CASE NAME: Golden Food Products India V. State Of Uttar Pradesh & Others
CASE NUMBER: Special Leave Petition (Civil) Nos.18095-18096 Of 2024
COURT: Supreme Court of India
DATE: January 06, 2026
QUORUM: Justice B.V. Nagarathna, Justice R. Mahadevan
FACTS
The present case emanated from an auction offered by the Ghaziabad Development Authority, for allotment of an industrial plot under the Madhuban Bapudham Yojana, Ghaziabad, issued in pursuance of an advertisement dated 25.08.2023. The auction was through a two-bid system, comprising technical and financial bids.
The Appellant, Golden Food Products India, submitted its technical bid and an initial financial bid of Rs. 25,920/- per square metre on 02.02.2024 with an earnest money deposit of Rs. 80,64,000/-. The technical bid was approved on 14.03.2024.
Subsequent to this, an open auction was held on 15.03.2024 at a reserve price of Rs. 25,600 per square metre for the identifiable land measurement of 3150 square metres. The number of bidders who participated was only two. During the open auction process, the appellant increased its offer to Rs. 29,500 per square metre, after which it was declared as the highest bidder, being 15.23% above the reserve price.
Despite this, no allotment letter was given. After making representations and filing applications under RTI, it came to notice through a representation that GDA had cancelled the bid. GDA, by its letter dated 22.05.2024, intimated to the appellant that it had cancelled its bid because smaller plots within the same scheme had attracted Higher prices, and that a new auction would be held. The earnest money payment had been refunded.
The aggrieved party, the appellant, filed writ C no.17883/2024 to the Allahabad High Court, which was rejected on merit. The second writ petition (writ C no.20059/2024) was rejected on the ground that it was a result of an order that was in its final stages. The appellant filed an appeal to the Supreme Court, SLP (Civil) Nos.18095-18096/2024, which was converted to Civil appeals of 2026.
ISSUES
- Whether the cancellation of the appellant’s highest bid was arbitrary and violative of Article 14.
- Whether the High Court was justified in dismissing the writ petitions, including on technical grounds.
LEGAL PROVISIONS
- Article 14 of the Constitution of India
- Principles governing public auctions and tenders
- Doctrine of legitimate expectation
ARGUMENTS OF THE PETITIONER (APPELLANT)
The Appellant thus contended that it had met all the tender conditions and, furthermore, had progressively improved its bid above the reserve price. RTI replies revealed that the technical bid was valid, the financial bid was the highest, and the reason for cancellation, comparison with smaller plots, was not disclosed in the auction brochure. Internal Note sheets showed post-auction reasoning amounting to extraneous consideration and post-hoc rationalisation.
It had been contended that such cancellation without notice was in violation of principles of natural justice and denied the appellant a legitimate expectation of allotment by issuance of an allotment letter. Mere refund of earnest money, prima facie, could not legitimise arbitrary State action.
ARGUMENTS OF THE RESPONDENTS
The respondents alleged that there was no vested right acquired in taking part in an auction until acceptance was communicated. The conditions of tender vested the final discretion in the Vice-Chairman. The bid was withdrawn in the public interest with a view to protecting revenues, as comparable plots have obtained higher rates. It was submitted that judicial review is limited in tender contracts.
ANALYSIS
The Supreme Court stated that public auction sales have sanctity and cannot be set aside arbitrarily. The reserve price for larger and smaller plots stood fixed at Rs. 25,600 per square meter, taking into account that larger plots were less in demand. The appellant’s tender was higher than the reserve price and not fraudulent or collusive.
Disclosures under RTI revealed that the reason for cancellation was neither made known beforehand nor was it based on relevant reasons. It was illogical to equate a 3150 sq. m. area with smaller areas measuring 123 to 132 sq. m. Hold fast to the proposition that all actions by the State are liable to scrutiny by Article 14.
The Court further held that the appellant has a legitimate expectation of allotment, which was overridden by cancellation in its absence behind its back. The High Court judgment on the second writ petition on technical grounds has been repelled, as matters of substantive illegality cannot be protected on procedural technicalities.
JUDGMENT
Supreme Court (Bench consisting of Justice B.V. Nagarathna & Justice R. Mahadevan), in a notable judgement dated 06 January 2026, allowed both appeals, setting aside the orders passed by both High Courts. The cancellation of the auction was also quashed by the Supreme Court. It was ordered that the appellant will have to refund the earnest money within four weeks, while GDA will have to issue the allotment letter in two weeks thereafter, along with completing all necessary consequential steps. A valid auction, being cancelled based merely on the anticipations that a higher price might be obtained, in view of the highest bid being greater than the reserve price, in the absence of any element of fraud or illegality, is arbitrary and thus unconstitutional, the Supreme Court held.
CONCLUSION
The Court reiterated that a public body cannot annul a valid auction solely on the ground of anticipated enhanced revenue. The annulment of an auction erodes the sanctity of public auctions, which go against Article 14.
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WRITTEN BY: USIKA K
