Rajasthan High Court Upholds Auction Terms, Rejects Post-Auction Lease Rent Imposition

Court Affirms Promissory Estoppel, Declares Additional Lease Rent Terms Unlawful

In a significant judgment, the Rajasthan High Court has upheld the original terms of an auction conducted by the Krishi Upaj Mandi Samiti, Sumerpur, dismissing the State of Rajasthan's appeal to impose new annual lease rent conditions on allottees post-auction. The Division Bench comprising Dr. Pushpendra Singh Bhati and Justice Sandeep Taneja delivered the verdict on November 6, 2025, affirming the 2009 decision by a Single Judge that had favored the respondents, led by Bhai Shankar Lal Jawan Mal.

The case revolved around the auction of plots on a 99-year lease, initially held in 1995, where the terms did not stipulate any annual lease rent. However, a subsequent directive in 1998 sought to impose a new condition requiring an annual lease payment equivalent to 5% of the market value, with a 25% enhancement every fifteen years. This condition was introduced after the allottees had already acted upon the original terms, constructed structures, and commenced their businesses.

The High Court reiterated the principle of promissory estoppel, emphasizing that the allottees, having relied on the original auction terms, could not be subjected to new financial liabilities. The Court found the unilateral imposition of additional pecuniary burdens to be impermissible, arbitrary, and contrary to established legal principles governing public contracts.

Furthermore, the Court upheld the interpretation of Section 105 of the Transfer of Property Act, 1882, which states that payment of rent is not a mandatory element of a lease. The Court observed that once the leasehold rights were transferred upon payment of a one-time premium during the auction, introducing additional rent conditions was contrary to the law and the auction's original terms.

The decision underscores the judiciary's commitment to upholding contractual sanctity and preventing arbitrary alterations that could adversely affect parties who have relied on original agreements. The State's appeals were dismissed, affirming the Single Judge's ruling, and reinforcing the protection of allottees against unforeseen financial impositions post-auction.

Bottom Line:

Auction terms cannot be unilaterally altered post-auction to impose additional pecuniary burdens on allottees. The principle of promissory estoppel applies where allottees have acted upon the original terms of the auction.

Statutory provision(s): Transfer of Property Act, 1882 Section 105

State of Raj. v. Bhai Shankar Lal Jawan Mal, (Rajasthan)(DB) : Law Finder Doc Id # 2814071