Judgment:
C.M. Nayar, J.
(1) The present petition is directed against respondents I and 2 for quashing the contract which the said respondents have allegedly entered into with respondent No.4 for display of Glow Signs and Hoardings in Departure Hall, Jaipur Airport, Jaipur without following the prescribed and established tendering procedure.
(2) The petitioner is the sole proprietor of Chand Associates, a proprietory concern carrying on the business of putting advertisement hoardings and other allied hoardings and has been carrying on the said business in major cities of India. It is further alleged that the petitioner has been getting awards from various Government, public sector and private sector organisations for displaying their advertisement hoardings and to put up glow signs for last more than 5 years. Respondent No.1 is a body constituted under the Airports Authority of India Act, 1994 and is responsible for running and managing the airports situated in the country. Respondent No.2 is the person in charge looking after the matters of respondent No.1 in the Delhi region. Respondents 3 and 4 are also engaged in business similar to that of the petitioner. It is further alleged that respondent No.1 by virtue of powers vested in its favor under the above said Act, issues all licences, permits, quotas and exemptions for better management and running of the airports and also invites tenders/offers from eligible contractors for providing such services or facilities, as may be required.
(3) The procedure adopted by respondent No.1 to award contracts to eligible contractors, as stated in paragraph 7 of the petition is (a) to issue public notices in newspapers and/or relevant trade magazines or by displaying the tender notice on the Notice Boards art the relevant airports thereby inviting the eligible contractors to participate in such tenders by quoting their rates; (b) to short list the best eligible parties and to award the contract or to negotiate further and thereafter award the contract to one such party who fulfillls the requirements of respondent No.1.
(4) It is submitted that the above is the prescribed procedure of tendering followed by all Government and public sector undertakings to award contracts for various items. Respondent No.1 has been following the said procedure from time to time to award contracts, including the award of Jaipur Airport Arrival Hall to number of contractors. The copies of such tender notices issued by respondent No.1 in newspapers and/or trade magazines are collectively filed as Annexure-A to the writ petition. The petitioner further contends that it has come to his notice from the market sources that during the second week of February, 1996, respondent No.2 has been negotiating with certain parties to award contract for a period of three years for comprehensive advertisement which would comprise of hoarding glow signs etc. at the departure hall of Jaipur Airport which was allegedly stated to be worth Rs.one Crore. The parties to the present petition did not deny the fact that there was no tender invitation from respondents I and 2 either in the newspapers or trade magazines or no such tender notice was displayed on the notice board at the offices of the Airports as has been the usual practice of respondent no.1 to award contracts. The said respondents issued notices inviting tenders for exclusive advertisement rights for Jaipur Airport (Arrival Hall) in newspapers in March/April, 1995 and all normal procedures were adopted for award of contract in respect of the advertisement rights for Arrival Hall whereas in the case of Departure Hall for the same Airport, respondents I and 2 deviated from such procedure for the reasons best known to them. Respondent No.2 issued a letter/tender notice only to two parties i.e. respondents 3 and 4 in the month of Scptember,1995 and it is not denied that the negotiations with the said two parties had taken place and respondents I and 2 were in the process of finalising the contract in favor of respondent No.3 or respondent No.4 allegedly at a very low price. The copy of this communication as filed as Annexure-B to the writ petition reads as follows:
'SUBJECT:Display of Glow Sign and Hoardings in Departure Hall Dear Sir, You are requested to give your offer for comprehensive advertisement of the Departure Hall which would comprise of hoarding glow sign etc. as detailed below. 32 Nos. of glow sign (Translite) of size 8'x4' 12 Nos. of glow signs (Standing) size 10'x4' and 4 Nos. of show windows size 7'x4'x3' and 3 Nos. of hoarding size 40'x20' shall be permitted. On receipt of your offer it may be necessary to hold a negotiation with you for which you will be intimated. It is further clarified that in addition to your definite offer you have to pay water and electricity charges on the basis of actual consumption and if approved the contract will be given for 3 years against the negotiated license fee which shall be subject to satisfactory performance. Yours faithfully, sd/- (S.H. Khan) for Executive Director Delhi Region'
(5) The petitioner on knowing of the facts as stated above, allegedly met the officials of respondents I and 2 and requested them to provide an equal opportunity to him as well as other contractors in the business as (a) the procedure followed to decide the contract is against the established policy of respondent No.1 (b) the petitioner and other contractors cannot be discriminated in comparison to respondent Nos.3 or 4. There was no response from respondents 1 and 2 and this petition impugns the decision to award contract which has since been awarded to respondent No.4 as illegal, arbitrary, discriminatory and mala fide.
(6) The main grounds of attack are that respondents 1 and 2 failed to discharge the responsibility by violating the well established and prescribed procedure to invite tenders from eligible contractors before awarding the contract. The contract has since been awarded in favor of respondent No.4 at a throw-away price thus causing huge monetary loss to the public exchequer.
