Brief Background
The Supreme Court in Golden Food Products India v. State of Uttar Pradesh & Others (Civil Appeal Nos. of 2026, arising out of SLP (C) Nos. 18095–18096 of 2024, decided on 06.01.2026) dealt with the legality of cancelling a validly concluded auction on the mere expectation of higher bids. The dispute arose from an auction conducted by the Ghaziabad Development Authority (GDA) on 25 August 2023 for allotment of industrial plots under the Madhuban Bapudham Yojana. The Appellant i.e., Golden Food Products India, submitted both technical and financial bids for Plot No. 26, measuring 3150 square metres. The reserve price was fixed at ₹25,600 per square metre and the Appellant’s bid of ₹29,500 per square metre which was 15.23% above the reserve price was declared the highest bidder.

Despite this, GDA cancelled the allotment in May 2024 citing that smaller plots in the same scheme had fetched much higher rates per square metre. The earnest money deposit of ₹80,64,000 was refunded and a fresh auction was announced. The Appellant challenged this cancellation before the Allahabad High Court but the High Court  dismissed writ petitions. Aggrieved by it, the Appellant approached the Supreme Court.

Legal Submissions by the Parties
Appellant:

• On behalf of the Appellant, it was argued that once its technical and financial bids were accepted and it was declared the highest bidder, cancellation of the auction was arbitrary and unlawful. The ground of “lower rates compared to smaller plots” was extraneous, not part of the auction brochure, and was disclosed only after the Appellant filed RTI applications.
• The Appellant contended that cancellation amounted to rewriting tender conditions after the auction, which violated Article 14 of the Constitution. Reliance was placed on Eva Agro Feeds (P) Ltd. v. Punjab National Bank(2023) 10 SCC 189, where the Court held that mere expectation of higher prices cannot justify cancelling a valid auction.
• The Appellant emphasized that adjacent plots above 2000 square metres had been allotted at prices only marginally above the reserve price, whereas its bid was substantially higher. It was further argued that returning earnest money does not cure arbitrariness, and cancellation without notice violated principles of natural justice.

Respondents:

• The Respondents’ submitted that participation in an auction does not confer a vested right, and the highest bid is only an offer until acceptance. No allotment letter was issued, and earnest money was refunded, extinguishing any contractual relationship.
• Further, it was submitted that cancellation was justified to safeguard public revenue, as smaller plots had fetched significantly higher rates. It was further argued that Judicial review in tender matters is limited.
• The Respondents placed reliance on Tata Motors Ltd. v. BEST Undertaking (2023) 19 SCC 1, which emphasized “fair play in the joints” for public authorities. The tender conditions vested final authority in the Vice-Chairman, whose decision was binding.

Court’s Decision
The Supreme Court allowed the appeal and set aside the High Court’s orders. The Court emphasized the sanctity of the auction process, reiterating from K. Kumara Gupta v. Sri Markendaya & Sri Omkareswara Swamy Temple (2022) 5 SCC 710 that unless fraud, collusion, or material irregularity is shown, a valid auction cannot be cancelled. Sanctity of public auctions must be preserved, otherwise credibility of the process is eroded.

The Court held that mere expectation of higher bids cannot justify cancellation, relying on Eva Agro Feeds (supra). Arbitrary cancellations undermine transparency and fairness in public procurement. It further noted that comparison with smaller plots was irrelevant. Smaller plots naturally attracted higher demand and higher bids, whereas larger plots of 3150 square metres had lower demand. The reserve price was fixed uniformly at ₹25,600 per square metre, and expecting similar rates for larger plots was irrational.

The Court recognized that once the Appellant’s bid was accepted and declared highest, it had a legitimate expectation of allotment. Cancellation without notice violated natural justice, and returning earnest money did not legitimize arbitrary action. The High Court erred in dismissing the writ petitions by accepting Respondent’s reasoning. The Court emphasized that absence of a formal allotment letter does not negate the Appellant’s right to fair treatment.

Comparative Case Law Analysis
The Court distinguished several precedents. In Haryana Urban Development Authority v. Orchid Infrastructure Developers (2017) 4 SCC 243, cancellation was upheld because the contract contained an express clause permitting rejection without reasons, which was absent here. In Rajasthan Housing Board v. G.S. Investments (2007) 1 SCC 477, cancellation was justified due to allegations of large-scale irregularities, unlike the present case.

Further, in State of Orissa v. Harinarayan Jaiswal (1972) 2 SCC 36, statutory discretion of the State Government was involved, making the facts not comparable. In U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma (2013) 5 SCC 182, the bid was below reserve price and rightly rejected, whereas here the bid was above reserve price. In Indore Vikas Pradhikaran v. Shri Humud Jain Samaj Trust (2024 SCC OnLine SC 3511), cancellation was justified due to outstanding property tax, which was not the case here.

Finally, in Subodh Kumar Singh Rathour v. KMDA (2024) 15 SCC 461, the Court observed that public interest cannot be a pretext for arbitrary termination, a principle directly applicable here.

Conclusion
The Supreme Court’s ruling underscores the principle that validly concluded auctions cannot be cancelled merely to seek higher bids later. The sanctity of auction processes is paramount, and arbitrary cancellations erode credibility. Legitimate expectation arises once a bidder is declared highest, even before formal allotment.

By - C. George Thomas and Gurkaranbir Singh