Kiran Raj

The Supreme Court Division Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan, in an order dated 16 January 2026, set aside a Punjab and Haryana High Court decision and directed the Ludhiana Improvement Trust to refund ₹1,57,04,580 to an auction purchaser, with interest at 9% per annum from 19 July 2021, within six weeks. The dispute arose after the purchaser paid the bid amount for a plot sold in a public auction, but the Trust later declined to execute the conveyance, citing a pending civil suit concerning the same property. The Court found that bidders were not informed of the ongoing litigation and related encumbrances at the time of auction and held that such non-disclosure vitiates a public auction, warranting restitution of the amount deposited.

The auction purchaser approached the High Court seeking a writ of mandamus for execution of the conveyance. The writ petition was dismissed, with the High Court directing that the pending civil suit be decided first. Aggrieved by the refusal to grant relief despite full payment having been made, the auction purchaser approached the Supreme Court.

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Before the Supreme Court, the purchaser confined the relief to refund of the deposited amount along with reasonable interest. The statutory authority did not dispute receipt of the amount or the fact that litigation relating to the property was pending at the time of auction. The central issue before the Court concerned the legality of conducting a public auction without disclosure of pending litigation and the entitlement of the auction purchaser to restitution.

The Court recorded that “when the plot in question was put to auction … the fact about pendency of litigation was not disclosed before the parties who offered their bids in the public auction.” It observed that "It was the legal duty on the part of the Trust to have made it clear in the auction notice itself that the subject plot is a subject matter of litigation. Authorities (such as banks, recovery officers, or state bodies) conducting public auctions are legally required to disclose all known encumbrances and litigation relating to the property, as failure to do so invalidates the sale. Suppressing such material facts renders the auction fraudulent or vitiated by material irregularity."

Referring to the conduct of the authority, the Court stated that “we do not approve the way the Trust proceeded with the auction of the plot in question.” It reiterated that "Public auction is one of the modes of sale intending to get highest competitive price for the property. Public auction also ensures fairness in actions of the public authorities and their officers who should act fairly and objectively. Their actions should be legitimate. Their dealing should be free from suspicion. Nothing should be suggestive of bias, favouritism, nepotism or beset with suspicious features of underbidding detrimental to the legitimate interest of the stakeholders."

The Court also recorded that the auction purchaser “bona fide participated in the public auction and was declared the highest bidder,” and that the amount paid “is not in dispute.” Drawing upon earlier precedent in Delhi Development Authority v. Corporation Bank & Ors on restitution, the Bench observed that “the jurisdiction to make restitution is inherent in every court and will be exercised wherever the justice of the case demands.” It further stated that “the Auction Purchaser has been caught in the undertow of circumstances, not of its making,” and that “among all the actors … it alone stands innocent.”

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The Court ordered that “we set aside the judgment and order passed by the High Court. The Trust to refund the amount of Rs.1,57,04,580/- … with interest at the rate of 9% per annum from the date of the deposit. The amount referred to above be refunded within a period of six weeks from today without fail.” The appeal was accordingly allowed “in the aforesaid terms.”

Advocates Representing the Parties

For the Petitioners: Mr. Aabhas Kshetarpal, Advocate-on-Record; Mr. Dhiliban Varadarajan, Advocate; Mr. Harsh N. Dudhe, Advocate

For the Respondents: Mr. Sanchar Anand, Advocate; Mr. Apoorva Singhal, Advocate-on-Record; Mr. Rajat Rathee, Advocate; Mr. Aman Kumar Thakur, Advocate; Mr. Pratimesh, Advocate; Mr. Aman Bhardwaj, Advocate; Ms. Nupur Kumar, Advocate-on-Record; Ms. Muskan Surana, Advocate

Case Title: Viney Kumar Sharma v. The Improvement Trust & Anr.
Case Number: Civil Appeal arising out of SLP (C) No. 24811 of 2025
Bench: Justice J.B. Pardiwala, Justice K.V. Viswanathan