Acquired land must be used for approved public purpose: FCC

ISLAMABAD: The Federal Constitutional Court ruled that land acquired for a specified public purpose continues to remain impressed with and subservient to the very purpose for which its acquisition was sanctioned. “Such land does not lose its public character merely by reason of a subsequent transfer, assignment or judicial sale. Consequently, neither the beneficiary company nor any subsequent transferee, assignee or auction purchaser acquires an unfettered, absolute or indefeasible right to alter, divert or change the user of the acquired land except with the previous sanction of the Provincial Government and strictly in accordance with the terms and conditions embodied in the agreement executed for acquisition of the land under Section 41 of the Land Acquisition Act, 1894.” A two-judge bench, headed by Chief Justice Amin-ud-Din Khan and comprising Justice Ali Baqar Najafi, upheld the Peshawar High Court (PHC) judgment and dismissed the petition of M/s Adil International (Pvt.) Ltd. The Court held that since the land in question was acquired specifically for the establishment of Paper and Board Mills, the petitioner cannot claim, as a vested, absolute or indefeasible right, its conversion into a housing scheme. It said in the event the provincial (KP) government forms an opinion that the whole or any part of the land has become surplus to the requirements of the original purpose or is being utilised in a manner inconsistent with the object of acquisition, it shall be at liberty to exercise its powers in accordance with law and the terms and conditions of the agreement dated 16-10-1954 executed under Section 41 of the Land Acquisition Act, 1894. According to the record land, measuring 1020 Kanals and 19 Marlas situated in Mohal Amangarh, Nowshera Khurd, Tehsil Nowshera, was acquired by Adamjee Papers & Board Mills under the provisions of the Land Acquisition Act, 1894, for the establishment of Board/Paper Mills. An agreement dated 16.10.1954 was executed between the provincial government and the beneficiary company in terms of Section 41 of “the Act”, whereby the company expressly covenanted that the land so acquired would be utilised exclusively for the construction and operation of Board/Paper Mills and that no part thereof would be used, transferred or otherwise dealt with for any purpose foreign to the object of acquisition without obtaining the previous consent of the Provincial Government. In 2000, the petitioner, Adil International, purchased the assets of Adamjee Papers & Board Mills through a court-supervised auction for Rs220 million. As the factory had become unusable, the company dismantled the structure after obtaining necessary approvals and sought conversion of the land into a housing scheme. When the authorities refused to grant the required NOC, the petitioner successfully obtained orders from the High Court and the Supreme Court directing the authorities to consider and issue the NOC. Eventually, the NOC was granted, and the petitioner developed the housing scheme, sold plots, and construction commenced. Subsequently, certain government authorities issued directions restricting the use and transfer of the land, leading to the refusal of registration and attestation of sale deeds. The petitioner challenged these actions through a writ petition, seeking declarations that the impugned actions were unlawful and directions for the registration of sale transactions. However, the High Court on 11-09-2024 dismissed the writ petition, prompting the petitioner to seek leave to appeal. The judgment, authored by CJP Amin, said: “Once land is acquired for a specified object, the same cannot ordinarily be diverted to another purpose at the whims of the beneficiary or its successor-in-interest.” It also said any transfer, lease, mortgage, or other disposition effected in contravention of Section 43-A of the Act is liable to be treated as legally defective and voidable at the instance of the State, besides being amenable to appropriate injunctive or restorative relief to ensure reversion of the land to its lawful and intended public purpose. It follows, therefore, that land acquired under the coercive power of eminent domain retains an indelible statutory nexus with the object of acquisition, and Section 43-A operates as a substantive safeguard designed to preserve the integrity of public acquisition and to prevent its distortion into private commercial gain. Similarly, Section 41 of the Act accords statutory force and binding efficacy to the agreement executed between the Government and the beneficiary company, with the terms and conditions incorporated therein continuing to govern and regulate the manner and purpose for which the acquired land may be utilised. The judgment said that mere cessation of industrial activity as indicated in the instant case, abandonment of the original undertaking, or subsequent transfer of ownership does not operate to extinguish the obligations and restrictions emanating from the agreement, nor does it confer upon the transferee any superior or enlarged rights beyond those which vested in the original beneficiary. “A successor in interest merely steps into the shoes of the original allottee and remains equally bound by the statutory limitations and contractual covenants governing the acquired property.” Copyright Business Recorder, 2026