Satinder Pal Singh vs Bedi Hospital
- Court
- Supreme Court
REPORTABLE
IN THE SUPREME COURT OF INDIA
2026 INSC 1142
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). OF 2026
@ SPECIAL LEAVE PETITION NO. 33791 OF 2025
SATINDER PAL SINGH & ORS. ...APPELLANT (S)
VERSUS
BEDI HOSPITAL & ORS. …RESPONDENT(S)
WITH
CIVIL APPEAL NO(S). OF 2026
@ SPECIAL LEAVE PETITION NO. 33793 OF 2025
J U D G M E N T
1. Leave granted.
2. These Civil Appeals arise out of the final judgment and order
1
of the High Court of Punjab and Haryana at Chandigarh , allowing
the writ petition filed by M/s Bedi Hospital, respondent no. 1 herein
and the writ petitioner before the High Court, challenging the letters
of cancellation of the bid contract dated 27.01.2023 and the
Agreement to Sell dated 09.02.2023 on the ground that the bid
amount offered by M/s Bedi Hospital is not reflective of market
Signature Not Verified
Digitally signed by
KAPIL TANDON
Date: 2026.10.16
17:44:15 IST
Reason:
1
CWP No. 2811 of 2023
Page 1 of 18
trends. For reasons to follow, we set aside the High Court’s decision
and have directed the Chandigarh Administration to conduct a fresh
e-auction for the said site within a period of three months.
3. The short facts giving rise to the filing of the present civil
appeals are as follows: The Chandigarh Administration issued an e-
auction notice on 31.08.2022 calling for the e-auction of 12
residential sites, 1 commercial site, and 2 nursing home sites on a
freehold basis. In these appeals, we are only concerned with the two
nursing home sites, namely Site No. 3 and Site No. 4, located at
Sector 33C, Chandigarh, admeasuring 744.44 sq. yards each. The
corrigendum published by the Chandigarh Administration dated
04.09.2022 fixed the reserve price for both sites at Rs 6.91 Crores.
4. M/s Bedi Hospital and the appellant submitted their respective
bids for both sites, and on 20.10.2022 after conclusion of the auction
process, the Appellant’s bid for Site No.3 was accepted and
approved as its bid of Rs. 18.25 Crores was the highest. As regards
Site No. 4 is concerned, M/s Bedi Hospital’s bid of Rs. 12.58 Crores
was accepted and approved. For consideration of the present set of
appeals, we are concerned only with Site No. 4 and the controversy
that ensued as regards Site No. 4, as follows.
5. After M/s Bedi Hospital was declared as the Highest Bidder
for Site No. 4, it deposited the required 25% of the bid amount on
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21.10.2022, following which the Estate Officer issued an Agreement
to Sell in favour of M/s Bedi Hospital on 28.10.2022. Thereafter, on
16.11.2022, M/s Bedi Hospital also deposited the balance 75% of
the bid amount. As the Chandigarh Administration was not issuing
the necessary Allotment Letter for execution of the Conveyance
Deed, M/s Bedi Hospital addressed a letter dated 12.01.2023 to the
Chandigarh Administration requesting them to expedite the
formalities.
6. It is in the above-referred circumstances that the Chandigarh
Administration seems to have had a rethink on 11.01.2023 about
finalising formal allotment in favour of M/s Bedi Hospital for the
reason that the bid amount for Site No. 4 was, according to them,
not “reflective of the market trend”. This is understandable for the
reason that while the adjacent Site No. 3 for the same extent had
fetched Rs.18.25 crores, the bid of M/s Bedi Hospital for the plot in
question, auctioned on the same day, fetched only Rs.12.58 crores.
7. On 27.01.2023, the Chandigarh Administration issued the
first impugned letter to M/s Bedi Hospital cancelling the bid contract,
the relevant portion of which reads as follows:
“It is intimated that the Bid Contract awarded in your
favour on 20.10.2022 in respect of Nursing Home Site No.
4, Sector 33-C, Chandigarh is hereby cancelled with
immediate effect due to the reason that the site adjacent
to Nursing Home Site No. 4 having same area, has
fetched the highest bid of Rs. 18,25,75,598/-. Such huge
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difference i.e. Rs. 6 crores between the adjacent sites
having same area does not reflect the market trend.
