M/S Drosia India Limited Thru. Director Mr. Waheedul Hasan Siddiqui vs The State Of U.P. Thru. The Prin. Secy. Deptt. Of Housing And Urban Planning Lko. And 3 Others

A.F.R
JUDGMENT RESERVED ON:14.5.2026
JUDGMENT DELIVERED ON:15.7.2026
Neutral Citation No. - 2026:AHC-LKO:46625-DB
HIGH COURT OF JUDICATURE AT ALLAHABAD
LUCKNOW
WRIT - C No. - 4180 of 2025
M/s Drosia India Limited Thru. Director Mr. Waheedul Hasan Siddiqui
…..Petitioner(s)
Versus
The State of U.P. Thru. the Prin. Secy. Deptt. of Housing and Urban
Planning Lko. and 3 others
…..Respondent(s)
Counsel for Petitioner(s) : Ajeet Pratap Singh, Abhishek Singh,
Kushagra Dikshit, Lalta Prasad
Misra, Piyush Kishor, Prashant
Kumar, Saima Khan, Sarvesh
Kumar Tiwari
Counsel for Respondent(s) : C.S.C., Ratnesh Chandra
alongwith
WRIT - C No. - 13795 of 2020
M/s Drosia India Limited Thru. Dir Waheedul Hasan Siddiqui
…..Petitioner(s)
Versus
State of U.P. Thru. Secy. Housing Lko. And Others
…..Respondent(s)
Counsel for Petitioner(s) : Ashok Kumar Singh, Anshuman
Singh, Mahima Pahwa
Counsel for Respondent(s) : C.S.C., Ratnesh Chandra, Shailendra
Singh Chauhan, Shireesh Kumar

2
WRIC No. - 4180 of 2025
Court No. - 5
HON'BLE ALOK MATHUR, J.
HON'BLE AMITABH KUMAR RAI, J.
1. Heard Sri Sanjay Bhasin, learned Senior Advocate assisted by Sri
Prashant Kumar, Sri Abhishek Kumar, Sri Ajeet Pratap Singh, Sri
Sarvesh Kumar Tiwari and Sri Devesh Srivastava, learned counsel for
the petitioner, learned Standing Counsel for the State-respondents and
Sri Ratnesh Chandra, learned counsel for Lucknow Development
Authority.
2. Learned counsel for the parties contend that the issue involved in
WRIT - C No. – 4180 of 2025 and WRIT - C No. – 13795 of 2020 are
the same. As such, the Court proceeds to hear and decide both the writ
petitions together. For convenience, facts of Writ C No. 4180 of 2025
are being taken into consideration.
3. At the very outset, learned counsel for the petitioner submits that
Writ C No. 13795 of 2020 has been rendered infructuous due to
subsequent events and orders passed by the opposite parties after filing
of Writ C No. 4180 of 2025. Learned counsel for the petitioner has
categorically indicated this fact in paragraph 5 of memo of Writ C No.
4180 of 2025. He prays that the Writ C No. 13795 of 2020 may be
dismissed as having become infructuous.
4. Accordingly, Writ C No. 13795 of 2020 is dismissed as infructuous.
5. Learned counsel for the petitioner The instant writ petition has been
filed praying for the following main relief(s):
“(i) To issue writ or direction in the nature of certiorari quashing the
order dated 24.12.2024 passed by the opposite party number 3
(contained as Annexure number 1 to this writ petition). 
(ii) To issue writ or direction in the nature of certiorari quashing the
order dated 11.04.2025 issued by the opposite party no. 4/Incharge
officer(commercial), LDA (contained as Annexure number 2 to this writ
petition). 

3
WRIC No. - 4180 of 2025
(iii) To issue the writ, order or direction in the nature of Mandamus
directing the LDA to allow the petitioner to deposit the amount as per
the rate advertised at the time of advertisement dated 21.09.2007
regarding plot bearing number TCG-01-A-V 4/1 situated at
Vibhutikhand, Gomtinagar, Lucknow without any interest and adjusting
the amount deducted at the time of cancellation vide order dated
11.07.2022 passed by opposite party no. 3 and handover the peaceful
possession of the said plot immediately.”
6. The petitioner is a Company duly incorporated under the Companies
Act, 1956 and registered in the name of ‘Messers Drosia India Limited’
and is engaged in the business of real estate and hospitality. The
Lucknow Development Authority had published an advertisement dated
21/09/2007 inviting applications for participation in the tender auction
for plots for hotel purposes. In the said auction, the bid of the petitioner
was for Rs. 12,050/- per square meter as against the reserve price of
₹
8800 per square meter and accordingly the bid of the petitioner was the
highest, but no order was passed directing the petitioner to deposit 35%
of the bid amount within 7 days. The petitioner in the aforesaid
circumstances himself deposited an amount of 45 lakhs on
₹
13/10/2007 as earnest money, but the Lucknow Development Authority
by means of an order dated 18/10/2007 unilaterally cancelled the
auction as the bid price was low.
7. The petitioner being aggrieved by the order dated 18/10/2007 filed a
writ petition before this Court being Writ Petition No. 8173 (MB) of
2007, and this Court proceeded to stay the order dated 18/10/2007 on
02/11/2007. During the pendency of the aforesaid petition, both parties
entered into a dialogue and the matter was settled between them, and as
per the said settlement, the petitioner was to withdraw the writ petition
and submit a request to the Lucknow Development Authority to
withdraw the order of cancellation of the auction and thereafter settle
the plot in favour of the petitioner in terms of the auction.

