Supreme Court Upholds Sanctity of Auction Process, Orders Allotment to Highest Bidder, SC quashes arbitrary cancellation of industrial plot auction by Ghaziabad Development Authority
In a landmark judgment, the Supreme Court of India has reinforced the sanctity of the auction process, ruling in favor of Golden Food Products India. The appellant had challenged the cancellation of their highest bid for an industrial plot in Ghaziabad by the Ghaziabad Development Authority (GDA), which had annulled the auction citing low bid prices compared to smaller plots within the same scheme.
The case, heard by a bench comprising Justices B.V. Nagarathna and R. Mahadevan, centered on the principles of fairness and natural justice in public auctions. The Court emphasized that the comparison of bids for smaller plots with a large industrial plot was irrelevant and that the cancellation without notice was arbitrary, violating principles of natural justice.
The auction, conducted on August 25, 2023, saw Golden Food Products India emerge as the highest bidder for a 3150 square meter plot with a bid of Rs. 29,500 per square meter, well above the reserve price of Rs. 25,600. Despite this, the GDA cancelled the bid, comparing it to higher prices fetched by much smaller plots.
The Supreme Court highlighted that the demand dynamics between smaller and larger plots were distinct, and cancellation based on this comparison was invalid. The Court criticized the GDA for acting on irrelevant considerations and failing to issue a show-cause notice to the appellant before cancelling the bid.
Justice Nagarathna, delivering the judgment, stated that the auction process must uphold its credibility and should not be canceled based on mere expectations of higher future bids. The decision underlined that the appellant had a legitimate expectation to receive an allotment letter after being declared the highest bidder.
The Court has directed Golden Food Products India to re-deposit the earnest money, after which the GDA is ordered to issue the allotment letter and proceed with the sale, thus concluding the auction process in favor of the appellant. The judgment reaffirms the need for transparency and fairness in government auctions, setting a precedent for similar disputes.
Bottom Line:
Cancellation of bid in public auction on irrelevant considerations violates principles of natural justice and sanctity of auction process.
Statutory provision(s): Article 14 of the Constitution of India
Golden Food Products India v. State of Uttar Pradesh, (SC) : Law Finder Doc id # 2833593
