The judgment decides only the two civil appeals against the High Court's revival of Bedi Hospital's bid. It does not decide who will ultimately own Site No. 4; the fresh e-auction directed by the Court is to be held under the Chandigarh Estate Rules, 2007, open to all bidders.
- Case
- Satinder Pal Singh & Ors. v. Bedi Hospital & Ors.
- Court
- Supreme Court of India
- Decision
- Citation
- 2026 INSC 1142
- Bench
- Pamidighantam Sri Narasimha; Alok Aradhe
- Judgment by
- Not stated in the judgment (signed by Pamidighantam Sri Narasimha and Alok Aradhe, JJ.)
- Case numbers
- Civil Appeals arising out of SLP Nos. 33791/2025 and 33793/2025
- Outcome
- Civil appeals allowed; the Punjab and Haryana High Court's judgment dated 1 April 2025 in CWP No. 2811 of 2023 is set aside; the Chandigarh Administration is directed to hold a fresh e-auction of Nursing Home Site No. 4, Sector 33C, Chandigarh, within three months. No order as to costs.
The order
On 16 October 2026, the Supreme Court ordered the Chandigarh Administration to hold a fresh e-auction of Nursing Home Site No. 4 in Sector 33C, Chandigarh, within three months, setting aside a Punjab and Haryana High Court judgment that had revived Bedi Hospital's cancelled Rs.12.58 crore bid.
The Court held that in the Chandigarh e-auction system, no enforceable contract comes into existence until the conveyance deed is executed — and that a public authority may recall or revisit an auction before that stage where the decision is aimed at maximising the price of public property, provided it acts fairly.
The auction and the cancellation
The Administration's 31 August 2022 e-auction notice put up two identical nursing-home sites in Sector 33C — 744.44 sq. yards each, reserve price Rs. 6.91 crore. On 20 October 2022, the appellant's Rs. 18.25 crore bid won Site No. 3; Bedi Hospital's Rs. 12.58 crore bid won Site No. 4.
Bedi paid 25% on 21 October 2022, signed an agreement to sell on 28 October 2022, and paid the remaining 75% on 16 November 2022. When no allotment letter arrived, it wrote on 12 January 2023 asking the Administration to expedite. Instead, the Administration had already had a rethink: the adjacent, identical Site No. 3 had fetched nearly Rs. 6 crore more on the same day, so Site No. 4's price did not, in its view, reflect market trends.
On 27 January 2023 the Administration cancelled the bid contract, quoting its terms: the Estate Officer had 'absolute right to accept or reject any or all the offer(s)' without assigning reasons, and Clause 4 of the agreement to sell provided that if the seller failed to transfer the property for reasons other than public order, state security or public policy, it would return the 25% deposit and the bidder would have no claim to damages. The full amount Bedi had paid was refunded, and it was told it could bid in a fresh auction. A second letter on 9 February 2023 cancelled the agreement to sell.
The writ petition and the second auction
Bedi moved the Punjab and Haryana High Court on 6 February 2023 (CWP No. 2811 of 2023). At admission on 10 February 2023, the High Court let the Administration hold a fresh auction but restrained it from finalising it. After two unsuccessful rounds, a third notice on 5 August 2023 (reserve Rs. 18.25 crore) produced an auction on 6 September 2023 in which the appellant — by then impleaded as a necessary party — emerged the highest bidder at Rs. 18.30 crore. Bedi did not participate. The Administration placed a status report on 20 November 2023.
At final hearing, the High Court allowed Bedi's writ and quashed the 27 January and 9 February 2023 cancellation letters. The appellant and the Administration appealed; this Court directed status quo on 18 August 2026.
The rule: when the contract is concluded
The Court read Rule 5 of the Chandigarh Estate Rules, 2007 — framed under the Capital of Punjab (Development and Regulation) Act, 1952 — with the e-auction's general terms: after the full consideration is received, the Estate Officer issues an allotment letter, and only then is a conveyance deed executed within 30 days. 'An agreement enforceable in law alone is a contract,' the Court said; such an enforceable agreement 'will come into existence only upon execution of the conveyance deed.' The agreement to sell under Rule 5(iv) is not by itself an enforceable contract under Section 2(h) of the Indian Contract Act, 1872.
Until then, Rule 5(vi) read with Explanation I — and clauses VI(1) and VI(5) of the auction terms — reserve the Administration's right to withdraw a site and reject the highest bid without assigning reasons, the Estate Officer's decision being final. The only restraint is public-law fairness: the action must not be arbitrary.
On that footing, the Court held the recall lawful: 'in the matter of sale of public property, the dominant consideration is to secure the best price' (Chairman & MD, SIPCOT v. Contromix (1995) 4 SCC 595), and a substantially lower price fetched at the auction is a relevant consideration for not finalising the contract — 'as long as the enforceable contract has not been entered into'. It distinguished Vice-Chairman, CIDCO v. Shishir Realty ((2022) 16 SCC 527), which concerned cancellation of already-executed lease deeds without a chance to cure, and Golden Food Products (2026 SCC OnLine 24), where the cancellation had been opaque and in breach of natural justice; here the reason was communicated in the cancellation letter itself and the money was refunded the same day.
The two-year interim mess
The Court was sharply critical of the High Court's interim arrangement: instead of deciding the writ at admission or staying the cancellations, the High Court let a fresh auction run, 'which has opened up a second phase of litigation which has continued for more than two years'. At final hearing, the High Court never examined the rights created by the concluded re-auction — which had lawfully fetched an additional Rs. 6 crore, 'not a small amount'.
When the Court asked whether Bedi would match the appellant's price, senior counsel P. S. Patwalia, after consulting his client, said Bedi would pay Rs. 18.30 crore. The appellant objected that this would unjustly displace it after it had paid in full and Bedi had stayed out of the re-auction. The Court chose a third course: a fresh e-auction for Site No. 4 under the 2007 Rules, to begin and conclude within three months, with no order as to costs.
BANTHRY ANALYSISFor law students
The judgment draws the line every public-auction dispute turns on: the sanctity of the highest bid (Golden Food Products) yields where no enforceable contract yet exists and the price is substantially below market, because the State's duty as a seller of public property is to maximise revenue — but the recall must be transparent and fair, with reasons communicated and money refunded. Once the conveyance deed is executed, the contract crystallises and the recall power is spent.
Equally instructive is the rebuke of interim orders that 'open up a second phase of litigation': a court that permits a fresh auction while the writ petition is pending must, at final hearing, reckon with the rights the auction created — here, the appellant's Rs. 18.30 crore winning bid — rather than simply restoring the original bidder.
READING PROMPTSQuestions for a closer reading
- At what point, according to the Court, does an enforceable contract come into existence in the Chandigarh e-auction scheme — and why does that timing decide the case?
- How did the Court distinguish Shishir Realty and Golden Food Products from Bedi Hospital's case?
- What was wrong with the High Court's interim arrangement of permitting a fresh auction while the writ petition was still pending?
