- 1 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF APRIL, 2026 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE T.M.NADAF WRIT APPEAL NO. 32 OF 2026 (LB-RES) BETWEEN: SRI. VISHAL PATHANGE G., AGED 48 YEARS, S/O GOPAL KRISHNA RAO, R/AT: NO. 1112, SHOBHA CHYRASANTHEMUM, TANISANDRA MAIN ROAD, NARAYANAPURA, BENGALURU - 560 077. …APPELLANT (BY SRI. NAYANA TARA B G., ADVOCATE) AND: 1. STATE OF KARNATAKA, REPRESENTED BY PRINCIPAL SECRETARY DEPARTMENT OF URBAN DEVELOPMENT, VIDHANA SOUDHA, BANGALORE - 560 001. 2. MYSORE URBAN DEVELOPMENT AUTHORITY, JHANSI RANI LAKSHMI BAI ROAD, Digitally signed by REKHA R Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 CHAMARAJAPURA, LAKSHMIPURAM, MYSORE - 570 005. REPRESENTED BY ITS COMMISSIONER …RESPONDENTS (BY SRI. MOHAMMED JAFFAR SHAH, AGA FOR R1, MS. MEGHA SUNIL, ADVOCATE FOR SRI. G.B. SHARATH GOWDA, ADVOCATE FOR R2) THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO ALLOW THE PRESENT APPEAL BY SETTING ASIDE THE ORDER DATED 19.11.2025 PASSED BY THE LEARNED SINGLE JUDGE IN WP No.16755/2021 AND ETC. THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE T.M.NADAF ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE D K SINGH) Unsuccessful petitioner is before us in this appeal under Section 4 of Karnataka High Court Act, 1961, challenging the order dated 19.11.2025 passed by the Writ Court in W.P.No.16755/2021. The Writ Court under the - 3 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 impugned order disposed of the writ petition, directing the respondent No.2 to re-auction the site bearing No.4026/A, Vijaynagar 4th Stage, 2nd Phase, Mysuru, by giving wide publicity in a time bound manner and further directed respondent No.2 to forthwith refund a sum of Rs.12,00,000/- to the petitioner along with interest at the rate of 9% per annum from the rate of deposit till the date of re-payment. 2. The parties are referred to as per their ranking before the Writ Court. 3. The facts germane to filing of the present appeal are as under: (i) It is the claim of the petitioner that respondent No.2 published a Notification dated 05.07.2021 for e- auction of corner and middle sites. The petitioner who was interested in site bearing No.4026/A, Vijaynagar 4th Stage, 2nd Phase, Mysuru opted the same, for which the reserved price was fixed at - 4 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 Rs.47,66,000/-. The petitioner submitted his bid for the said amount and emerged as highest bidder among two. Thereafter, he has received a Short Message Service ('SMS' for short) on 06.08.2021 from an Officer of the respondent No.2, calling upon him to deposit 25% of the bid amount. The petitioner deposited a sum of Rs.12,00,000/- on 06.08.2021. (ii) While the petitioner was waiting for the allotment order, to his dismay, he noticed that on 01.09.2021, respondent No.2 issued another e-auction Notification proposing to sell 282 sites and the site for which the petitioner had submitted his bid was also re-notified. On verification, he noticed that respondent No.2 passed an order rejecting his bid on the ground that the price offered was not satisfactory. (iii) It was further contented that the petitioner was neither notified nor informed the reason of rejection - 5 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 of his bid. He thereafter filed an application under the Right to Information Act, 2005, ('RTI' for short). On the basis of the information, he came to know that in an earlier auction, the respondent No.2 had accepted price escalation ranging from Rs.50,000/- to less than Rs.2,00,000/-. He therefore contends that this cannot be a criteria for cancelling the auction of Site No.4036/A, since respondent No.2 had received a higher bid. It was also contended that various sites in Devanur, 2nd Stage, 2nd Phase, Hebbal 1st Stage and Vijayanagara 4th Stage, 2nd Phase were sold for lesser amounts and therefore, the claim of the respondent No.2 that, it was not satisfied with the petitioner's bid is only a ruse to deny him the benefit of the auction and the reason for rejection is unsustainable in law inasmuch as respondent No.2 had called upon the petitioner to deposit 25% of the bid amount, which accordingly complied. - 6 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 4. It is submitted that since other sites in the vicinity were sold at much lesser price than the one offered by the petitioner, the reason for rejecting the bid of the petitioner is not honest and bona fide, and is tainted and reeks with mala fides, for some extraneous consideration. 