Delay in Compensation Payment for Acquired Land

In W.P. No. 2450 of 2012, the Islamabad High Court ruled on a petition filed by the Ministry of Interior Employees Cooperative Housing Society (MIECHS), which sought compensation from the Capital Development Authority (CDA) for the acquisition of its land in Budhana Kalan, Islamabad, in 2009. The Court set aside the award dated 15.01.2009 concerning compensation to MIECHS for 682 kanals and 15 marlas of land, as the compensation had not been paid even after 15 years. The Court directed CDA to initiate a fresh process for determining the current market value of the acquired land and ordered CDA to pay the costs incurred by MIECHS.

Background:

MIECHS had purchased over 4,200 kanals of land in Budhana Kalan, intending to develop a housing scheme for its members. However, due to the construction of a motorway link road and subsequent acquisition of 682 kanals and 15 marlas of MIECHS’s land for educational purposes under a 2008 directive, the CDA acquired the land at a rate of Rs. 8,50,000 per kanal, below the market price at the time. While CDA compensated for 61 kanals, the remaining payment for over 590 kanals was withheld due to various administrative issues. Despite numerous requests by MIECHS, CDA failed to complete the acquisition process or pay the full compensation.

In 2020, MIECHS filed an additional writ petition seeking either the return of its land or updated compensation reflecting the current market value of the acquired land. CDA, in its defense, argued that it was willing to compensate MIECHS once the latter handed over possession of the land, a claim that the Court found baseless.

Key Issues:

Delay in Compensation Payment: Whether CDA's 15-year delay in paying compensation for the acquired land warranted setting aside the original award from 2009.

Current Market Value of Acquired Land: Whether the 2009 award compensation, if paid in 2024, could still be deemed just and fair in light of the significant increase in real estate prices.

CDA’s Legal Obligations: Whether CDA could delay compensation payment by making it contingent upon MIECHS handing over possession of the land, which had already vested in CDA upon the award's issuance.

Court's Analysis:

Delay in Compensation Payment: The Court strongly criticized CDA for its 15-year delay in compensating MIECHS. The Court referred to the legal requirement that compensation be paid "as soon as possible" after the issuance of an award, noting that CDA's failure to meet this obligation had deprived MIECHS of its right to fair compensation. The Court highlighted that the lengthy delay had rendered the original compensation amount of Rs. 8,50,000 per kanal inadequate, given the substantial increase in real estate prices over the past 15 years. The Court held that such a delay amounted to expropriation rather than lawful acquisition, as MIECHS had been deprived of its property without adequate compensation.

Current Market Value: The Court emphasized that compensation should be paid in accordance with the land's market value at the time of acquisition. However, since CDA had failed to pay MIECHS the awarded compensation within a reasonable time, the original award had lost its efficacy. The Court ruled that paying the 2009 award in 2024 would not provide MIECHS with sufficient funds to acquire equivalent land. As a result, the Court set aside the award and ordered CDA to initiate a fresh determination of the current market value of MIECHS’s land.

CDA’s Legal Obligations: The Court rejected CDA’s argument that compensation should only be paid once MIECHS handed over possession of the land. It clarified that, under Section 32 of the CDA Ordinance, the land had vested in CDA upon the issuance of the 2009 award, and taking possession was CDA’s responsibility. The Court found CDA’s stance to be legally unsound, as the law did not make the payment of compensation contingent upon the landowner handing over possession. The Court held that CDA’s delay in paying compensation, coupled with its failure to take possession of the land, constituted a violation of MIECHS’s rights under the law.

Court's Conclusion: The Islamabad High Court set aside the compensation award issued on 15.01.2009 due to CDA's failure to pay the compensation within a reasonable time. The Court directed CDA to initiate a fresh process for determining the current market value of the land and ordered that compensation be paid to MIECHS based on this updated valuation. The Court also ordered CDA to bear MIECHS’s costs.

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