Supreme Court Holds That a Highest Bid Above Reserve Price Cannot Be Arbitrarily Cancelled Merely Due to Expectation of Higher Revenue

Case Name: Golden Food Products India v. State of Uttar Pradesh & Ors.
Citation: 2026 INSC 22
Date of Judgment/Order: 06 January 2026
Bench: Justice B.V. Nagarathna and Justice R. Mahadevan

Held: The Supreme Court held that where a highest bid in a public auction is valid, compliant with tender conditions, and exceeds the reserve price, the auctioning authority cannot arbitrarily cancel the bid merely because higher prices were fetched for smaller or dissimilar plots or due to an expectation that a higher price might be obtained in a fresh auction, in the absence of fraud, collusion, or illegality.

Summary: The appellant emerged as the highest bidder for an industrial plot measuring 3150 square metres under the Madhuban Bapudham Yojana, Ghaziabad, after its technical and financial bids were accepted and it quoted a price 15.23% above the reserve price. Despite this, the Ghaziabad Development Authority cancelled the auction without notice, citing that smaller plots in the same scheme had fetched higher per-square-metre prices. The Allahabad High Court dismissed the appellant’s writ petitions on the ground that no indefeasible right accrued without issuance of an allotment letter. The Supreme Court examined the auction process, comparative plot sizes, demand dynamics, reserve price fixation, and settled jurisprudence on public auctions, and found that the authority had relied on irrelevant considerations, violated principles of fairness and legitimate expectation, and acted arbitrarily in cancelling a lawful auction conducted in accordance with law.

Decision: The appeals were allowed, the impugned orders of the Allahabad High Court dated 24.05.2024 and 15.07.2024 were set aside, the cancellation of the appellant’s highest bid was quashed, and the Ghaziabad Development Authority was directed to issue an allotment letter and complete the auction process in favour of the appellant upon re-deposit of the earnest money within the stipulated time, with parties directed to bear their own costs.