Participation in Draw Does Not Cure Illegality: Supreme Court Rejects Estoppel in Arbitrary Flat Allotment Case

“Ineligibility Cannot Be Regularised by Subsequent Decision of Governing Body”, In a significant pronouncement on the limits of estoppel and post-facto regularisation in administrative decisions, the Supreme Court held that participation in a flawed selection process does not bar an aggrieved applicant from challenging illegality.

The judgment, delivered on 17 February 2026 by a Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran, set aside the Punjab and Haryana High Court’s dismissal of a writ petition challenging allotment of super deluxe flats by the HUDA Employees Welfare Organization (HEWO). The High Court had held that since the appellant participated in the draw of lots and lost, he was estopped from questioning the allotment. The Supreme Court found this reasoning unsustainable.

High Court’s Estoppel Theory Rejected

The High Court had cursorily concluded that Respondent No. 4 was allotted a flat through a draw of lots in which the appellant also participated, and therefore, the appellant could not turn around and challenge the process.

The Supreme Court, however, emphasized that estoppel cannot operate against illegality. Where the process itself is tainted by arbitrariness or violation of eligibility criteria, mere participation does not sanctify the outcome.

The Court found that Respondent No. 4 did not satisfy the stipulated pay-band level requirement prescribed for super deluxe flats. The eligibility condition clearly required applicants to fall within Level 10 to 20 of the pay band. The fourth respondent admittedly did not meet this requirement at the relevant time.

Despite this, the Governing Body later attempted to “regularise” the allotment by recording that only four out of seven applicants satisfied the criteria and therefore the earlier draw should be treated as valid.

The Supreme Court categorically rejected this approach, observing that there was “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.”

“Draw of Lots Would Not Be Stultified Merely Because Only Four Applicants Available”

The Bench remarked that it failed to understand how the draw of lots could be frustrated merely because fewer applicants were eligible.

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,” especially when the allotment was for a single flat.

Ineligibility, the Court held, is “stark and obvious” and cannot be cured by a subsequent decision of the Governing Body. Administrative bodies cannot retrospectively dilute eligibility norms to justify an already completed allotment.

Doubts Over Procedural Compliance

The Court also recorded serious doubts about the timing and validity of the fourth respondent’s application. It noted that the application form bore no date or place, nor any indication of the demand draft details evidencing earnest money deposit.

Such lapses, especially in a process involving public trust and fiduciary responsibility, further reinforced the finding of arbitrariness.

Rule of Law Prevails Over Technical Defences

By rejecting the estoppel argument, the Supreme Court reaffirmed a core principle of public law: illegality cannot be legitimised by acquiescence.

Participation in a process does not bar judicial review when the challenge is to violation of statutory or eligibility norms. The doctrine of estoppel cannot override constitutional mandates of fairness and equality.

The Court thus set aside the allotment to Respondent No. 4 along with that of Respondent No. 3, imposed costs, and directed a fresh draw of lots among eligible applicants.

A Broader Administrative Law Message

Beyond the immediate dispute, the ruling underscores that governing bodies — especially those comprising government officers — must adhere strictly to notified eligibility conditions. Any deviation, relaxation or regularisation must have a legal foundation and cannot be tailored to suit particular individuals.

The judgment reinforces that fairness in procedure is not a mere formality but a substantive constitutional requirement.

Date of Decision: 17 February 2026