GOLDEN FOOD PRODUCTS INDIAversusSTATE OF UTTAR PRADESH & OTHERS

                   [2026] 2 S.C.R. 47 : 2026 INSC 22

                    Golden Food Products India
                                   v.
                   State of Uttar Pradesh & Others
                    (Civil Appeal No(s). 56-57 of 2026)
                               06 January 2026
             [B.V. Nagarathna* and R. Mahadevan, JJ.]


                           Issue for Consideration
       The authority conducting the auction expected a higher bid than
       what the highest bidder had bid, whether it can be a reason to
       discard the highest bid.

                                  Headnotes†
       Auction – Ghaziabad Development Authority (GDA)-respondent
       no.2 herein had advertised the allotment of various plots
       through an auction – On 15.03.2024, an open auction was
       conducted in which the reserve price of the subject plot was
       fixed at Rs.25,600/- per sq. mtr. – The appellant submitted a bid
       of Rs.29,500/- per sq. mtr., which was the highest, and was thus
       declared the highest bidder – However, later respondent found
       that the GDA–respondent no.2 had cancelled the allotment –
       Thereafter, on 22.05.2024, the GDA-respondent no.2 officially
       notified the appellant that they had cancelled their financial
       bid and announced that a fresh auction would take place for
       the plot – Since it noticed that “similar properties” in the same
       scheme had received substantially higher prices than offered
       by the appellant – Writ petition filed by the appellant before
       the High Court was dismissed – The High Court held that the
       appellant cannot claim an “indefeasible right” to insist upon
       the execution of a sale deed in its favour – Later, appellant filed
       another writ petition, which was also dismissed – Correctness:
       Held: An auction process has a sanctity attached to it and only for
       valid reasons that the highest bid can be discarded in an auction
       which is otherwise held in accordance with law – If a valid bid has
       been made which is above the reserve price, there should be a
       rationale or reason for not accepting it – Therefore, the decision
       to discard the highest bid must have a nexus to the rationale or
       the reason – Merely because the authority conducting the auction
       expected a higher bid than what the highest bidder had bid cannot
* Author
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      be a reason to discard the highest bid – In the instant case, no
      other party had placed a bid higher than the appellant herein –
      There was no infirmity in the conduct of the auction – No other
      party had complained about the process of auction conducted
      by the GDA-respondent no.2 – The bid offered by the appellant
      herein was the highest and above the reserve price – In the
      circumstances, the said bid ought to have been accepted by GDA-
      respondent no.2 rather than cancelling the same without notice to
      the appellant herein – Hence, the cancellation of the bid submitted
      by the appellant herein is quashed – The impugned orders of
      the High Court dated 24.05.2024 and 15.07.2024 passed in the
      respective writ petitions are set-aside – The appellant is directed to
      re-deposit the earnest money – After the re-deposit of the earnest
      money, the GDA-respondent no.2 shall make an order of allotment
      of the subject plot in favour of the appellant herein and take all
      consequential steps for concluding the auction process in favour
      of the appellant herein. [Para 33]

                               Case Law Cited
      Eva Agro Feeds (P) Ltd. v. Punjab National Bank [2023] 13 SCR
      861 : (2023) 10 SCC 189; Tata Motors Ltd. v. Brihan Mumbai Electric
      Supply & Transport Undertaking [2023] 6 SCR 695 : (2023) 19
      SCC 1; K. Kumara Gupta v. Sri Markendaya & Sri Omkareswara
      Swamy Temple [2022] 8 SCR 968 : (2022) 5 SCC 710; Haryana
      Urban Development Authority v. Orchid Infrastructure Developers
      (P) Ltd. [2017] 1 SCR 847 : (2017) 4 SCC 243; Rajasthan Housing
      Board v. G.S. Investments [2006] Supp. 7 SCR 868 : (2007) 1 SCC
      477; State of Orissa v. Harinarayan Jaiswal [1972] 3 SCR 784 :
      (1972) 2 SCC 36; Uttar Pradesh Avas Evam Vikas Parishad v. Om
      Prakash Sharma [2013] 6 SCR 199 : (2013) 5 SCC 182; Meerut
      Development Authority v. Association of Management Studies
      [2009] 6 SCR 663 : (2009) 6 SCC 171; Indore Vikas Praadhikaran
      (IDA) v. Shri Humud Jain Samaj Trust, 2024 SCC OnLine SC 3511;
      M.P. Power Management Company Limited v. Sky Power Southeast
      Solar India (Private) Limited [2022] 5 SCR 1 : (2023) 2 SCC 703;
      Nagar Nigam, Meerut v. Al Faheem Meat Exports (P) Ltd. [2006]
      Supp. 10 SCR 354 : (2006) 13 SCC 382; Subodh Kumar Singh
      Rathour v. Kolkata Metropolitan Development Authority [2024] 7
      SCR 532 : (2024) 15 SCC 461 – referred to.