Therefore, it has been decided by the Administration to
cancel the current bid for Nursing Home Site No. 4 and
re-auction it with reserve price as the highest bid of
Nursing Home Site No. 3 Sector 33-C, Chandigarh. The
refund of the amount deposited by you has been
processed and will be credited in your account by
31.01.2023.
It is pertinent to mention here that as per the sub-clause
(i) under clause I of the general terms and conditions for
sale of Nursing Home Sites by E-Auction on Free hold
basis at Chandigarh, whereby “The Estate Officer, UT,
Chandigarh has absolute right to accept or reject any or
all the offer(s) or adjourn/postpone/cancel the e-auction
without assigning any reason thereof.
Further as per Clause No. 4 of Agreement to Sale
executed on 28.10.2022 – “That similarly on the failure of
the Seller to fulfill its obligation to transfer the property for
any reasons other than the reasons connected with public
order, security of State or change in public policy, the
seller shall return the amount of 25% so paid by the
purchasers/bidders and the intending purchasers/bidders
shall have no claim to any damages.
You may participate in the bid, whenever the site is re-
auctioned by the department.”
(emphasis supplied)
8. We may indicate here itself that pursuant to the cancellation
letter dated 27.01.2023, the Chandigarh Administration returned the
entirety of the bid amount to M/s Bedi Hospital and indicated its
intention to conduct a fresh e-auction. It also made it clear that even
M/s Bedi Hospital can participate in the fresh e-auction process.
9. On 06.02.2023, M/s Bedi Hospital challenged the said
cancellation by filing a writ petition before the Punjab and Haryana
High Court. Pending disposal of the writ petition, the Chandigarh
Administration proceeded further and also cancelled the Agreement
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to Sell vide a cancellation letter dated 09.02.2023, which was also
challenged by M/s Bedi Hospital by way of an amendment to the
pending writ petition filed by it.
10. Immediately after filing of the writ petition, when the case
came up for admission on 10.02.2023, the High Court, while issuing
notice, granted the Chandigarh Administration the liberty that it can
proceed with fresh auction, but directed that the same shall not
finalise till the next date of hearing. In view of the specific direction
of the High Court, due to previous bids being inefficient or
unsuccessful in meeting the requisite technical requirements under
auction notices dated 18.02.2023 and 12.06.2023 for fresh auction
of Site No. 4, the Chandigarh Administration issued a third fresh
notice inviting e-tenders for Site No. 4 on 05.08.2023, fixing the
reserve price at Rs.18.25 crores and inviting bids. Three
participants, including the appellant, qualified to take part in the
fresh e-auction for Site No. 4 after the pre-bid technical seminar
conducted on 08.08.2023. In the auction conducted on 06.09.2023,
the appellant was declared as the Highest Bidder, having offered
Rs. 18.30 crores. It is important to mention that M/s Bedi Hospital
did not participate in the fresh e-auction. In view of the earlier
directions of the High Court at the stage of admission of the writ
petition dated 10.02.2023, the Chandigarh Administration placed
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the conduct and conclusion of the re-auction process before the
High Court by way of a status report dated 20.11.2023.
11. Appellant filed an application for impleadment in the writ
petition filed by M/s Bedi Hospital contending that, being the
successful bidder in the subsequent e-auction, it is a necessary
party to the writ proceedings.
12. By the order impugned before us, the High Court allowed the
writ petition filed by M/s Bedi Hospital and set aside and quashed
the Chandigarh Administration’s letters dated 27.01.2023 and
09.02.2023 rescinding the bid contract and cancelling the
Agreement to Sell, respectively. Thus, challenging the judgment and
order passed by the High Court, the appellant and the Chandigarh
Administration have filed the present civil appeals. This Court, vide
order dated 18.08.2026, directed the parties to maintain status quo
over the said site.
13. We have heard Mr. Guru Krishna Kumar, learned senior
counsel for the appellant, and Mr. Vikramjit Banerjee, learned ASG
for the Chandigarh Administration. On the other hand, we also heard
Mr. P.S. Patwalia, learned senior counsel appearing for M/s Bedi
Hospital.
