“Second Highest Bidder Has No Vested Right”: Punjab & Haryana High Court Upholds Re-Auction of Improvement Trust Property
Case Name: Pritpal Singh Ahluwalia v. State of Punjab and Others
Date of Judgment: 08 May 2026
Citation: CWP-12651-2022
Bench: Justice Suvir Sehgal and Justice Yashvir Singh Rathor
Held: The Punjab and Haryana High Court held that even the highest bidder in a public auction does not acquire a vested right until the bid is formally accepted by the competent authority. The Court further held that a second highest bidder cannot seek allotment as a matter of right merely because the highest bidder defaulted in depositing the bid amount. Upholding the decision of the Improvement Trust to conduct a fresh auction in public interest and for maximizing revenue, the writ petition was dismissed.
Summary: The petitioner sought issuance of a writ of mandamus directing the respondents to allot Shop-cum-Flat No. 30-A measuring 100 square meters situated in the 8.64 Acre Scheme floated by the Improvement Trust, Batala. The petitioner also challenged the order dated 15.02.2022 passed by the Director, Local Government, whereby the Trust was directed to auction the property afresh instead of allotting it to the petitioner.
The Improvement Trust had auctioned the property on 01.12.2021. The reserve price was fixed at ₹31,200 per square meter. The petitioner submitted a bid of ₹50,050 per square meter and deposited 25% of the sale consideration along with cess. However, another bidder, Simratpal Singh, emerged as the highest bidder with an offer of ₹77,000 per square meter but failed to deposit the mandatory 25% amount as required under the auction conditions. Consequently, the earnest money of the highest bidder was forfeited.
Thereafter, the Improvement Trust passed a resolution proposing allotment of the property to the petitioner at the rate offered by the highest bidder. However, the Director, Local Government rejected the proposal and advised the Trust to initiate fresh auction proceedings for the property.
The respondents defended the decision by contending that the petitioner was merely the second highest bidder and had no enforceable right to claim allotment. It was further argued that re-auction of the property was necessary in the financial interest of the Trust because the petitioner’s bid was substantially lower than the highest bid received in the earlier auction.
The High Court reiterated the settled legal principle that even the highest bidder in a public auction does not acquire any vested or enforceable right unless the bid is formally accepted by the competent authority. The Court relied upon the Supreme Court judgment in Laxmi Kant v. Satyawan to hold that the Government retains the authority to reject even the highest bid in public interest and for safeguarding public revenue.
The Court also relied upon Haryana Urban Development Authority v. Orchid Infrastructure Developers Private Limited to reiterate that there can be no concluded contract in the absence of acceptance of bid and a highest bidder cannot seek allotment as a matter of right. The Court further referred to earlier Division Bench judgments holding that where re-auction is likely to fetch higher revenue, rejection of an earlier bid cannot be faulted unless the decision is shown to be mala fide or actuated by extraneous considerations.
Applying the aforesaid principles, the High Court observed that the petitioner was not even the highest bidder and therefore stood on a weaker footing. Since the competent authority had formed an opinion that accepting the petitioner’s bid would not be financially prudent and that the property could fetch a higher price through fresh auction, the Court found no illegality in the impugned decision.
Decision: The Punjab and Haryana High Court dismissed the writ petition and upheld the decision of the authorities to conduct a fresh auction of the property. The Court held that the petitioner, being merely the second highest bidder, had no vested right to seek allotment of the property.