Nepotism and Self-Aggrandizement Are Anathema to a Democratic System: Supreme Court Quashes Allotment of Super Deluxe Flats by Government Employees’ Welfare Society

“Governing Body Members Act in Fiduciary Capacity — Fairness and Transparency Are Non-Negotiable”, In a sharp indictment of arbitrariness within welfare institutions run by government officers, the Supreme Court of India on 17 February 2026 set aside the allotment of two super deluxe flats by the HUDA Employees Welfare Organization (HEWO), terming the actions of its Governing Body as a “clear act of favouritism and blatant display of self-aggrandizement.”

Bench comprising Justice Sanjay Kumar and Justice K. Vinod Chandran held that even though HEWO is registered under the Societies Registration Act, its composition of government officers and the land allotment by the Government justified invocation of Article 226 jurisdiction. The Court quashed the allotments made to Respondent Nos. 3 and 4, imposed costs, and directed a fresh draw of lots.

Challenge to Preferential Allotment and Dubious Draw of Lots

HEWO, a welfare society comprising employees and officers of Haryana Urban Development Authority (HUDA/HSVP), had two super deluxe flats available following cancellation of earlier memberships.

One flat was allotted to Respondent No. 3, a Governing Body member, on the basis of a “preference” carved out for such members. The remaining flat was allotted to Respondent No. 4 through a draw of lots.

The appellant, a member eligible by virtue of 14 years’ deputation and satisfying pay-band requirements, challenged the allotments alleging nepotism, arbitrariness and bias — particularly pointing out that Respondent No. 4 was a subordinate working under Respondent No. 3.

The Punjab & Haryana High Court dismissed the writ petition, holding that the appellant, having participated in the draw, was estopped from challenging the outcome. The Supreme Court found this approach legally flawed.

“Article 226 Properly Invoked”: Society of Government Officers Bound by Public Law Standards

Though HEWO is a society under the Societies Registration Act, the Court affirmed that judicial review under Article 226 was maintainable.

The Bench observed that the Governing Body consisted of ex officio members holding responsible government positions. Such members, even while acting within 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 made it clear that registration under a statute does not immunize a body from constitutional scrutiny when public law elements are present.

“Complete Farce”: Governing Body Member Allots Flat to Himself After Deadline

The Court’s strongest observations were directed at the allotment made to Respondent No. 3.

The eligibility required minimum six months’ service on deputation and submission of application with earnest money before the last date. On the last date for application, Respondent No. 3 was neither an employee of HUDA nor a Governing Body member. He assumed charge only later and did not satisfy the six-month requirement.

Despite this, a preferential allotment was granted to him after the deadline.

The Court noted with disapproval that the allotment letter was “a communication addressed by the 3rd respondent; in his official capacity, to himself; in the individual capacity, making it a complete farce.”

At the time of allotment, no application had been filed, no earnest money deposited, and no membership fee paid.

The Bench categorically held that “such preferential allotment cannot be made, even if it be made to a governing body member, who does not satisfy the eligibility criteria,” and declared the allotment a “clear act of favouritism and blatant display of self-aggrandizement.”

Ineligible Applicant Regularised Through Post-Facto Decision

With respect to Respondent No. 4, the Court found that he did not satisfy the stipulated pay-band level requirement. The Governing Body later attempted to regularise the allotment on the ground that only four of seven applicants met the criteria.

Rejecting this reasoning, the Court observed, “We fail to understand how the draw of lots would be stultified or frustrated by reason only of only four members being available.”

There was no rule mandating a minimum number of applicants. Ineligibility could not be cured by subsequent decisions. The Court also expressed doubts about whether the fourth respondent’s application and earnest money were submitted within time.

Significantly, the Court noted that Respondent No. 4 worked as an Accountant in the office headed by Respondent No. 3, remarking that the latter’s entry into HUDA “not only facilitated preferential allotment to himself but also to his subordinate.”

High Court’s “Cursory” Approach Set Aside

The Supreme Court criticized the High Court for dismissing the writ petition in a cursory manner and invoking estoppel merely because the appellant had participated in the draw of lots.

Participation in a flawed process, the Court implied, cannot validate an illegal allotment.

Costs Imposed and Fresh Draw Ordered

Allowing the appeal, the Court quashed both allotments and imposed costs of ₹1 lakh on HEWO, ₹50,000 on Respondent No. 3 and ₹25,000 on Respondent No. 4.

The deposited amounts are to be refunded without interest, and the respondents must vacate the premises within one month of refund.

A fresh draw of lots has been directed among the four originally eligible applicants. If only one eligible applicant remains, one super deluxe flat is to be allotted to the appellant with six months’ time to deposit the amount.

The Court further clarified that the costs imposed on HEWO may be recovered from the Governing Body members who took the impugned decision.

A Strong Message Against Institutional Nepotism

The judgment sends a clear signal that welfare bodies run by public servants cannot function as private enclaves of privilege.

By holding that “nepotism and self-aggrandizement are anathema to a democratic system,” the Supreme Court has reaffirmed that even internal allotments within employee societies must conform to constitutional standards of fairness, transparency and equality.

Date of Decision: 17 February 2026