M/s Sangam Enterprises VS CDA

JUDGMENT SHEET

IN THE ISLAMABAD HIGH COURT, ISLAMABAD

JUDICIAL DEPARTMENT

F.A.O.No.86/2018 M/s Sangam Enterprises and others Versus Capital Development Authority and another

Date of Hearing: 14.11.2018 Appellants by: Mian Muhammad Omar Riaz, Advocate. Respondents by: Mr. Aamir Latif Gill, Advocate.

MIANGUL HASSAN AURANGZEB, J:- Through the instant appeal, the appellants, M/s Sangam Enterprises and others, impugn the order dated 05.07.2018, passed by the Court of the learned Civil Judge (West), Islamabad, whereby the appellants’ application for interim injunction filed along with their suit for declaration and permanent injunction, was dismissed.

2.Learned counsel for the appellants submitted that vide allotment letter dated 20.01.1994, Plot No.93-E, Industrial Area, Sector I-10/3, Islamabad, measuring 3166.66 square yards (“the suit plot”) was allotted by the C.D.A. to appellant No.1 for establishing PRCC, RCC, Steel Corepipe Industry; that subsequently, vide letter dated 19.07.1994, C.D.A. allowed appellant No.1’s application for the change of trade from "PRCC, RCC, Steel Corepipe" to "Compression of Natural Gas in Cylinders"; that after obtaining permission from the Ministry of Natural Resources, Department of Explosives, etc., appellant No.1 established a CNG Filling Station at the said plot; that after issuing a completion certificate regarding the CNG Filing Station, the C.D.A. raised objections to the effect that appellant No.1 had not been permitted to establish a CNG Filling Station at the said plot; that a demand of Rs.24,08,02,326/- had been raised against appellant No.1 as conversion charges for the purpose of the suit plot to be changed from Industrial to Commercial; that initially, relief was granted to appellant No.1 by the High Court but vide order dated 17.06.2015, the allotment of the said plot was cancelled by the C.D.A.; that appellant No.1 had been called

upon to pay conversion charges at the rate of Rs.26,000/- per square yards; that appellant No.1 has been discriminated against by the C.D.A. since another similarly placed person namely, Muhammad Sadiq Qureshi, had been allowed conversion of the land used for the establishment of a CNG Filling Station on payment of conversion charges at the rate of Rs.1,000/- per square yards; and that the C.D.A. could not adopt a policy of pick and choose. Learned counsel for the appellants prayed for the appeal to be allowed and for the impugned order dated 05.07.2018 to be set-aside.

3.On the other hand, learned counsel for C.D.A. submitted that at no material stage, was appellant No.1 granted permission by the C.D.A. to establish a CNG Filling Station at the suit plot; that appellant No.1 had been granted permission only to perform the industrial activity of Compression of Natural Gas in Cylinders at the suit plot; that appellant No.1 had unauthorizedly established a CNG Filling Station at the suit plot; that as early as 22.06.1998, appellant No.1 was issued a show cause notice by the C.D.A.; that appellant No.1 had embroiled the C.D.A. in litigation for several years and had got the benefit of stay orders; that the running of a CNG Filling Station is a commercial activity and appellant No.1 is bound to pay the conversion charges for carrying out commercial activities on a plot meant for industrial use; that appellant No.1 had ignored show cause notices dated 22.06.1998, 20.10.1998, 27.12.2012, 23.05.2014 and 05.05.2015; that it is only after the issuance of the said notices and affording an opportunity of hearing to appellant No.1 that the allotment of the suit plot was cancelled on 17.06.2015; that as regards conversion charges of Rs.1,000/- per square yards, the same pertained to land in Village Jhangi Syedan; that since the suit plot is in a developed sector of Islamabad, appellant No.1 cannot expect to pay the same amount of commercialization charges; that the C.D.A. has levied commercialization charges at the rate of Rs.26,000/- per square yards for the suit plot; that commercial charges are imposed after determining the market value of the plot in question; that the plot of land in Jhangi Syedan is privately

owned, whereas the suit plot was allotted by the C.D.A.; and that appellant No.1 does not have a prima-facie case for the grant of an injunction. Learned counsel for the C.D.A. prayed for the appeal to be dismissed.

4.I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance.

5.The record shows that on 20.01.1994, the suit plot was allotted to appellant No.1 on lease for a period of ninety nine years for the establishment of “PRCC, RCC, Steel Corepipe Industry”. Soon thereafter, appellant No.1 applied for a change of trade from “PRCC, RCC, and Steel Corepipe” to “Compression of Natural Gas in Cylinders” with respect to the suit plot. Vide letter dated 19.07.1994, Capital Development Authority (“C.D.A.”) approved appellant No.1’s said request subject to the installation by appellant No.1 of effective devices against fire, leakages of poisonous gas and treatment of liquid waste etc. Vide letter dated 22.08.1994, appellant No.1 was informed about the C.D.A.’s said decision and the conditions on which it was made.