4
WRIC No. - 4180 of 2025
8. It is in the aforesaid circumstances that a representation was
submitted by the petitioner on 15/07/2015 and the vice-chairman of the
Lucknow Development Authority passed an order on 18/11/2015
intimating his decision to withdraw the previous order of cancellation
dated 18/10/2007 subject to payment of interest. The order dated
18.11.2015 was communicated to the petitioner vide letter dated
3.12.2015. According to the petitioner the order dated 18.11.2015
passed by the Lucknow Development Authority was illegal and
arbitrary inasmuch as while setting aside the previous order of
cancellation, it imposed a penalty upon the petitioner treating this case
as if he had not paid the entire sale consideration from the date of
auction till the date of revocation of cancellation. The main contention
of the petitioner was that the interest can only be levied after the
allotment letter is issued and possession is handed over and not from
any date prior and also that there is delay in payment of the instalments.
In the present case inasmuch as the possession of the plot was not given
to the petitioner, there was no question of levying interest on payment.
9. The petitioner expressed his opposition to levying of interest by the
Lucknow Development Authority by submitting a representation on
12/01/2016. The said representation was duly considered and by means
of an order dated 11/03/2016 the amount of interest was reduced to
simple interest and amount of 50% of deposit which previously was Rs.
11,65,77,329/- was reduced to Rs. 7,86,61,606/-.
10. The grievance of the petitioner to the levy of interest was on
account of the fact that according to the petitioner, the penal interest
would be levied only when the allotment letter is issued and possession
of the plot had been handed over to the petitioner and not at any stage
prior. According to the petitioner this aspect of the matter has already
been considered by the Lucknow Development Authority in the case of
Ms Ganpati Constructions where the levy of interest from 07/10/2013
to 30/05/2017 was waived off by the authority itself as the possession
of the property was not given to the auction purchaser, and accordingly

5
WRIC No. - 4180 of 2025
wanted his case to be considered in accordance with the order passed in
favour of Ms Ganpati Constructions.
11. As the grievance of the petitioner was not considered or rectified, he
preferred another representation on 18/04/2016 objecting to the levy of
interest from the date of the auction. Despite the submission of
representation the petitioner was directed to deposit the amount by
means of an order dated 03/04/2017. It is the case of the petitioner that
he repeatedly took up the matter before the Lucknow Development
Authority, but they only repeatedly told him that certain amounts have
to be firstly paid by him before the aspect of possession will be
considered. The petitioner, accordingly, made a total payment of Rs.
3,71,01,690/- which was more than 50% of the sale consideration and
only thereafter he was communicated that the allotment had been made
in his favour by allotment letter dated 03/12/2015.
12. Despite deposit of the aforesaid amount the possession of the plot
was never handed over to him by the respondents, but the respondents
stated that the entire cost of plot will have to be deposited before the
same could be handed over to him, despite the fact that according to the
petitioner in all other similar circumstances the possession of the plots
were handed over on deposit of 25% of the amount of consideration.
13. During this period, the COVID 19 pandemic had gripped the entire
country, and the State Government in such peculiar circumstances had
decided to waive the penalty and interest amount of persons who had
defaulted. The petitioner also moved an application under the OTS
scheme seeking waiver of penalty and interest, but by means of a letter
dated 30/12/2021, the petitioner was informed that in case he does not
deposit the amount demanded then his allotment would be cancelled.
The petitioner kept on making representations against the said demand,
and subsequently by means of an order dated 11/07/2022 his allotment
was cancelled and the money deposited by the petitioner was refunded
after making certain deductions.