(7) Respondents 1 and 2 have filed their counter affidavit and have contended that the procedure generally adopted for award of contracts in such matters is by public notices in the newspapers or by displaying the tender notice on the notice board at the relevant Airports thereby inviting the eligible contractors to participate in such tenders by quoting the rates. However, such contracts, are also awarded by inviting sealed quotation and/or through negotiations with selected parties depending 'upon the requirement and nature of contract. The fact is not denied that only respondents 3 and 4 were invited to participate and give their offers by sealed quotation for the impugned contract and no other party was informed either in press or through notice board. The relevant Explanationn to adopt this procedure is explained in the counter affidavit in reply to paras 10,11 and 12 of the writ petition. The same can be reproduced as under:
'7.With regard to paras 10, Ii, & 12 of the petition it is admitted that notice inviting tender for exclusive rights for the Arrival Hall at Jaipur Airport was issued through newspaper advertisements in April 1995 in response to which only three parties had responded. The petitioner neither responded to the advertisement nor submitted any tender. The contract was awarded to Respondent No. 3. When the departure side of the Jaipur Airport was getting ready communications were received from Respondent No. 3, Sandeep Publicity and Respondent No. 4, National Advertising Company who were two of the tenderers for the exclusive advertising rights for the Arrival Hall at Jaipur Airport requesting for the award of the contract for the Departure Hall. It is submitted that since the scope of the contract for exclusive advertising rights in the Departure Hall of the Airport was identical to that of the arrival hall which was already awarded through issue of notice inviting tenders in the newspaper and since the said two parties interested in the contract had already communicated their interest, it was decided to go in for sealed quotation from the said parties which procedure has been followed in many cases. These selected parties hap pened to be two of the three bidders being the highest and the second highest for the exclusive advertisement rights in the Arrival Hall of the Airport. The highest amount quoted by one of these two parties for a period of three years was Rs.72,75,996.00 against the amount of Rs.45,36,660.00 for the identical contract for the Arrival hall at the said airport which was awarded only six months back to Respondent No. 3. It is submitted that there was an increase of more than Rs.27 lacs (60%) for the identical contract in a span of just six months which was considered attractive enough and thus the contract for the departure hall was awarded to National Advertising company Respondent No. 4 on 16.2.1996.'
(8) Counter affidavit is also filed by respondent No.3 wherein it is contended that it has been wrongly excluded by the action of respondents I and 2. It is further alleged that after the offers were given by respondents 3 and 4, respondent No.4 was allowed to change his envelope and this fact was brought to the notice of the Authorities. On the contrary, respondent No.4 has taken the following pleas:
(A)that the present petition is totally motivated and has been filed in collusion and in connivance with respondent No.3 for the following reasons as stated in the counter affidavit; '(i) The surname of Mr. Chander Mohan, the petitioner is Abrol. Mr. Chander Mohan is known as Chand Abrol. The petitioner was earlier working with the Respondent No. 3 - M/s Sandeep Publicity.A copy of the visiting card of Mr. Chand Abrol is annexed hereto and is marked -Annexure R4-A. A perusal of the visiting card used by the petitioner Chander Mohan alias Chand Abrol reveals that the respondent No. 3 also operates in the city of Ahmedabad the city in which the petitioner is alleged to be doing advertising business. (ii) The father of the petitioner namely Mr. Varinder Kumar Abrol is working along with the Respondent No. 3 company. The Ahmedabad address given by the petitioner in the Memo of Parties is none other then the address of M/s Sandeep Publicity-the respondent No. 3. In fact the address in Ahmedabad given by the petitioner is a premises used by Respondent No. 3 as its godown. The answering respondent is annexing hereto.true copies of the letter head of the Respondent No. 3 'and a letter addressed by the father of the petitioner for and on behalf of respondent No. 3 to the Transport Manager, Ahmedabad Municipal Transport Service and the same are collectively marked Annexure R4-B. (iii) M/s Chand Associates is merely an alter-ego of the respondent No. 3 - M/s Sandeep Publicity in as much it is common in the advertising business that various advertising firms have associations and ostensible partnerships to maintain a cartel and/or monopoly in certain fields of advertising and/or with the several government organizations that license out advertisement rights. Similarly there are other advertising firms in India in which either the petitioner and/or his relatives are associated with the partners and/or the relatives of the partners of the respondent No. 3. (iv) The alleged Delhi address given by the petitioner is Infrequently visited and the petitioner does not reside at the given address. The answering respondent submits that what the said respondent No. 3 could not achieve by way of fair competition is now being sought to be achieved by it indirectly in a malafide manner by setting up the petitioner. The alleged 'market source' from whom the petitioner claims to have allegedly gathered information in the second week of February 1995 is none other than Respondent No. 3. (b) the amount quoted by respondent No.4 was the highest as against the amount offered by respondent No.3. thereforee, the contract was correctly awarded ; (c) that assuming though at the same time denying that there was any error of procedure committed by respondent 'No.1 in resorting to private negotiations, the facts and circumstances in the present case do not warrant any interference of this Court by exercising its extraordinary civil jurisdiction, especially when the procedure adopted by respondent No. 1 Authority and the award of contract to respondent no.4 is neither illegal, arbitrary or malafide; (d) the procedure adopted by respondent No.1 as will be evident from the facts of the case, was in public interest and in the interest of respondent No.1 itself. The said respondent was vested with the right to adopt any fair procedure for the award of contract in question and said decision has to be final. There is no error of jurisdiction nor any error so flagrant as to amount to misuse, misconception or arbitrary use of powers vested with respondent No.l. The said power, in the present case, has not been abused and has been exercised bonafide, properly and responsibly.