                                  List of Acts
      Constitution of India.
[2026] 2 S.C.R.                                                           49

     Golden Food Products India v. State of Uttar Pradesh & Others


                             List of Keywords
     Auction; Sanctity of Auctions; Bid; Cancellation of bid; Revenue
     Maximization; Indefeasible Right; Doctrine of Non-Arbitrariness;
     Reserve Price; Irrelevant Considerations; Reasoned Order; Plot Size
     Disparity; Earnest Money Deposit; Madhuban Bapudham Yojana.

                            Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 56-57
     of 2026
     From the Judgment and Order dated 15.07.2024 and 24.05.2024
     of the High Court of Judicature at Allahabad in WC Nos. 20059
     and 17883 of 2024, respectively

                         Appearances for Parties
     Advs. for the Appellant(s):
     Vipin Sanghi, Sr. Adv., Siddharth Praveen Acharya, Aditya Bhati,
     Lakshay Sharma, Bhuvnesh Vyas.
     Advs. for the Respondent(s):
     Malak Manish Bhatt, Ms. Sukanya Joshi.

                Judgment / Order of the Supreme Court

                                Judgment

     Nagarathna, J.

     Leave granted.
2.   The present appeals have been filed against the following impugned
     final orders passed by the Allahabad High Court:
     a)    Final order dated 24.05.2024 passed in Writ C No.17883/2024
           (for short, “Impugned Order No.1”); and
     b)    Final order dated 15.07.2024 passed in Writ C No.20059/2024
           (for short, “Impugned Order No.2”),
           whereby the High Court dismissed the aforesaid writ petitions.
3.   In brief, the facts of the case are that the Ghaziabad Development
     Authority (“GDA”) – respondent No.2 herein had advertised the
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      allotment of various plots through an auction dated 25.08.2023,
      including an industrial plot bearing Plot No.26, Madhuban Bapudham
      Yojana, Ghaziabad, measuring an area of 3150 square metres (“the
      plot”, in question). The auction was conducted through a two-bid
      system – a ‘technical bid’ and a ‘financial bid’.
4.    On 02.02.2024, the appellant submitted separate technical and financial
      bids. In the financial bid, the appellant submitted an offer of Rs.25,920/-
      per square metre, and deposited a demand draft of Rs.80,64,000/- as
      earnest money. On 14.03.2024, the GDA - respondent No.2 notified
      the appellant that their technical bid had been approved. Subsequently,
      on 15.03.2024, an open auction was conducted in which the reserve
      price of the plot was fixed at Rs.25,600/- per square metre. There
      were only two bidders in the auction, including the appellant. The
      appellant submitted a bid of Rs.29,500/- per square metre, which was
      the highest, and was thus declared the highest bidder.
5.    Thereafter, on 25.04.2024, the appellant preferred a representation
      addressed to the Vice-Chairman of the GDA - respondent No.2,
      requesting issuance of an allotment letter for the said plot. On not
      receiving any reply, the appellant filed an RTI Application bearing
      Diary No.33697/RTI/2024, asking GDA - respondent No.2 to furnish
      internal note sheets and memos of the appellant’s bid. However,
      upon going to the office of GDA - respondent No.2 to inspect the
      same, they found that the GDA - respondent No.2 had cancelled the
      allotment. Thereafter, on 22.05.2024, the GDA - respondent No.2
      officially notified the appellant that they had cancelled their financial
      bid and announced that a fresh auction would take place for the plot.
6.    According to the GDA - respondent No.2, upon comparing the price
      received for the plot in question with the prices received for “similar
      properties” under the Madhuban Bapudham Yojana in the financial
      year 2023-24, it found that the following prices were received:

