SHC refers Karachi Cotton Exchange building dispute to ETPB for decision in 90 days

KARACHI: The Sindh High Court (SHC) has referred the ownership dispute over the historic Karachi Cotton Exchange building to the chairman of the Evacuee Trust Property Board (ETPB), directing him to determine within 90 days whether the Karachi Cotton Association (KCA) or the property falls within the category of evacuee trust property.

In the meantime, a two-judge constitutional bench comprising Justice Muhammad Saleem Jessar and Justice Nisar Ahmed Bhanbhro allowed the KCA to retain possession of the building and continue its business activities without interference. The court also ordered tenants in the Cotton Exchange building to deposit rent with the SHC nazir until the status of the KCA and the property is decided.

The bench also suspended a notification issued on Aug 9, 1963, which had been relied upon by the ETPB and the Federal Investigation Agency (FIA) to treat the property as federal trust property. In addition, the court set aside an FIR lodged against certain Karachi Metropolitan Corporation (KMC) officers, KCA members and others, holding that no fraud case was made out on the material before it.

Dispute over sealing and ownership claims

The matter reached the SHC after the FIA and ETPB sealed the building in a joint action on Dec 12, declaring it federal trust property. An FIR was later registered against KMC officials, KCA members and others over allegations that forged and bogus documents had been used to claim ownership of the property.

Following those steps, the KMC, the KCA, several of its members and tenants filed around 10 petitions challenging the 1963 notification, the sealing order, eviction notice and the FIR.

After reviewing the record and hearing the parties, the bench said the ETPB and FIA had not produced material showing that the custodian of evacuee property had at any point treated the building as evacuee property or taken control of it. The judgement, authored by Justice Bhanbhro, said the respondents had relied only on the Aug 9, 1963 notification and that this by itself was not enough to establish the building as evacuee trust property.

Court observations on property status

The court noted that no material had been placed on record to show that the KCA had been included in the trust pool under any evacuee law in force before the Evacuee Trust Properties (Management and Disposal) Act, 1975. It further observed that the respondents had not shown that any proceedings were ever conducted to declare the KCA as trust property or to place the KCA and the Cotton Exchange building under the trust pool.

The judgement recorded that the petitioners had submitted a registered lease deed from 1933 to show that the property had been purchased by the KCA. It added that when the respondents’ counsel was confronted on the issue, he conceded that no proceedings under Section 8 of the 1975 law had taken place after the 1963 notification, or at least none were within his knowledge.

The bench also observed that the KCA is a limited company formed for cotton trade and that its memorandum and articles of association do not show it to be a charitable organisation. It further said the record was unclear on when the KCA was placed on the ETPB register as public trust evacuee property.

The court held that the petitioners had not been given an opportunity of hearing before the KCA was placed on the register of evacuee trust properties, or before eviction notices were issued and the building was sealed, adding that due process had to be observed at every level.

Jurisdiction and FIA case

On objections to the petitions’ maintainability raised by the federal law officer and counsel for the ETPB and FIA, the court said the petitioners had challenged three separate actions: the 1963 notification, and the sealing order and eviction notice issued in December last year. It therefore ruled that the petitions were filed within time and were not barred by delay.

The bench said the question of whether the disputed property is evacuee property, evacuee trust property, or owned by the KCA requires fresh adjudication, and that exclusive jurisdiction for that exercise rests with the chairman of the ETPB.

Advocate General Sindh Jawad Dero had argued that the case should be sent to the provincial ETPB. The bench, however, said the provincial ETPB had not appeared during the proceedings to assert such a claim, whereas the federal ETPB had actively contested the case. It added that, by operation of law, properties declared as evacuee trust property remained under the management and control of the federal government, and for that reason adjudicatory powers would vest in the federal ETPB.

The judgement also referred to submissions made before the court that, after the 18th Amendment, management and control of evacuee trust property became a provincial subject and that Sindh had enacted legislation in that regard. However, the court noted that the federal government had not transferred management and control of evacuee trust properties to the province.

“We will not render our findings on the issue, same being dispute between two governments falls outside the domain of this court and was under exclusive jurisdiction of Honorable Federal Constitutional Court to adjudicate. If the provincial government is aggrieved of the control of evacuee trust properties by federal government, it may approach the Honorable Federal Constitutional Court,” the bench said on that constitutional question.

As for the FIA’s role, the bench said the agency had acted in aid of the ETPB in compliance with a Supreme Court order and therefore could not be said to have acted outside the law in general. However, it found that the FIR itself was not sustainable.

“However, from perusal of FIR No 37 of 2025 recorded by FIA it transpires that no case of fraud was made out and registration of FIR was a colourful exercise of powers by FIA, besides ETPB did not fall within the schedule under FIA Act 1974, therefore the FIA should not have recorded the FIR and this mistake stands admitted by FIA itself during proceedings of case,” it was stated.

“The notification dated 9th August 1963 is suspended and the matter is referred to the chairman ETPB, Islamabad for fresh determination of status of KCA, whether it was an evacuee trust property or evacuee property. Since Cotton Exchange Building is owned by KCA, therefore, determination of status of KCA will automatically decide the fate of Cotton Exchange Building,” the court held while disposing of the petitions.

The chairman was directed to decide the issue within 90 days after giving all interested parties a fair hearing, and, if necessary, to summon witnesses and procure the relevant record.