Sushil Kamalnayan Bharukav.State of Maharashtra & Others

Synopsis

This judgment addresses the critical issue of judicial consistency and the sanctity of public auction processes. The case originated from the cancellation of an e-auction for an industrial plot conducted by the Maharashtra Industrial Development Corporation (MIDC). The appellants, declared the highest bidders, challenged this cancellation before the Aurangabad Bench of the Bombay High Court. Simultaneously, another entity (Pratik Group), which had not successfully participated in the auction, filed a separate petition seeking a fresh tender. In a significant turn of events, the Principal Bench of the same High Court, in a separate but related matter, had already set aside the cancellation of a similar auction process, a decision accepted by MIDC. However, the Aurangabad Bench dismissed the appellants' petition and ordered a fresh tender. The Supreme Court intervened to resolve this contradiction, setting aside the Aurangabad Bench's order and directing MIDC to allot the plot to the original highest bidders, thereby upholding the principles of judicial discipline and the finality of a concluded auction absent any irregularity.

1. Basic Information of the Judgment

Title of the Case: Sushil Kamalnayan Bharuka & Others vs. State of Maharashtra & Others

Case Type: Civil Appeal

Diary Number (Original SLP): SLP (Civil) Nos. 21419-21420 of 2023

Supreme Court Citation: 2026 INSC 168

Bench Strength: Division Bench (Two Judges)

Appellants: Sushil Kamalnayan Bharuka & Others (Original Writ Petitioners)

Respondents: State of Maharashtra, MIDC, and Pratik Group (Respondent No. 4)

Appeal From: Common impugned order dated 09.08.2023 of the Bombay High Court (Aurangabad Bench) in W.P. No.3872/2022 and W.P. No.1324/2023.

Citation: 2026 INSC 168
Court: Supreme Court of India
Coram: Justice B.V. Nagarathna and Justice Ujjal Bhuyan
Date of Judgment: February 03, 2026

3. Legal Framework

This case does not interpret a specific statutory provision but is grounded in established legal principles governing public auctions and the exercise of writ jurisdiction by High Courts.

• Principle of Sanctity of Public Auction: The core legal principle is that a public auction, once conducted fairly and concluded in favor of the highest bidder, should not be lightly interfered with. This is to ensure the credibility and finality of such processes.

• Principle of Judicial Consistency and Discipline: The judgment heavily relies on the fundamental tenet that different benches of the same High Court cannot pass contradictory orders on identical issues. This ensures certainty in law and prevents forum shopping.

• *Related Precedent: K. Kumara Gupta vs. Sri Markendaya & Sri Omkareswara Swamy Temple, (2022) 5 SCC 710: This precedent was pivotal. The Supreme Court in that case held that a public auction or sale in favor of the highest bidder cannot be set aside at the behest of a third party who did not even participate in the auction, unless the auction is vitiated by fraud, collusion, or material irregularity. It emphasized that the highest offer in a public auction should be accepted as fair value to maintain the sanctity of the process.

4. Relevant Facts of the Case

1. The Tender Process: On 20.01.2022, MIDC issued an e-bidding notice for various plots, including the subject plot (Plot No. P-4/2) in Aurangabad. The process involved a technical bid and a commercial bid.

2. Appellants' Bid: The appellants participated in the process, submitted a bid of Rs.16,299/- per square meter, and deposited the requisite earnest money.

3. Declaration as Highest Bidders: On 11.02.2022, the appellants were declared the highest bidders for the subject plot via a system-generated email.

4. Cancellation by MIDC: Despite this, MIDC issued an office note on 02.03.2022 cancelling the entire e-bidding process for six plots, including the subject plot, citing "multiple complaints" about the process.

5. First Round of Litigation (Principal Bench): Other bidders from the same cancelled auction process approached the Principal Bench of the Bombay High Court (W.P. Nos.3993/2022, etc.). On 18.11.2022, the Principal Bench, noting that no other bidder had challenged the cancellation, set aside MIDC's decision to cancel the tender and directed MIDC to consider the bids of those petitioners. MIDC accepted this order.

