Summary of this article
Auction notice did not mention annual lease rent
Government cannot alter terms after auction completion
Premium-only leases valid under property law
The Rajasthan High Court has held that where people participate in the auctioning of land by the state government, the latter cannot charge the allottees lease rent per annum if the same information is not exhibited during the auctioning process.
In a judgment on November 6, 2025, the high court held that the imposition of a recurring lease rent close to three years from the allotment of the property constituted an illegal variation of the original conditions of the auction sale. The court ruled that once the auction is held, the bids are sanctioned, and the delivery of possession is done, the financial liability of the purchaser becomes final and cannot be inflated in any subsequent process.
How the Dispute Arose
The matter dates back to September 18, 1995, where the Krishi Upaj Mandi Samiti, Sumerpur, Rajasthan, published an advertisement inviting bids for shop plots in the Market Yard. The plots were to be leased out for 99 years. It was stated in the advertisement that the earnest money deposit, manner of bidding, and one-time premium payable to the bidders will have to be done. The advertisement did not state the provision for the yearly lease rent.
The auction took place on September 29, 1995. The petitioner took part in the auction process after paying earnest money of Rs 10,000 and won the plot for the shop after becoming the highest bidder. His bid was also cleared by the director of Agriculture Marketing.
New Condition Introduced After Allotment
The petitioner contested this demand before the Rajasthan High Court on the ground that the annual lease rent was never identified in the terms of the auction sale and that this burden was imposed on them unexpectedly.
What the Court Analysed
The court held that after the auction process was completed and the bid was accepted, thereby making the transaction contractual. The allottees had paid the entire premium for the plots and even used them for other purposes, like building shops and operating businesses.
The additional communication made by the government in 1998 aimed at imposing an additional pecuniary burden which went beyond what the parties agreed to accept.
Action Did Not Authorise Fresh Charges
The state government held that the petitioner was bound by the undertaking at the allotment stage regarding the execution of the lease deed according to the approved form by the government and therefore was legit on the annual lease rent charge.
The high court has refused this submission. It said the undertaking was given in a situation under which the allottees had no choice in the matter; otherwise, their plots would be forfeited.
Transfer of Property Act Considerations
The court also relied on Section 105 of the Transfer of Property Act, 1882. This section says that a lease can be created for a consideration of a premium, rent, or both. The court said that the payment of monthly or annual rent is not a necessary part of a lease.
In this particular case, the auction took place for premium-based leasing. As soon as the entire amount of the bid has been paid and delivery of possession has been made, delivery is made. The state cannot later introduce an element of annual rent payments through the leasing deed, it said.
Application of Promissory Estoppe
In this particular case, the court relied upon the Doctrine of Promissory Estoppel, stating that since it was induced by certain bidders that certain terms of auction would be used, they cannot thereafter change that financial obligation. The court held that imposition of an annual lease rent years after the allotment was unreasonable, unjust, and arbitrary, and was directly contrary to what was stated in the notice of the auction.
