Supreme Court: In an appeal against the judgment of the Punjab & Haryana High Court concerning the legality of allotment of two super deluxe flats by HUDA, Urban Estate and Town and Country Planning Employees Welfare Organization (‘HEWO’), a welfare society of government employees and allegations of favouritism, arbitrariness, and violation of eligibility conditions, a Division Bench of Sanjay Kumar and K. Vinod Chandran,* JJ., while condemning nepotism in Government Welfare Societies flat allotment, set aside the High Court’s judgment, quashed the impugned allotments and imposed costs of ₹1,00,000 on the HEWO-respondent 2, ₹50,000 on the respondent 3 and ₹25,000 on the respondent 4.
Factual Matrix
The respondent 2, a welfare society registered under the Societies Registration Act, was constituted to implement social welfare schemes for employees connected with HUDA/HSVP and to allot residential accommodation to its eligible members. The appellant, having served on deputation in HUDA for 14 years, was a member eligible for allotment.
Two super deluxe flats became available after cancellation of earlier memberships. As per the governing body’s earlier decisions new memberships were to be granted through draw of lots to eligible persons; and flats arising from cancellation could be given on preference to a governing body member, provided the eligibility conditions were satisfied. Applications were invited with prescribed eligibility, including minimum service requirement, specified pay band level, and deposit of earnest money within time.
Before the last date expired, the presiding governing body member allotted one flat to himself. Later, after he surrendered the allotment, the respondent 3, who had only then joined HUDA and thereby became an ex officio governing body member, obtained the flat without fulfilling any of the prescribed eligibility criteria.
The remaining flat was allotted through draw of lots to the respondent 4. Though he satisfied the basic pay requirement, he did not fall within the prescribed pay-band level. His ineligibility was later “regularised” by a subsequent Governing Body decision. He was also a subordinate working in the office headed by Respondent 3.
The appellant challenged both allotments alleging favouritism and arbitrariness. The High Court held the writ petition maintainable but dismissed it on the ground that one allotment followed surrender of an earlier allotment and the appellant had participated in the process and was therefore estopped from challenging the allotment.
Aggrieved, the appellant approached the Supreme Court.
Moot Points
-
Whether a writ petition under Article 226 was maintainable against HEWO, a registered society?
-
Whether the allotments made to the third and fourth respondents were arbitrary, violative of the bye-laws, and contrary to principles of fairness and transparency?
-
Whether the appellant was estopped from challenging the allotment after participating in the draw of lots?
Court’s Analysis
The Court affirmed the High Court’s finding that invocation of Article 226 was proper, and writ petition was maintainable. The Court asserted that Article 226 can be invoked because issue of lack of transparency and violation of fairness and reasonableness was raised in allotment of housing facilities and the land had been allotted by the Government; the members were government employees and the governing body consisted of ex officio public officials holding responsible governmental positions.
The Court emphasised that such officers, even when acting in a society, “should act in a fiduciary capacity for the common good, ensuring fairness, transparency and accountability, while eschewing favouritism, bias and arbitrariness”
The Court found the entire process, of allotment of flat to respondent 3, to be a “complete farce” because on the last date for application he was neither an employee of HUDA nor a governing body member; he had not applied within time; no earnest money or membership fee had been deposited and he did not satisfy the six months’ deputation/service requirement. Moreover, the communication demanding payment was self-issued in his official capacity. The Court held the allotment made to the respondent 3 was a “clear act of favouritism and blatant display of self-aggrandizement.”
With regards to allotment to the respondent 4, the Court noted that although he had 18 years’ of service, but he did not fall within the prescribed pay-band level and his application itself raised doubts regarding timely submission and payment.
The Court held the governing body’s later decision to treat the draw as regularised merely because fewer eligible applicants were available as unsustainable. The Court noted that there was no rule requiring a minimum number of applicants, and ineligibility could not be cured later. The Court further noted the hierarchical relationship between the respondents 3 and 4, indicating that the respondent 3’s entry facilitated allotment to his subordinate.
“We fail to understand how the draw of lots would be stultified or frustrated by reason only of only four members being available, especially since the allotment by draw of lots was for one single super deluxe flat… There is no stipulation either in the decision of the governing body or in the rules and regulations that there should be a specific number of applicants for a determinate number of flats.”
Considering the gross abuse of powers and authority carried out by the respondents, the Court set aside the High Court’s judgment and quashed the impugned allotments. It imposed costs of ₹1,00,000 on the Respondent 2, ₹50,000 on the respondent 3 and ₹25,000 on the respondent 4.
The Court further directed that —
-
Part of the costs to be paid to the appellant as litigation expenses; the rest to the Supreme Court Legal Services Committee.
-
Amounts deposited by the allottees to be refunded without interest.
-
Respondent s 3 and 4 were directed to vacate the flats.
-
Fresh draw of lots to be conducted among the eligible applicants available at the relevant time.
-
If only one eligible applicant remains, one flat to be allotted to the appellant with time to deposit the amount.
-
[Dinesh Kumar v. State of Haryana, Civil Appeal arising out of SLP (C) No. 16057 of 2025, Decided on 17-02-2026]
*Judgment by Justice K. Vinod Chandran
Advocates who appeared in this case :
Mr. Pradeep Dahiya, Counsel for the Appellant
Mr. Alok Sangwan, learned Sr. A.A.G., Counsel for the Respondent No. 1/State
Mr. Shadan Farasat, Senior Counsel, Counsel for the Respondent No. 2
Mr. Shirish K. Deshpande, Counsel for the Respondent No. 3 and 4