Failure to disclose known fire damage warrants refund of auction consideration with interest.

Respondent No. 3 auctioned scrap and e-waste materials through respondent No. 2. Petitioner No. 1, the successful bidder, paid ₹70,92,500, including GST, and received a delivery order.

A fire had occurred at the storage godown on 10 November 2023, before payment. The petitioners later alleged that materials were damaged or missing and sought a refund; respondent No. 3 relied on committee reports assessing limited fire damage and finding no shortage apart from damaged materials.

The petitioners disputed those reports, noting they were not notified of the inspections, were not present, and were not provided copies.

They sought, among other relief, a refund of the amount paid.

1. Whether the petitioners were entitled to a refund of the auction payment where the fire occurred before payment and the respondents did not disclose it or conduct the damage assessment with the petitioners’ participation.

2. Whether the Court should direct a joint inspection of the auction materials or order a refund in light of the elapsed time and the disputed inspection reports.

The judgment does not cite any statute, regulation, or precedent.

The Court’s reasoning rests on the procedural requirements of fairness and transparency in the circumstances: the respondent authority ought to have disclosed the fire and notified the petitioners of the inspection, and the petitioners ought to have been given an opportunity to participate and receive the resulting reports.

The Court considered the reports’ contradictory character and the passage of time in determining the appropriate relief.

The fire occurred before the respondents accepted the auction payment, yet respondent No. 3 did not disclose it to the petitioners or respondent No. 2.

The damage assessments were conducted without notice to or participation by the petitioners, and the reports were not furnished to them; the reports were also contradictory.

A joint inspection was no longer useful because more than three and a half years had passed and the scrap could have deteriorated further.

In these circumstances, the Court considered a refund, rather than further inspection, appropriate.

The writ petition was allowed, and GA No. 1 of 2026 and GA No. 2 of 2026 were disposed of.