DATE: 16/10/2025
COURT: High Court of Punjab and Haryana
BENCH: Justice Anupinder Singh Grewal and
Justice Deepak Manchanda
FACTS:
The petitioner participated in an e-auction
conducted by the Haryana Shahari Vikas Pradhikaran (HSVP) for Plot No. 41,
Sector-5, Pinjore, measuring 162 sq. meters, submitting the highest bid of Rs.1,50,99,300/-. The
bid was accepted, leading to the issuance of a Letter of Intent on 24.02.2023,
followed by full payment of the sale consideration.
Subsequently, an allotment letter and offer of possession were issued on
02.12.2023, with no outstanding dues. However, on 20.02.2024, the entire amount
was refunded to the petitioner's bank account without prior notice,
explanation, or a speaking order, prompting the petitioner to file
representations and a legal notice demanding restoration or an alternative
plot, which went unaddressed.
HSVP defended the cancellation, citing an
internal decision on 06.07.2023 to cancel the auction of certain plots,
including the one in question, due to incomplete development works, though this
was overlooked, leading to erroneous issuance of the allotment letter. A
revised layout plan approved on 14.11.2023 deleted smaller plots like the
petitioner's 8-marla one, replacing them with 32 larger 1000 sq. yard plots on
the now-levelled hilly terrain. Court proceedings revealed HSVP's failure to
provide justification for the changes, lack of environmental clearance details,
and initiation of disciplinary action against officials for lapses,
highlighting arbitrariness in the process.
ISSUES:
The primary issues revolved around the
legality of HSVP's unilateral cancellation of the plot allotment after full
payment and issuance of possession without notice, reason, or adherence to
natural justice principles, including audi alteram partem; whether this
violated contractual obligations under the Indian Contract Act, 1872, and
legitimate expectations; the applicability of e-auction policy clauses for
refund under "circumstances beyond control"; HSVP's lack of due
diligence in verifying site conditions before auction; and the entitlement to
restoration or an alternative plot under HSVP's policies dated 18.02.2013,
15.11.2021, and 24.11.2022, amid allegations of arbitrariness, mala fides, and
deviation from HSVP's mandate for affordable housing.
JUDGEMENT WITH REASONING:
The court allowed both writ petitions,
quashing the unilateral cancellation as arbitrary and mala fide, and directed
HSVP to restore the allotment by carving out a fresh plot in the same vicinity
or through a suitable alternative measure within three months, while imposing
costs of Rs.1 lakh each on HSVP payable to the petitioners within two months;
the matter was to be relisted if costs were not paid.
The court reasoned that HSVP's actions were
arbitrary and lacked justification, as the cancellation occurred after a
concluded contract via bid acceptance, full payment, and possession offer,
without any notice or opportunity for hearing, violating principles of natural
justice and Sections 4 and 5 of the Indian Contract Act, 1872. Reliance on
Clause 39 of the e-auction policy for refund under "circumstances beyond
control" was deemed misplaced, as the issues like incomplete development
and hilly terrain were within HSVP's control and stemmed from its own failure
to conduct due diligence before the auction. The revised layout plan, which
deleted smaller plots in favor of larger ones after levelling the site, raised
concerns of mala fides and profit-driven motives, contradicting HSVP's
statutory purpose of providing affordable housing on a no-profit-no-loss basis.
Court proceedings exposed the absence of rationale in records for the changes, no
environmental clearance for the revised project, and uncompleted inquiries
against erring officials, emphasizing HSVP's repeated lapses as seen in prior
cases like Tamanna Babbar v. State of Haryana.
Furthermore, the court upheld the
petitioner's legitimate expectations, drawing from judgments like State of
Jharkhand v. Brahmaputra Metallics Pvt. Ltd., which stress that public
authorities must honor representations and act fairly without unreasonableness
akin to violating natural justice. The petitioner, a government servant who
invested lifetime savings, was deprived of affordable housing amid rising
property prices, infringing on Article 21 rights, especially since HSVP
admitted levelling the terrain post-allotment, undermining its hilly terrain
excuse. The policy dated 18.02.2013 explicitly allowed for alternative plots by
carving out or replanning, overriding HSVP's claim of no such provision in
e-auction rules, as the policies served distinct purposes. Imposing costs
served as a punitive measure to deter future mistakes, ensuring accountability
and preventing exploitation of citizens through discriminatory shifts toward
high-value plots.
ANALYSIS:
This case exemplifies the Punjab and
Haryana High Court's stringent oversight of public authorities' administrative
actions, particularly in the realm of land allotment and urban development. The
court's decision on October 16, 2025, to quash the Haryana Shahari Vikas
Pradhikaran's (HSVP) unilateral cancellation of a plot allotment underscores
the primacy of natural justice principles, contractual sanctity under the
Indian Contract Act, 1872, and legitimate expectations doctrine. By deeming
HSVP's actions arbitrary and mala fide, stemming from inadequate due diligence,
lack of justification for revising the layout plan from affordable smaller
plots to high-value larger ones, and failure to provide notice or a hearing the
judgement reinforces that state instrumentalities cannot whimsically resile
from concluded contracts, especially after full payment and possession offers.
Drawing on precedents like State of Jharkhand v. Brahmaputra Metallics Pvt.
Ltd., the court highlighted how such conduct violates Article 21's right to
life by depriving citizens, particularly middle-income government servants, of
affordable housing amid escalating property prices. The imposition of Rs.1 lakh costs per
petition as a punitive measure signals a deterrent against repeated lapses, as
evidenced by references to prior cases like Tamanna Babbar v. State of Haryana, emphasizing accountability in public welfare
schemes.
The ruling has broader implications for
urban planning and housing policies in Haryana, critiquing HSVP's shift toward
profit-oriented development that discriminates against lower-income groups by
converting affordable housing sites into exclusive high-value plots. By
mandating restoration or alternative allotment within three months under the
2013 policy, overriding restrictive e-auction clauses—the court affirms that
distinct policies serve complementary purposes and cannot be selectively
invoked to evade obligations. As of December 8, 2025, with the two-month
deadline for costs approaching December 16 and the three-month restoration
period extending to January 16, 2026, the absence of reported compliance or
relisting suggests ongoing monitoring may be required to ensure enforcement.
This judgement not only protects individual rights but also compels public
bodies like HSVP to prioritize transparency, environmental considerations
(noting the unaddressed clearance queries), and their statutory mandate for
equitable, no-profit-no-loss housing, potentially influencing future
litigations against similar administrative overreaches in India's real estate
sector.
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