6
WRIC No. - 4180 of 2025
14. Against the order of cancellation dated 11/07/2022, the petitioner
preferred a revision under Section 41(3) of the Uttar Pradesh Urban
Planning and Development Act, 1973. The revisional authority did not
pass any order on the application for interim relief made by the
petitioner, while on the other hand, the Authority was proceeding to re-
auction the said plot and create third-party rights.
15. In the aforesaid circumstances, the petitioner preferred a writ
petition before this Court being Writ C No. 5403 of 2022 which was
disposed of by means of an order dated 18/08/2022, restraining the
parties from creating any third-party rights, till the interim application
in the revision proceedings is decided. The revision was finally allowed
in favour of the petitioner on 26/04/2024 and a very categorical finding
was given that no interest can be levied for the period 2007 to 2015
while remanding the matter to the opposite party no. 3 for a limited
purpose to determine the levy of interest from 2007 to 2015, strictly as
per the terms and conditions of the auction.
16. The Lucknow Development Authority in the remand proceedings
proceeded to pass the impugned order dated 24/12/2024 and again
levied the interest from the date of cancellation of allotment to the date
of reallotment which had previously been levied on the petitioner
against which he preferred a revision.
17. The order dated 24/12/2024 has been assailed by the petitioner in
the present writ petition. The appellant has vehemently submitted that
the impugned order dated 24/12/2024 levying interest from the date of
auction till the date of revocation of the order of cancellation, that is
from 15/10/2007 to 15/07/2015 is illegal and arbitrary and contrary to
the order dated 26/04/2024 passed by the State Government passed in
the revision preferred by the petitioner as well as terms and conditions
of the auction. It is submitted that the Lucknow Development Authority
is bound to comply with the directions of the State Government, while
the impugned order has been passed clearly in defiance of the revisional
order and is, therefore, illegal and arbitrary and deserves to be set aside.

7
WRIC No. - 4180 of 2025
18. The petitioner has relied upon the judgment of Hon'ble Supreme
Court in the case of The Bhopal Sugar Industries Ltd vs Income Tax
Officer, Bhopal, 1961 AIR 182 and judgment of this Court in the case
of M/s Mayur Continental,Dehradun and others vs Administrator,
Nazul Land, Dehradun and others, (1989) 2 UPLBEC 127.
19. It was further submitted that the Lucknow Development Authority
could not have levied interest from the date of the auction till the date
of revocation or cancellation of the auction in the absence of any
conditions in the bid document or any other provision enabling the
authority to levy such interest. It was submitted that as per the
government order dated 06/02/1997 in case the highest bid price offered
is higher than the base price, then the bid should be accepted and not
cancelled unless there is some concealment or fraud committed while
offering the said bid.
20. It was contended that this Court in Writ Petition No. 8173 (MB) of
2007, had passed an interim order in favour of the petitioner after
considering the provisions of the government order dated 06/02/1997.
21. It was also submitted by the counsel for the petitioner that as per the
government order dated 06/02/1997 it has been provided that the
highest bid cannot be cancelled unless some concealment of fraud is
committed in offering the bid and, therefore, it was submitted that the
action of the respondents in cancelling the bid of the petitioner itself
was illegal and arbitrary and violative of Article 14 of the Constitution
of India.
22. The writ petition has been vehemently opposed by Sri Ratnesh
Chandra, learned counsel for the Lucknow Development Authority.
23. There is no dispute that during the auction held on 12/10/2007 the
petitioner had made a bid for 12,050/- against the reserve price of
₹ ₹
8,800/- while for the adjacent plot bid of Rs. 35,500/- was received and
there was a significant difference in the bid amount and there was a
reasonable expectation that in a subsequent auction a higher price
would be fetched and therefore, by means of order dated 17/10/2007,

8
WRIC No. - 4180 of 2025
the bid made by the petitioner was rejected. The petitioner thereafter
had filed a writ petition before this Court being Writ Petition No. 8173
(MB) of 2007, where, by means of an interim order dated 02/11/2007
the order dated 17/10/2007 was stayed, and as the writ petition
remained pending, after a period of eight years an application was
preferred by the petitioner for resolving the said dispute before the
Lucknow Development Authority on 15/07/2015. The vice-chairman of
the Lucknow Development Authority gave his approval to the said
proposal made by the petitioner on 18/11/2015 but recorded that the
terms and conditions of the auction would apply, and payment would
have to be made by the petitioner along with interest.
24. The formal communication of the decision of the Lucknow
authority was made on 03/12/2015 according to which 50% of the bid
amount has to be deposited by 31/12/2015, which was the amount of
Rs.11,65,77,329/- and the remaining 50% in four quarterly instalments
of Rs. 3,19,26,887/-. The computation of the aforesaid amount
including interest was provided to the petitioner vide letter dated
03/04/2017 according to which from 17/11/2007 to 21/03/2017 interest
at the rate of 15% was imposed amounting to 8, 57,43,282/-.
₹
25. There is no dispute that the petitioner had opposed the imposition of
interest from 2007 to 2017.
26. In paragraph 22 of the counter affidavit filed by the Lucknow
Development Authority, it has been stated that the State Government
had allowed the revision preferred by the petitioner on 26/04/2024 and
the orders dated 04/07/2022 and 11/07/2022 were set aside and
remanded the matter to Lucknow Development Authority, directing the
authority to consider the aspect of charging interest afresh after giving
an opportunity of hearing to the petitioner.
27. The opposite parties have relied upon condition nos. 1 and 11 of the
terms and conditions of the auction notice to impose interest upon the
petitioner from the date of the auction till the date of allotment was
made into 2017.

