In a significant ruling, the Supreme Court of India has set aside an e-auction of Delhi Development Authority (DDA) land and directed the concerned bank to return the entire money to the auction purchaser along with interest. The judgment, delivered on September 25, 2025, by a bench comprising Justice Sanjay Kumar and Justice Alok Aradhe, came in an appeal filed by the DDA against Corporation Bank and others.
Background
The dispute traces back to 2001 when DDA allotted a plot in Jasola to Sarita Vihar Club for building a sports and recreational facility. Under the lease conditions, the club was required to seek prior written consent of the Lieutenant Governor before mortgaging the land. Despite this, the club mortgaged the plot to Corporation Bank without obtaining proper approval.
When the club defaulted on repayment, the bank moved the Debt Recovery Tribunal (DRT) and eventually the land was put up for auction in 2012. M/s Jay Bharat Commercial Enterprises emerged as the highest bidder, paying over ₹13 crore for the plot. The sale was confirmed, and possession was handed over. But DDA objected, claiming the mortgage itself was void and that its right to unearned increase had been overlooked.
Court's Observations
The bench minced no words in criticizing both the bank and the recovery officer.
"The auction was held in violation of the lease terms and statutory provisions," the Court observed, stressing that the DDA’s claim of unearned increase was never factored into the sale proclamation.
The judges also noted the peculiar position of the auction purchaser, who had acted in good faith.
"Among all the actors in this legal drama, it alone stands innocent," the bench remarked, invoking the principle of restitution.
The Court emphasized that an auction conducted on a flawed foundation cannot stand, and the burden of responsibility must fall on the bank which advanced the loan without lawful authority.
Decision
Striking down the Delhi High Court’s earlier order that had dismissed DDA’s challenge, the Supreme Court quashed the auction notice of September 27, 2012, as well as the subsequent sale certificate issued in 2013.
In a clear directive, the Court ordered the bank to refund the entire deposit to the auction purchaser. Further, it held that the purchaser is entitled to interest at the rate of 9% per annum from the date of deposit until repayment.
"The money which would have earned value elsewhere must be restored with fairness," the bench declared.
With this ruling, the Supreme Court has reaffirmed that state property cannot be alienated in violation of lease conditions, and that innocent third parties caught in the crossfire must be compensated promptly.
Case Title: Delhi Development Authority vs. Corporation Bank & Ors.
Case Number: Civil Appeal No. 11269 of 2016