         Type of         Area (in   Reserve Price    Date of      Selling Price
         Property        square      (per square      Sale        (per square
                          metre)        metre)                       metre)
       Industrial Plot   131.90      Rs.25,600/-    25.08.2023     Rs.83,500/-
       Industrial Plot   123.83      Rs.25,600/-    25.08.2023     Rs.82,000/-
       Industrial Plot   123.92      Rs.25,600/-    25.08.2023     Rs.82,000/-
       Industrial Plot   132.20      Rs.25,600/-    25.08.2023   Rs.1,21,000 /-
[2026] 2 S.C.R.                                                           51

     Golden Food Products India v. State of Uttar Pradesh & Others


7.   Therefore, since it noticed that “similar properties” in the same
     scheme had received substantially higher prices than offered by the
     appellant in its bid, the auction committee recommended cancelling
     the appellant’s bid in order to conduct a fresh auction. This decision
     was approved by the Vice-Chairman of GDA - respondent No.2.
     Following this, the appellant was notified of the decision and its
     earnest money deposit was refunded.
8.   Aggrieved, the appellant approached the Allahabad High Court
     through Writ C No.17883/2024, seeking a writ of mandamus directing
     the GDA - respondent No.2 to issue an allotment letter in favour
     of the appellant and also execute a sale deed with respect to the
     plot. By Impugned Order No.1 dated 24.05.2024, the High Court
     dismissed the Writ Petition, taking on record the submission of the
     GDA - respondent No.2 that the appellant’s financial bid was lower
     than the bids for other plots in the same scheme and holding that
     the appellant cannot claim an “indefeasible right” to insist upon the
     execution of a sale deed in its favour.
9.   The appellant again approached the High Court through Writ C
     No.20059/2024, seeking that the letter dated 22.05.2024, by which
     the GDA - respondent No.2 informed them of the non-acceptance
     of their financial bid, be quashed. In addition, the appellant sought
     directions to issue an allotment letter in its favour, as well as execute
     a sale deed in respect of the plot. By Impugned Order No.2 dated
     15.07.2024, the High Court held that in the absence of a challenge
     to its order dated 24.05.2024, the same had attained finality as the
     appellant had not preferred any modification or review of the same.
     In addition, letter dated 22.05.2024 was sent prior to the order dated
     24.05.2024 and leave was granted to the appellant to participate in
     a fresh auction conducted by the GDA - respondent No.2. Therefore,
     the said Writ Petition was deemed to be misconceived and hence
     dismissed. Aggrieved, the appellant preferred SLP (C) Nos.18095-
     18096 of 2024, before this Court, challenging Impugned Order Nos.1
     and 2, which have been converted into the Civil Appeals that arise
     for our consideration.

     Submissions:
10. We have heard learned senior counsel Sri Sanghi for the appellant
    and learned counsel for the respondents. We have perused the
    material on record.
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11. Learned senior counsel for the appellant Sri Sanghi submitted that
    the respondents arbitrarily cancelled the appellant’s bid on the ground
    that the quoted rate was allegedly lower than the rates fetched for
    smaller plots of different dimensions in the same scheme. However,
    this ground was not mentioned in the auction brochure and was only
    disclosed after the appellant filed multiple RTI applications. The RTI
    replies reveal that the appellant’s technical bid was valid and that
    his price bid was the highest. The decision to cancel the bid for “low
    rates compared to smaller plots” was an extraneous and arbitrary
    consideration.
12. The appellant also submitted that the replies to his RTI applications
    establish that he had complied with all tender conditions and had
    validly deposited the required earnest money. The cancellation of the
    appellant’s bid amounts to rewriting the tender after the bids were
    opened, which is not permitted in law. It is contrary to Article 14 of
    the Constitution of India as it is arbitrary, for a statutory authority to
    cancel a valid bid on grounds that were not mentioned in the auction
    brochure. That comparing the appellant’s bid with dissimilar plots
    (which were smaller) amounts to imposing new tender conditions
    after the auction. Our attention was drawn to the decision of this
    Court in Eva Agro Feeds (P) Ltd. vs. Punjab National Bank,
    (2023) 10 SCC 189 (“Eva Agro Feeds”) in which a two-judge
    bench of this Court (B.V. Nagarathna and Ujjal Bhuyan, JJ.) held
    that “…mere expectation of the Liquidator that a still higher price
    may be obtained can be no good ground to cancel an otherwise
    valid auction and go for another round of auction. Such a cause of
    action would not only lead to incurring of avoidable expenses but
    also erode the credibility of the auction process itself”. The appellant
    submitted that this principle applies in the present case, where the
    auction was cancelled arbitrarily because of a ground that was not
    provided in the brochure.
13. The RTI responses show that an adjacent plot of the same scheme
    was allotted without any benchmarking against smaller plots. Further,
    they show that the GDA - respondent No.2 allotted several plots above
    2000 square metres at prices only marginally above the reserve
    price. In contrast, the appellant’s bid was a full 15.23% above the
    reserve price (Rs.29,500/- as against Rs.25,600/-). Therefore, the
    respondent’s treatment of the appellant was inconsistent, selective
    and arbitrary.
[2026] 2 S.C.R.                                                             53

