Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-000056-000057 – 2026 |
| Diary Number | 33449/2024 |
| Judge Name | HON’BLE MRS. JUSTICE B.V. NAGARATHNA |
| Bench | HON’BLE MRS. JUSTICE B.V. NAGARATHNA; HON’BLE MR. JUSTICE UJJAL BHUYAN |
| Overrules / Affirms | Affirms existing precedent (Eva Agro Feeds) |
| Type of Law | Administrative law; public auction and tender jurisprudence; Article 14 challenge |
| Questions of Law |
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| Ratio Decidendi | The Court held that once an auction is conducted without fraud or collusion and a bid above the reserve price is validly accepted, the highest bid cannot be cancelled on irrelevant or after-the-fact considerations. It reaffirmed that mere expectation of a higher bid is no ground to reopen or cancel a concluded auction (Eva Agro Feeds). Comparison of bids on dissimilar plots—particularly smaller plots with higher demand—is arbitrary and extraneous. Returning earnest money does not cure arbitrariness. Authority decisions in auction matters must adhere to rule of law and principles of natural justice; arbitrary cancellations violate Article 14. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
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Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | High Courts |
| Distinguishes | Instances where smaller-plot benchmarks are used to cancel larger-plot auctions |
| Follows | Eva Agro Feeds (2023 10 SCC 189); K. Kumara Gupta (2022 5 SCC 710) |
What’s New / What Lawyers Should Note
- Government authorities cannot cancel a valid highest bid on grounds not specified in the tender document.
- Comparing bids for dissimilar plots (size/demand) is extraneous and renders cancellation arbitrary.
- Returning earnest money does not cure an arbitrary cancellation.
- Limited scope of judicial review: courts must prevent arbitrariness while giving “fair play in the joints.”
- Provides a fresh binding authority for quashing arbitrary cancellations in public auctions and issuance of allotment letters.
Summary of Legal Reasoning
- The Court restates the sanctity of public auctions: once held without fraud or collusion, the highest bid above reserve must be accepted.
- It applies Eva Agro Feeds to hold that mere expectation of a higher price post-auction is no valid ground for cancellation.
- It rejects the authority’s post-hoc comparison of a large plot’s bid with those of smaller, more in-demand plots as arbitrary.
- It emphasizes adherence to rule of law and Article 14: cancellations must have nexus to tender conditions and reasons communicated with natural justice.
- It directs the auctioning authority to issue the allotment letter on re-deposit of earnest money, vindicating the appellant’s legitimate expectation.
Arguments by the Parties
Petitioner (Appellant)
- Cancellation based on low rate vis-à-vis smaller plots was extraneous and not in tender brochure.
- Technical and financial bids were valid; highest bidder status conferred a right to allotment.
- Arbitrary rewriting of tender conditions violates Article 14 and natural justice.
- Relies on Eva Agro Feeds: expectation of higher price not a ground to cancel.
Respondents (Development Authority & State)
- No vested right until formal acceptance/allotment letter; bid was an offer revocable at authority’s discretion.
- Earnest money was returned, extinguishing contractual relationship.
- Judicial review is limited; must afford “fair play in the joints” (Tata Motors).
- Cancellation based on objective market comparison to maximize public revenue; vice-chairman’s decision final under tender terms.
Factual Background
A state authority advertised a 3150 sqm industrial plot by two-stage auction (technical and financial) on August 25, 2023. The appellant bid Rs 29,500/- per sqm—15.23% above the reserve price—and was declared highest bidder. Without notice or reasons in the tender brochure, the authority cancelled the allotment on May 22, 2024, citing comparison with smaller plots. The High Court dismissed petitioner’s writs; the Supreme Court quashed the cancellation and directed issuance of the allotment.
Statutory Analysis
- Tender and auction governed by Madhuban Bapudham Yojana auction rules and general principles of contract.
- Article 14 invoked to challenge arbitrariness in auction cancellations.
- Judicial power under Article 32/226 to enforce non-arbitrariness and natural justice in administrative actions.
Dissenting / Concurring Opinion Summary
None recorded; judgment delivered unanimously by a two-judge bench.
Procedural Innovations
No new procedural rules; the judgment reaffirms existing standards for judicial review of auction cancellations.
Alert Indicators
- Precedent Followed: Eva Agro Feeds (2023 10 SCC 189) reaffirmed limiting post-auction cancellations.