ‘Residential Apartments’ is in clear violation of the Islamabad Land Disposal Regulation, 2005 as well as 1992 Zoning Regulation. It is trite law that any agreement, which is in violation of law, is not sustainable, the judgment read.



The instant judgment ruled that the third parties, which claim to have acquired interest on the basis of sub-leases executed by the appellant in their favour, sink or sail with the appellant.

The division bench has noted that it was advertised and existed in the documents that apartments were ‘Serviced Apartments’ and not ‘Residential Apartments’ and the CDA failed to warn the public when it came to its notice that apartments are being sold for residential purposes.

As regulator, the court stated, it was expected of the CDA to be more vigilant and avoid the situation which has been created due to their inaction, in the form of third party rights and erection of towers.

The court noted, the appellant has not paid the instalments and the building is not yet complete and apartments constructed have been sold out/subleased to strangers. Moreover, there is no document to show that the master plan was amended for constructing a five-star hotel with other amenities.

In the present case, it said, the BNP Pvt Ltd is a different entity from BNP Group and even to examine the assertion of the appellant that it is one and the same, if the veil of incorporation is lifted, it is seen that the appellant is a private affair of Abdul Hafeez Sheikh and his family primarily.

It added that it was only at the time of execution of lease deed that the BNP Pvt Ltd surfaced and the CDA did not raise any objection. Above all, one of the main grounds for cancellation of lease agreement is that the appellant [BNP Pvt Ltd] never participated in the process of bidding and was not prequalified.

However, the court concluded that impugned action of the CDA does not suffer from illegality, irrationality and procedural impropriety inasmuch under the law and the CDA is empowered to cancel the lease. Also, the court has held that the impugned judgment does not suffer from any error of law or factual infirmities calling for interference in appeal.