(9) The learned counsel for the petitioner has vehemently argued that respondents 1 and 2 have deviated from the accepted mode of award of contract in such cases i.e. either by inviting offers of submission of tender in newspapers or by sealed quotations by only asking respondents 3 and 4 to submit their quotations. This procedure which excludes all others is clearly unreasonable, arbitrary and discriminatory. Strong reliance is placed on the judgments as reported in Ramnam Dayaram Shetty v. International Airport Authority of India and others : (1979)IILLJ217SC ; Ram and Shyam Company v. State of Haryana and others : AIR1985SC1147 ; Haji TM.Hassan Rawther v. Kerala Financial Corporation : [1988]1SCR1079 Sterling Computers Limited v. M/s M & N Publications limited and others : AIR1996SC51 and Tata Cellular v. Union'. of India : AIR1996SC11 .
(10) In Ram and Shyam Co. (supra) the Supreme Court highlighted the fact that tender means 'tenders to be invited from independent contractors' and not a private secret deal. The disposal of public property partakes the character of a trust. So disposal of the State Property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. The court then approved the law as laid down in the case of Ramana Dayaram Shetty (supra). The following part of paragraph 12 is of relevance:
'A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. In this connection we may profitably refer to Ramana Dayaram Shetty v. International Airport Authority of India in which Bhagwati, j. speaking for the Court observed : (SCC P. 506, para 12) It must, thereforee, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at: its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. must be confined and structured by rational, relevant and non- discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. At another place it was observed that the Government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated. It was further observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought in Kasturi Lal Lakshmi Reddy v. State of J & K while upholding the order of the Government of Jammu and Kashmir dated April 27, 1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under: (SCCp.l3,paral4) Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is .found to be wanting in the quality of reasonableness or lacking in the element of public interest,, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The government, thereforee, cannot, for example, give a contract or sell or lease out its property . for a consideration less than the highest that can be Obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. At one stage, it was observed that the Government is not free like an ordinary individual, in selecting recipient for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well-settled that the Government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that respondent 4 was not selected for any special purpose of to satisfy any Directive Principles of State policy. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in 'the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. Only a blind can refuse to perceive if.'
(11) The judgments highlighted the accepted position that at any rate the disposal of State property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose of it as best subserve the public interest.
(12) In Haji T.M.Hassan Rawther (supra) the Supreme Court has clearly accepted the position that the public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders as a general rule. Reference can be made to paragraphs 8 and 14 of the judgment which read as follows :
'8.The only question that arises for consideration is whether on the facts and in the circumstances, the Corporation was not justified in selling the property by private negotiations in favor of M/s Gurnraj Plantations at the instance of P.M. Jacob. It is needless to state that the Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose. These principles may be taken as well established by the following decisions of this Court (i) K.N. Guraswamy v. State of Mysore : [1955]1SCR305 , (ii) Mohinder Singh Gui v. Chief Election Commr., New Delhi : [1978]2SCR272 , (Hi) R.D. Shetty v. International Airport Authority of India, : (1979)IILLJ217SC , (iv) Kasturi Lal Lakshmi Reddy v. State offamma and Kashmir, : [1980]3SCR1338 , (v) fertilizer Corpn. Kamgar Union v. Union of India, Air 1981 Sc 344, (vi) Ram and Shyam Company v. State of Haryana, : AIR1985SC1147 and (vii) Sachidanand Pandey v. State of W.B., : [1987]2SCR223 . '
'14.The public property owned by-the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favourit is or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is not the only rule. As 0. Chinnappa Reddy, J. observed 'that though that is the ordinary rule, it is not an invariable rule.' There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience.'
