Supreme Court Restored the Bidder’s Rights in auction of industrial plot
Ghaziabad Development Authority had invited bids for various plots including industrial plot no.26 in MB Yojana, Ghazibad.
In the financial bid, the appellant gave offer of Rs.25,920/- per sq.mt and deposited earnest money.
Thereafter, in the open auction, the petitioner was the highest bidder for Rs.29,500/- per sq.mt as against the reserve price of Rs.25,600/- per sq.mt for the plot of 3150 sq.mts. Thus, the quoted price was 15.23% above the reserve price.
However, the GDA respondent no.2 had cancelled the said bid since the prices of similar properties of different dimensions had received substantially higher prices.
HELD that the reserve price fixed for smaller plot and also the subject plaot was uniform i.e. Rs.25,600/- per sq.mt. Therefore, there has been uniformity in the fixing of the reserve price inso far as the subject plot and the smaller plot is concerned.
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 16 123.83 square metres to 132.20 square metres only whereas in the 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.
HELD merely because the smaller plots of 123 to 132 sq.mts were sold at a higher price as compared to the large subject plot of 3150 sq.mts, it could not have been the basis for cancellation of bid of the appellant.
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.
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.
SC Restored the Bidder’s Rights holding that cancellation of an auction bid for industrial plot merely on the expectation of higher bids received for smaller plots is arbitrary.
Judgment dated 6.1.2026 of the Supreme Court in SLP (Civil) Nos.18095-18096 of 2024 of Golden Food Products India Vs. State of Uttar Pradesh and others
