The Supreme Court has set aside the Punjab and Haryana High Court's decision in a dispute over a nursing home site in Chandigarh, directing the Chandigarh Administration to conduct a fresh e-auction within three months. The Court held that the Administration could revisit the earlier auction to secure a better price for public property before the allotment was finalised.
Background
The dispute concerned Nursing Home Site No. 4 in Sector 33C, Chandigarh, measuring 744.44 square yards. The Chandigarh Administration had offered the site for sale through an e-auction in 2022, fixing its reserve price at ₹6.91 crore.
Bedi Hospital emerged as the highest bidder for Site No. 4 with an offer of ₹12.58 crore. It deposited the entire amount, and an Agreement to Sell was executed. However, the Administration subsequently cancelled the bid contract on January 27, 2023, observing that an adjacent nursing home site of the same size had fetched ₹18.25 crore in the same auction.
The Administration refunded the amount deposited by Bedi Hospital and decided to conduct another auction. Bedi Hospital challenged the cancellation before the Punjab and Haryana High Court, which set aside the cancellation letters in its judgment dated April 1, 2025. Satinder Pal Singh and the Chandigarh Administration challenged that decision before the Supreme Court.
A Bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe examined the Chandigarh Estate Rules, 2007, and the applicable e-auction conditions.
The Court noted that the allotment letter had not been issued and the conveyance deed had not been executed. It held that the Administration retained the authority to revisit the auction before the contract became enforceable, provided its decision was not arbitrary or unreasonable.
The judgment observed:
“However, while dealing with matters relating to sale or lease of public property, the action of a public authority to recall or revisit the auction process would be justified if the decision is intended to maximise the price for the sale/lease of public property.”
The Court also considered the subsequent auction, conducted pursuant to the High Court's interim directions. In September 2023, Satinder Pal Singh's bid of ₹18.30 crore was accepted, bringing an additional ₹6 crore compared with Bedi Hospital's original offer. Bedi Hospital had not participated in that auction, although it was permitted to do so.
The Bench observed that the High Court had failed to consider the consequences of the completed re-auction when deciding Bedi Hospital's petition.
“Having conducted and concluded a fresh auction, the Chandigarh Administration placed a status report before the High Court indicating clearly that the subsequent e-auction fetched an additional amount of Rs. 6 Crores. Six crores is not a small amount, and this Court cannot shut its eyes to the glaring reality of the facts that have unfolded about price discovery.”
The Supreme Court allowed the appeals, set aside the High Court's judgment dated April 1, 2025, and directed the Chandigarh Administration to conduct a fresh e-auction of Site No. 4 within three months, following the procedure prescribed under the Chandigarh Estate Rules, 2007.
No order was passed as to costs.
