Madras High Court
Administrative and Public LawContract Law

A municipality cannot reject the highest bid and order a fresh auction without valid justification.

A.Mayazhaghu vs The Commissioner

Madras High CourtJUDGMENT: October 08, 20262 MIN READSOURCE JUDGMENT
A municipality cannot reject the highest bid and order a fresh auction without valid justification.. A.Mayazhaghu vs The Commissioner. Madras High Court. LawLens
THE ORIGINAL LAWLENS SUMMARY
01

Facts

The Municipality conducted an auction for a licence to collect fees at its Weekly Cattle Market/Shandy. The petitioner was declared the highest bidder, at Rs.3,16,50,000/-, in an auction in which five persons participated; the result was forwarded to the Municipal Council for confirmation.

Source reference: para. 2; para. 6

The petitioner offered to remit the bid amount and sought issuance of the licence, but the Municipality declined to proceed and decided to conduct a fresh auction.

Source reference: para. 3; para. 4; para. 6; para. 7

After the Municipality refused to accept the amount and issue the licence, the petitioner filed a writ petition under Article 226 seeking a mandamus directing issuance of the licence and preventing a re-auction.

Source reference: p. 1; para. 3
02

Issues

1. Whether the Municipality could decline to proceed with the auction and conduct a fresh auction without showing a valid or justifiable reason, despite the petitioner being declared the highest bidder.

Source reference: para. 6; para. 7

2. Whether the petitioner was entitled to a direction requiring the Municipality to accept the bid amount and issue the licence.

Source reference: para. 7; para. 8
03

Law Applied

The Court referred to no specific statute, tender condition, or precedent. It applied the principle that a public authority’s decision to withhold a licence after an auction must have a valid and legally sustainable basis; absent such justification, the authority’s refusal to proceed with the auction cannot be sustained.

Source reference: para. 6; para. 7

The writ jurisdiction under Article 226 was invoked to seek mandamus.

Source reference: p. 1
04

Reasoning

The Court noted that the petitioner had been selected as the highest bidder and had expressed readiness to pay the full bid amount.

Source reference: para. 6; para. 7

The Municipality’s decision to conduct a fresh auction was not supported by any valid or justifiable reason. In those circumstances, the Court held that refusing to accept the bid amount and issue the licence was legally unsustainable.

Source reference: para. 6; para. 8
05

Holding

The Court answered the issues in the petitioner’s favour and allowed the writ petition.

It directed the Municipality to issue the licence upon accepting Rs.3,16,50,000/- within two weeks of receiving a copy of the order. No costs were ordered, and the connected miscellaneous petitions were closed.

Source reference: para. 8; para. 9
Madras High Court

Original Court PDF

A.MayazhaghuvsThe Commissioner

Madras High Court · October 08, 2026

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