9
WRIC No. - 4180 of 2025
28. Clause 1 and 11 of the terms and conditions of the auction notice
are are quoted hereinbelow:-
“ 0-1. / ,
क्रमसं होटल व्यवसायिकभूखण्डोंकानिस्तारण टेण्डरएवंतदोपरान्त
-
नीलामीद्वाराकियाजायेगा।निर्धारिततिथि कोप्रत्येकभूखण्डकेलियेअलग

अलगटेण्डरडालेजायेंगे।इसकेउपरान्तनिविदाएनिर्धारिततिथि कोसमिति के
, (
द्वाराखोलीजायेंगी तदोपरान्तउच्चतमनिविदाकोआरक्षितविक्रयमूल्य जो
)
प्राधिकरणकेआरक्षितमूल्यसेकमनहो मानकरनीलामीबोलीप्रारम्भकी

जायेगी।टेण्डरअथवानीलामीमेंप्राप्तसर्वोच्चदरहीविचारणीयहोगी।उपाध्यक्ष

लखनऊविकासप्राधिकरणकोपूर्णअधिकारहोगाकि सर्वोच्चबोलीकोअस्वीकृत

करदेंऔरजमानतधनराशि वापसकरदेंतथानीलामीहेतुदुबाराटेण्डरआमंत्रित

करें।जिनलोगोंनेटेण्डरडालेहैवहदुबाराटेण्डरडालसकतेहैं।
0-11.
क्रमसं नीलामीमेंप्राप्तउच्चतमटेण्डरअथवाबोलीकेआधारपरहीकिसी
,
व्यक्ति कोसम्पत्तिकाआवंटनपूर्णनहींमानाजायेगा राम्पत्तिकाआवंटनउसी
,
समयमानाजायेगाजबसक्षमस्तरअर्थातउपाध्यक्ष विकासप्राधिकरणसे

स्वीकृति केउपरान्तलखनऊविकासप्राधिकरणकीओरसेआवंटनपत्रजारीहो

जायेगा।आवंटनकेपश्चातसमस्तवांछितधनराशि निर्धारितसमयमेंजमाकरते
,
हुऐऔपचारिकताएंकीपूर्ति करनीहोगीअन्यथाआवंटननिरस्तकरदियाजायेगा

यदिकोईटेण्डरदाताबोलीस्वीकारहोनेकेपश्चातवांछितऔपचारिकताओंकीपूर्ति

नहींकरताहैअथवाभूखण्डकेआवंटनकोनिरस्तकियाजाताहैतोनियमोंके
/ "
अन्तर्गतधनराशि कटौती जब्तकरतेहुएशेषधनराशि जमावापसकरदीजायेगी।
29. The respondents have also relied upon the letter dated 15/07/2015
submitted by the petitioner to justify the levying of interest, stating that
the petitioner himself had offered to deposit the same and therefore, the
petitioner cannot challenge the same on the principle of estoppel.
30. I have heard the counsels of the parties and perused the record.
31. The first aspect which deserves consideration is the validity of the
order of cancellation of the bid of the petitioner vide order dated
17/10/2007. Though the said order was assailed by the petitioner in
Writ Petition No. 8173 (MB) of 2007, which was subsequently
dismissed as infructuous by means of an order dated 31/10/2017, but as
the said order is the genesis of the dispute leading to the present
petition, the validity of the same will have a bearing on the present
controversy.
32. The petitioner had participated in the auction for purchase of a plot,
which was advertised by the Lucknow Development Authority on

