The Federal Constitutional Court (FCCP) has ruled that land acquired for a public purpose under the Land Acquisition Act, 1894, cannot be diverted to any other purpose-particularly for private, commercial use or a housing scheme-without the prior approval of the government.
The court further held that even a purchaser acquiring such land through a court auction remains bound by all legal and contractual obligations applicable to the original company and does not acquire an absolute right to alter the nature of its use.
A two-member bench comprising Chief Justice Justice Aminuddin Khan and Justice Ali Baqar Najafi dismissed the leave to appeal petition filed by M/s Adil International (Pvt.) Ltd. in a 39-page judgment, upholding the decision of the Peshawar High Court.
The court observed that when the State acquires private land in the public interest, the constitutional justification for such acquisition rests solely on the public purpose for which the land is taken. If the land is subsequently used for private or commercial purposes, the constitutional basis of the acquisition itself is undermined.
According to the judgment, 1,020 kanals and 19 marlas of land in Nowshera were acquired in 1954 for the establishment of Board and Paper Mills. After the mills ceased operations, their assets were sold through a public auction under the orders of a Banking Court, where the petitioner company purchased the assets.
The company later demolished the factory and sought to develop a housing scheme on the land. However, the relevant authorities refused to approve the change in land use and registration of plots. The company’s constitutional petition challenging the decision was earlier dismissed by the Peshawar High Court.
The Federal Constitutional Court held that the transfer of ownership through a judicial auction does not alter the legal character of the land. The new purchaser acquires only those rights that were available to the original company and remains bound by the same statutory and contractual conditions attached to the acquisition.
The judgment noted that under Section 41 of the Land Acquisition Act, the agreement between the government and the original company had legal force, restricting the use of the land exclusively to the establishment and operation of the Board and Paper Mills. It further observed that under Section 43-A of the Act, the sale, lease, mortgage, transfer or change in the use of such land cannot be undertaken without the prior approval of the provincial government.
The court emphasized that land acquired for a public purpose does not become ordinary private property, as its public character continues to subsist. Allowing such land to be used for private commercial gain, it said, would be contrary to the legal framework of the Land Acquisition Act and Article 24 of the Constitution.
The judgment further observed that while the Constitution guarantees citizens the fundamental right to own property, the State may acquire private property only in accordance with law and for a public purpose. Therefore, if the original public purpose ceases to exist or the land is used contrary to that purpose, the government is competent to take action under the law.
Referring to Islamic principles, the court noted that Islam protects private property rights and prohibits the unlawful appropriation or misuse of another person’s property. It held that the principles of Shariah also support the view that land acquired for a public purpose cannot be diverted to private commercial interests.
The court concluded that since the land in question had been specifically acquired for the establishment of the Board and Paper Mills, the petitioner company failed to establish any legal, absolute or indefeasible right to convert it into a housing scheme.
It further observed that if the provincial government concludes that the land is no longer required for the original purpose or is being used in violation of that purpose, it is competent to proceed in accordance with the Land Acquisition Act, 1894, and the agreement executed on October 16, 1954.
Finding no legal, constitutional or jurisdictional infirmity in the judgment of the Peshawar High Court, the Federal Constitutional Court dismissed the leave to appeal petition and upheld the impugned judgment.