(13) In Sterling Computers Limited (supra) the Supreme Court clearly held that by way of judicial review the Court cannot examine the details of the terms of the contract which had been entered into by public bodies but they can certainly examine whether 'decision making process' was reasonable, rational, not arbitrary and vocative of Article 14 of the Constitution of India. The wisdom of inviting tenders for securing public interest is highlighted in paragraphs 25 and 27 of the judgment, which read as follows:
'25.The cases aforesaid on which reliance was placed on behalf of the appellants, have also reiterated that once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14; the executive does not have an absolute discretion, certain precepts and principles have to be followed, the public interest being the paramount consideration. It has also been pointed out that for securing the public interest one of the methods recognised is to invite tenders affording opportunity to submit offers for consideration in an objective manner. However, there may be cases where in the special facts and circumstances and due to compelling reasons which must stand the test on Article 14 of the Constitution, departure of the aforesaid rule can be made. This Court while upholding the contracts by negotiation in the cases referred to above has impressed as to how in the facts and circumstances of those cases the decision taken by the State and the authorities concerned were reasonable, rational and in the public interest. The decisions taken in those cases by the authorities concerned, on judicial scrutiny were held to be free from bias, discrimination and under the exigencies of the situation then existing to be just and proper. On the basis of those judgments it cannot be urged that this Court has left to the option of the authorities concerned whether to invite tenders or not according to their own discretion and to award contracts ignoring the procedures which are basic in nature, taking into account factors which are not only irrelevant but detrimental to the public interest.' '27. In the facts and circumstances of the present case it has to be held that the Mtnl has applied the 'irrelevant considerations' doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated September 26, 1991, because it has failed to take into account considerations which were necessarily relevant i.e. following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and has taken into account irrelevant considerations that (i) if the contract is terminated and a decision is taken for a fresh tender, the UIP/UDI may put legal obstacles in retendering, (ii) the response for printing free of cost and also paying the royalty may be poor (iii) the concept of the yellow pages may suffer a big set back and may take it unattractive to the advertisers because of the loss of confidence.'
(14) In the present case, respondents I and 2 have discarded the traditional method of inviting offers by tender or by sealed negotiations but have admittedly asked only respondents 3 and 4 to submit their sealed quotations. The learned counsel for respondents I and 2 has argued that the circumstances warranted this action and no bias and mala fide can be attributed. The reason which has been assigned is that in April, 1995 when open tenders were invited for exclusive rights for the Arrival Hall, only three parties had responded and the contract was awarded in favor of respondent No.3 for about Rs.45 lakhs. In this background, few months later the Authorities did not deem it necessary to advertise in the press or to invite tenders by sealed quotations but merely asked respondents 3 and 4 to negotiate and in this process the Authorities gained about Rs.30 lakhs by awarding the contract in favor of respondent No.4.
(15) The learned counsel for respondent No.4 has similarly contended that (a) there is no bar in law nor an absolute ban is imposed that the contract per se becomes bad if no tenders are invited; (b) the process of taking decision is bona fide and the ultimate result, thereforee, goes outside the judicial review as no malafides arc alleged and no grounds exist in law to set aside such a contract; (c) The petitioner is just being put up on behalf of respondent No.3 as he was earlier working with that company. In this background, the present petition is motivated, mala fide and an abuse of process of law and cannot be entertained. Reliance is placed on the judgments as reported in Associated Provincial Picture Houses, Limited v. Wednesbury Corporation 1948 (1) LR Kbd 223; Ramana Dayaram Shetty v. The International Airport Authority of India and others (supra); M/s Kasturi Lal Lakshmi Reddy etc. v. The State of Jammu and Kashmir and another : [1980]3SCR1338 ; Union of India and others v. Hindustan Development Corporation and others : AIR1994SC988 ; Tata Cellular v. Union of India (supra) and Ramdas Shriniwas Nayakand another v. Union of India and others : AIR1995Bom235 .
