In a significant ruling upholding the sanctity of public auctions, the Supreme Court has directed the Ghaziabad Development Authority (GDA) to sell a prime industrial plot to the highest bidder for Rs 9.3 crore, overturning the authority's decision to scrap the sale expecting a higher price.
The Core of the Legal Dispute
The case centred on a 3,150-square-metre industrial plot located in the Madhuban Bapudham Yojna. On May 22, 2024, the GDA cancelled an auction for this land despite receiving two bids. The highest bidder, Golden Food Products India, had quoted a rate of Rs 29,500 per square metre, which totalled approximately Rs 9.3 crore for the entire plot.
The GDA's rationale for cancellation was based on the sale of a much smaller, 132-sq-m plot nearby for Rs 1.6 crore, which worked out to a staggering rate of Rs 1.21 lakh per square metre. Using this benchmark, the authority estimated the larger plot could fetch around Rs 38 crore. The Allahabad High Court had initially upheld the GDA's decision to cancel the auction.
Supreme Court's Landmark Judgment
A Supreme Court bench comprising Justices B V Nagarathna and R Mahadevan delivered a decisive verdict on the appeal filed by Golden Food Products India. The bench firmly ruled that the GDA could not have scrapped the auction merely because it expected a higher price.
The court highlighted that the highest bid of Rs 29,500 per sq metre was significantly above the reserve price of Rs 26,500 per sq metre. It found no infirmity or irregularity in the auction process itself. Writing the judgment, Justice Nagarathna emphasised the principle of auction sanctity.
"An auction process has a sanctity attached to it and only for valid reasons can the highest bid be discarded in an auction which is otherwise held in accordance with law," the judgment stated. It further clarified, "If a valid bid has been made which is above the reserve price, there should be a rationale or reason for not accepting it."
Final Directives and Implications
The Supreme Court explicitly stated that an auction cannot be annulled simply because the highest bid did not favourably compare with an expected price. "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," the bench asserted.
Since no one had complained about procedural irregularities, the court ordered the cancellation of Golden Food Products' bid to be quashed. The SC directed the company to re-deposit the earnest money within four weeks. Subsequently, the GDA must allot the plot to the company two weeks after the deposition, formally concluding the auction process.
This ruling reinforces legal certainty in public auctions, ensuring that government authorities cannot arbitrarily reject valid highest bids based on mere expectations of higher value, thereby protecting bidder rights and process integrity.