6. Second Round of Litigation (Aurangabad Bench):
   The appellants herein filed W.P. No.3872/2022 before the Aurangabad Bench challenging the cancellation of the auction for their plot.
   Respondent No. 4, Pratik Group, filed W.P. No.1324/2023 before the same bench. Pratik Group had not been declared a successful bidder and sought, as an alternative, a fresh tender process.

7. Contradictory High Court Orders: In a common impugned order dated 09.08.2023, the Aurangabad Bench dismissed the appellants' petition and allowed Pratik Group's petition, directing MIDC to start a fresh bidding process for the subject plot. This order was directly contradictory to the Principal Bench's order, which had restored the original auction.

5. Issues in the Judgment

1. Whether the order passed by the Aurangabad Bench of the Bombay High Court, directing a fresh tender process, could be sustained in light of a prior, contradictory order passed by the Principal Bench of the same High Court on an identical issue arising from the same auction process.

2. Whether the cancellation of the e-auction process, which had resulted in the appellants being declared the highest bidders, was justified, especially when a coordinate bench had already set aside such a cancellation.

3. Whether a third party (Pratik Group) that did not successfully participate in the auction could maintain a writ petition seeking to set aside the auction process in the absence of any allegation of fraud or collusion.

6. Ratio Decidendi (The Reasoning of the Court)

The Supreme Court's reasoning was anchored on the following key points:

• Binding Nature of Judicial Consistency: The Court held that there cannot be two contradictory orders from different benches of the same High Court on the very same issue. The Principal Bench had already adjudicated the question of whether the cancellation of the e-auction process was justified and had set it aside. This order had attained finality, as MIDC did not challenge it. The Aurangabad Bench was therefore obligated to follow the judicial precedence and consistent view, not create a conflict.

• Application of K. Kumara Gupta Precedent: The Court applied the principle from K. Kumara Gupta with full force. It observed that the appellants had been declared the highest bidders. Unless there was a finding of material irregularity, fraud, or collusion in the auction—which was not the case—it was not open to set aside the auction in favor of the highest bidder based on representations from a third party (Pratik Group) that did not even make a successful offer. Repeated interference would frustrate the very purpose and sanctity of public auctions.

• Status of the Respondent (Pratik Group): The Court noted that the respondent-Pratik Group's writ petition was "speculative" as they were not successful participants. The relief granted to them by the Aurangabad Bench, which effectively nullified the appellants' rightful claim, was legally unsustainable.

7. New Legal Principle/Clarity Established

This judgment does not establish a new legal principle but serves as a strong reiteration and reinforcement of existing doctrines:

• Primacy of Judicial Discipline: The most significant takeaway is the emphatic reinforcement of judicial discipline. It clarifies that when a legal issue (here, the validity of the auction cancellation) has been conclusively decided by a coordinate bench of the High Court, other benches must follow that decision to maintain consistency and avoid confusion. Ignoring such a precedent can be a valid ground for the Supreme Court's intervention.

• Protection of Highest Bidders' Rights: It reaffirms that the rights of a highest bidder in a concluded public auction are substantial and cannot be defeated by the unsubstantiated grievances of non-participants. The burden of proof to vitiate an auction lies heavily on the party alleging fraud or collusion.

8. Supreme Court's Examination and Analysis

The Supreme Court conducted its analysis in a structured manner:

1. Identification of Contradiction: The Court first highlighted the core problem: the existence of two conflicting orders from the Principal Bench and the Aurangabad Bench of the Bombay High Court on the same subject matter—the cancellation of the MIDC e-auction.

2. Scrutiny of the Principal Bench Order: The Court examined the Principal Bench's order (dated 18.11.2022), noting that it had quashed the cancellation of the tender process. Critically, the Court pointed out that MIDC had accepted this order, giving it finality.

3. Examination of MIDC's Own Affidavit: The Court took note of paragraph 7 of MIDC's affidavit before the Aurangabad Bench, which unequivocally stated that the appellants had fulfilled all technical requirements, were qualified for the commercial bid, and were declared the highest bidders. This admission from the respondent authority itself weakened the case for cancelling the auction.