    Golden Food Products India v. State of Uttar Pradesh & Others


14. The appellant further submitted that the High Court, in its impugned
    orders, failed to appreciate the difference between an ‘indefeasible
    right to allotment’, and the ‘right to fair and non-arbitrary treatment’. In
    the present case, the respondents cancelled the allotment without a
    show-cause notice or hearing, which violates the principles of natural
    justice. It was contended that simply returning the earnest money
    deposited cannot legitimise an arbitrary cancellation.
15. Per contra, learned counsel for the respondents submitted that
    participation in a tender or auction does not confer any vested/
    enforceable right to obtain the bid. Unless the auctioning authority
    accepts the bid and communicates the same, the highest bid is
    only an offer, which is revocable at the authority’s discretion. In this
    case, no letter of acceptance or allotment was ever issued to the
    appellant. On the contrary, the earnest money deposit was returned,
    thereby extinguishing any semblance of a contractual relationship.
    The appellant cannot compel the execution of a sale deed. The
    reasons for cancellation were also communicated, which means that
    the decision was not arbitrary.
16. Further, the respondents also submitted that judicial review in
    matters pertaining to tender processes is limited. In this regard, our
    attention was drawn to the decision of a three-Judge Bench of this
    Court in Tata Motors Ltd. vs. Brihan Mumbai Electric Supply &
    Transport Undertaking, (2023) 19 SCC 1, wherein it was observed
    that “courts should not use a magnifying glass while scanning the
    tenders and make every small mistake appear like a big blunder. In
    fact, the courts must give “fair play in the joints” to the government
    and public sector undertakings in matters of contract”.
17. It was submitted that following from this principle, the respondent’s
    decision to cancel the action was based on objective considerations
    (the prevailing market rates and the need for safeguarding public
    revenue). Comparable plots in subsequent auctions had obtained
    significantly higher prices and therefore the decision to re-auction the
    plot in question was a measure intended to maximise public benefit.
18. It was further submitted that the tender document expressly stated
    that the decision of the Vice-Chairman/Authority in matters of allotment
    are final and binding. Therefore, the cancellation in the present case
    was not without authority and was within the scope of the tender
    conditions made available to the appellant.
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      Points for Consideration:
      a)   Whether the High Court was right in dismissing the writ petitions
           filed by the appellant herein?
      b)   What Order?
19. The undisputed facts of the case are that the GDA - respondent
    No.2 had advertised the allotment of various plots through an
    auction dated 25.08.2023. The appellant’s technical bid as well as
    the financial bid were accepted on 14.03.2024 and on 15.03.2024,
    respectively. The reserve price fixed for the subject plot measuring
    3150 square metres was Rs.25,600/- per square metre and the
    appellant had bid Rs.29,500/- per square metre which was the
    highest bid and therefore the appellant was declared the highest
    bidder. In fact, there were only two bidders in the auction including
    the appellant. Since no further steps were taken by the GDA -
    respondent No.2 in the matter of issuance of allotment letter to the
    appellant herein, steps were taken to ascertain about the same.
    The appellant became aware that the GDA - respondent No.2 had
    cancelled the allotment and had notified the appellant about the
    cancellation only on 22.05.2024. This was done without any prior
    intimation to the appellant. The reason for cancellation according to
    GDA - respondent No.2 was owing to the low bid which was made
    by the appellant herein although it was higher than the reserve
    price. The High Court has accepted the said contention of GDA -
    respondent No.2 and has accordingly dismissed the writ petitions
    filed by the appellant herein.
20. We have considered the arguments advanced at the Bar, in light of
    the facts of this case and the judgments of this Court relied upon
    by the learned counsel for the respective parties.
21. In K. Kumara Gupta vs. Sri Markendaya & Sri Omkareswara
    Swamy Temple, (2022) 5 SCC 710, it was observed by this Court that
    unless and until it was found that there was any material irregularity
    and/or illegality in holding the public auction and/or the auction was
    vitiated by any fraud or collusion, it is not open to set aside the
    auction or sale in favour of the highest bidder on the basis of some
    representation made by a third party who did not even participate
    even in the auction proceedings and did not make any offer. If there is
    repeated interference in the auction process, the object and purpose
[2026] 2 S.C.R.                                                        55

