Public Auction Can’t Be Cancelled on Third-Party Objections Alone: Supreme Court

The Supreme Court has said that an auction or sale in favour of the highest bidder cannot be cancelled merely on the basis of a representation made by a third party who neither participated in the auction nor made any offer, unless there is material irregularity, illegality, fraud, or collusion in the auction process.

A Bench of Justices B V Nagarathna and Ujjal Bhuyan observed that repeated interference in public auctions would defeat the very purpose and sanctity of such auctions.

“Unless there are allegations of fraud, collusion, etc., the highest offer received in the public offer should be accepted as a fair value. Otherwise, there shall not be any sanctity of any public auction,” the bench said.

Court was hearing a civil appeal filed by Sushil Kamalnayan Bharuka and others against the cancellation of an auction for a 4,800 sq mt plot in the Chikhalthana Industrial Area in Aurangabad. The auction had been conducted by the Maharashtra Industrial Development Corporation (MIDC).

The appellants had submitted a bid of Rs 16,299 per square metre and deposited earnest money of Rs 12,55,120 along with their application. In 2022, they were informed through an email that they had emerged as the highest bidders.

However, MIDC later cancelled the e-bidding process through an office note, citing multiple complaints regarding the auction process, and issued a fresh tender for six plots, including the plot in question.

Before the Supreme Court, the appellants argued that once they had been declared the highest bidders after qualifying the technical bid stage, their offer stood accepted. Their counsel also relied on an earlier order of the Principal Bench of the Bombay High Court, which had quashed MIDC’s decision to cancel the auction process.

On the other hand, counsel appearing for Pratik Group argued that merely setting aside the cancellation of the auction was not enough relief. It was contended that Pratik Group itself was the highest bidder and MIDC should have allotted the plot and executed the sale deed in its favour.

The Supreme Court found “considerable force” in the submissions made on behalf of the appellants, observing that once a bid had been declared as the highest bid, unnecessary litigation over the process should not arise in the absence of any proven illegality.

The Bench also noted that the issue of whether the cancellation of the e-auction was justified had already been decided by the Principal Bench of the Bombay High Court, which had set aside the cancellation. That order had attained finality since MIDC had accepted it and did not challenge it further.

“In the circumstances, we do not think that there can be two contradictory orders of different benches of the High Court on the very same issue,” the bench said.

Holding that judicial consistency also required similar relief to be granted to the appellants, the Supreme Court set aside the impugned order and directed MIDC to process the allotment of the plot in favour of the appellants and execute the sale deed, subject to the balance payment being made within four weeks.

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Case Title: Sushil Kamalnayan Bharuka & Others Vs State of Maharashtra & Others

Bench: Justices B V Nagarathna and Ujjal Bhuyan 

Date of Judgment: February 3, 2026