SC Mandates Disclosure of Pending Litigation in Auction Notice
When the plot was put to auction by Ludhiana Improvement Trust, it did not disclose the pendency of litigation to the parties who offered their bids. The appellant was the highest bidder and paid Rs.1,57,04,580/- to the Trust.
It was the legal duty on the part of the Trust to have made it clear in the auction notice itself that the subject plot is a subject matter of litigation. Authorities (such as banks, recovery officers, or state bodies) conducting public auctions are legally required to disclose all known encumbrances and litigation relating to the property, as failure to do so invalidates the sale. Suppressing such material facts renders the auction fraudulent or vitiated by material irregularity.
Public auction is one of the modes of sale intending to get highest competitive price for the property. Public auction also ensures fairness in actions of the public authorities and their officers who should act fairly and objectively. Their actions should be legitimate. Their dealing should be free from suspicion. Nothing should be suggestive of bias, favouritism, nepotism or beset with suspicious features of underbidding detrimental legitimate interest of the stakeholders.
The decision in the case of Delhi Development Authority Vs Corporation Bank and others reported in 2025 LiveLaw (sC) 953 was also relied on.
In that context, the respondent was directed to refund the entire bid amount with interest.
Order dated 16.1.2026 of the Supreme Court in SLP (Civil) No.24811 of 2025 of Viney Kumar Sharma Vs. The Improvement Trust and Another