10
WRIC No. - 4180 of 2025
21/09/2007, where 11 bids were received, and the bid of the petitioner
was the highest having offered the rate of 12,050/- per square meter
₹
against the reserve price of 8,800/- per square metre. The bid of the
₹
petitioner was cancelled only on account of the fact that the adjoining
plot, which was a commercial plot, was sold for 35,500/-. This Court
₹
in a writ petition filed by the petitioner being Writ Petition No. 8173
(MB) of 2007 stayed the order of cancellation dated 18.10.2007, after
holding that as per the policy of the State Government dated
22/05/2006 the Hotel business has been given the status of industry and
it has been provided that price fixed for the hotel shall be at the
industrial rate, while it was noticed that the adjacent plot was a
commercial plot and naturally such a plot would fetch a higher price
than an industrial plot, and therefore found the order of cancellation to
be prima facie arbitrary and stayed the same by means of the order
dated 02/11/2007.
33. It is also relevant to consider that as per the Government order dated
06/02/1997 in case the highest bid price offered is higher than the base
price, then the bid should be accepted and not cancelled unless there is
some concealment or fraud committed in offering the said bid. In the
order passed subsequently by the respondents themselves clearly
mentioned that there were 11 bidders in the said auction and therefore
there is no element of collusion or fraud and it is for this reason that the
respondents decided to settle the dispute in favour of the petitioner.
Accordingly, we find that in the absence of any allegation of fraud or
concealment, the bid of the petitioner could not have been cancelled.
34. At this stage, it would be relevant to consider the recent judgment
of the Supreme Court in the case GOLDEN FOOD PRODUCTS
INDIA vs STATE OF UTTAR PRADESH & OTHERS, 2026 INSC
22 where it has been observed as under:-
“ 28. In our view, there cannot be any imprimatur of the
Court to such arbitrary cancellation of auction by an
instrumentality or agency of the State in the absence of
there being any fraud, collusion, suppression etc. Merely

11
WRIC No. - 4180 of 2025
because the smaller plots measuring 123 to 132 square
metres were auctioned and sold at a higher price as
compared to the subject plot measuring 3150 square metres
which is a large sized plot, could not have been the basis
for cancelling the auction insofar as the subject plot is
concerned. The demand for smaller plots being higher was
sold at a higher price per square metre than the subject
plot, where there was no demand for the subject plot as only
two bidders participated in the auction. The bid of the
appellant was above the reserve price. There was no other
reason to cancel the auction sale of the subject plot.
Therefore, GDA - respondent No. 2 was under an
obligation in law having accepted the bid offered by the
appellant to issue the allotment letter instead of cancelling
the auction on the basis of irrelevant considerations that
too behind the back of the appellant. Expectation of a
higher bid in a subsequent auction cannot be a reason to
cancel an auction held in accordance with law.
29. The appellant herein as also all bidders would had
made all financial arrangements before making technical
and financial bids in an auction. The technical bid of the
appellant herein was accepted. There was no reason to
decline the financial bid made by the appellant which was
the highest bid. The financial bid was also over and above
the reserve price. There was no reason attributed to the
appellant for cancellation of the auction sale. In the
circumstances, the appellant had a legitimate expectation to
receive an allotment letter vis-à-vis the subject plot as it
was the highest bidder. Instead, without any prior notice to
the appellant the auction itself was cancelled which
constrained the appellant to approach the High Court. The
High Court has lost sight of these facts of the matter and
has simply dismissed the writ petitions filed by the appellant
herein which is not correct.
30. We could consider the judgments cited at the Bar as
under:
a) In Haryana Urban Development Authority v. Orchid
Infrastructure Developers (P) Ltd., (2017) 4 SCC 243, the
contract contained an express clause stating that the
presiding officer had the right to reject a bid without
offering any reasons. Although twenty-seven bidders
participated in the said auction and the reserve price was

12
WRIC No. - 4180 of 2025
Rs. 106.65 crores and the highest bid was Rs. 111.75 crores
for 9.527 acres of land in Gurgaon, the bid was cancelled.
However, such a clause is conspicuous by its absence in the
present case.
b) In Rajasthan Housing Board v. G.S. Investments, (2007)
1 SCC 477, owing to a news item published in a newspaper
that large scale bungling had taken place in the auction due
to which the price fetched for the plots was much below the
market rate, a direction was issued by this Court to hold a
fresh auction. Such a situation did not arise in the instant
case.
c) In State of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC
36, there was a direction to hold a re-auction as the power
to accept or reject the bid was given to the highest authority
in the State and the State Government was of the opinion
that the price was inadequate. Possibly, in the facts of the
said case, the said direction was issued by this Court.
d) In Uttar Pradesh Avas Evam Vikas Parishad v. Om
Prakash Sharma, (2013) 5 SCC 182, the reserve price was
fixed at Rs. 1,80,200/- and the respondent therein offered
Rs. 1,31,500/- which was much less than the reserve price.
Hence, the bid was rightly rejected.
e) In Meerut Development Authority v. Association of
Management Studies, (2009) 6 SCC 171, the request of the
respondent therein for allotment of remaining 20,000
square metres to them as they had acquired 37,000 square
metres of land as per the reserve price, was rejected as the
price quoted had been lower than the reserve price for the
said remaining land and rightly so.
f) In Indore Vikas Praadhikaran (IDA) v. Shri Humud Jain
Samaj Trust, 2024 SCC OnLine SC 3511, this Court
distinguished Eva Agro Feeds and found that the bid could
not be accepted as the tender committee while finalizing the
bids noticed that property tax of Rs. 1.25 crore in respect of
the subject land therein was outstanding. On noticing this
error, the Board decided to cancel the bid of the respondent
therein and decided to issue a fresh notice inviting tenders.
31. The following judgments also require consideration:
a) In M.P. Power Management Company Limited v. Sky
Power Southeast Solar India (Private) Limited, (2023) 2