(16) MR.CHANDHIOK has compared the facts of the present case to the facts in the case of Ramana Dayaram Shetty (supra) to reiterate that the petitioner has no real interest in the matter. thereforee, he is not entitled to any relief. The present petition cannot be termed as bona fide as the petitioner is merely acting at the instance of respondent No.3 with a view to helping him to obtain the contract. thereforee, the award of contract in favor of respondent No.4 cannot be set aside at the instance of the petitioner. The position of law is, however, clearly elucidated in paragraph 35 of the judgment which reads as follows:
'35.Now, on this view we should have ordinarily set aside the decision of respondent I accepting the tender of respondents 4 and the contract resulting from such acceptance but in view of the peculiar facts and circumstances of the present case, we do not think it would be a sound exercise of discretion on our part to upset that decision and void the contract. It does appear from the affidavit filed by the parties 'that the appellant has no real interest in the result of the litigation, but has been put up by A.S. Irani for depriving respondents 4 of the benefit of the contract secured by them. We find that a number of proceedings have been instituted for this purpose from time to time by A.S. Irani either personally or by instigating others to take such proceedings. The first salvo in the battle against respondents 4 was fired by K.S. Irani, proprietor of Cafe Excelsior, who filed a suit challenging the decision of respondent I to accept the tender of respondents 4 but in this suit .he failed to obtain an interim injunction and his appeal was dismissed b'y the High Court on October 19, 1977. It is significant that when the tenders were opened in the office of the Airport Director, Cafe Excelsior vyas represented by A.S. Irani, which shows that either Cafe Excelsior was a nominee of A.S. Irani or in any event K.S. Irani, proprietor of Cafe Excelsior was closely connected with A.S. Irani. Moreover, it is interesting to note that though the tender of respondents 4 was accepted as far back as April 19, 1977, K.S. Irani did not adopt any proceedings immediately but filed the suit only after A.S. Irani was informed by the Airport Director on August 22, 1977 that a final order has been received from the Ministry requiring A.S. Irani to immediately close down his restaurant and snack bars.' It is also a circumstance not without significance that A.S. Irani did not immediately take any proceedings for challenging the'acceptance of the tender of respondents 4, but filed a suit in his own name only after the appeal of K.S. irani was dismissed by the High Court on October 19, 1977. These circumstances clearly indicate that the suit was filed by K.S. Irani at the' instance of A.S. Irani or in any event in concert with him and when the suit of K.S. Irani failed to achieve the desired result, A.S. Irani stepped into the arena and filed his own suit. This suit was for a mandatory injunction seeking removal of the two snack bars which had in the meantime been put up by respondents 4 pursuant to the acceptance of their tender by respondent 1. But in this proceeding also A.S. Irani failed to obtain an ad interim injunction. It was only after the failure to obtain interim relief in these two proceedings, one by K.S. Irani and the other by A.S. Irani, that the appellant filed the present writ petition in the High Court of Bombay challenging the decision of respondent I to accept the tender of respondents 4. Now, it appears from the record that the appellant was at the material time conducting a restaurant called Royal Restaurant and Store which was owned in partnership by 'three persons, namely, J.K. Irani, K.M. Irani and G.S. Irani. G.S. Irani is the brother of A.S. Irani and he was managing and looking after the restaurant of A.S. Irani at the airport. It would, thereforee, be a fair inference to make that the appellant was well connected with A.S. Irani and from the manner in which proceedings with.a view to thwarting the attempt of respondents 4 to obtain the benefit of their contract, have been adopted one after the other in different names, it does appear that the appellant has filed the writ petition at the instance of A.S. Irani with a view to helping him to obtain the contract for the restaurant and the snack bars. It is difficult to understand why the appellant should have waited until November 8, 1977 to file the writ petition when the tender of respondents 4 was accepted as far back as April 19, 1977. The Explanationn given by the appellant is that he was not aware of the acceptance of the tender of respondents 4 but that is a rather naive Explanationn which cannot be easily accepted. It is not possible to believe that the appellant who was so well connected with A.S. Irani and G.S. Irani did not know that A.S. Irani had failed to obtain the contract for running the restaurant and the snack bars and that this contract had been awarded to respondents 4 as a result of which A.S. Irani was being pressed to close down his restaurant and snack bars. We have grave doubts whether this writ petition was commenced by the appellant bona fide with a view to protecting his own interest. Moreover, the writ petition was filed by the appellant more than five months after the acceptance of the tender of respondents 4 and during this period, respondents 4 incurred considerable expenditure aggregating to about Rs-1,25,000 in making arrangements for putting up the restaurant and the snack bars and in fact set up the snack bars and started running the same. It would now be most inequitous to set aside the contracts of respondents 4 at the instance of the appellant. The position would have been different if the appellant had filed the writ petition immediately after the acceptance of the tender of respondents 4 but the appellant allowed a period of over five months to elapse during which respondents 4 altered their position. We are, thereforee, of the view that this is not a fit case in which we should interfere and grant relief to the appellant in the exercise of our discretion under Article 226 of the Constitution.'
(17) The above plea of respondent No.4 can be disposed of by citing paragraph 9 of the same judgment which reads as under:
'9.That takes us to the next question whether the acceptance of the tender of respondents 4 was invalid and liable to be set aside at the instance of the appellant. It was contended on behalf of respondents I and 4 that the appellant had no locus to maintain the writ petition since no tender was submitted by him and he was a mere stranger. The argument was that if the appellant did not enter the field of competition by submitting a tender what did it matter to him whose tender was accepted ; what grievance could he have if the tender of respondents 4 was wrongly accepted. A person whose tender was rejected might very well complain that the tender of someone else was wrongly accepted, but, it was submitted, how could a person who never tendered and who was at no time in the field, put forward such a complaint? This argument, in our opinion, is misconceived and cannot be sustained for a moment. The grievance of the appellant, it may be noted, was not that his tender was rejected as a result of improper acceptance of the tender of respondents 4, but that he was differentially treated and denied equality of opportunity with respondents 4 in submitting a tender. His complaint was that if it were known that non-fulfilment of the condition of eligibility would be no bar to consideration of a tender, he also would have submitted a tender and competed for obtaining a contract. But he was precluded from submitting a tender and entering the field of consideration by reason of the condition of eligibility, while so far as respondents 4 were concerned, their tender was entertained and accepted even though they did not satisfy the condition of eligibility and this resulted in inequality of treatment which was constitutionally impermissible. This was the grievance made by the appellant in the writ petition and there can be no doubt that if this grievance was well founded, the appellant would be entitled to maintain the writ petition. The question is whether this grievance was justified in law and the acceptance of the tender of respondents 4 was vitiated by any legal infirmity.'
