| Appeal from | [Arising out of impugned final judgment and order dated 01-04-2025 in CWP No. 2811/2023 passed by the High Court of Punjab & Haryana at Chandigarh] |
| Statutes / Rules | Chandigarh Estate Rules, 2007 — Rule 5 (ii), (iv), (v), (vi) & Explanation I; Capital of Punjab (Development and Regulation) Act, 1952 — Ss. 3, 22; Indian Contract Act, 1872 — S. 2(h); Constitution of India — Art. 14; General Terms & Conditions of E-Auction dated 31.08.2022 — Clauses IV(a), IV(c), VI(1), VI(2), VI(4), VI(5); Form ‘B’ Agreement to Sell — Clause 4 |
| Argued by | Mr. Guru Krishna Kumar, Sr. Adv. (for the appellant); Mr. Vikramjit Banerjee, ASG (for Chandigarh Administration); Mr. P.S. Patwalia, Sr. Adv. (for M/s Bedi Hospital) |
| For Petitioner(s) | Mr. T.V. Ratnam, AOR; Mr. Rajendra Prasad Maurya, Adv.; Mr. Vikramjeet Banerjee, A.S.G.; Mr. Tadimalla Bhaskar Gowtham, Adv.; Mr. Bhuvan Kapoor, Adv.; Mr. Varun Chugh, Adv.; Mr. Krishna Kant Dubey, Adv.; Mr. Shreekant Neelappa Terdal, AOR |
| For Respondent(s) | Mr. Bhargava V. Desai, AOR; Mr. Shivam Sharma, Adv. |
| Result | Appeals allowed; High Court judgment set aside; fresh e-auction of the site directed within 3 months |
Public Property — Sale by Public Auction — Cancellation of highest bid before issuance of allotment letter and execution of conveyance deed — Price maximisation — Chandigarh Estate Rules, 2007, Rule 5 — Indian Contract Act, 1872, S. 2(h) — Article 14 — Judicial review — Effect of High Court’s interim order permitting re-auction.
Held (1) — Agreement to Sell is not a concluded contract: An agreement enforceable in law alone is a contract. Under the scheme of Rule 5 of the Chandigarh Estate Rules, 2007 and the e-auction terms, an enforceable contract comes into existence only upon execution of the conveyance deed, which is the culmination of offer, acceptance, payment of consideration and execution of the Agreement to Sell. An Agreement to Sell under Rule 5(iv) is not, in itself, an enforceable contract under S. 2(h) of the Contract Act. Until the conveyance deed is executed, the Administration may exercise its reserved power under Rule 5(vi) read with Explanation I and Clauses VI(1) and VI(5) to withdraw the site and reject the highest bid. Courts must identify the events by which the contract gets concluded; thereafter rights and liabilities crystallise under the conveyance deed. [Paras 17–19]
Held (2) — Recall of auction for price maximisation is not arbitrary: Before the contract is concluded, the only restraint on the authority is the public-law obligation not to act arbitrarily or unreasonably. In the sale or lease of public property, a decision to recall or revisit an auction intended to maximise the price is justified so long as no enforceable contract has come into being. A substantially lower price fetched at the auction is a relevant consideration for not finalising the contract with the so-called “highest bidder”. Where the adjacent nursing home site of identical area, auctioned the same day, fetched Rs. 18.25 crore against the respondent’s Rs. 12.58 crore, the cancellation of the bid contract (27.01.2023) and of the Agreement to Sell (09.02.2023) for re-auction was neither illegal nor arbitrary. SIPCOT v. Contromix Pvt. Ltd., (1995) 4 SCC 595, relied on. [Paras 6, 20]
Held (3) — Precedents relied on by the High Court distinguished: CIDCO v. Shishir Realty (P) Ltd., (2022) 16 SCC 527, concerned unilateral cancellation of executed lease deeds for alleged breaches found not to exist, and does not apply. Golden Food Products India v. State of U.P., 2026 SCC OnLine SC 24, turned on breach of natural justice and transparency, where cancellation was never communicated. Here the cancellation letter stated the precise reason, the entire consideration was refunded, and the bidder was invited to participate in the re-auction; no violation of natural justice or transparency arose. [Para 21]
Held (4) — High Court failed to account for consequences of its own interim order: Having permitted the Administration to hold a fresh e-auction at the admission stage (rather than dismissing the petition or staying the cancellation), the High Court decided the writ petition on merits without considering the rights created by the re-auction or the status report showing that the re-auction fetched Rs. 18.30 crore. The subsequent auction, conducted under the High Court’s direction and open to the respondent (who chose not to participate), was legal and valid; the price discovered could not be ignored. [Paras 23–25]
Held (5) — Relief moulded in the interests of justice: Where the original bidder offered before the Supreme Court to match the re-auction price of Rs. 18.30 crore and the re-auction bidder opposed substitution, the Court, considering the situation created by the inconclusive interim arrangement, held that justice and public purpose would be served by a fresh e-auction of the site under the Chandigarh Estate Rules, 2007, to commence and conclude within three months. [Paras 26–28]