A three-judge panel of the Supreme Court on Wednesday will review an application submitted by The Bahria Town (Pvt) Ltd Karachi (BTLK) requesting payment deferral of for the next 3 years of a monthly instalment payment plan of Rs. 2.5 billion citing pandemic-related recession.
The payment plan was issued by the Supreme Court where BTKL was supposed to pay Rs. 2.5 billion every 7 months in monthly instalments.
The bench reviewing the application to defer the payments till September 2023 will be headed by Justice Ijaz-ul-Ahsan.
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The deferral application was constituted by senior counsel Syed Ali Zafar on behalf of the BTLK and Malik Riaz Hussain, the real estate tycoon who owns the company.
The company had acquired 16,896 acres of land on March 21, 2019, from Malir Development Authority (MDA). The Supreme Court had accepted an offer made by the real estate tycoon to pay Rs. 460 billion for the purchase of the land.
With the pandemic hitting Pakistan’s businesses, the real estate company has cited pandemic-related recession as reason for its inability to continue payment. The application submitted to the Supreme Court states the Covid-19 pandemic’s major impact in Pakistan and the business sector as well as on multinationals across the world.
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Bahria Town Company, the parent company of BTLK is a lucrative company with previous housing and construction schemes in Lahore and Islamabad, among many other cities in Pakistan. The Karachi scheme is its recent project and it’s the first in the province of Sindh.
Previously, the supreme court had ruled that the land grant between the MDA and the Sindh government and its exchange with the land of the private land developers, such as Bahria Town, was illegal. The court had accepted the offer to implement its May 4, 2018 judgement which held this ruling.
According to the ruling, in compliance to the earlier court order, the real estate company had already paid Rs. 57 billion, excluding the Rs1.2 billion mark-up earned on the advance amount deposited on a decreasing balance basis which was available for adjustment.
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The application submitted to the court specified that to pay a monthly instalment of Rs. 2.5 billion, the company must earn Rs. 100 million per day, based on an average 25 working days per month.
The application continued that this is a difficult task even without the pandemic in normal circumstances and regardless, the BTLK has been fulfilling the task.
However, the Covid-19 pandemic since March has affected business operations being run by the applicant. The Pakistan economy has collectively suffered, including the real estate sector, as operations had to be shut down due to lockdowns in the country resulting in the economic activity to be in negative growth shock causing a deep recession.
The BTLK has 600,000 members and 53,000 employees who have suffered due to the declining sales and prices of plots and houses, leading to the elimination of purchasing power and halting construction activities.
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The application further states that the developer in order to comply with the plan, has to spend more than Rs. 1 billion every month by making payments to members, third parties, suppliers or contractors and employees of the company as maintenance of these housing societies requires fixed and variable expenditures.
Expenses of utilities and site operational expenses, such as costs of oil, maintenance of a clean and hygienic environment in the residential project, provisions of security and development and welfare expenses are also included in these expenditures.
In all fairness, a time duration of at least 3 three years was asked to be given to the developer to repay the instalments of its MDA land. The developer it was added in the application is already committed to pay the Rs. 460 billion amount.