Government auctions are conducted to sell properties or assets under the authority of the government. These may include seized goods, properties sold for non-payment of taxes, assets sold during liquidation proceedings, unclaimed properties, or surplus government items.
To ensure that these auctions remain fair and transparent, Section 220 of the Bharatiya Nyaya Sanhita (BNS), 2023 makes it an offence for certain persons to participate in an unlawful manner.
What does Section 220 say?
Section 220 mainly deals with two types of people who should not participate in a government auction:
- People who are legally not allowed to bid in the auction because they are disqualified under the applicable law, government order, or auction rules.
- People who place bids without intending to complete the purchase, but only to disrupt the auction, inflate the price, or interfere with the bidding process.
Who Cannot Participate in a Government Auction?
While the law does not list every category, legal experts explain that, depending on the law governing the auction, the people with legal incapacity to participate in bidding are :
- Government officials.
- The auctioneer or officer conducting the sale.
- Persons specifically barred by a court or government order.
- Minors who cannot legally enter into contracts.
- Persons who are legally incapable of carrying out commercial transactions.
- Any other person disqualified under the applicable law or the auction conditions.
The exact list of disqualified persons depends on the rules governing that particular auction.
Bidding on Behalf of a Barred Person Is Also an Offence
A person cannot avoid the law by asking someone else to bid on their behalf.
If a friend, relative, employee, or any other person knowingly participates in an auction for someone who is legally barred from purchasing the property, both may be held liable under Section 220.
Eg: Benami bidding:
Suppose a government department auctions a seized property.
- A government official is legally barred from bidding.
- He asks his friend to bid on his behalf.
- The friend knows he is acting for the disqualified official.
Fake Bidding Is Also Illegal
The law also targets people who participate in an auction without any intention of completing the purchase.
Eg: Fake bidding:
A person repeatedly bids ₹1 crore for a property even though:
- they have no money,
- never intended to pay,
- only wanted to increase the price or force the auction to fail.
Punishment Under Section 220
A person found guilty under Section 220 of the Bharatiya Nyaya Sanhita may face
- Imprisonment for up to one month,
- a fine of up to ₹200, or
- both.
The offence is classified as non-cognizable, meaning the police cannot arrest a person without a court’s permission. It is also a bailable offence, allowing the accused to seek bail as a matter of right, and the case is triable by any Magistrate.
When Does This Law Apply?
For Section 220 to apply, two important conditions must generally be satisfied:
- The auction must be conducted by a public servant who has the lawful authority to conduct the sale.
- The bidder must know that they, or the person they represent, are legally disqualified from participating, or must knowingly bid without intending to fulfil the obligations of the purchase.
Why Should Buyers Be Careful?
Before participating in a government auction, always check:
- Whether you are legally eligible to bid.
- Whether the auction notice places any restrictions on participation.
- That you are not bidding on behalf of a person who is legally barred.
- That you have the financial ability and genuine intention to complete the purchase if your bid is successful.
Ignoring these requirements can result in criminal liability, even if the bid is never completed.
For assistance, you may contact the Legal experts of the verified real estate team to review the norms and conditions of the auction process as well as conduct legal checks on properties listed for auction.
Final Thoughts
Government auctions are meant to ensure fairness and transparency in the sale of public assets. Section 220 of the Bharatiya Nyaya Sanhita helps prevent proxy bidding, fake bidders, and participation by persons who are legally disqualified. Understanding these rules can help buyers participate confidently while avoiding unnecessary legal consequences.