1. Public auction for commercial plot — Default in payment — Cancellation and revocation of allotment — Dispute over balance payment and execution of sale deed. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 )
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2025 Supreme(SC) 1108
SUPREME COURT OF INDIA
DIPANKAR DATTA, N.V. ANJARIA, JJ.
Tamil Nadu Housing Board, Rep. By Its Managing Director And Ors. – Appellants
Versus
S. Ganesan – Respondent
Civil Appeal No. 9631 of 2025 [Arising Out of SLP (C) No. 12187 of 2025]
Decided On : 21-07-2025
Advocates appeared:
For the Petitioner(s): Ms. G. Indira, AOR Mr. P Gandepan, Adv. Ms. Amrita Kumari, Adv. Ms. Anjali Singh, Adv. Ms. Deepa Rathore, Adv. Ms. Raniba Pangnila, Adv.
For the Respondent(s): Mr. S. Gowthaman, AOR
For the Petitioner(s): Ms. G. Indira, AOR Mr. P Gandepan, Adv. Ms. Amrita Kumari, Adv. Ms. Anjali Singh, Adv. Ms. Deepa Rathore, Adv. Ms. Raniba Pangnila, Adv.
For the Respondent(s): Mr. S. Gowthaman, AOR
Public authorities must prioritize transparency and accountability in auction processes, ensuring compliance with contractual obligations to protect public interests.
Headnote:(A) Tamil Nadu Housing Board Act - The respondent was the highest bidder for a commercial plot but failed to make the initial deposit, leading to cancellation of the allotment. Multiple opportunities were afforded to the respondent to comply with payment obligations, but he failed to do so. The Board is responsible for public property management and must act in the public interest. (Paras 2, 30, 32)
(B) Auctions - Principles of transparency, fairness, and accountability must guide public authority in auction processes. Indulgences extended to the respondent have resulted in loss of public revenue. (Paras 29, 30)
Facts of the case:
The respondent successfully bid for a commercial plot but failed to make the required deposit on time, resulting in cancellation. Despite various allowances made by the Board, the respondent did not settle his dues correctly, leading to protracted litigation.
Findings of Court:
The court confirmed the cancellation of the allotment while also allowing the respondent a timeline to vacate the property. The Board may recover outstanding dues through legal channels.
Issues: The court addressed the legality of the cancellation, the respondent's default in payments, and the implications of public interest in managing public property.
Ratio Decidendi: The Supreme Court emphasized the need for the respondent to comply with payment obligations, stating that his conduct raised doubts regarding his bona fides. The court underscored that public property management prioritizes public interest over individual claims.
Result: The appeal is allowed, with the respondent required to vacate the plot within four months.
Legal Category Hierarchy
Table of Contents
2. Respondent sought execution of sale deed and extension of time for payment — Board contended the respondent was a chronic defaulter causing loss to public exchequer. (Para 27 )
3. Respondent exhibited apathy and lack of bona fides through repeated payment defaults — Public property management must prioritize public interest, transparency, and the public exchequer. (Para 28 , 31 )
4. Chronic default in payment and lack of bona fides by an allottee justify the cancellation of allotment of public property to serve the broader public interest. (Para 29 , 30 , 32 )
5. Appeal allowed — Allottee directed to vacate plot within four months — Board authorized to dislodge occupant and recover balance as arrears of land revenue. (Para 33 , 34 )
6. What is the primary duty of a public authority acting as a custodian of public property?
The authority must prioritize the greater public good and ensure that decisions regarding public property serve the broader public interest, guided by principles of transparency, fairness, and reasonableness. (Para 29 )
7. Does an administrative error in calculating dues excuse an allottee from paying the actual balance of a transaction?
No. If the allottee knows or should have known the actual amount owed, an inadvertent error by the authority does not excuse the failure to pay the correct balance, and such conduct may call into question the allottee's bona fides. (Para 30 )
8. Can a right to make payment for a property be closed due to repeated defaults and lack of bona fides?
Yes. Continued apathy, indifference toward judicial orders, and a history of failing to adhere to payment commitments can lead to the conclusive closure of the right to make payment and the termination of the allotment. (Para 28 , 31 , 33 )
JUDGMENT
DIPANKAR DATTA, J.