4. Application of Precedent to Facts: The Court then applied the principles from K. Kumara Gupta to the facts. It reasoned that since the appellants were the highest bidders and there was no evidence of fraud or collusion, the auction in their favor could not be set aside simply because a non-participant (Pratik Group) wanted a fresh chance.

5. Rejection of Contradictory Arguments: The Court dismissed the arguments of the respondents that the two cases were different. It held that the core issue—the legality of the auction's cancellation—was identical, and therefore, the legal outcome must be consistent.

9. Final Outcome and Critical Analysis

• Final Outcome:
  The Supreme Court allowed the appeals. It:
  Set aside the impugned order dated 09.08.2023 passed by the Aurangabad Bench of the Bombay High Court.
  Directed MIDC to process the allotment of the subject plot in favor of the appellants (Sushil Kamalnayan Bharuka & Others), who were the original highest bidders.
  Ordered the appellants to make the balance payment to MIDC within four weeks, following which MIDC was to execute the sale deed.

• Critical Analysis:
  This judgment is a classic illustration of the Supreme Court's role as the final arbiter of legal consistency and fairness.
  Upholding the Rule of Law: By setting aside the contradictory High Court order, the Supreme Court reinforced the rule of law, which demands predictability and consistency in judicial decisions. It sent a clear message that forum shopping or seeking a different outcome from a different bench on the same issue will not be tolerated.
  Preventing Abuse of Process: The judgment protects the public auction system from being undermined by frivolous challenges from disgruntled or non-participating parties. If every non-participant could successfully challenge a concluded auction, it would create immense uncertainty and deter genuine participation.
  Vindication of the Highest Bidder: The decision vindicates the legitimate expectations of a successful bidder who has complied with all formalities. It affirms that a "highest bidder" status confers a valuable right that cannot be arbitrarily nullified by the auctioning authority or by a court at the behest of a third party without strong, legally valid reasons.
  Practical Wisdom: The Court's observation that the respondent-Pratik Group's petition was "speculative" highlights the practical wisdom in not allowing those who failed to compete effectively to reopen concluded commercial transactions. This promotes finality and efficiency in commercial dealings.

10.  (MCQs)

Q1. In the case of Sushil Kamalnayan Bharuka vs. State of Maharashtra, which precedent did the Supreme Court rely upon to emphasise that a public auction in favour of the highest bidder should not be set aside at the instance of a non-participant?
a) Hero Cycles Limited vs. Hero Ecotech Limited (2026)
b) K. Kumara Gupta vs. Sri Markendaya & Sri Omkareswara Swamy Temple (2022)
c) State of Maharashtra vs. Pratik Group (2023)
d) Bombay High Court Principal Bench Order (2022)

Q2. According to the legal principles reiterated in this judgment, under what circumstances can a concluded public auction in favour of the highest bidder be set aside?
a) If any third party makes a representation against the auction.
b) If the auctioning authority receives multiple complaints, regardless of their nature.
c) If the auction is found to be vitiated by fraud, collusion, or material irregularity.
d) If a fresh tender process is likely to yield a higher revenue.

Q3. What was the primary reason for the Supreme Court to set aside the Aurangabad Bench's order?
a) The Aurangabad Bench did not have the jurisdiction to hear the matter.
b) The appellants had not deposited the earnest money on time.
c) The Aurangabad Bench's order was contradictory to an order passed by the Principal Bench of the same High Court on an identical issue, which had attained finality.
d) MIDC had not filed an affidavit in the case.

Q4. What was the final direction given by the Supreme Court to the Maharashtra Industrial Development Corporation (MIDC)?
a) To initiate a fresh tender process for the subject plot.
b) To refund the earnest money to all the bidders.
c) To process the allotment and execute the sale deed in favour of the appellants (Sushil Kamalnayan Bharuka & Others) upon receipt of balance payment.
d) To investigate the technical glitches in the e-bidding system.