High Court Condemns HSVP for Arbitrary Plot Cancellation, Imposes ₹1 Lakh Costs

In a strongly worded judgment that underscores the intersection of administrative accountability and constitutional rights, the Punjab and Haryana High Court has rebuked the Haryana Shahari Vikas Pradhikaran (HSVP) for unilaterally canceling plot allotments made through a transparent e-auction process. The court, comprising Justices Anupinder Singh Grewal and Deepak Manchanda, not only directed the restoration of the allotments but also imposed a cost of ₹1 lakh on the authority in each of the petitions. This ruling, delivered in Vishal Kandwal v. State of Haryana and Ors. , highlights how arbitrary state actions can infringe upon the fundamental right to life under Article 21 of the Indian Constitution, particularly in the context of accessing affordable housing amid skyrocketing property prices.

The decision serves as a cautionary tale for public authorities tasked with housing development, emphasizing principles of natural justice, contractual integrity, and the statutory mandate to promote equitable access to shelter. For legal professionals, it reinforces the judiciary's role in curbing administrative overreach and profit-driven policies that disadvantage middle-class citizens.

Background of the Case

The petitioner, Vishal Kandwal, a serving Commandant in the Central Reserve Police Force (CRPF), participated in an HSVP e-auction in January 2023 for plots in Sector 25, H Pinjore, Panchkula. Kandwal successfully bid ₹1,50,99,300 for Plot No. 41, a modest 14-marla plot designed for affordable housing. Following the acceptance of his bid, he received a Letter of Intent and promptly paid the full consideration. On December 2, 2023, HSVP issued an allotment letter and handed over symbolic possession, marking the culmination of what appeared to be a legitimate and binding transaction.

However, on February 20, 2024, Kandwal was stunned to find the entire amount refunded to his account without any prior intimation, notice, or reasoned order. His subsequent representations and a legal notice to HSVP went unheeded, prompting him to file a writ petition under Article 226 of the Constitution. Represented by Senior Advocate Kshitij Sharma and Advocate Shruti Sharma, Kandwal argued that a concluded contract had been formed under the Indian Contract Act, 1872, and that the unilateral cancellation violated core principles of natural justice, including audi alteram partem (hear the other side).

HSVP's defense painted a picture of administrative inadvertence and developmental constraints. The authority claimed that the auction of three plots, including Kandwal's, had been internally canceled in July 2023 due to concerns over inadequate infrastructure and hilly terrain in the area. They asserted that the subsequent issuance of the allotment letter and possession was a clerical error. To justify the layout changes, HSVP invoked Clause 39 of its 2022 E-Auction Policy, which permits refunds in cases of inability to deliver possession due to circumstances beyond control, without any obligation to provide alternative plots. Furthermore, they argued that a revised development plan retained only larger 1,000-square-yard plots, rendering smaller affordable options obsolete.

Court's Scathing Critique of HSVP's Actions

The bench's findings were unequivocal in dismantling HSVP's justifications, labeling the cancellation as "whimsical," "profit-driven," and a blatant "abuse of discretion." The court noted the absence of any pre-cancellation notice, hearing, or speaking order, which rendered the action procedurally flawed and substantively arbitrary. "We cannot lose sight of the fact that the petitioner invested his entire lifetime savings to construct a house as a government servant and had legitimately obtained allotment of Plot No.41, where even symbolic possession was also handed over to him on 02.12.2023. Still, without assigning any reason, the allotment was cancelled, and the payment was refunded on 20.02.2024," the justices observed.

Central to the ruling was the invocation of Article 21, which guarantees the right to life and personal liberty. The court held that depriving a citizen of affordable housing, especially in the face of escalating property prices from 2023 to 2025, constituted a direct violation of this fundamental right. Citing the petitioner's status as a public servant who had pooled his life savings for a modest home, the bench emphasized that HSVP's post-allotment "discovery" of hilly terrain could not penalize the allottee. This perspective aligns with evolving jurisprudence, such as in Olga Tellis v. Bombay Municipal Corporation (1985), where the Supreme Court expanded Article 21 to include the right to shelter as intrinsic to human dignity.

The court rejected HSVP's reliance on the e-auction policy, clarifying that it operates in a distinct domain from the 2013 Alternative Plot Allotment Policy. Under the latter, HSVP is obligated to carve out equivalent plots—even through re-planning or utilizing unplanned pockets—when original allotments become untenable. "HSVP, being the framer of both policies, cannot selectively rely on one to defeat the purpose of the other," the judgment stated, underscoring the authority's duty to harmonize its frameworks in favor of allottees.