5. After notice, respondent No.2 appeared and filed statement of objections inter alia contending that one of the conditions of the auction Notification was that the commissioner of respondent No.2 was entitled to either accept or reject any of the bids submitted by the bidders after assigning reason. It is contented that in the auction held on 09.07.2021 there were only two bidders and the petitioner was the highest bidder at Rs.47,66,000/-. It was further argued that in a meeting of respondent No.2, held on 02.08.2021, to decide upon the bid submitted by the petitioner and similarly placed persons, respondent No.2 upon considering the bids, noticed that in respect of auction that was held on 09.07.2021, there were only two - 7 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 participants and also noticed that the other sites situated in the same locality which were brought to auction fetched better and competitive price. Considering the above, respondent No.2 decided to reject the bid submitted by the petitioner at the meeting held on 02.08.2021. 6. Respondent No.2 claims that it acted strictly in accordance with law and that no fault could be found with its actions. So far as deposit of 25% of the bid amount is concerned, respondent No.2 denied that there is practice of sending SMS to auction purchasers to deposit the money and that the petitioner had voluntarily deposited the amount. Further contended that in view of Rule 6(2) of the Karnataka Urban Development Authorities (Disposal of Corner Sites & Commercial Sites) Rules, 1991 ('Rules 1991' for short), respondent No.2 is entitled either to accept or refuse any bid after assigning reasons. Accordingly, respondent No.2 has exercised the discretion in the meeting held on 02.08.2021, which is in accordance with the law. - 8 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 7. The Writ Court having considered rival submissions was of the opinion that there is no dispute with regard to auction held on 09.07.2021 and also there is no dispute that the price offered by the petitioner was higher than the reserved price fixed. However, the Writ Court noticed that the acceptance or refusal of the bid remained with the discretion of respondent No.2 and the same was to be done after assigning the reasons. 8. The Writ Court was further of the opinion that the petitioner does not dispute that the respondent No.2 has assigned a reason, though he contends that the reason is not a specific one. However, the fact remains that the discretion to accept or reject a bid is with respondent No.2 and the petitioner has no right until the bid submitted by him is accepted and sale certificate is issued. In that view of the matter, the Writ Court formed an opinion that there is no effective direction could be issued to the respondent No.2 to accept the bid submitted by the petitioner, particularly in the face of the contention - 9 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 of respondent No.2 that the price offered by the petitioner is not satisfactory. 9. In that view of the matter, the Writ Court has disposed of the writ petition, directing the respondent No.2 to re-auction the site and also to refund the amount of Rs.12,00,000/- deposited by the petitioner with interest at the rate of 9% per annum. It is this order passed by the Writ Court, is called in question in this appeal. 10. Heard Smt.Nayana Tara. B.G, learned counsel appearing for the appellant and Sri.Mohammed Jaffar Shah, learned Additional Government Advocate for respondent No.1 and Ms.Megha Sunil, learned counsel for Sri.G.B.Sharath Gowda, learned counsel for respondent No.2. 11. On the query of the Court the only reason assigned by the learned counsel appearing for the respondent No.2 is that, there are only two participants participated in the auction and as such, there is no - 10 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 competitive price fetched in the auction. Except this there is no allegation of fraud or cartelization between the two bidders attributable to the petitioner. 12. Smt.Nayana Tara.B.G, submits that once the auction has been permitted to take place and the petitioner comes out as a successful bidder and subsequently deposited 25% of the bid amount, there is some legitimate expectation lies with the petitioner to seek for completion of the auction proceedings and for issuance of sale certificate. The reasons assigned are very vague and cryptic. In these circumstances, she further submits that having asked the petitioner to deposit 25%, the respondent No.2 ought not to have cancelled the auction and re-notified the site for e-auction in the subsequent Notification published and sought to allow the appeal. 