The Supreme Court has set aside the cancellation of two sand-mining auctions in Madhya Pradesh, holding that the government cannot reject the highest bids merely because they are lower than the amounts offered in an earlier auction.

A bench of Justice Aravind Kumar and Justice Vipul M. Pancholi ruled that although the government has the power to reject bids, it must exercise that power fairly and on objective grounds.

The case concerned auctions for sand-mining areas in Shahdol and Katni districts. Two companies, Sahakar Global Ltd. and Dhanlaxmi Merchandise Pvt. Ltd., emerged as the highest bidders in an auction held in October 2025. Both companies had offered amounts above the reserve prices fixed by the government.

However, the Madhya Pradesh State Mining Corporation cancelled the auctions because the companies' new bids were lower than their earlier offers. The Corporation argued that accepting the lower bids would reduce government revenue. The Madhya Pradesh High Court upheld the cancellation, prompting the companies to approach the Supreme Court.

Setting aside the impugned order, the judgment authored by Justice Aravind Kumar observed that a higher bid made in an earlier auction cannot automatically be treated as the correct value of the property in a later auction. The government must have a reasonable basis for concluding that the fresh bids are inadequate.

“…an auction conducted in accordance with law carries a sanctity which cannot be disregarded merely because the authority thereafter considers that a higher figure might have been desirable.”, the Court said.

The Court faulted the High Court's approach to assess the realised difference between the earlier and later bids, citing the loss to the exchequer. According to the Court, the earlier bids were relevant to the Corporation's decision, but they could not automatically be treated as the correct measure of the value of the mining areas in the fresh auction.

“A numerical comparator does not become sufficient merely because it exists; the comparison must bear a rational nexus with the subject and circumstances of the auction whose result is sought to be discarded.”, the Court said.

It further noted that the earlier offers were substantially higher, but the High Court and Corporation had treated that difference as decisive without adequately assessing why the results of the fresh competitive auction were unacceptable.

“By treating the difference between the earlier and later bids as the corresponding loss to the exchequer, the High Court proceeded upon the same assumption as the Board, namely that the earlier annual bids remained the appropriate measure of what ought to have been realised under the September 2025 process. The material placed before it did not establish that premise.”, the Court said.

As a result, the Court set aside the High Court's judgment and quashed the Corporation's cancellation of the Shahdol and Katni auctions.

"The tender process dated 18.09.2025 shall stand restored in respect of Shahdol and Katni. Within two weeks from today, Sahakar Global Limited and Dhanlaxmi Merchandise Private Limited shall communicate to the Corporation their unconditional willingness to stand by their respective final bids dated 10.10.2025, namely ₹48,20,40,000 for Shahdol and ₹54,07,41,111 for Katni, and to comply with the remaining requirements of the tender.”, the Court ordered.

Appearance:

For Petitioner(s) :Mr. Balbir Singh, Sr. Adv. Ms. Megha Karnwal, AOR Mr. Aaditya Thorat, Adv. Ms. Shreya Mishra, Adv. Mr. Christy J. Philip Vettickattu, Adv. Mr. Vedant Kohli, Adv. Ms. Shivali Shah, Adv. Mr. K. Parameshwar, Sr. Adv. Mr. Mukesh Butani, Adv. Mr. Shoeb H. Khan, Adv. Mr. Shankey Agrawal, AOR Mr. Harsh Shukla, Adv. Mr. N. Sai Kaushal, Adv. Mr. Siddharth Agrawal, Adv. Mr. Nitin Dhatarwal, Adv. Mr. Anas Hasan Khan, Adv.

For Respondent(s) :Mr. Tushar Mehta, Solicitor General Mr. Maninder Singh, Sr. Adv. Mr. Prashant Singh, Advocate General Mr. D. S. Parmar, A.A.G. Ms. Mrinal Gopal Elker, AOR Ms. Manisha T. Karia, A.A.G. Mr. Harmeet Singh Ruprah, AOR Mr. Arkaj Kumar Ga, Adv. Ms. Niharika Singh, Adv. Mr. Ruchil Jain, Adv. Mr. Mohammad Shadab Naqvi, AOR Mr. Anirudh Sharma, AOR Mr. Atreyi Chatterjee, Adv. Mr. Varun Kesharwani, Adv. Mr. Arayan Khare, Adv.