Section 64 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 64 lays down six rules for "the case of a sale by auction". They cover lots, when the sale is complete, when a bidder can retract, the seller's right to bid, what happens when the seller bids without notifying a right to do so, the reserved or upset price, and the effect of pretended bidding. This article follows the text of the Act consulted (latest amendment shown: Act 28 of 1993); amendments after that should be checked in the official text.
In a sale by auction: (1) each lot is prima facie a separate contract of sale; (2) the sale is complete on the fall of the hammer or other customary manner, and until then any bidder may retract; (3) the seller may bid, or one person for him, only if the right is expressly reserved; (4) otherwise the seller may not bid or employ a bidder, and a sale contravening this may be treated as fraudulent by the buyer; (5) the sale may be notified as subject to a reserved or upset price; (6) pretended bidding to raise the price makes the sale voidable at the buyer's option.
What section 64 covers
The section opens: "In the case of a sale by auction—" and then lists six numbered rules. It does not define an auction. Whether a particular sale is an auction is not answered by the section; the rules apply once it is "a sale by auction". The six rules are explained in order below; if you are planning an auction and want the conditions of sale checked, a short legal consultation before the catalogue is printed is the usual step. Our article on how a contract of sale is made deals with offer and acceptance under section 5 and is the starting point for the formation of any contract of sale.
Rule (1): lots
"Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale".
Two points: the rule applies where goods are "put up for sale in lots", and the effect is "prima facie", which means it can be displaced. A buyer of one lot is the buyer under one contract; a buyer of another lot is under another. The Act does not say what displaces the rule. (Example, our own: Mehra Boutique buys lot 3 and Pathak Stores buys lot 7 at one auction; each purchase is prima facie a separate contract of sale.)
Rule (2): completion and retraction
"the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid".
- Completion. The sale is complete when the auctioneer "announces its completion", and the section names two ways: "by the fall of the hammer" or "in other customary manner".
- Retraction. "Until such announcement is made, any bidder may retract his bid." So before the announcement a bid is not binding on the bidder; the Act says "any bidder".
The Act does not say what makes a manner "customary". Property in the goods passes under the other parts of the Act; see our article on passing of property.
Rule (3): the seller's right to bid
"a right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bid at the auction". Key words: the right must be reserved expressly; it is reserved "by or on behalf of the seller"; and "but not otherwise" shows that without express reservation the seller may not bid. When it is reserved, the seller "or any one person on his behalf" may bid, so the seller may bid himself, or one person for him, but not both and not several. "Subject to the provisions hereinafter contained" points to the rules that follow.
Rule (4): no bidding by the seller without notification
"where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer".
Three limbs:
- The seller may not bid himself or employ any person to bid if the sale is not notified to be subject to a right to bid on behalf of the seller.
- The auctioneer may not knowingly take a bid from the seller or such a person.
- A sale contravening the rule "may be treated as fraudulent by the buyer".
The word "may" gives the buyer the option. The Act does not say what follows if the buyer treats the sale as fraudulent, beyond those words; the text is silent on the consequences. The word "notified" in rule (4), and the word "expressly" in rule (3), should be read together: reserve the right expressly and notify it in the sale conditions.
Rule (5): reserved or upset price
"the sale may be notified to be subject to a reserved or upset price".
The Act does not say what the effect is if the highest bid is below that price, or how the price is to be notified; it only provides that the sale may be so notified.
Rule (6): pretended bidding
"if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer."
Here the effect is stated: the sale is "voidable at the option of the buyer". For voidable contracts in the general law of contract, see our article on section 19 of the Indian Contract Act, 1872, which concerns a different Act and from which this article takes no rule.
The six rules at a glance
| Rule | Subject | Effect as printed |
|---|---|---|
| (1) | Lots | Each lot "prima facie" a separate contract |
| (2) | Completion; retraction | Complete on announcement by the fall of the hammer or in other customary manner; bidder may retract until then |
| (3) | Right to bid reserved | Seller or any one person on his behalf may bid, if expressly reserved, "but not otherwise" |
| (4) | Seller bids without notification | Not lawful; sale "may be treated as fraudulent by the buyer" |
| (5) | Reserved or upset price | Sale "may be notified" to be subject to it |
| (6) | Pretended bidding | Sale "voidable at the option of the buyer" |
Practical points
Sellers should put the conditions of sale in writing, stating whether the right to bid is reserved and whether there is a reserved or upset price. Auctioneers should not knowingly take a bid from the seller or his agent unless the right is reserved and notified. Buyers should read the notification and keep the catalogue, because rules (3) to (5) depend on what was notified.
Need help with the terms of an auction sale?
The conditions of an auction decide whether the seller may bid and whether a reserved price applies. Our team can look at your proposed terms and give legal consultation on how they sit with section 64, or on a sale already held.
Key takeaways
- Each lot is prima facie a separate contract of sale.
- The sale is complete on the fall of the hammer or in other customary manner; a bidder may retract until the announcement.
- The seller may bid, or one person for him, only if the right is expressly reserved.
- A sale in which the seller bids without notification may be treated as fraudulent by the buyer.
- Pretended bidding to raise the price makes the sale voidable at the buyer's option.
Read next
- Section 5 of the Sale of Goods Act, 1930: how a contract of sale is made
- Section 4 of the Sale of Goods Act, 1930: sale and agreement to sell
- Sections 62-63 of the Sale of Goods Act, 1930: exclusion of implied terms and reasonable time
- Section 19A of the Indian Contract Act, 1872: power to set aside contract induced by undue influence
Disclaimer: Based on the consolidated text of the Sale of Goods Act, 1930 consulted on 2 October 2026, whose latest amendment shown is Act 28 of 1993. It explains the words of the statute only; later amendments and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.