6.After completion of the building on the suit plot, Mr. Qamar- uz-Zaman gave a notice of completion to the C.D.A. of the building and applied for occupying the same. On 03.07.1998, the Building Control Section of the C.D.A. issued a completion certificate in respect of the building on the suit plot to appellant No.1. In the said certificate, it is clearly mentioned that the “building is meant for industrial use”.

7.On 22.06.1998, the Estate Management Directorate of the C.D.A. called upon appellant No.1 to show cause as to why allotment of the suit plot should not be withdrawn. In the said notice, the position taken by the C.D.A. was that appellant No.1 had committed gross violation of the terms and conditions of the allotment by establishing a Gas Filling Station and a Service Station on the suit plot. In the said notice, it was also mentioned that appellant No.1 could only carry out the activity of “Compression of Natural Gas in Cylinders”.

8.In the reply dated 08.07.1998 to the said show cause notice, it was stated that the C.D.A., had vide letter dated 20.10.1994, approved the construction drawings for a building for the refueling of Compressed Natural Gas (“C.N.G.”). It was also stated that after the approval of the construction drawings, permission for the installation of a C.N.G. refueling station had been obtained from Ministry of Petroleum and Natural Resources, Government of Pakistan and from the Explosive Department, Ministry of Industries.

9.After finding the reply to the said show cause notice to be unsatisfactory, final show cause notice dated 20.10.1998 was issued by the Estate Management Directorate of the C.D.A. to appellant No.1. Appellant No.1 was warned that failure on appellant No.1’s part to remove all the unauthorized structures and use of the suit plot for the authorized trade would result in the automatic cancellation of the allotment letter. The report dated 28.11.1998 of the Building Control Section of the C.D.A. shows that the service station and the automobile workshop on the suit plot had been removed.

10.Letter dated 21.11.2000 from the Estate Management Directorate of the C.D.A. shows that the issue regarding the establishment of a C.N.G. Filling Station on the suit plot had been considered by the C.D.A. Board in its meeting held on 08.08.2000. In the said meeting, it was decided to levy commercialization charges at the rate of Rs.26,000/- per square yard on appellant No.1 as commercial activity of running a C.N.G. Filling Station was being carried out on the suit plot. Vide the said letter dated 21.11.2000, appellant No.1 was called upon to arrange payment of Rs.8,07,49,830/- within a period of thirty days, failing which the allotment of the suit plot would be cancelled.

11.The said letter dated 21.11.2000 was challenged by appellant No.1 in writ petition No.2867/2000 before the Hon'ble High Court. Vide order dated 17.02.2004, the said writ petition was disposed of with the direction to the C.D.A. to issue notices to the petitioners in the said petition and give them an

opportunity of hearing before taking a decision in the matter. Thereafter, the C.D.A. issued notice of hearing to appellant No.1 on 29.03.2004. Finding the officials of the C.D.A. to be harsh in their attitude, appellant No1 filed writ petition No.938/2004, which was dismissed in limine, vide order dated 09.04.2004. Thereafter, the C.D.A., vide order dated 05.07.2004, held the imposition of the commercialization charges at the rate of Rs.26,000/- per square yard to be in order. Appellant No.1 was called upon to clear dues within a period of sixty days, failing which the allotment letter was to be cancelled. The said order dated 05.07.2004 was assailed by appellant No.1 in writ petition No.3285/2004 before this Court. Vide judgment dated 10.07.2009, this Court allowed the said writ petition and set- aside the said order dated 05.07.2004. The matter was remanded to the C.D.A. with the direction to decide the same afresh through a speaking order after affording an opportunity of hearing to appellant No.1. It was also directed that the C.D.A. would inspect the site and ascertain whether the whole or part of the suit plot was being used for a commercial activity and thereafter, levy commercialization charges in accordance with the law and the applicable rules.

12.Letter dated 27.11.2012 from the Industrial Planning Section of the C.D.A. shows that on 03.05.2012, a meeting with appellant No.1 took place in the office of Director General (Planning) of the C.D.A. In this meeting, appellant No.1 agreed to pay commercialization charges for the whole of the suit plot area. Appellant No.1 was advised to pay the conversion charges from Industrial to Commercial as early as possible. These charges had been worked out by the Finance Wing of the C.D.A. to be Rs.24,08,02,326/-. A formal demand from appellant No.1 for the payment of the said amount was made by the C.D.A. through its letters dated 22.10.2012 and 06.11.2012. Since the said amount was not paid by appellant No.1, the C.D.A. issued show cause notices dated 27.12.2012, 23.05.2014 and 05.05.2015 calling upon appellant No.1 to pay the said amount. Vide letter

dated 17.06.2015, the C.D.A. cancelled the allotment of the suit plot.