14. Before we consider the respective contentions of the parties,
it is necessary to examine the relevant rules by which the
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Chandigarh Administration would conduct its affairs and also the
Terms and Conditions of the E-Auction for determining the legality
and validity of the recall letters dated 27.01.2023 and 09.02.2023.
15. The Chandigarh Estate Rules, 2007, are framed under
Section 3 and Section 22 of the Capital of Punjab (Development and
Regulation) Act, 1952. Rule 5 is quoted for ready reference below:
“5. Sale/Lease by Auction
(i) In case of sale/lease by auction, the interested bidders
will have to deposit an earnest money of Rupees two
lakhs, in cash or by means of demand draft drawn on any
Scheduled Bank situated at Chandigarh in favor of Estate
Officer, U.T. Chandigarh with the Estate Officer, U.T.
Chandigarh in order to become eligible for participating in
the auction.
(ii) On the acceptance of the highest bid, twenty five
percent of the bid accepted by the auctioning officer shall
be paid at the fall of the hammer by the highest auction
purchaser by means of demand draft drawn in favor of
Estate Officer UT Chandigarh.
…..
(iv) Thereafter, an Agreement to Sell shall be executed
between the Estate Officer, U.T., Chandigarh, and the
auction purchaser in the prescribed form as at Form-B or
Form B-I, as the case may be, with a stipulation that in
case of default in making timely payment of the remaining
balance of 75% within the stipulated time period, the
amount of 25% paid by the auction purchaser shall be
forfeited. Similarly, in case the Chandigarh administration
fails to fulfill its obligation to transfer/lease out the
property for any reason other than the reasons connected
with public order, security of State, or change in public
policy, the Administration shall return the amount of 25%
paid by the auction purchaser alongwith the equivalent
amount deposited by him/her as damages for non-
performance.
(v) The remaining 75% of the consideration money shall
be deposited by the intending purchaser in lump sum
within 90 days of the date of auction by way of the
prescribed mode of payment failing which the offer of
allotment shall be deemed to have been cancelled and
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the payment made under sub-rule (ii) shall be forfeited
and the intending purchaser shall have no claim to any
damages.
….………………………
(vi) Upon the receipt of full consideration, the Estate
Officer shall issue allotment letter to the intending
purchaser giving the terms and conditions of the allotment
and calling upon him to execute a Conveyance
deed/Lease deed in Form ‘C’ or Form ‘D as the case may
be. These documents shall be issued/executed by the
Estate Office and the purchaser, as the case may be,
within a period of 30 days from the date of issue of the
allotment letter.
Explanation I: The Estate Officer may withdraw any
site/building that may have been put up for auction and
he may accept or reject the highest bid without assigning
any reason and the decision of the Estate Officer in this
regard shall be final.”
(emphasis supplied)
16. The General Terms and Conditions for Sale of the Nursing
Home Sites by E-Auction notified on 31.08.2022 have the following
stipulations:
“IV. DEPOSIT ON CLOSE OF BID/AUCTION (25%)
(a) The successful bidder will be required to pay
Sr. No Type of Property Amount on Close of
Bid (Rupees)
1. Nursing Home
Sites
Highest bidder will
have to deposit 25%
(Twenty Five
percent) of the bid
amount (after
adjusting EMD)
online through
NEFT/RTGS within
the time stipulated in
the Bid Contract
awarded after the
close of Bid/Auction.
Page 8 of 18
Note: Bid Contract will be awarded by the Estate Officer
after close of bid/auction, due communication of which
shall be sent via e-mail to the approved bidder.
………
(c) An agreement to sell shall be executed between
the Estate Officer, U.T. Chandigarh and the bidder
in the prescribed Form ‘B’, within seven days of the
award of the bid contract.
…….
VI. OTHER TERMS AND CONDITIONS
1. After depositing the 25% of the bid money by the auction
purchaser, an agreement to sell shall be executed
between the Estate Officer, U.T. Chandigarh (to be
signed by Assistant Estate officer on behalf of Estate
Officer) and the auction purchaser in the prescribed
Form ‘B’ as the case may be with the stipulation that in
case of default in making timely payment of the
remaining balance of 75% within the stipulated period,
the amount deposited by the auction purchaser shall be
forfeited which in no case shall exceed 10% of the total
amount of the consideration money, interest and other
dues payable in respect of the site, building or booth.
