Satinder Pal Singh & Ors. v. Bedi Hospital & Ors., Civil Appeal arising out of SLP (C) No. 33791 of 2025 (with Civil Appeal arising out of SLP (C) No. 33793 of 2025), Supreme Court | 2026 INSC 1142
An agreement to sell under the Chandigarh Estate Rules, 2007 does not become an enforceable contract until the conveyance deed is executed. Before that, the Estate Officer can reject even the highest bid without giving reasons, but must act fairly and not arbitrarily. When a public property is auctioned, a much lower price than a comparable adjoining site fetched at the same auction is a relevant reason to cancel and try for a better price, provided that the bidder is told the reason, his deposit is refunded and he can take part in the fresh auction.
The Supreme Court has held that the Chandigarh Administration was within its rights to cancel an e-auction sale of a Sector 33C nursing home site, and to call a fresh auction, because the winning bid was Rs 6 crore lower than the one for the identical adjoining site. But it has also ordered a third auction of the site within three months because of the mess created by the High Court’s interim order. In an auction of two nursing home sites measuring 744.44 sq. yards each, with a reserve price of Rs 6.91 crore, Site No. 3 went to the appellant for Rs 18.25 crore, and Site No. 4 to Bedi Hospital for Rs 12.58 crore, on the same day. Bedi paid the full price, and an agreement to sell was signed. In January 2023, the Administration cancelled the bid because the price “does not reflect the market trend”, returned all the money and invited Bedi to bid again. Bedi challenged this in the High Court, which allowed a fresh auction but barred it from finalising it. In that auction in September 2023, the appellant won with Rs 18.30 crore, and Bedi did not participate. In April 2025, the High Court quashed the cancellation, without discussing the new auction. Justices P.S. Narasimha and Alok Aradhe set this aside. They held that an agreement to sell under the Chandigarh Estate Rules is not a binding contract until the conveyance deed is executed, and the rules let the Estate Officer reject the highest bid without giving reasons, subject to the requirement that he act fairly and not arbitrarily. Since the Administration acted before the allotment letter and conveyance deed, and a much lower price at the auction is a relevant reason to try for the best price, the court found no illegality. It distinguished the Shishir Realty and Golden Food Products rulings, since there was no breach of natural justice here, the reason was given and the full amount was refunded. The court found the High Court’s interim arrangement to be the cause of a “second phase of litigation”. Bedi offered to match the Rs 18.30 crore bid, but the appellant objected, and the court directed a fresh e-auction of Site No. 4 under the 2007 Rules, to be completed within three months.