Without statutory provision for surrender, cancellation and forfeiture of auctioned lease premium are valid.

The petitioner, along with five other persons, participated in an open auction for SCO Site No. 41-42, Sector 8-C, Chandigarh, and deposited 10% of the bid amount on 11 December 1998 and a further 15% on 8 January 1999, totalling ₹52,05,000 as recorded in the judgment.

On 8 January 1999, an application was also made seeking issuance of the allotment letter in favour of M/s G.R. Exim Pvt. Ltd., which had not participated in the auction.

On 18 March 1999, the petitioner requested surrender of the site and refund of the deposited amount, citing delay in issuance of the allotment letter and, according to the respondents, financial difficulties.

The Estate Officer issued a show-cause notice under Rule 20 of the Chandigarh Lease-Hold of Sites and Building Rules, 1973, and thereafter cancelled the allotment and forfeited 10% of the premium.

On appeal, the Chief Administrator reduced the forfeiture from 10% of the premium to 2% of the total premium and directed refund of the balance amount without deduction of ground rent or interest.

The petitioner’s revision was dismissed as time-barred, while the 8% amount ordered to be refunded was paid to him.

Whether the respondents were legally entitled to cancel the petitioner’s allotment and forfeit part of the premium under Rule 20 of the Chandigarh Lease-Hold of Sites and Building Rules, 1973, when the petitioner sought surrender of the site?

Whether the petitioner was entitled to refund of the retained 2% of the premium, together with interest, on the ground that the respondents had delayed issuance of the allotment letter and had not delivered possession?

Whether the impugned appellate and revisional orders suffered from illegality or procedural infirmity?

The Court applied Rule 9 of the Chandigarh Lease-Hold of Sites and Building Rules, 1973, governing allotment of sites by auction, and Rule 20, which empowers the Estate Officer, after giving a reasonable opportunity of hearing, to cancel the lease and forfeit the whole or part of the premium and ground rent, subject to a maximum of 10% of the total premium.

The Court held that the Rules contain no provision permitting unilateral surrender of the auctioned site with an automatic right to refund of the earnest money or premium.

It relied on Raj Karan Boparai v. Union Territory, Chandigarh, 2002 (3) RCR (Civil) 454, wherein it was held that, in the absence of a provision for surrender or refund, cancellation under Rule 20 could entail forfeiture of the earnest money, wholly or partly.

The Court also applied the principle that an order passed after notice and an opportunity of hearing, and within the statutory authority’s jurisdiction, will not be interfered with under Articles 226/227 absent demonstrated illegality or perversity.

The Court found that the petitioner had voluntarily sought surrender of the site and that the Rules did not recognise surrender as a ground for automatic refund.

The Court further noted that the alleged delay in allotment was connected with the petitioner’s request to change the proposed allottee from himself to M/s G.R. Exim Pvt. Ltd., an entity that had not participated in the auction.

The petitioner was issued a show-cause notice, heard personally, and thereafter the Estate Officer passed the cancellation and forfeiture order in accordance with Rule 20.

Although the initial forfeiture of 10% was legally permissible, the appellate authority had already taken a lenient view by reducing it to 2% and refunding the remaining 8%.

Since the petitioner could not establish any violation of the Rules, denial of hearing, or other jurisdictional error, the Court found no basis to order refund of the retained 2% or payment of interest.

The petitioner had no independent right to surrender the site and claim complete refund merely because he was dissatisfied with the transaction or alleged delay in allotment.

The reduction of forfeiture from 10% to 2% by the appellate authority, along with refund of the remaining 8%, was upheld.

The writ petition was accordingly dismissed, and no further refund or interest was granted.