However in case the Chandigarh Administration fails to
fulfil its obligation to allot the property for any reason or
in public interest, the Administration shall return the
amount of 25% to paid by the auction purchaser and the
intending purchaser shall have no claim to any damages.
2. The remaining 75% of the consideration money shall be
deposited by the intending purchaser in lump sum within
90 days of the date of the auction by way of the
prescribed mode of payment failing which the offer of
allotment shall be deemed to have been cancelled and
the payment of 25% so made at the time of fall of
hammer shall be forfeited which in no case shall exceed
10% of the consideration money and dues payable in
respect of site or building or both and the intending
applicant/auction purchaser shall have no claim to any
damages.
…….
4. Upon the receipt of full consideration money, the Estate
officer shall issue allotment letter to the intending
purchaser giving the terms and conditions of the
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allotment and calling upon him to execute conveyance of
deed in Form ‘C’. These documents shall be
issued/executed by the Estate Office and the purchaser,
within a period of 30 days from the date of issue of the
allotment letter. The allotee shall bear all the expenses
occurring for the registration and stamp duty etc.
5. The Estate Officer may withdraw any site that may have
been put up for auction and he may accept or reject the
highest bid without assigning any reason and the
decision of the Estate Officer in this regard shall be final.”
17. The Terms and Conditions of the E-Auction Notice are in
consonance with Rule 5 of the Chandigarh Estate Rules, 2007. In
short, the mandatory requirements of the terms and conditions are
as follows: Clause IV(a) read with Clause IV(c) deals with the modus
operandi of the deposit to be made at the close of the auction. They
provide that the highest bidder should deposit 25% of the amount
and then an Agreement to Sell shall be executed between the Estate
Officer and the highest bidder in the prescribed Form ‘B’ which is
again in line with the Chandigarh Estate Rules, 2007. Clause VI,
which deals with other terms and conditions, provides for the post-
auction procedure, which again follows the same process laid down
in Rule 5 of the Chandigarh Estate Rules, 2007. Clause VI(1)
provides for two situations wherein the Agreement to Sell can stand
forfeited, leading to the refund of the 25% already deposited, which
includes non-payment by the bidder of the remaining 75% or if the
Chandigarh Administration fails to allot the property for any reason.
Page 10 of 18
Clause VI(2), on the other hand, provides for a deadline of 90 days
within which the remaining 75% amount ought to be paid; otherwise,
the allotment is deemed to be cancelled, leading to a refund of the
25% amount deposited. Clause VI(4) states that once the full
consideration is received, the Estate Officer shall issue an allotment
letter to the intending purchaser, indicating the terms and conditions
of the allotment and calling upon him to execute a conveyance deed
as provided for in Form ‘C’ within a period of 30 days. Clause VI(5)
also specifies the power to the Estate Officer to withdraw any site
that may have been put up for auction, rejecting the highest bid
offered, without assigning any reason, and the decision of the Estate
Officer shall be final.
18. It is also important to refer to Clause 4 of the Agreement to
Sell, a standard format of which has been provided in Form ‘B’ of
the Chandigarh Estate Rules, 2007. The same is quoted as follows:
“4. That similarly, on the failure on the part of the seller to
fulfill its obligations to transfer the property for any
reasons other than the reasons connected with public
order, security of State, or change in public policy, the
seller shall return the amount of 25% so paid by the
purchasers/bidders and the intending purchasers/bidders
shall have no claim to any damages.”
19. An agreement enforceable in law alone is a contract. Such an
enforceable agreement, in the present case, will come into
existence only upon execution of the conveyance deed. Execution
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of the conveyance deed is the culmination of the process by which
the promise, the offer, acceptance, payment of consideration, and
execution of an Agreement to Sell are complete. An Agreement to
Sell contemplated under Rule 5(iv) of the Chandigarh Estate Rules,
2007 in itself is not an enforceable contract under Section 2(h) of
the Indian Contract Act, 1872. As the conveyance deed is not yet
executed, the Chandigarh Administration will be in a position to
exercise its power under Rule 5(vi) read with Explanation I of the
Chandigarh Estate Rules, 2007 or under Clauses VI(1) and VI(5) of
the General Terms and Conditions of E-Auction dated 31.08.2022.