    Golden Food Products India v. State of Uttar Pradesh & Others


     of holding public auction and its sanctity would be frustrated. That
     unless there are allegations of fraud, collusion, etc., the highest
     offer received in the public offer should be accepted as a fair value.
     Otherwise, there shall not be any sanctity of any public auction.
22. In Eva Agro Feeds, it was observed that the mere expectation of
    the liquidator (in the said case) which could also mean the auction
    seller that, a still higher price may be obtained can be no good ground
    to cancel an otherwise valid auction and go in for another round of
    auction. Such a course of action would not only lead to incurring of
    avoidable expenses but also erode credibility of the auction process
    itself. Thus, the auctioning authority must adhere to the rule of law
    and an auction cannot be cancelled arbitrarily.
23. In the present case, the main contention of learned senior counsel
    for the appellant was that in an arbitrary manner, GDA - respondent
    No.2 cancelled the appellant’s bid on the ground that it was lower
    than the rates fetched for smaller plots of different dimensions of the
    same Scheme. That the technical bid of the appellant was accepted
    and the price quoted by the appellant was Rs.29,500/- per square
    metre which was higher than Rs.25,600/- per square metre which was
    the reserve price. The appellant’s financial bid was also accepted.
    Therefore, the decision to subsequently cancel the financial bid
    of the appellant owing to “a low rate” quoted by the appellant as
    compared to the “other smaller plots” is an arbitrary and extraneous
    reason. That once the auction has been held in accordance with
    law and there had been no fraud, collusion or any other infirmity in
    the holding of the auction and the earnest money has been validly
    deposited, there could not have been any subsequent cancellation
    of the bid. In the instant case, merely because a higher rate could
    have been achieved then what was accepted and declared by the
    auctioning authority could not be the reason for setting aside the
    auction itself. That the price quoted by the appellant herein was
    15.23% above the reserve price. Further, without any issuance of the
    notice to the appellant herein, the financial bid had been cancelled.
    Returning of the earnest money deposited by the appellant herein
    would not legitimize an arbitrary cancellation. Hence, it was contended
    that the impugned orders of the High Court may be set aside and
    a direction may be issued to the respondents herein to issue a
    letter of allotment of the subject plot in the name of the appellant
    herein.
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24. In order to justify the cancellation, learned counsel for GDA -
    respondent No.2 contended that the bid made by the appellant was
    low as compared to bids received in respect of “smaller plots” on the
    very same date. Therefore, the discretion was rightly exercised by
    GDA - respondent No.2 to cancel the financial bid of the appellant
    and return the earnest money.
25. As already noted, Rs.25,600/- per square metre was the reserve price
    fixed for the subject plot measuring 3150 square metres which is a
    larger area compared to other smaller plots which also carried the
    same reserve price. Ordinarily when large areas of industrial land
    are auctioned, the overall price would be separately assessed as
    compared to the smaller plots. This is because insofar as the industrial
    plots are concerned, most of the applicants seek allotment of smaller
    plots and the demand for larger plots would be scarce. Since the
    GDA- respondent No.2 intended to auction an area of 3150 square
    metres as one plot which is a large plot, the reserve price was also
    fixed at Rs.25,600/- per square metre. As noted above, that can be
    compared to the reserve price fixed for the smaller plots of land which
    was also Rs.25,600/-. Intentionally, an identical reserve price was
    fixed owing to a lower demand for a larger plot. Otherwise, a higher
    reserve price could have been fixed by the GDA – respondent No.2
    for the subject plot. Merely because the area of plot in the instant
    case was 3150 square metres and it was a larger plot, the reserve
    price could not have been higher. Therefore, the reserve price fixed
    for the smaller plot as well as what has been fixed for the subject
    plot was uniform i.e. Rs.25,600/- per square metre. Therefore, there
    has been a uniformity in the fixing of the reserve price insofar as the
    subject plot as well as the smaller plot is concerned, as is evident
    from the table extracted above which are all under the very same
    Madhuban Bapudham Yojna in the financial year 2023-24.
26. In the instant case, the date of auction of the subject plot was
    25.08.2023 which was the very same date on which the other smaller
    plots were auctioned. Merely because the selling price or the financial
    bids made by the parties vis-à-vis the smaller plots were concerned
    was higher per square metre cannot be a reason to also expect a
    very high price or a similar price insofar as the subject plot measuring
    3150 square metres is concerned. After all, from the table reproduced
    above, it is evident that the smaller plots were measuring between
    123.83 square metres to 132.20 square metres only whereas in the
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    Golden Food Products India v. State of Uttar Pradesh & Others


