Auctioning allotted shops without prior notice and hearing violates natural justice and is unsustainable.

The petitioners were vegetable vendors who had earlier operated from different locations in Dhamtari before being allotted Shops Nos. 08 to 17 in the Navin Mandi premises at Shyamtarai, Dhamtari, pursuant to allotment proceedings and allotment letters dated 21 November 1997.

They claimed to have paid the entire consideration amount and applicable rent and to have remained in possession of the shops for several years.

On 15 September 2021, the respondent authorities issued an auction notice in respect of the shops and proceeded with an auction in favour of Respondent Nos. 4 to 12.

Respondent No. 2 defended the impugned action, while Respondent Nos. 4 to 12 contended that they were successful auction purchasers who had deposited substantial amounts, although the agreement in their favour had not yet been executed.

The Court found that no show-cause notice had been served upon the petitioners before issuance of the auction notice.

Whether the auction notice dated 15 September 2021, affecting the petitioners’ allotted shops and possession, was invalid for violation of the principles of natural justice due to failure to issue prior notice and provide an opportunity of hearing?

Whether the respondent authorities could proceed with fresh auction proceedings without first cancelling or otherwise lawfully terminating the petitioners’ existing allotment and determining the alleged breaches in accordance with law?

The Court applied the settled principle that every administrative or quasi-judicial action having civil consequences must comply with the principles of natural justice, including prior notice and a reasonable opportunity of hearing.

The right to be heard is a mandatory safeguard ensuring fairness, transparency, and accountability and is not an empty formality.

Where governmental or public authorities take action affecting possession, livelihood, or existing allotment rights, they must provide an effective opportunity to respond and must thereafter pass a reasoned order in accordance with law.

The petitioners’ allotment and long-standing possession of Shops Nos. 08 to 17 were undisputed, while the respondents relied on alleged non-compliance with allotment conditions and claimed that the allotment was temporary.

Since the proposed auction had the effect of depriving the petitioners of possession and their means of livelihood, the authorities were required to first communicate the alleged defaults, issue a show-cause notice, and afford an opportunity to explain their position.

The record showed that no such notice or hearing had been provided before the auction notice was issued.

The Court therefore held that the impugned action was procedurally unfair and contrary to natural justice, irrespective of the respondents’ assertion that the petitioners had violated the allotment conditions.

The respondents were left at liberty to initiate fresh proceedings in accordance with law, provided that the petitioners were given a proper opportunity of hearing and a reasoned order was passed thereafter.

The writ petition was disposed of on those terms.