(18) The facts of the present case can not in any manner be held comparable to the case as cited. The persistent litigation and long delay in approaching the Court were held to be major factors in not granting any relief to the petitioner therein as it would have been inequitable in the facts and circumstances as narrated above. The petitioner, in this case, may have certain links with respondent No.3 although there is no positive proof but that by itself will not disentitle him from relief in case the entire process is held as vitiated on the ground of arbitrariness and irrationality.
(19) It is further contended that in the present case the petitioner has not been able to prove that the impugned action does not specify the test of reasonableness and public interest and reliance is placed on the judgment as reported in M/s Kasturi Lal Lakshmi Reddy etc. (supra). Paragraph 14 reads as follows:
'WHERE any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, thereforee, cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Govt.is reasonable and in public interest. But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and thereforee the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the Court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the Court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala tides though it may, in a given case, furnish evidence of mala tides.'
(20) Paragraphs 35 and 36 of the judgment as reported in Sachidanand Pandey and another : [1987]2SCR223 are next cited which make the following reading:
'35.INRashbihari Panda v. State of Orissa-, the government offered the option to purchase kendu leaves to certain old contractors on the same terms as in the previous year. Realizing that the scheme of offering to renew contracts with the old licenses on the same terms was open to objection, the government changed its policy and formulated a new scheme by which offers were invited from intending purchasers of kendu leaves but the invitation was restricted to those individuals who had carried out the contracts in the previous year without default and to the satisfaction of the government. The court held that the right to make offers being open. to a limited class of persons, it effectively shut out all other persons carrying on trade in kendu leaves and also new entrants into that business. It was, thereforee, ex facie discriminatory and imposed unreasonable restrictions upon the right of persons other than existing contractors to carry on business. It is to be seen that in the present case no one has come forward alleging that he has been discriminated against and his fundamental right to carry on business had been affected. The very nature of the construction and establishment of a Five Star Hotel is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them. The decision taken by the All India Tourism Council was an open decision well known to everyone in the hotel business. Yet no one except the Itdc and the Taj Group of Hotels had come forward with any proposal. We have it in the record that the Oberoi Group of Hotels already had a Five Star Hotel in Calcutta while the Welcome Group of Hotels were making their own private negotiations and arrangements for establishing a Five Star Hotel. In the circumstances, particularly in the absence of any loading hoteliers coming forward, the government of West Bengal was perfectly justified in entering into negotiation with the Itdc and the Taj Group of Hotels instead of inviting tenders. '36. In R.D. Shetty v. International Airport Authority, Bhagwati, J.(as he then was) speaking for the court observed that the activities of the government had a public element and if it entered into any contract, it must do so fairly without discrimination and without unfair procedure. Whenever the government dealt with the public, whether by way of giving jobs or entering into contracts or issuing quotas or li- censes or granting other forms of largesse, the government could not act arbitrarily at its sweet will but must act in conformity with standards or norms, without being arbitrary, irrational or irrelevant. If the government departed from such standard or norm in any particular case or cases its action was liable to be struck down unless it could be shown that the departure was not arbitrary but was based on some valid principle which was not irrational, unreasonable or discriminatory. In the present case as earlier explained by us direct negotiation with those who had come forward with proposals to construct Five Star Hotels was without doubt the most reasonable and rational way of proceeding in the matter rather than inviting tenders or holding public auction. There was nothing discriminatory in the procedure adopted since no other leading hotelier had shown any inclination to come forward. Tenders and auction were most impractical in the circumstances.'
(21) The learned counsel has placed reliance on the judgment as reported in Union of India and others v. Hindustan Development Corporation and others (supra) to reiterate the proposition that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. The burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because there are a large number of policy considerations which must necessarily weigh with the Government in taking action and thereforee the Court would not strike down governmental allocation as invalid on this ground unless it is clearly specified that the action is unreasonable or not in public interest. The learned Judges in this case have referred to various judgments including those rendered by the Supreme Court and the accepted proposition as laid down in State of Madhya Pradesh and others v. Nandlal Jaiswal and others Jt 1986 (2) S.C.701.