13.On 10.10.2016, the appellants filed a suit for “declaration, mandatory and permanent injunctions” against the C.D.A. In the said suit, the appellants had prayed for a declaration to the effect that the C.D.A. could not cancel the allotment of the suit plot on the basis of wrong calculation of commercialization charges. The levy of commercialization charges at the rate of Rs.26,000/- per square yard was challenged, and so was the said letter dated 17.06.2015, whereby the C.D.A had cancelled the allotment of the suit plot. Along with the said suit, the appellants had also filed an application for interim relief. Apparently, ad-interim injunctive relief was obtained by the appellants. Vide order dated 05.07.2018, the appellants’ application for interim injunction was dismissed by the learned Civil Court. The said order dated 05.07.2018 has been impugned by the appellants in the instant appeal.

14.It is not disputed that permission to establish a CNG Filling Station at the suit plot had not been granted by the C.D.A. at any material stage. Permission to carry out the industrial activity of “Compression of Natural Gas in Cylinders” cannot be equated with the commercial activity of running a CNG Filling Station. Although appellant No.1 may have got permission from the Ministry of Industries and from the Ministry of Petroleum and Natural Resources to establish a CNG Filling Station at the suit plot but such a permission has not been granted to appellant No.1 by the C.D.A.

15.As early as 22.06.1998, appellant No.1 was informed by the C.D.A. that the suit plot was being used in gross violation of the terms and conditions of the allotment. Vide letter dated 20.10.1998, appellant No.1 was informed by the C.D.A. through a final show cause notice that the CNG Filling Station had been established at the suit plot unauthorizedly. Vide letter dated 21.11.2000, appellant No.1 had been called upon by the C.D.A. to pay commercialization charges at the rate of Rs.26,000/- per square yards. Appellant No.1 has avoided paying the

commercialization charges by embroiling the C.D.A. in litigation (i.e., writ petition Nos.2293/1998, 2867/2000, 938/2004 and the civil suit from which the present proceedings have arisen). Given this inequitable conduct on the appellants’ part, I am of the view that it is undeserved of equitable/discretionary relief.

16.Vide letter dated 08.08.2006, conversion charges at the rate of Rs.1,000/- per square yards were imposed by the C.D.A. for the establishment of a CNG Filling Station on land privately owned in Village Jhangi Syedan. Privately owned land in Village Jhanig Syedan cannot be compared with the suit plot which is located in the developed sector of Islamabad i.e., Sector I-10/3. The C.D.A. determines the conversion charges on the basis of the value of the land in question. Therefore, since no reasonable comparison can be drawn between the suit plot and the land in Jhangi Syedan, appellant No.1 cannot expect get away with conversion charges at the rate of Rs.1,000/- per square yards.

17.The Finance Wing (Costing Section) of the C.D.A. had worked out the conversion charges (from industrial to commercial) for the suit plot to be Rs.24,08,02,326/- in accordance with the criteria adopted in the C.D.A. Board’s decision dated 22.11.2005. As per the said criteria, the conversion charges are determined on the basis of the difference in the market price of the plot used for commercial purpose and the plot used for industrial purpose. In the instant case, since no plot for a CNG Station had been auctioned by the C.D.A. in Sector I-10, the price of Rs.67,000/- per square yard for the plot auctioned in 2009 in Markaz I-8, Islamabad for a CNG Station was taken into consideration for determining the market value of a plot for a CNG Station. Furthermore, for determining the market value of an industrial plot, the value of an industrial plot auctioned on 31.05.2011 by the C.D.A. at the rate of Rs.33,000/- per square yard was taken into consideration.

18.It is an admitted position that the suit plot has not been bifurcated. Therefore, appellant No.1 cannot get away with paying commercialization charges only for a portion of the suit plot. Even otherwise, appellant No.1 in its meeting with the

C.D.A. held on 03.05.2012 agreed to pay commercialization charges for the whole plot area.

19.Since appellant No.1 has not paid conversion/commercialization charges for the suit plot ever since 21.11.2000 when it was first required to pay such charges by the C.D.A. at the rate of Rs.26,000/- per square yards; and since the allotment of the suit plot was cancelled vide letter dated 17.06.2015 after the issuance of several show cause notices (i.e., show cause notices dated 22.06.1998, 20.10.1998, 27.12.2012, 23.05.2014 and 05.05.2015); and since an opportunity of hearing was afforded to appellant No.1 before the issuance of the said letter dated 17.06.2015, I am of the view that the learned Civil Court did not commit any illegality in dismissing the application for interim injunction. Consequently, the instant appeal is dismissed with no order as to costs.

(MIANGUL HASSAN AURANGZEB)

JUDGE

ANNOUNCED IN AN OPEN COURT ON ________/2018.

(JUDGE)

Qamar Khan*

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