Under the Rules as well as the Tender Conditions, the Chandigarh
Administration has reserved its right to “withdraw any site or building
that may have been put up for auction” without assigning any
reason, and the decision of the Estate Officer, acting for the
Chandigarh Administration in this regard, is declared as final. While
interpreting the Chandigarh Estate Rules, 2007 relating to the
conduct of E-Auction, coupled with the General Terms and
Conditions of the E-Auction Notice dated 31.08.2022, courts must
endeavour to identify the events by virtue of which a contract gets
concluded. After the occurrence of such events, the contract gets
concluded, and thereafter, the rights and liabilities of the parties will
be crystallized and governed by the terms and conditions of the
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Conveyance Deed. As the Allotment Letter was not issued with no
corresponding Conveyance Deed executed, the Chandigarh
Administration is entitled to exercise its power to cancel.
20. The only restriction against non-issuance of the allotment
letter or the conveyance deed would only be a public law restriction
on Chandigarh Administration not to act in an arbitrary and
unreasonable manner. The conduct of a public authority must be
informed by fairness in action and in furtherance of public purpose.
However, while dealing with matters relating to sale or lease of
public property, the action of a public authority to recall or revisit the
auction process would be justified if the decision is intended to
2
maximise the price for the sale/lease of public property. This is
permissible as long as the enforceable contract has not been
entered into. In the present case, the decision of the Chandigarh
Administration to revisit the auction was taken before finalization of
the allotment letter and the consequential execution of conveyance
deed. At this stage, a substantial lower price fetched at the auction
can be a relevant consideration for not finalising the contract in
2
This Court in Chairman and Managing Director, SIPCOT, Madras & Ors. v. Contromix Pvt.
Ltd . (1995) 4 SCC 595, para. 12. has observed the following: “In the matter of sale of public
property, the dominant consideration is to secure the best price for the property to be sold. This
can be achieved only when there is maximum public participation in the process of sale and
everybody has an opportunity of making an offer. Public auction after adequate publicity
ensures participation of every person who is interested in purchasing the property and generally
secures the best price….”
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favour of a so-called “highest bidder”. For these reasons, we are of
the opinion that there is no illegality or arbitrariness in the action of
the Chandigarh Administration to revisit the auction process and call
for a fresh auction for price maximization.
21. The decision of this Court in Vice-Chairman and Managing
Director, City and Industrial Development Corporation of
Maharashtra Limited and Another v. Shishir Realty Private Limited
3
and Others relied upon by the High Court to arrive at its conclusion
has no application to the facts of the present case and is
distinguishable. The said decision dealt with the unilateral
cancellation of lease deeds accorded by the appellant authority
therein to the respondent therein on the ground of alleged violations
of terms and conditions of the lease deed, without any opportunity
given to re-tender or to cure any of the alleged defects, despite both
the High Court and this Court finding that there were no such
violations leading to the cancellation orders being an arbitrary State
Action. In the present case, the cancellation was followed by a full
refund of the total consideration along with the Chandigarh
Administration requesting M/s Bedi Hospital to take part in the fresh
3
“When a contract is being evaluated, the mere possibility of more money in the public coffers,
does not in itself serve public interest. A blanket claim by the State claiming loss of public money
cannot be used to forego contractual obligations, especially when it is not based on any
evidence or examination. The larger public interest of upholding contracts and the fairness of
public authorities is also in play. The courts need to have a broader understanding of public
interest, while reviewing such contracts”. (2022) 16 SCC 527, para 61.
Page 14 of 18
E-Auction. M/s Bedi Hospitals has also relied on the judgment of this
Court in Golden Food Products India v. State of Uttar Pradesh &
4
Ors. during the course of its submissions submitting that an auction
process has sanctity and only for valid reasons can the highest bid
be discarded. In that case, despite being the highest bidder, the
appellant’s allotment of an industrial plot was cancelled by the
respondent authority therein and this was known only through the
appellant’s own inspection of the internal notes of that authority with
no proper intimation given regarding such cancellation. This Court
intervened on the ground that the principles of natural justice and
transparency in a public auction were not adhered to. In the present
case, no such violations of the principles of natural justice or
transparency were committed by the Chandigarh Administration.
