The Allahabad High Court has held that a public body which receives the highest bid in a validly conducted auction must abide by it, and cannot cancel it merely in the hope that a future auction will fetch more.

It held that the Ghaziabad Development Authority's repeated cancellation and re-auction of one plot, with the reserve price never revised, was a colourable exercise of power.

The bench of Justice Siddhartha Varma and Justice Kunal Ravi Singh held,

“Once the highest price is received in an auction, then any Authority/ public body conducting the auction must abide by the highest price received, unless there are extenuating circumstances which would render the entire auction proceedings vitiated.”

Petitioner was the highest bidder at the Authority's auction of 15.10.2025 for Plot No. A-252, Kaushambi Yojana, Ghaziabad, bidding ₹1,11,000/- per sq. mtr. against a reserve price of ₹93,000/-. No allotment letter followed, and he wrote twice offering to deposit 25% of the bid amount. On 27.10.2025 he was e-mailed a note recording that his bid had not been accepted, without any reason; he was told orally that the Authority expected a higher price. The plot was re-advertised on 02.12.2025 and the writ petition was filed on 11.12.2025.

The records summoned by the Court showed the plot auctioned four times in about three months. The first auction on 30.07.2025 drew twelve bidders and a highest bid of ₹1,95,000/- per sq. mtr., declined because the plot was being auctioned for the first time and might fetch more. The next two highest bids, ₹1,56,000/- and the petitioner's ₹1,11,000/-, were rejected for falling short of ₹1,95,000/-. Only the fourth auction, on 29.12.2025, produced an accepted bid, of ₹2,06,000/-. The reserve price stayed at ₹93,000/- throughout.

“The record also reflects a very curious tendency of the Authority to cancel the bid repeatedly on the ground that they would receive a higher bid. But even more surprising is the fact of not raising the reserve price. What is the rationale of the Auction committee to form an opinion that a higher bid would be received in future is not reflected in the records. It appears to be a mere speculative exercise in the hope of a big windfall.”

The Authority had submitted that under Clause (xi) of the bid document acceptance rested with the Vice-Chairman, so the auction did not conclude on the fall of the hammer and no rights accrued without confirmation. The Court held that where colourable exercise of power is alleged it is the decision-making process that falls for scrutiny, and that a highest bidder's want of an indefeasible right to an award does not place the reserved power of rejection beyond judicial review.

Relying on Golden Foods Products India v. State of U.P., in which it was held that mere expectation of a higher bid is no reason to discard the highest bid in an auction free of infirmity, and finding nothing on record to show any complaint, collusion or fraud touching the auction of 15.10.2025, the Court held the cancellation to be a colourable exercise of power tainted with arbitrariness.

The Court further held that the subsequent allotment, made while the petition was pending and with the Authority aware of its pendency, was hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, and that non-impleadment of the subsequent allottee was no ground for dismissal, as he had neither deposited 25% of the bid amount nor obtained execution of the deed and could be compensated in money.

Accordingly, the cancellation intimation dated 27.10.2025 along with the cancellation order dated 24.10.2025 was set aside and the auction of 15.10.2025 restored to the petitioner's bid, with a direction to issue an allotment letter against which he must pay as scheduled. The auction of 29.12.2025 and the allotment letter of 19.01.2026 were held to be without sanctity in law.

Applying Delhi Development Authority v. Corporation Bank, the subsequent allottee was held entitled to refund of the entire amount deposited with 6% interest within a month of production of a certified copy of the order, rising to 9% on default. The writ petition was allowed.

Counsel for Petitioner :- Anuj Srivastava, Pranshu Gupta

Counsel for Respondent :- C.S.C., Tejasvi Misra