     instant case the subject plot is a large area of 3150 square metres.
     The subject plot cannot be compared with the smaller plots auctioned
     on that very day. There were only two parties who made their bids in
     respect of the subject plot and the appellant herein was the highest
     bidder. This fact also demonstrates that there were no bidders for
     the said extent of plot as there was no demand for the same unlike
     a demand for smaller plots. GDA - respondent No.2 could not have
     therefore expected to receive a similar rate of bid per square metre
     vis-à-vis a smaller plot insofar as the subject plot is concerned. As
     already noted, the reserve price in respect of the smaller plot as well as
     the subject plot was fixed at the same rate. However, as noted above
     there were only two bidders who bid for the subject plot measuring
     3150 square metres. The demand for smaller plots being more as
     compared to larger plots, naturally the bid amounts were higher for
     smaller plots. There being lesser demand for the subject plot being
     3150 square metres, only two bidders submitted their financial bid
     and the appellant was declared to be the higher bidder.
27. Further, the amount of Rs.29,500/- per square metre which was bid
    by the appellant herein was above Rs.25,600/- per square metre
    being the reserve price. Naturally, the appellant was declared to be
    the highest bidder. This is in fact a crystallization of the future rights
    and obligation of the parties. The appellant had a right to receive the
    allotment letter and GDA - respondent No.2 had a duty to issue the
    same, particularly in the absence of fraud, collusion or any other reason
    which could have led to the cancellation of the auction. Thereafter,
    GDA- respondent No.2 could not have compared the selling price
    of the smaller plots with the financial bid made by the appellant
    herein so as to cancel the auction itself. The same was done on an
    irrelevant consideration. Therefore, it was arbitrary, whimsical and
    irrational. Hence, the appellant was justified in seeking the reliefs
    before the High Court. The High Court ought to have considered the
    case of the appellant in the above perspective and granted relief to
    the appellant herein by directing GDA - respondent No.2 to pass an
    order of allotment to the appellant herein. Instead, the High Court has
    been swayed by the argument of GDA - respondent No.2 to the effect
    that the bid offered by the appellant herein was on the lower side. The
    learned senior counsel for the appellant contended that the adjacent
    plot and the plots above 2000 square metres have been allotted by
    the GDA - respondent No.2 at prices only marginally above the reserve
    price whereas in the instant case the appellant had bid a price which
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      was 15.23% above the reserve price. The High Court has also been
      impressed by the argument that the appellant had no vested right as
      no letter of acceptance of bid was issued to it and the earnest money
      of Rs.80,64,000/- was returned to the appellant and therefore, there
      was no right in the appellant to insist upon the allotment of the subject
      plot. This reasoning is also incorrect and flawed. Having regard to the
      facts of the present case and the discussion made above, the High
      Court was not right in dismissing the writ petitions.
28. In our view, there cannot be any imprimatur of the Court to such
    arbitrary cancellation of auction by an instrumentality or agency of the
    State in the absence of there being any fraud, collusion, suppression
    etc. Merely because the smaller plots measuring 123 to 132 square
    metres were auctioned and sold at a higher price as compared to
    the subject plot measuring 3150 square metres which is a large
    sized plot, could not have been the basis for cancelling the auction
    insofar as the subject plot is concerned. The demand for smaller plots
    being higher was sold at a higher price per square metre than the
    subject plot, where there was no demand for the subject plot as only
    two bidders participated in the auction. The bid of the appellant was
    above the reserve price. There was no other reason to cancel the
    auction sale of the subject plot. Therefore, GDA - respondent No.2
    was under an obligation in law having accepted the bid offered by the
    appellant to issue the allotment letter instead of cancelling the auction
    on the basis of irrelevant considerations that too behind the back of
    the appellant. Expectation of a higher bid in a subsequent auction
    cannot be a reason to cancel an auction held in accordance with law.
29. The appellant herein as also all bidders would had made all financial
    arrangements before making technical and financial bids in an auction.
    The technical bid of the appellant herein was accepted. There was
    no reason to decline the financial bid made by the appellant which
    was the highest bid. The financial bid was also over and above the
    reserve price. There was no reason attributed to the appellant for
    cancellation of the auction sale. In the circumstances, the appellant
    had a legitimate expectation to receive an allotment letter vis-à-vis
    the subject plot as it was the highest bidder. Instead, without any
    prior notice to the appellant the auction itself was cancelled which
    constrained the appellant to approach the High Court. The High Court
    has lost sight of these facts of the matter and has simply dismissed
    the writ petitions filed by the appellant herein which is not correct.
[2026] 2 S.C.R.                                                           59