13
WRIC No. - 4180 of 2025
SCC 703, the bid of the respondent therein was accepted
and it was observed that public interest cannot always be
conflated with an evaluation of the monetary gain or loss
alone.
b) In Nagar Nigam, Meerut v. Al Faheem Meat Exports (P)
Ltd., (2006) 13 SCC 382, an advertisement inviting
applications for a fresh contract to run a slaughterhouse
was sustained. In the said judgment, it was observed that
the award of government contracts through public auction
or public tender was to ensure transparency in the public
procurement, to maximise the economy and efficiency in
government procurement, to promote healthy competition
among the tenderers and to eliminate irregularities,
interference and corrupt practices by the authorities
concerned. In rare and exceptional cases, for instance
during natural calamities and emergencies declared by the
Government; where the procurement is possible from a
single source only; where the supplier or contractor has
exclusive rights in respect of the goods or services and no
reasonable alternative or substitute exists; where the
auction was held on several dates but there were no bidders
or the bids offered were too low, etc., this normal rule may
be departed from and such contracts may be awarded
through “private negotiations”. The Government must then
have freedom of contract. Some fair play in the joints is a
necessary concomitant for an administrative body
functioning in an administrative sphere. The plea of the
respondent therein seeking permission to modernize the
slaughterhouse and therefore, to refrain from issuing an
advertisement was negatived.
c) In Subodh Kumar Singh Rathour v. Kolkata Metropolitan
Development Authority, (2024) 15 SCC 461, this Court
observed that merely because the rates embodied in a
contract with the passage of time have become less
appealing, the same cannot become a determinative
criterion for either terminating the contract or for the
courts to decline interference in such contractual disputes.
Public interest cannot be used as a pretext to arbitrarily
terminate contracts. Merely because the financial terms of a
contract are less favourable over a period of time does not
justify its termination. It was observed that the mere

14
WRIC No. - 4180 of 2025
possibility of fetching a higher license fee was no ground to
cancel the tender issued to the appellant therein.
32. An auction process has a sanctity attached to it and only
for valid reasons that the highest bid can be discarded in an
auction which is otherwise held in accordance with law. If a
valid bid has been made which is above the reserve price,
there should be a rationale or reason for not accepting it.
Therefore, the decision to discard the highest bid must have
a nexus to the rationale or the reason. Merely because the
authority conducting the auction expected a higher bid than
what the highest bidder had bid cannot be a reason to
discard the highest bid. In the instant case, no other party
had placed a bid higher than the appellant herein. There
was no infirmity in the conduct of the auction. No other
party had complained about the process of auction
conducted by the GDA - respondent No. 2. The bid offered
by the appellant herein was the highest and above the
reserve price. In the circumstances, the said bid ought to
have been accepted by GDA - respondent No. 2 rather than
cancelling the same without notice to the appellant herein.
Hence, the cancellation of the bid submitted by the
appellant herein is quashed.
33. For the aforesaid reasons, the impugned orders of the
High Court dated 24.05.2024 and 15.07.2024 passed in the
respective writ petitions are set-aside. The appellant is
directed to re-deposit the earnest money preferably within
four weeks from today. Within two weeks from the date of
the re-deposit of the earnest money, the GDA - respondent
No. 2 shall make an order of allotment of the subject plot in
favour of the appellant herein and take all consequential
steps for concluding the auction process in favour of the
appellant herein. These appeals are allowed in the
aforesaid terms.”
35. The law laid down by Hon’ble Supreme Court for cancellation of
auction is extremely clear and in paragraph 32 it has been held that the
highest bid can be discarded only on reasonable grounds which cannot
be whimsical or bereft of any cogent reason. In the aforesaid
judgement, the Supreme Court had also reaffirmed its previous
judgement in the case of Eva Agro Feeds (P) Ltd.  v.  Punjab National

