Court Auction Sale Cannot Be Set Aside Without Proving Material Irregularity and Substantial Injury: P&H High Court

Case Name: Rajinder Kaur v. Late Joginder Kaur & Ors.

Date of Judgment: 05 March 2026

Citation: CR-1931-2026

Bench: Justice Deepak Gupta

Held: The Punjab and Haryana High Court held that a court auction sale conducted in execution proceedings cannot be set aside under Order XXI Rule 90 CPC merely on allegations of irregularity unless the applicant proves both material irregularity in conducting the sale and substantial injury caused by it. The Court emphasized that objections which could have been raised prior to the auction cannot be allowed to be raised after the sale is concluded.

Summary: The petitioner invoked the supervisory jurisdiction of the High Court under Articles 226 and 227 of the Constitution challenging the orders of the Executing Court dated 19.01.2026 and the Additional District Judge dated 16.02.2026 which had refused to set aside an auction sale conducted during execution proceedings.

The dispute concerned House No. 2781, Sector 22-C, Chandigarh, which had earlier been the subject matter of a preliminary partition decree dated 06.01.2017. The property belonged to the widow and five children of late Khushal Singh, each having a 1/6th share. After the death of the widow Joginder Kaur, the property became the subject of execution proceedings.

Since the applicable Chandigarh Estate Office rules did not permit fragmentation of the property, partition by metes and bounds was not feasible. Consequently, the Executing Court ordered partition through public auction of the property.

During the first auction held on 06.01.2025, the highest bid of ₹2.49 crore was made by Arvinder Singh. However, the bid was cancelled when the bidder failed to deposit the balance amount within the stipulated period. A subsequent auction conducted on 20.04.2025 also failed as no bids were received. Thereafter, a fresh schedule was fixed and a new auction was held on 15.10.2025. In that auction, respondent No.3 Pankaj Bansal emerged as the highest bidder with an offer of ₹2.10 crore.

Following the auction, the petitioner filed an application under Order XXI Rule 90 CPC seeking to set aside the sale, alleging that the auction proceedings were conducted in haste, lacked transparency, and resulted in the property being sold at a grossly inadequate price. It was further contended that the mandatory requirements under Order XXI Rules 66 and 54 CPC had not been complied with, and that the sale was vitiated by alleged collusion among bidders.

The Executing Court dismissed the application, holding that no material irregularity or fraud had been established. The appellate court also dismissed the appeal, prompting the petitioner to approach the High Court.

The High Court examined the statutory framework governing court auction sales under Order XXI Rules 66, 67, 89 and 90 CPC. It noted that Rule 66 mandates issuance of a proper proclamation of sale specifying essential particulars such as the property to be sold, encumbrances, and other material facts necessary for prospective bidders to assess the value of the property.

The Court also referred to Supreme Court precedents including Desh Bandhu Gupta v. N.L. Anand and Shalimar Cinema v. Bhasin Film Corporation, which emphasize that courts must strictly comply with the statutory requirements governing auction sales to ensure fairness and competitive bidding.

However, the Court clarified that Order XXI Rule 90 CPC does not permit reopening of concluded auction sales merely on technical grounds. A sale can be set aside only if the applicant proves both material irregularity or fraud in conducting the sale and substantial injury caused by such irregularity. Additionally, objections that could have been raised before the sale or before settlement of the proclamation cannot be entertained afterward.

Applying these principles to the present case, the Court found that the auction had been conducted after following the prescribed procedure, including issuance of notice, proclamation, and conduct of auction by the Civil Nazir. The petitioner had failed to establish any material irregularity or substantial injury resulting from the sale.

Decision: The Punjab and Haryana High Court dismissed the petition, upholding the orders of the Executing Court and the Additional District Judge. The Court held that the auction sale could not be set aside in the absence of proof of material irregularity or substantial injury as required under Order XXI Rule 90 CPC.