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An 'auction' for the post of sarpanch in a Gurdaspur village saw one of the bidders offering Rs 2 crore for the position.
The auction, a violation of democratic norms, has been condemned by several political leaders.
Elections to gram panchayats in Punjab will be held on October 15.
Bidding for the auction that was held in Hardowal Kalan village started at Rs 50 lakh, and shot up to Rs 2 crore, offered by local Bharatiya Janata Party leader Atma Singh.
The politician, who made the bid through a cheque, said villagers had decided to elect a Sarpanch who will offer maximum funds for the village.
The auction money will be spent on the development of the village, he said.
The allocation of the funds will be decided by a committee composed of the villagers, said Atma Singh, whose father too had once served as sarpanch.
Hardowal Kalan, one of the biggest villages in Gurdaspur district with around 350 acres of Panchayat land, is not the sole village where such an auction took place.
In Bathinda's Gehri Buttar village, a similar bidding process took place for the sarpanch post.
One of the aspirants bid Rs 60 lakh for the post, but no final decision could be reached.
Congress leader Partap Singh Bajwa condemned the auction and demanded jail for those who orchestrated it.
"This is open corruption. There is no precedent of such a bidding process," he said.
"This is wrong, I want to ask the vigilance bureau to take action against whoever offered Rs 2 crore," the Leader of Opposition in the Punjab assembly added.
Polling will be held for 13,237 'sarpanches' and 83,437 'panches' on October 15 through the use of ballot boxes.
According to the election schedule, the last date for filing nomination papers is October 4. Scrutiny of the nomination papers will take place on October 5 and the last date for withdrawal of nominations is October 7.
Votes will be counted the same day they are cast.