The Punjab and Haryana High Court has laid down a formula for deciding what a defaulting allottee must pay when a resumption order passed for non-payment of instalments is set aside. Under the formula, the allottee pays the unpaid percentage of the allotment price, applied to the current reserve price of a similar plot, rather than only the old dues with interest and penalty.

A Division Bench of Justice Vikas Bahl and Justice Divya Sharma set aside the resumption of a residential plot in Sector 19, Sirsa. The Bench held that the Haryana Shahari Vikas Pradhikaran (HSVP) authorities never considered whether resumption was being ordered as a last resort, even though the allottees repeatedly offered to clear all their dues.

On the competing positions of allottees and the authority, the Court observed, “It would always be the plea of the allottees that even in case there is a default of several years, they should only be asked to pay the outstanding principal amount along with interest and penalty to save the property from being resumed, whereas it would invariably be the stand of the authorities that the order of resumption should be upheld and some amount of deposit should also be forfeited, as the prices of the property in question have increased.”

The Court said no straitjacket formula can apply. However, it laid down a broad principle for cases where a plot is resumed for non-payment of instalments:

"I) To first calculate the percentage of the total allotment price paid by the allottee on or before the date of the resumption order. The formula to calculate the same would be: Amount paid x 100 = % Total Allotment price

II) Second, to calculate the percentage of total allotment price which was outstanding on the date of resumption order. The formula to calculate the same would be:- 100 - % calculated under Step (I) = %

III) Third, to find out from the respondent authorities as to what was the reserve price fixed by the authorities in the last auction held with respect to the similarly placed property. In case no auction has been held in the recent past, from the date of adjudication, then the present day Collector's rate could also be taken into consideration.

IV) The amount payable could then be calculated by the following formula:- % of total allotment price which was outstanding on the date of resumption order [as calculated under Step (II)] x Reserve Price/Collector's rate determined under Step (III)

V) From the abovesaid amount which is payable as calculated under Step (IV), amount which has been paid after the date of resumption order or during the pendency of the writ proceedings should be deducted to find out the exact amount payable."

The Court gave an example: an allottee who had paid 40% of the price before resumption would have to pay 60% of the last auction reserve price of a similar plot. If interest and penalty together come to a higher amount, the allottee may be asked to pay that higher amount, depending on the facts. The Bench clarified that it had not analysed every factual situation, so whether the formula applies must be decided case by case.

In the present case, the 450 sq. m. plot was allotted on a freehold basis in September 2008 at a tentative price of Rs. 29,94,750. After two transfers, it was re-allotted to the petitioners in July 2010.

The first two instalments were paid, with interest for the delay. The petitioners then stopped paying, citing losses in their petrol pump business.

In July 2021, they received a letter saying the plot had been resumed automatically by HSVP's PPM system. The appellate authority set this aside in September 2021, noting that the Estate Officer had passed no speaking order and the resumption appeared only on the PPM system. It remanded the matter for a hearing.

On remand, the Estate Officer again ordered resumption in December 2021. The Court described this as a “cryptic and non-speaking order”. The order acknowledged that the plot had been resumed directly by the PPM system without a personal hearing. Even so, it concluded that the allottee had failed to pay despite reminders and that the plot “has been resumed as per HSVP policy.” The appeal and revision were then dismissed.

During the writ proceedings, HSVP placed on record an account statement showing dues of Rs. 73,15,212, including penalty and interest. The petitioners deposited that amount by demand draft within the time allowed by the Court, but HSVP did not encash it.

HSVP argued as third-party purchasers, the petitioners knew the instalment schedule, Notices under Section 17 of the 1977 Act were sent by registered post, which amounts to deemed service under Section 42. The petitioners offered to pay only in 2021, after a delay of about 11 years.

Restoring the plot on payment of old dues would cause loss to the exchequer, since a similar plot had a reserve price of about Rs. 2.82 crore in a March 2026 auction.

The Court relied on the Supreme Court's decision in M/s Teri Oat Estates (P) Ltd. v. U.T. Chandigarh. That case holds that the drastic power of resumption and forfeiture must be used only as a last resort, that the authority must consider the facts of each case, and that its action must be tested under Article 14. The Court also relied on its own Division Bench decision in Krishan Lal v. State of Haryana (2024), where a resumed booth was restored on payment of Rs. 1.35 crore. The Supreme Court dismissed the SLP against that decision in July 2025.

On the facts, the Court noted, about 50% of the price had been paid before resumption.

The petitioners offered to pay all dues at every stage: before the Estate Officer, the appellate authority and the revisional authority and none of the authorities applied its mind, or recorded any finding, on whether resumption was a last resort.

When HSVP stated the dues in court, the petitioners deposited the full amount immediately.

The Court held that this was not a case for “the extreme order of resumption.”

The petitioners also alleged that the Estate Officer's order was drafted by the Law Officer. The Court said that, if true, this was “unfortunate”. However, it declined to examine the allegation because it had not been pleaded and examining it would delay the case.

Applying the formula, the Court took 50% of the 2026 reserve price of Rs. 2,81,94,800, which comes to Rs. 1,40,97,400. After crediting the Rs. 73,15,212 already deposited, the balance came to Rs. 67,82,188. The petitioners agreed to pay this amount.

The Court set aside the resumption, appellate and revisional orders dated 16.12.2021, 01.07.2022 and 29.03.2024. It restored the plot to the petitioners, subject to the direction that they must deposit Rs. 67,82,188 within two months. Since the earlier draft was never encashed, they will hand over a fresh draft of Rs. 73,15,212 once HSVP returns the original. They must approach HSVP for this within two weeks.

Mr. Rajesh Sethi, Advocate and Mr. Arav Gupta, Advocate and

Ms. Ashmeet Kaur Shah, Advocate for the petitioners.

Mr. Deepak Bhardwaj, Addl. A.G. Haryana and Mr. Deepak Sabherwal, Advocate and

Ms. Hitika Sabherwal, Advocate for the respondents-HSVP.