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WRIC No. - 4180 of 2025
Bank , (2023) 10 SCC 189  (“ Eva Agro Feeds ”) where it was held as
under:
“… mere expectation of the Liquidator that a still higher
price may be obtained can be no good ground to cancel an
otherwise valid auction and go for another round of
auction. Such a cause of action would not only lead to
incurring avoidable expenses but also erode the credibility
of the auction process itself”.
36. In the instant case, a perusal of the terms and conditions of the
tender issued by the respondents in clause 6 it was clearly provided that
if an allotment is obtained by fraud and misrepresentation undue
influence etc, then it shall be cancelled. If a sale deed is executed on the
basis of such allotment obtained by fraud, undue influence etc, then the
sale deed will also be cancelled and 50% of the sale price will be
forfeited.
37. It is not the case of the respondents that there was any fraud
committed by the petitioner or undue influence exerted by him, and
there were 11 persons who had participated in the auction and therefore
it cannot be said that the auction was hit by any of the conditions,
which could render it liable for cancellation, and therefore the order of
cancellation of the bid of the petitioner was arbitrary and illegal.
Accordingly, we find that the decision to cancel the auction was clearly
illegal and arbitrary and when this aspect of the matter was realised by
the respondents themselves, they sought to restore the bid of the
petitioner, subject to certain conditions.
38. During the pendency of the Writ Petition No. 8173 (MB) of 2007
on the representation of the petitioner the respondents, by means of an
order dated 03/12/2015, gave their approval for allotment of the
disputed plot in favour of the petitioner, subject to the condition that the
petitioner deposits the remaining consideration along with interest from
the date of the auction. It is relevant to note that in the aforesaid order,
there is no mention of any rule or any provision of law which may

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WRIC No. - 4180 of 2025
enable the respondents to levy interest upon the petitioner from the date
of the auction till the date of payment.
39. There is no dispute that the petitioner has been repeatedly
contesting the aspect of the levy of interest, restoration of his bid and
allotment of a plot in his favour. It is this contention that the levy is
contrary to the conditions of the tender itself and the plot should be
given to him on the same terms and conditions of the bid amount made
by him during the said auction.
40. The terms and conditions of the auction pertaining to the payment
to be made by the successful bidder have been provided in clause 10
which is as under:-
“10.
नीलामीकीकार्यवाहीलखनऊविकासप्राधिकरणगोमतीनगरकार्यालय

मेंसार्वजनिकरूपसेसमिति केसमक्षकरायीजायेगी।नीलामीकेपूर्वनीलामी

केनियमवशर्तेएकबारपुनःसूचितकरदीजायेगी।भुगतानकाविवरणनिम्न
-
होगाः
( ) 35
अ उच्चतम टेण्डर दाता को कुल धनराशि की प्रतिशत धनराशि बोली
/
गयी बोली नीलामी की स्वीकृति की तिथि से सात कार्यदिवसों में जमा
(
करनी होगी इसमें निविदा के साथ जमा जमानत धनराशि समायोजित कर
) 35
ली जायेगी उपरोक्तानुसार प्रतिशत धनराशि जमा होने एवं आवंटन पत्र
निर्गत होने की तिथि से एक माह के अन्दर 15 प्रतिशत धनराशि पुनः जमा
करनी होगी तथा शेष 50 प्रतिशत धनराशि 3-3 माह की 4 किस्तों में 15
प्रतिशत ब्याज की दर पर जमा की जा सकेगी।
( )
ब किश्तों का प्रारम्भ आवंटन पत्र निर्गत होने की तिथि से माना जायेगा।
( ) 18
स देयकिश्तोंकाभुगताननकरनेपर प्रतिशतकीदरसेदण्डब्याजदेय
”
होगा।
41. A perusal of the aforesaid provisions clearly indicates that the
highest bidder has to deposit 35% of the bid amount within 7 days from
the date of acceptance of his bid and it is only after deposit of 35% of
the amount that the allotment letter would be issued to him. It is further
provided that the successful bidder has to deposit further 15% of the bid
amount within one month from the date of allotment and the remaining
50% has to be deposited in four instalments of 3-3 months alongwith
interest @ 15%. In clause 10(b) of the aforesaid terms and conditions, it
is further provided that installments will commence only after issuance