Moreover, the bench critiqued the shift from affordable 8-marla, 14-marla, and 1-kanal plots to exclusive 1,000-square-yard high-value lots as indicative of a profit-oriented agenda. HSVP, established under the Haryana Development and Regulation of Urban Areas Act, 1975, is statutorily mandated to provide housing on a "no profit-no loss" basis. The court viewed the layout revision—unsupported by any documentary evidence in the original records—as contrary to this objective, potentially discriminating against middle- and lower-income groups in favor of affluent buyers.

Legal Principles and Precedents Invoked

The petitioner's counsel drew on State of Jharkhand v. Brahmaputra Metallics Pvt. Ltd. (2020) 17 SCC 480, where the Supreme Court invalidated unilateral contract terminations by state entities without adherence to natural justice. The High Court echoed this, holding that HSVP's conduct breached not only contractual obligations but also administrative law tenets like reasonableness and non-arbitrariness, as enshrined in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948).

The ruling also referenced the court's prior decision in Tamanna Babbar v. State of Haryana (CWP-3314-2025), where HSVP admitted to similar lapses in site verification before auctions. This pattern of negligence, the bench noted, reflected systemic issues within the authority, including inadequate due diligence and a propensity for post-facto rationalizations. Such observations could invite broader scrutiny, potentially leading to policy reforms or even contempt proceedings for non-compliance.

In terms of remedies, the court allowed both petitions, directing HSVP to restore the allotments within three months—either by delineating fresh plots in the revised layout or through other viable alternatives in the same vicinity. The ₹1 lakh costs, payable within two months, serve as a deterrent against future arbitrariness, though modest in scale compared to the petitioner's financial stakes.

Broader Implications for Administrative Law and Housing Policy

This judgment has profound ramifications for legal practitioners in administrative and constitutional law. It reaffirms the judiciary's vigilance against state instrumentalities that prioritize fiscal gains over public welfare. HSVP's actions, described as "mala fide" and exploitative, exemplify how public authorities can undermine their constitutional duties, converting affordable housing schemes into elitist enclaves. Legal experts may see this as an extension of the right to housing discourse, building on cases like Chameli Singh v. State of U.P. (1996), which recognized shelter as a fundamental right necessary for dignified living.

For housing developers and policymakers, the ruling mandates rigorous pre-auction assessments and transparent decision-making. The emphasis on integrating alternative allotment policies prevents authorities from using boilerplate clauses to evade liability. In an era of urban migration and housing shortages, this decision could embolden similar challenges nationwide, particularly against entities like the Delhi Development Authority (DDA) or state housing boards facing accusations of arbitrary allotments.

Moreover, the linkage to Article 21 elevates housing disputes from mere contractual matters to constitutional imperatives. Lawyers advising clients in e-auctions or land allotments should now stress the need for documented possession and swift judicial recourse upon irregularities. The costs imposed highlight the trend of penalizing frivolous defenses, potentially influencing cost-allocation strategies in writ litigation.

From a societal lens, the court's critique of HSVP's "profit-driven" shift underscores the tension between development goals and equity. With property prices surging—often doubling in peri-urban areas like Pinjore—the ruling protects vulnerable buyers, including government employees like Kandwal, from bureaucratic whims. It also signals to legislators the urgency of amending housing acts to enshrine anti-arbitrariness safeguards explicitly.

Conclusion: A Call for Administrative Integrity

The Punjab and Haryana High Court's intervention in Vishal Kandwal is more than a case-specific remedy; it is a clarion call for public authorities to uphold fairness in housing delivery. By tying arbitrary cancellations to Article 21 violations, the bench has fortified the legal arsenal against administrative caprice. As HSVP navigates compliance, including the Chief Administrator's personal appearance noted in the order, the onus is on such bodies to realign with their statutory ethos.

For the legal community, this ruling offers fertile ground for appellate challenges or comparative analyses with pan-Indian housing jurisprudence. It reminds us that the right to life extends beyond survival to the tangible pursuit of shelter—a right that no whimsical policy can erode. As urban India grapples with affordability crises, judgments like this ensure that the scales of justice tilt toward the common citizen.

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