13. Learned counsel relies on the judgment of Supreme Court in the case of GOLDEN FOOD PRODUCTS INDIA VS. STATE OF UTTAR PRADESH AND OTHERS, - 11 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 arising out of Special Leave Petition (Civil) Nos.18095-18096/2024 dated 01.06.2026 and stressed on paragraph No.32 of the judgment which reads as under: "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 highest 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." 14. Upon consideration of rival submissions on 02.03.2026, this Court passed the following order: "Smt.Nayana Tara, learned counsel for the appellant will take instruction from the appellant that whether he is willing to pay interest on balance 75% of the bid amount along with interest at the rate of 10% per annum after 45 days from the bid date till date of payment. Post this writ appeal on 13.03.2026." - 12 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 15. In furtherance of the order, the petitioner filed a memo of calculation dated 12.03.2026, without prejudice, accepting the order with respect to payment of interest on the delayed payment of the balance amount of Rs.35,66,000/-. Today the petitioner has filed another memo calculating the interest upto date i.e., till 07.04.2026 from 31.07.2021, which comes to Rs.15,70,039/- towards interest on the balance amount and submits that petitioner is ready to deposit the amount, and sought four weeks' time from today. 16. However, respondent No.2 on query submits that since the auction sale has already been cancelled, there is no provision for accepting the amount now sought to be deposited by the petitioner under the memo and sought to dismiss the appeal. 17. Having considered the rival submissions, we have gone through the entire appeal paper as well as the - 13 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 judgment of the Supreme Court in GOLDEN FRUIT PRODUCTS INDIA supra. 18. The Supreme Court in Paragraph No.32 of the judgment has clearly held that 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 an nexus to the rationale or the reason. 19. We find from the records that no rationale reason forthcoming from the order passed by respondent No.2 for discarding or cancelling the auction bid by the petitioner. Except that, there were only two participants and there was no competition, and the other sites in the vicinity have fetched more amount ranging between Rs.50,000/- to Rs.2,00,000/- than the one bid by the - 14 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 petitioner. We could have accepted this reason, provided there is no further process on the bid of the petitioner. It is not in dispute that the petitioner has deposited 25% of the amount on the SMS received by him, though the respondent No.2 denies that there is no such procedure of sending SMS. But the fact remains that the petitioner has been informed and deposited the amount way back in the year 2021, and even was ready to deposit the balance. However, the same was not accorded by cancelling the auction, in the absence of any rationale reason to that effect. 20. In view of these peculiar facts and circumstances of the case and since the petitioner has come forward to deposit the balance amount along with interest at the rate of 10%, which would come to Rs.15,70,000/- as of today and certainly the same is more than the amount which was fetched in respect of other sites in the vicinity, as per the reasonings assigned by the - 15 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 respondent No.2. It is also noticed that the site is still available. 21. In that view of the matter, we modify the judgment of learned Single Judge and set aside the order of cancellation passed by the respondent No.2. In that view of the matter, we direct respondent No.2 to accept the balance amount of 75% along with interest, which would come to Rs.51,36,039/- as of today rounded off to Rs.51,40,000/-. In the event, the petitioner deposits the same within four weeks from today, respondent No.2 shall issue sale certificate and valid title deed within four weeks thereafter. Accordingly, we dispose of the appeal. 22. This judgment is rendered in the peculiar facts and circumstances of the case, wherein after auction sale, the petitioner was made to deposit 25% which has already been deposited and he is coming forward to deposit the balance amount along with interest at the rate of 10% and in view of the judgment of the Supreme Court in GOLDEN - 16 - HC-KAR NC: 2026:KHC:19283-DB WA No. 32 of 2026 FOOD PRODUCTS INDIA supra at paragraph No.32, and this shall not be treated as precedent in future. 23. In view of disposal of the appeal, pending application/s if any stands disposed of. Sd/- (D K SINGH) JUDGE Sd/- (T.M.NADAF) JUDGE RR List No.: 1 Sl No.: 19 ct-vn