Award of contract for Northern Strip Project: SC reserves its judgement

The Supreme Court on Monday reserved its verdict on the controversial issues pertaining to award of contract for Northern Strip Project - a new commercial area in Sector E-11, developed under the first public-private partnership involving Capital Development Authority (CDA) and a co-operative housing society.
A two-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry with Justice Ghulam Rabbani reserved its judgement after conclusion of arguments by the both parties on a suo motu case. The Northern Strip Project - a 54-acre stretch of land near Margalla hills, which was completed in less than two years, under strict and vigilant check of the apex court. When the project was launched in 2009, the court took suo motu notice of media reports, which alleged irregularities in the award of its contract to Multi-Professional Co-operative Housing Society (MPCHS).
The lawyer for the housing society defended the joint venture agreement between CDA and the society, saying that the civic body had invited it to participate in the bidding through legal mechanism. He told the court that the housing society had invested Rs 1.8 billion after winning the contract in a transparent manner from among seven bidders. He contended that three successive heads of the civic body were not able to find anything wrong with the agreement.
Akram Sheikh, a lawyer appearing as amicus curiae, had contended that the agreement was ultra vires of the CDA Ordinance and its rules and regulations. He contended that there was no provision in the CDA Ordinance authorising any private party to undertake development of any sector
Terming it a bigger scam, he said trillions of rupees were involved in it. He claimed that owner of the society AU Farooqi was the cabinet secretary when the agreement was signed between the CDA and MPCHS. The counsel for CDA, during previous hearings, had also defended the agreement, saying that it was done in accordance with the relevant laws. He had contended that the possession of the land was not handed over to the society, which was rather allowed to carry out development work.
It is pertinent to mention that the basic idea behind the Northern Strip Project was to get the state land vacated from encroachers and turned it into a commercial area on the pattern of Blue Area. With the completion of the project, the CDA would get 71.3 per cent of the commercial strip, including commercial and residential plots and area of roads, parks and parking lots, running into billions of rupees; while the housing society was to get the remaining 28.7 per cent.
In order to win the contract, three parties had filed bids that opened on March 14, 2008. They were MPCHS, Golra Associated and Services Co-operative Housing Society. Except MPCHS, the others did not provide required documents and their proposals lacked technical and financial bids. Under the contract, the housing society was liable to overcome any deficiency and fault in the project in one year after its completion. As was agreed under the terms of the public-private-partnership agreement, MPCHS got the concerned 54 acres stretch of land that was vacated from encroachers; paid compensation to the native settlers and bore the development costs. The total investment of the society is said to be Rs 1.8 billion while the CDA spent not a single penny on it.
Under the agreement, the plots to be carved out in the Northern Strip will be shared by the two organisations (MPCHS and CDA) according to the 43-57 per cent formula. Thus, the area for sale under the project will be shared by MPCHS and CDA under a 15.46 to 20.52 acres formula. The layout plan for the project was approved on March 13, 2009, but it was soon enveloped into a controversy generated by some quarters over alleged irregularities concerning undue benefits to MPCHS. This prompted the SC to take suo motu of the project on August 13, 2009.
However, it was pleaded in the apex court that MPCHS had invested over Rs 1 billion in the project and that according to the terms of agreement between CDA and the society, the latter was entitled to 50 per cent of its share (of plots) at the time of approval of the layout plan. Besides, MPCHS also managed to get the land vacated from encroachers. Thus, the apex court did not order a halt to development of the project but instead directed CDA to form a committee to ensure good standards in its development.
Sector E-11, where the Northern Strip is located, was privatised by the then Prime Minister Nawaz Sharif under the 1992 Islamabad Zoning Regulations. Thereafter, some seven private and co-operative housing societies emerged to develop the sector. On the other hand, other sectors close to E-11, including E-12, F-12 and G-13, which had been acquired by CDA 26 years ago, could not be developed because of the authority's inability to possess the land due to encroachments which had increased by 500 times since then.