    Golden Food Products India v. State of Uttar Pradesh & Others


30. We could consider the judgments cited at the Bar as under:
     a)    In Haryana Urban Development Authority vs. Orchid
           Infrastructure Developers (P) Ltd., (2017) 4 SCC 243, the
           contract contained an express clause stating that the presiding
           officer had the right to reject a bid without offering any reasons.
           Although twenty-seven bidders participated in the said auction
           and the reserve price was Rs.106.65 crores and the highest
           bid was Rs.111.75 crores for 9.527 acres of land in Gurgaon,
           the bid was cancelled. However, such a clause is conspicuous
           by its absence in the present case.
     b)    In Rajasthan Housing Board vs. G.S. Investments, (2007)
           1 SCC 477, owing to a news item published in a newspaper
           that large scale bungling had taken place in the auction due
           to which the price fetched for the plots was much below the
           market rate, a direction was issued by this Court to hold a fresh
           auction. Such a situation did not arise in the instant case.
     c)    In State of Orissa vs. Harinarayan Jaiswal, (1972) 2 SCC
           36, there was a direction to hold a re-auction as the power to
           accept or reject the bid was given to the highest authority in
           the State and the State Government was of the opinion that the
           price was inadequate. Possibly, in the facts of the said case,
           the said direction was issued by this Court.
     d)    In Uttar Pradesh Avas Evam Vikas Parishad vs. Om Prakash
           Sharma, (2013) 5 SCC 182, the reserve price was fixed at
           Rs.1,80,200/- and the respondent therein offered Rs.1,31,500/-
           which was much less than the reserve price. Hence, the bid
           was rightly rejected.
     e)    In Meerut Development Authority vs. Association of
           Management Studies, (2009) 6 SCC 171, the request of the
           respondent therein for allotment of remaining 20,000 square
           metres to them as they had acquired 37,000 square metres of
           land as per the reserve price, was rejected as the price quoted
           had been lower than the reserve price for the said remaining
           land and rightly so.
     f)    In Indore Vikas Praadhikaran (IDA) vs. Shri Humud
           Jain Samaj Trust, 2024 SCC OnLine SC 3511, this Court
           distinguished Eva Agro Feeds and found that the bid could
           not be accepted as the tender committee while finalizing the
           bids noticed that property tax of Rs.1.25 crore in respect of the
60                                                          [2026] 2 S.C.R.

