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2026 Supreme(Online)(P&H) 79339

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Suvir Sehgal, Deepak Manchanda, JJ
Manish – Appellant
Versus
State of Haryana – Respondent
CWP No.10147 of 2025

Advocates:
For the Appellants/Petitioners: Sanjiv Gupta, Anuj Gupta
For the Respondents: Anant Kataria, Deepak Sabherwal

Public authorities cannot cite internal policy limitations to deny alternative plots when the initial failure to deliver possession arises from their own lack of due diligence, as such conduct constitutes arbitrary and unreasonable action breaching legitimate expectations.

Headnote:(A) Constitution of India - Article 21 - Right to housing - Public authority’s obligation of due diligence - Reasonable and fair conduct - Doctrine of legitimate expectation - Public authority cannot escape contractual obligations through unilateral cancellation due to its own failure in due diligence - Arbitrary or whimsical exercise of power is violative of Wednesbury unreasonableness and natural justice principles. (Paras 14, 15, 20)

(B) Contractual Obligations - Specific performance - Allotment of alternative plot - Where a public authority admits to lapses in due diligence regarding site acquisition or development, it is bound to provide relief to the claimant who has discharged full financial consideration - Denial of alternative plot on the premise of policy clauses regarding e-auction is unsustainable if the failure is attributable to the authority’s own non-verification. (Paras 15, 18, 24)

Facts of the case:
The petitioner was a successful bidder in an e-auction and paid the entire sale consideration for a plot. Subsequently, the authority acknowledged that the allotted land was unacquired. The authority cancelled the allotment and offered only a refund, rejecting the petitioner’s request for an alternative plot based on policy terms, despite acknowledging internal lapses in verification.

Findings of Court:
The court observed that the authority’s failure to conduct due diligence prior to the auction led to the dispute. It noted that the petitioner could not be penalized for the authority's own admitted errors. The court held that forcing a refund upon the petitioner constitutes an arbitrary, unreasonable, and mala fide exercise of power.

Issues: Whether the public authority is justified in unilaterally cancelling an allotment and denying an alternative plot on the basis of a no-fault policy when the initial failure of due diligence is attributable to the authority itself.

Ratio Decidendi: A public authority constituted to provide housing cannot act in a profit-driven or capricious manner. Having admitted to the lack of verification and the consequent inability to provide the allotted plot, the authority is legally obligated to provide an alternative plot to a compliant allottee to uphold the principles of fairness, equity, and legitimate expectation.

Result: Petition allowed with directions to allot an alternative plot within three months and payment of costs.

Table of Content
1. failure to verify land status causing allotment disruption. (Para 1 , 2 , 3 , 4)
2. parties' contentions regarding policy clauses and due diligence. (Para 5 , 6 , 7)
3. admission of fault regarding unacquired land by authority. (Para 9 , 10 , 11 , 12 , 13)
4. arbitrary cancellation lacks due diligence and legal basis. (Para 14 , 15 , 16 , 17)

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DEEPAK MANCHANDA, J.

1. Through the present writ petition, the petitioner has prayed for issuance of a direction for allotment of a plot in terms of the allotment letter dated 13.12.2022 (Annexure P-5), or in the alternative, for allotment of an alternative plot of equivalent size in the same vicinity/location at the same price.

2. The facts, as emanating from the pleadings in the present writ petition are that the petitioner was declared as a successful bidder in an e-auction conducted on 27.05.2022, pursuant to which a Letter of Intent (LOI) dated 18.07.2022 was issued, followed by an allotment letter dated 13.12.2022 (Annexure P-5). After that the possession of the plot was also offered to the petitioner. However, upon visiting the site, the petitioner discovered certain defects and found that construction had already been raised over the allotted plot by a third party. Thereafter, despite having paid 100% of the sale consideration of the plot, the petitioner approached the respondent-HSVP by way of complaints dated 02.10.2023 and 06.10.2023, wherein it had been averred that the respondent-HSVP has itself acknowledged vide letter dated 24.11.2023 (Annexure P-18), that the land comprising the allotted plot had not been acquired. However, instead of allotting either the said plot or an alternative plot, the respondent-HSVP proceeded to issue a letter cancelling the allotment and offering refund of the deposited amount in terms of the applicable policy (Annexure P-21). Aggrieved by the aforesaid impugned action, the petitioner has approached this Court by way of the present writ petition.

3. Learned Senior Counsel for the petitioner submits that the petitioner having been declared a successful bidder in the e-auction conducted on 27.05.2022, deposited 100% of the sale consideration of the plot, pursuant whereto an allotment letter dated 13.12.2022 along with an offer of possession was issued in his favour. However, despite the aforesaid fact, the actual allotment of the plot could not materialize as it was subsequently discovered that the land on which the plot had been carved out had never been acquired by HSVP and the said fact stands duly acknowledged by the respondent-authority vide letter dated 24.11.2023 (Annexure P-18).

4. It has been argued that the petitioner is not at fault in any manner, inasmuch as prior to conducting the auction of the site in question, the respondent-authority failed to undertake proper due diligence. The dispute regarding non-acquisition of the land of the allotted plot was disclosed only after more than one and a half year from the date the petitioner had been declared a successful bidder in the e-auction held on 27.05.2022, despite the petitioner having already deposited the entire sale consideration.

5. Learned Senior Counsel further contends that the subsequent cancellation of the allotment and the offer of refund of the deposited amount are wholly arbitrary, discriminatory and contrary to the settled principles of law. In support of his submissions, reliance has been placed upon the judgments passed by this Court in Parveen Sharan Versus Haryana Shehri Vikas Pradhikaran and another , CWP-18713-2024 decided on 28.03.2025 and Vishal Kandwal Versus State of Haryana and others , CWP-14243-2024 decided on 16.10.2025.

6. Per contra, learned counsel for respondent-HSVP submits that the prayer of the petitioner for allotment of an alternative plot has rightly been rejected and that the present petition is liable to be dismissed on the ground that the petitioner had agreed to the terms and conditions of the e-auction policy dated 20.05.202

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2026 Supreme(Online)(P&H) 79339

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARHSuvir Sehgal, Deepak Manchanda, JJManish – AppellantVersusState of Haryana – RespondentCWP No.10147 of 2025

Public authorities cannot cite internal policy limitations to deny alternative plots when the initial failure to deliver possession arises from their own lack of due diligence, as such conduct constitutes arbitrary and unreasonable action breaching legitimate expectations.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Suvir Sehgal, Deepak Manchanda, JJ
Manish – Appellant
Versus
State of Haryana – Respondent
CWP No.10147 of 2025