What began as a routine industrial land auction in Ghaziabad ended with sharp judicial scrutiny at the country’s highest court. On Monday, the Supreme Court stepped in to correct what it described as an arbitrary cancellation by a development authority, restoring the rights of a bidder whose offer had already crossed the reserve price.
The court made it clear that public auctions cannot be undone merely because authorities later hope for better returns.
Background of the Case
The dispute arose from an auction conducted by the Ghaziabad Development Authority (GDA) in August 2023 for several industrial plots under the Madhuban Bapudham Yojana. One of these was a large industrial plot measuring 3,150 square metres.
Golden Food Products India participated through the prescribed two-stage bidding process. Its technical bid was approved, and during the open auction, it offered ₹29,500 per square metre-over 15 percent higher than the reserve price of ₹25,600.
With only two bidders in the fray, Golden Food Products emerged as the highest bidder.
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Despite this, no allotment letter followed.
Weeks later, the company discovered that the GDA had cancelled the auction and decided to hold a fresh one. The authority claimed the bid was “low” when compared to prices fetched by smaller plots in the same scheme.
The Allahabad High Court declined to interfere, holding that the bidder had no enforceable right without a formal allotment. That decision brought the matter before the Supreme Court.
At the heart of the case was a simple question:
Can a valid auction be cancelled solely because authorities believe a higher price might be possible later?
The bench examined records showing that smaller plots-around 120 to 130 square metres-had attracted higher per-square-metre rates. But the judges noted that demand dynamics for large industrial plots are fundamentally different.
“The reserve price was identical for both large and small plots,” the bench observed, “which itself reflected an understanding of lower demand for bigger parcels.”
Court’s Observations
The Supreme Court was unsparing in its assessment of the GDA’s conduct.
“The appellant’s bid was not only the highest but also substantially above the reserve price,” the bench noted, adding that there was no allegation of fraud, collusion, or procedural irregularity.
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The judges rejected the comparison with smaller plots outright.
“Expecting the same per-square-metre rate for a 3,150 square metre plot as for much smaller plots is unrealistic,” the court said, calling the cancellation “arbitrary and based on irrelevant considerations.”
The court also stressed that returning the earnest money did not cure the illegality.
“Merely refunding the deposit cannot legitimise an arbitrary cancellation carried out behind the bidder’s back,” the bench observed.
The Supreme Court disagreed with the High Court’s view that the bidder had no enforceable right.
While acknowledging that an auction does not automatically create ownership, the court clarified that once a lawful auction concludes with a highest bid above the reserve price, the authority has a duty to act fairly.
“The right here is not an indefeasible right to property,” the bench explained, “but the right to non-arbitrary treatment by a State authority.”
The judges also found fault with the lack of notice or hearing before cancelling the auction.
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Final Decision
Allowing the appeals, the Supreme Court quashed both orders of the Allahabad High Court and set aside the GDA’s decision to cancel the auction.
The court directed Golden Food Products India to re-deposit the earnest money within four weeks. It further ordered the GDA to issue an allotment letter for the industrial plot within two weeks thereafter and complete all formalities to conclude the auction.
“The sanctity of a public auction cannot be sacrificed merely because the authority later hopes for a higher price,” the bench concluded.
Case Title: Golden Food Products India vs State of Uttar Pradesh & Others
Case No.: Civil Appeal arising out of SLP (C) Nos. 18095–18096 of 2024
Case Type: Civil Appeal (Auction / Land Allotment)
Decision Date: 6 January 2026