                         Supreme Court Reports


           subject land therein was outstanding. On noticing this error, the
           Board decided to cancel the bid of the respondent therein and
           decided to issue a fresh notice inviting tenders.
31. The following judgments also require consideration:
      a)   In M.P. Power Management Company Limited vs. Sky Power
           Southeast Solar India (Private) Limited, (2023) 2 SCC 703,
           the bid of the respondent therein was accepted and it was
           observed that public interest cannot always be conflated with
           an evaluation of the monetary gain or loss alone.
      b)   In Nagar Nigam, Meerut vs. Al Faheem Meat Exports (P) Ltd.,
           (2006) 13 SCC 382, an advertisement inviting applications for
           a fresh contract to run a slaughterhouse was sustained. In the
           said judgment, it was observed that the award of government
           contracts through public auction or public tender was to ensure
           transparency in the public procurement, to maximise the economy
           and efficiency in government procurement, to promote healthy
           competition among the tenderers and to eliminate irregularities,
           interference and corrupt practices by the authorities concerned.
           In rare and exceptional cases, for instance during natural
           calamities and emergencies declared by the Government; where
           the procurement is possible from a single source only; where
           the supplier or contractor has exclusive rights in respect of the
           goods or services and no reasonable alternative or substitute
           exists; where the auction was held on several dates but there
           were no bidders or the bids offered were too low, etc., this
           normal rule may be departed from and such contracts may be
           awarded through “private negotiations”. The Government must
           then have freedom of contract. Some fair play in the joints is a
           necessary concomitant for an administrative body functioning
           in an administrative sphere. The plea of the respondent therein
           seeking permission to modernize the slaughterhouse and
           therefore, to refrain from issuing an advertisement was negatived.
      c)   In Subodh Kumar Singh Rathour vs. Kolkata Metropolitan
           Development Authority, (2024) 15 SCC 461, this Court
           observed that merely because the rates embodied in a contract
           with the passage of time have become less appealing, the same
           cannot become a determinative criterion for either terminating
           the contract or for the courts to decline interference in such
           contractual disputes. Public interest cannot be used as a pretext
[2026] 2 S.C.R.                                                          61

    Golden Food Products India v. State of Uttar Pradesh & Others


             to arbitrarily terminate contracts. Merely because the financial
             terms of a contract are less favourable over a period of time
             does not justify its termination. It was observed that the mere
             possibility of fetching a higher license fee was no ground to
             cancel the tender issued to the appellant therein.
32. An auction process has a sanctity attached to it and only for valid
    reasons that the highest bid can be discarded in an auction which
    is otherwise held in accordance with law. If a valid bid has been
    made which is above the reserve price, there should be a rationale
    or reason for not accepting it. Therefore, the decision to discard the
    highest bid must have a nexus to the rationale or the reason. Merely
    because the authority conducting the auction expected a higher bid
    than what the highest bidder had bid cannot be a reason to discard
    the highest bid. In the instant case, no other party had placed a
    bid higher than the appellant herein. There was no infirmity in the
    conduct of the auction. No other party had complained about the
    process of auction conducted by the GDA - respondent No.2. The
    bid offered by the appellant herein was the highest and above the
    reserve price. In the circumstances, the said bid ought to have been
    accepted by GDA - respondent No.2 rather than cancelling the same
    without notice to the appellant herein. Hence, the cancellation of the
    bid submitted by the appellant herein is quashed.
33. For the aforesaid reasons, the impugned orders of the High Court
    dated 24.05.2024 and 15.07.2024 passed in the respective writ
    petitions are set-aside. The appellant is directed to re-deposit the
    earnest money preferably within four weeks from today. Within two
    weeks from the date of the re-deposit of the earnest money, the GDA -
    respondent No.2 shall make an order of allotment of the subject plot
    in favour of the appellant herein and take all consequential steps
    for concluding the auction process in favour of the appellant herein.
    These appeals are allowed in the aforesaid terms.
     Parties to bear their own costs.

     Result of the case: Appeals allowed.



     †
         Headnotes prepared by: Ankit Gyan