(22) In State of Madhya Pradesh &: ors. v. Nandlal Jaiswal & Ors. it was observed thus:
'WE must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method' and, thereforee, its validity cannot be tested on any rigid a 'priori' considerations or on the application of any straight-jacket formula. The court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or play in the 'joints' to the executive. xxxxxx xxxxx xxxxx The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must now proceed to deal 'with the contention of the petitioners based on Article 14 of the Constitution.'
(23) The law is settled that the Court has to confine itself to the question of legality and cannot set aside the decision of the Authority on any other ground except those as referred to in the judgment of the Supreme Court in Tata Cellular (supra). Paragraph 77 is cited in this regard:
'77.THEduty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers.
(24) thereforee, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(I)Illegality: This means the decision- maker must understand correctly the law that regulates his decision-making power and must give effect to it. - (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention.'
(25) Similarly reference is made to the judgment of the Bombay High Court as reported in Ramdas Shriniwas Nayak and another (supra) and paragraph 13 reads as follows:
'IT is thus clear that it is not for the Court to determine whether a particular policy or a particular decision taken in the fulfillment of that policy is fair. The Courts should not enter into the merits of Government actions, more so, in economic matters unless the same is unreasonable and is not in public interest. Moreover, as observed by the Supreme Court in Kasturi Lal v. The State of Jammu and Kashmir, : [1980]3SCR1338 , the Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest, because, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and thereforee the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. There may be an infinite variety of consideration which would weigh with the Government in formulating its actions. In particular, the Court would have to decide whether the Government's action is reasonable and in public interest. In Kasturi lal's case (supra) the Supreme Court further held that there is always a presumption that the Government action is reasonable and in public interest and 'it is for the party challenging its validity to show that it is wanting in reasonableness and is not informed with public interest'. The same view was reiterated by the Supreme Court in Sterling Computers Limited v. M.N.Publications Limited Air1993 Scw 683 (supra) when it said: 'By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry'. It is not possible for the Courts to question and adjudicate every decision taken by an authority. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive. But at the same time the Courts can certainly examine whether a decision making process was reasonable, rational, not arbitrary and vocative of Article 14 of the Constitution.'
(26) This judgment arose out of the public interest litigation filed by the petitioners seeking to challenge the Power Purchase Agreement being finalised between Maharashtra State Electricity Board and Dabhol Power Company promoted by Enron Power Corporation, a company incorporated in U.S.A. The High Court dismissed the petition but suffice it will be to say that the problems did not rest there. The facts involved in the case are of no assistance to the contentions of the respondents and reference to this judgment is of no consequence. The law is all the same reinstated that it is open for the Court to review and examine whether decision is neither irrational nor arbitrary and vocative of Article 14.
(27) In answer to the claim of the petitioner that he is willing to pay more than Rs.one Crore in case the contract is offered to him, the learned counsel for respondent No.4 has argued that similar contention was rejected in the case of Sterling' Computers Ltd. (supra) as will be indicated from the reading of paragraph 31 of the judgment which is reproduced as follows: '31. As already mentioned above, Mr.Venugopal, the learned counsel appearing for the writ petitioners, offered an amount of Rs.60 crores on behalf of the writ petitioners as royalty to the Mtnl for printing the directories for Delhi and Bombay for the period of the supplemental agreement, if the said job is entrusted to them on the same terms and conditions. For that period the UIP/UDI/Sterling have offered only Rs 10 crores as additional royalty. This Court could have considered the desirability of directing the Mtnl to consider the said offer of Rs 60 crores on behalf of the writ petitioners but according to us, if any such direction is given and on basis of such direction the job of printing the directories for the period in question is given to the writ petitioners, the procedure so adopted shall suffer from the same vice. The Mtnl will enter into an agreement with the writ petitioners without inviting tenders and without offering opportunities to others who may be interested in the printing of the directories for Delhi and Bombay. As such while affirming the judgment of the High Court, we direct that all steps should be taken by Mtnl as early as possible for publishing the directories for Delhi and Bombay so that public in general should not suffer any more. The appeals are accordingly dismissed but in the facts and circumstances of the case there shall be no order as to costs.'
(28) There can be no quarrel about the above position. Here, the petitioner in the first instance is not asking that he may be awarded the contract. He is challenging the decision to award the contract in favor of respondent No.4 on the grounds that the same suffers from the vice of arbitrariness and inequality resulting in loss to the respondent Authority. The law is well settled that the disposal of the State property in public interest must be by such method as would grant an opportunity to public at large to participate and at the same time there must be an endeavor to earn more revenue. This can only be achieved if there are more participants who are invited to submit their offers.