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WRIC No. - 4180 of 2025
of the allotment letter. Other relevant conditions are found on perusal of
clause 10(c) of the aforesaid terms and conditions which provides that
in case the aforesaid installments are not paid within the time
prescribed then 18% penal interest would be levied upon the bidder.
42. The challenge to the imposition of interest for delayed payment was
made by the petitioner by filing a revision before the State Government
which was allowed by means of order dated 26.4.2024. The State
Government while deciding the said revision extensively considered the
grounds raised by the petitioner as well as reasons given by the
Lucknow Development Authority for imposition of the interest imposed
upon the petitioner. After considering the rival contentions, the State
Government was of the view that there was no reason for the Lucknow
Development Authority to have imposed interest upon the delayed
payment from the date of auction till the date of issuance of the
allotment letter dated 03.12.2025. It further considered that while
considering the representation of the petitioner, proper opportunity of
hearing was not given and therefore the said order itself is in gross
violation of principle of natural justice and accordingly allowed the
revision setting aside the orders of the Lucknow Development
Authority dated 04.07.2022 as well as 11.07.2022 and remanded the
matter for consideration afresh specially with regard to imposition of
interest from 12.10.2007 to 03.12.2015 in light of the terms and
conditions of the auction.
43. From the aforesaid, it is clear that the Lucknow Development
Authority was under a mandate to reconsider the terms and conditions
of the auction and only there was any provision by which they could
levy interest from the date of auction to the date of allotment, the said
interest could have levied.
44. From perusal of the impugned order, we find that only provisions
considered were Clause I and II of the terms and conditions and without
discussing as to how and under which provision the interest could be
levied, the Lucknow Development Authority again levied the interest

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WRIC No. - 4180 of 2025
from the date of auction to the date of allotment. The Vice-Chairman
while passing the impugned order has only recorded the fact that on the
basis of a compromise dated 15.07.2015, the interest have been levied
from 15.10.2007 and his predecessor in the note-sheet has duly
recorded the fact that while passing fresh order of allotment, interest
should be levied upon the petitioner and therefore he has proceeded to
pass the impugned order levying interest on the petitioner from the date
of auction to the date of allotment.
45. Accordingly, from the above, we find that firstly as per the terms
and conditions of the auction, the interest could have been levied only
from the date of allotment as provided in Clause 10 (C). We further find
that initially the bid of the petitioner was cancelled and at which stage
no allotment letter had been issued in favour of the petitioner.
Accordingly, without issuance of the allotment letter, we find that no
interest could have been levied upon the petitioner as per the terms and
conditions of the auction. We further find that as per Clause 10 of the
terms and conditions of the auction, the petitioner who was the
successful and the highest bidder was to deposit 35% of the bid amount
within 07 working days pursuant to which the allotment letter was to be
issued and within one month of the issuance of the allotment letter
further 15% of the bid amount was to be deposited by him. The
remaining 50% of the bid amount was to be deposited in 3-3 months in
four installments along with interest @ 15% and in Clause – (B) it was
clearly stated that the installment should be payable only after issuance
of the allotment letter and as per Clause - (C) penal interest could be
levied only when there is a delay in deposit of the installments.
Accordingly, it is abundantly clear that without issuance of the
allotment letter, no interest could have been levied upon the successful
bidder and therefore we do not find any reason or any provision by
which Lucknow Development Authority could have imposed interest
upon the petitioner for the delayed payment.
46. As already observed hereinabove, after examining the entire matter,
we find that even the cancellation of the bid of the petitioner on the

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WRIC No. - 4180 of 2025
ground that the adjacent plot was auctioned at a higher price and
therefore in case the disputed plot is subjected to any further auction, a
higher price can be obtained. Such a ground is unreasonable and
arbitrary inasmuch as it is contrary to the Government Order issued by
the State Government itself dated 06.02.1997 which aspect of the
matter has been duly discussed in the revisional order dated 26.04.2024.
47. It is for the aforesaid reason that the impugned order levying
interest upon the petitioner from the date of auction to the date of
allotment is illegal and arbitrary and accordingly set aside. The
respondents in the aforesaid circumstances are directed to pass a fresh
order requiring the petitioner to pay the amount for which bid was made
by him strictly as per Clause 10 of the terms and conditions of the
auction within one month from the date a certified copy of this order is
produced before the competent authority.
48. The respondents are also directed to comply with the conditions on
handing over the possession of the property in terms of terms and
conditions of the auction. While on the other hand the petitioner would
be under a mandate to pay all the dues as per terms and conditions of
the auction and in case the petitioner does not comply with the orders
passed by Lucknow Development Authority, the Lucknow
Development Authority shall be at liberty to proceed against him
strictly in accordance with law after taking due consideration of the
terms and conditions of the auction.
49. Keeping in view the aforesaid discussion, the writ petition is
allowed . The impugned orders dated 24.12.2024 and 11.4.2025, copies
of which are annexure 1 and 2 respectively to the writ petition, are
quashed.
(Amitabh Kumar Rai,J.) (Alok Mathur,J.)
July 15, 2026
J. K. Dinkar
Digitally signed by :-
JESHU KUMAR DINKAR
High Court of Judicature at Allahabad,
Lucknow Bench