1. Leave granted.
2. The first appellant1 [Board, hereafter]invited sealed bids for disposal of Prime Commercial Plot No. PC-16 at Razaak Garden Road, Arumbakkam, Chennai – 600106 [Plot, hereafter]. An open auction was conducted on 23rd September, 1986. The respondent participated in such auction and offered a bid of Rs. 4,78,921/-. He emerged as the highest bidder and was declared as such.
3. Vide letter No. AS 1/11364/1986 dated 23rd December, 1986, the Board communicated acceptance of the respondent’s offer for the Plot with a request to him to pay Rs. 1,19,731/- towards 25% as the initial deposit within 15 days from date of receipt thereof to enable it issue the Regular Allotment Order.
4. Due to the respondent’s failure to make the initial deposit as aforesaid, the said allotment was cancelled vide order dated 01st June, 1987.
5. The respondent thereafter made several representations to the Board to permit him to pay the arrears, which was ultimately allowed, as a special case, vide letter No. AR2/11364/86 dated 22nd November, 1993. It was stipulated therein that in addition to the initial deposit amount, the respondent must also pay Rs. 1,01,772/- towards 12% interest on the initial deposit for the period from 23rd December, 1986 to 31st December, 1993 (85 months) as well as Rs. 5000/- towards revocation fee on or before 31st December, 1993.
6. Since the respondent had remitted a sum of Rs. 1,19,731/- towards the initial deposit and Rs. 5000/- towards revocation fee, the Board revoked the cancellation order vide letter dated 04th February, 1994. This letter admittedly does not speak about payment of the interest amount.
7. On 28th February, 1994, the Board issued a Regular Allotment Order in favour of the respondent. He was granted permission to pay the balance amount of Rs. 3,57,191/- on “Hire Purchase Scheme” in monthly instalments of Rs. 8260/- over a period of 5 years. Clause 4 thereof stipulated consequences of default, including eviction.
8. Pursuant to the allotment order, the respondent took over possession of the Plot on 22nd March, 1994 and thereafter, on 12th December, 1997, requested the Board to inform the balance amount to be paid. The Board vide letter No. B1/11364/86 dated 27th February, 1998 inadvertently informed the respondent that he was required to pay Rs. 77,300/- towards the balance cost of the Plot with interest and penal interest as on 31st March, 1998. This amount was duly paid by the respondent along with interest and penal interest on 24th March, 1998. On 7th November, 2001, the respondent requested the Board to execute the sale deed in his favour.
9. In due course of time, the Board upon scrutiny of its records detected the error. Upon preparation of a new working sheet, it found that the respondent was liable to pay Rs. 15,26,023/- as of December, 2002. A letter to this effect was sent to the respondent on 16th December, 2002 and the earlier letter dated 27th February, 1998 was withdrawn.
10. Since the respondent did not pay Rs. 15,26,023/-, the Sites and Services Committee resolved to cancel the allotment vide resolution No. 24/2004 dated 30th July, 2004. Cancellation was communicated to the respondent vide letter dated 17th August, 2004.
11. Accepting the request of the respondent, the Board communicated its willingness to revoke the cancellation of allotment subject to the respondent undertaking that the pending dues amounting to Rs.20,77,911/- would be cleared. On 19th November, 2004, the respondent sent a letter undertaking to pay the due amount of Rs. 20,77,911/- within the next 10 days. As this letter was received by the Board belatedly, the amount due was recalculated till December, 2004 which was duly sent to the respondent. The respondent thereafter sent a letter to the second appellant (Executive Engineer of the Board) that the amount due up to 31st December, 2004 would be remitted within 10 days from 10th December, 2004. On 20th May, 2005, the respondent sent a l