(29) It is open for this Court to examine the decision making process in the facts of the present case as the respondents have discarded the usual method of inviting tenders. The judgment of the Supreme Court in Tata Cellular (supra) has referred to the principles of judicial review. Paragraph 70 reads as follows:
'70.ITcannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favourit is, However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.'
(30) The facts of the present case are not in dispute. The respondent Authority admittedly has done away with the traditional method of inviting tenders and merely invited respondents 3 and 4 to participate. The only ground for not advertising in the newspaper and not inviting through sealed quotations, as has been stated in the counter affidavit, is that the contract for exclusive advertising rights in the departure hall of the airport Was identical to that of the arrival hall which was already awarded through issue of notice inviting tenders in the newspaper and since the said two parties interested in the contract had already communicated their interest, it was decided to go in for sealed quotation from the said parties which procedure had been followed in many cases. The highest amount quoted by one of these two parties for a period of three years was Rs.72,75,996.00 against the amount of Rs.45,36,660.00 for the identical contract for the arrival hall at the said airport. thereforee, this offer was considered attractive enough and the contract for departure hall was awarded to respondent No.4 on 16th February, 1996. The question now arises whether the method adopted by respondents I and 2 was fair, just and bona tide.
(31) The position of law can be summarised that (a) the public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. The purpose of this rule is to get the highest price for the property and as well as to ensure fairness in the activities of the State in this regard. thereforee, the public property as owned by the State must be disposed of publicly; (b) there may be situations insisting departure from the rule but such instances must be justified by compulsions and not by compromise. These compulsions must be based on special facts and circumstances which must stand the test on Article 14 of the Constitution; (c) from the judgments as cited above, it is conclusively established that this Court has not left to the option of the Authorities to invite tenders or not according to their own discretion and to award contracts ignoring the procedures which are basic in nature by taking into account the irrelevant considerations which are detrimental to the public interest.
(32) Judging from the above standards, the method adopted by respondents I and 2 by inviting only respondents 3 and 4 to submit their sealed quotations and no one else cannot be held to be based on any compulsions and departure from the usual mode of inviting tenders or offers by sealed quotations where there can be larger participation is most unreasonable, irrational and arbitrary and is vocative of Article 14 of the Constitution of India. This method was never followed by the Authorities at any point of time except on this occasion and no cogent grounds have been made out to justify the same. The State or any instrumentality of the State should follow the practice of disposing of the State property by public auction or by inviting tenders to ensure fairness and avoid allegations of bias, favourtism or nepotism. The State in the present times is vastly accused of disposing of the public property by causing huge losses to the exchequer by adopting arbitrary and irrational methods which cannot withstand the scrutiny of the Courts in exercise of powers of judicial review. The recent instances and happenings in the country elaborate this point and it is the duty of the Courts to be all the more cautious and careful in assessing the role of the State in such transactions. In my opinion, the Court in exercise of its power has to evaluate the facts and circumstances of each case and the so-called inherent limitations in the exercise of power of judicial review looses its significance. It has to be firmly established that the Government has tried to get best person or the best quotation. The right to choose as held in the case of Tata Cellular (supra) cannot be considered to be an arbitrary power but in case the power is exercised for any collateral purpose and when such instances are not rare the exercise of that power will have to be struck down.
(33) In view of the .above reasons, the writ petition is allowed and rule is made absolute. The award of contract in favor of respondent No.4 is quashed.
(34) The question now arises as to what relief can be granted to do complete justice between the parties. Reference may be made to order dated April 8, 1996 passed by Anil Dev Singh, J. to test the bona fide of the petitioner in the present case:
'IT is not disputed by learned counsel for the parties that no tenders were invited for award of contract for display of Glow Sign and Hoardings in departure Hall, Jaipur Airport, Jaipur. Learned counsel for the petitioner submits that his client is willing to offer Rs.1.08 crore for the work in question as against the bid of the 4th respondent amounting to Rs.75 lakhs. He also states that his client will de- posit the requisite amount of Rs.11 lakhs by way of pay order with the first respondent within one week. He further submits that in the event of fresh bidding if the bid of the petitioner is less than Rs-1.08 crore, it will be open to the first respondent to forfeit the amount of Rs.ll lakhs. List the matter on 23rd April, 1996. Dasti.'
(35) The following directions are necessary in the facts of the present case:
(A)Respondent No.1 will issue notice inviting fresh tenders for the award of contract for exclusive advertisement right? for Departure Hall at Jaipur Airport. The time frame shall be .as decided by the Authority;
(B)In case the bid amount as offered by the participants is less than Rs-1.08 crore, respondent No.1 will not Only forfeit the amount of Rs.ll lakhs as directed by order dated April' 8, 1996 but will also recover the balance of shortfall from the petitioner including interest at the rate of 21% with effect from 16th February, 1996 i.e. the date when the contract was awarded in favor of respondent No.4tiH the award of fresh contract.
(36) There will be no order as to costs.