The cancellation letter dated 27.01.2023 clearly intimated M/s Bedi
Hospitals of the exact reason why the bid contract was rescinded,
and the entire consideration was refunded on the same day. The
Chandigarh Administration also provided the opportunity to M/s Bedi
Hospital to take part in the fresh auction for Site No. 4.
4
“An auction process has a sanctity attached to it, and only for valid reasons that the highest
bid can be discarded in an auction which is otherwise held in accordance with law. If a valid bid
has been made which is above the reserve price, there should be a rational or reason for not
accepting it. Therefore, the decision to discard the highest bid must have access to the rational
or the reason. Merely because the authority conducting the auction expected a higher bid, the
highest bid cannot be a reason to discard the highest bid.” 2026 SCC OnLine 24, para 32.
Page 15 of 18
22. We are, therefore, not in agreement with the reasoning drawn
by the High Court, and the judgment and order of the High Court, to
that extent, are set aside.
23. However, the story does not end here.
24. In our opinion, the difficulty arose because of the reason that
the High Court, instead of either dismissing the writ petition at the
admission stage itself or granting an interim order staying the
cancellation letters dated 27.01.2023 and 09.02.2023, proceeded to
permit the Chandigarh Administration to hold a fresh E-Auction.
That interim arrangement made by the High Court, has opened up
a second phase of litigation which has continued for more than two
years. Surprisingly, when the High Court took up the writ petition for
final hearing, it did not consider the consequences of the rights and
liabilities of parties that had been created due to the subsequent
auction. High Court simply proceeded to consider the writ petition
on its merits and disposed it of. In the order impugned before us, the
High Court has not discussed the consequences of the interim order
directing the conduct of a fresh E-Auction and the status report
submitted by the Chandigarh Administration after the successful
conclusion of the re-auction.
25. The subsequent auction that was conducted is legal and valid.
In fact, the said auction was conducted pursuant to the direction of
Page 16 of 18
the High Court on 10.02.2023, wherein even M/s Bedi Hospital was
permitted to participate. Having conducted and concluded a fresh
auction, the Chandigarh Administration placed a status report
before the High Court indicating clearly that the subsequent e-
auction fetched an additional amount of Rs. 6 Crores. Six crores is
not a small amount, and this Court cannot shut its eyes to the glaring
reality of the facts that have unfolded about price discovery.
26. Faced with this reality, we inquired with Mr. Patwalia, learned
senior counsel, if his client would be willing to match the price
offered by the appellant. With some amount of hesitation, but after
consulting his client, we were informed M/s Bedi Hospital would be
willing to match the bid amount of the appellant and pay Rs. 18.30
crores as the final price for Site No. 4. On the other hand, Mr. Guru
Krishna Kumar, learned senior counsel for the appellant, submitted
that his client paid the entire consideration and that it would be
unjust to permit M/s Bedi Hospital to replace him by matching the
price, particularly when the earlier amount deposited was refunded,
and M/s Bedi Hospital chose not to take part in the subsequent
auction.
27. Having considered the matter in detail and having reflected on
the unfortunate situation that has been created due to the
inconclusive interim arrangement made by the High Court, we are
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of the opinion that interests of justice and public purpose will be
subserved if we direct the Chandigarh Administration to conduct a
fresh e-auction of Site No. 4 after following the due procedure.
28. For the reasons stated above, the present set of civil appeals
is allowed, and the judgment and order of the High Court dated
01.04.2025 is set aside. The Chandigarh Administration is directed
to hold a fresh e-auction for Site No. 4 in Sector 33C, Chandigarh,
by following the procedure prescribed under the Chandigarh Estate
Rules, 2007. The entire process should commence and conclude
within a period of 3 months from today.
29. There shall be no order as to costs.
30. Pending application(s), if any, stand disposed of.
………………………………....J.
[ ]
PAMIDIGHANTAM SRI NARASIMHA
………………………………....J.
[ ALOK ARADHE ]
NEW DELHI;
OCTOBER 16, 2026.
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