Gurugram: The Punjab and Haryana High Court has come down heavily on the Haryana Shahari Vikas Pradhikaran (HSVP), criticising it for arbitrarily cancelling plot allotments and refunding payments without providing any notice, explanation, or formal order to successful bidders.
The division bench comprising Justice Deepak Manchanda and Justice Anupinder Singh Grewal described the HSVP’s move as “unjustified, arbitrary and a clear example of mala fide”.
The High Court directed the HSVP this week to restore the allotment to the petitioner, an officer of the central police force, and others, and imposed penalty costs of Rs 1 lakh in each case.
The dispute stems from a 25 January 2023 HSVP notice inviting online bids for 51 properties in the Panchkula Zone through an e-auction.
Vishal Kandwal, a Central Reserve Police Force commandant, successfully bid Rs 1,50,99,300 for Plot No. 41 in Sector-5, Pinjore, measuring 162 sq m.
Kandwal paid the complete sale amount to the HSVP and received a Letter of Intent, allotment letter, and offer of possession dated 2 December 2023 for the plot.
However, on 20 February 2024, Kandwal found the entire amount unexpectedly credited back to his bank account without any prior communication or justification.
When the HSVP failed to respond to his representations and a legal notice, Kandwal filed a petition before the Punjab and Haryana High Court.
The HSVP argued it cancelled the auction on 6 July 2023, after complaints from bidders that the development work in the area was incomplete. The HSVP said that it issued the allotment letters by mistake, as the cancellation memo went unnoticed.
The HSVP further argued that on 14 November 2023, it changed the plan and deleted smaller plots (including Plot No. 41) to retain only 32 larger plots of 1,000 sq yards.
It cited Clause 39 of its 20 July 2022 e-auction policy to argue that its action was well within its authority.
Clause 39 states that if possession cannot be delivered due to court orders, litigation, or circumstances beyond control, the full amount shall be refunded and the bidder shall have no claim for the property or any alternative site.
But the court rejected the argument, saying the cancellation did not fall within “circumstances beyond control” as the action was deliberate and entirely within the HSVP’s authority.
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‘Whimsical’ cancellations
The judgment noted that the reasons for cancellation were “whimsical and could have been avoided, had due diligence been exercised prior to issuance of the advertisement”.
The court observed that the petitioner had invested his life’s savings, and the HSVP had already delivered him a symbolic possession on 2 December 2023, by issuing an allotment letter and offer of possession.
The court said that the arbitrary cancellation without justification deprived him of affordable housing opportunities, particularly damaging given the significant property price escalation between 2023 and 2025.
“Such arbitrary action has deprived the petitioner of affordable housing, violating his right to life under Article 21 of the Constitution of India,” the judgment added.
The court said there were inconsistencies in the HSVP’s defence. On one hand, it said the land was on hilly terrain, and on the other hand, it said that the same land had been converted into 1,000 sq yard plots.
The court observed that the HSVP, constituted as a public authority to provide affordable housing on a no profit-no loss basis, appeared to be acting in a profit-driven manner detrimental to middle and lower-income citizens.
By converting affordable housing plots into high-value properties exclusively for wealthier sections of society, the HSVP contradicted its statutory purpose and violated constitutional and administrative law principles.
The bench cited the similar Tamanna Babbar vs. State of Haryana case, decided on 13 August 2025, where the HSVP was penalised Rs 1 lakh for advertising a plot without verifying that a nallah, or drain, existed on the land.
The court ruled that the petitioner was entitled to restoration of allotment under the HSVP policy dated 18 February 2013, which provides for allotment of alternative plots.
The policy stipulates that when plots of the required category are unavailable in the same sector, they shall be carved out in any unplanned pocket or through re-planning of available unsold plots.
The bench disagreed with the HSVP’s contention that the e-auction policy contained no provision for alternative plots after cancellation, noting that the two policies address different aspects and cannot be read to exclude legitimate claims.
The court dealt with the facts of the case by Vishal Kadwal but its judgment applies to a set of two petitions, the other filed by one Anil Kumar. The court said that since similar questions of law are involved in both cases, the judgment applies to both cases
The court ruled that the HSVP shall pay the costs of Rs 1 lakh to each petitioner within two months.
Invoking the doctrine of legitimate expectation, the judgment cited the Supreme Court’s ruling in the 2020 State of Jharkhand vs. Brahmaputra Metallics Ltd. case, which held that public authorities violate citizens’ trust when they fail to honour representations without adequate reason.
“The doctrine of legitimate expectation has its genesis in the field of administrative law. The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without any iota of abuse of discretion,” the Court quoted from precedent.
(Edited by Sugita Katyal)