Damania Industries Ltd. Vs. State of Orissa and ors. - Court Judgment

Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot be entertained i.e. cannot be admitted for consideration unless the statutory deposit is made and for this purpose the court has the discretion either to grant time to make the deposit or not. no formal order condoning the delay is necessary, an order of adjournment would suffice. the provisions of limitation embodied in the substantive provision of the sub-section (1) of section 173 of the act does not extend to the provision relating to the deposit of statutory amount as embodies in the first proviso. therefore an appeal filed within the period of limitation or within the extended period of limitation, cannot be admitted for hearing on merit unless the statutory deposit is made either with the memo of appeal or on such date as may be permitted by the court. no specific order condoning any delay for the purpose of deposit under first proviso to sub-section (1) of section 173 is necessary. [new india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - it is the further case that as the matter relates to a contract and as the decision has been arrived at after considering the case of the petitioner as well as opposite party no. 3 to be better than that of the petitioner. 3 is that if in the opinion of the experts, imported machinery was better and preferable to that offered by the petitioner, it cannot be said that their decision is tainted with mala fide or that it was just to keep the petitioner out of consideration. 6-5-92 (meat) from the office of the joint commissioner (m and mp), government of india, to the effect that as the tender schedule did not contain adequate details for establishing the centre and the machinery proposed do not ensure an effective plant and for the purpose the specifications and terms and conditions may be altered to ensure establishment of a better centre with the purpose of more efficientcarcassutilisation centre. the best way to approach this question would, we feel, be to reproduce/extract the relevant portion from the minutes of the purchase committee meeting which was contained in annexure-a to the counter filed by opposite parties i and 2. it reads thus :7. the question of purchase of dry renderer was limited to two firms, viz. the consultant offered their views that both are acclaimed as renowned firms in manufacturing of cercass utilisation and meat processing plant. 3 was blindly accepted, cannot also he accepted, for, we find from the minutes of the purchase committee meeting that certain items were recommended to be re-tendered as the rate quoted was not found to be competitive. ' likewise, finding the cost of an imported stitching machine to be high, the committee recommended for procurring an indigenous bag stitching machine by re-tender. 12. ii may be stated that in matters like the one at hand, the power of the court in exercise of its writ jurisdiction is limited. there can be no question of infringement of article 14 if the government tries to get the best person or the best quotation. moreso considering the fact that the total cost of the plant was near about a crore of rupees and any malfunctioning would have meant good money going down the drain. if the experts (members of the purchase committee) were of the opinion that an imported plant was better, we would not be inclined to substitute their opinion by that of ours, for we feel that the experts were in a better position to know what was good for the project. union of india, 1986 (2) uj (sc) 159 :(air 1986 sc 1527) is clearly distinguishable and does not apply to the facts of the present case. in foreign contracts, such a situation is bound to occur due to frequent change/fluctuation in the exchange rate and this fact cannot be taken as a ground to annul the selection of an imported dry renderer and the other ancillary equipments and moreso when a good part of the delay is because of the parties fighting out the litigation during the tendency whereof the exchange rate has changed. 3) has done good exercises and developed suitable proposals for establishing different sizes carcass utilisation centres in collaboration with their principal m/s. 3 behind the hack of the petitioner, the petitioner drew our attention to the last part of paragraph 9 of the counter filed by opposite parties 1 and 2 which reads thus :as a matter of fact, date and time of the purchase committee was intimated well in advance to all the tenderers. accordingly, it is submitted that the action is bad and the stale is likely to suffer as it would not be in a position to take action against m/s. haarslev has clearly mentioned that m/s. 3 to the petitioner on the above subject and in these letters also it is clearly, mentioned that these were in connection with the letter of the petitioner to their principal m/s. it has to be exercised for the public good.p.c. naik, j.1. the action of the stale in accepting the tender of opposite party no. 3 for setting up thecarcass and by-products utilisation centre at patha, cutttack, is the subject-matter of this writ petition.2. the action of the state is assailed, inter alia, on the ground that it has acted unfairly by giving undue preference to opposite party no. 3 and excluding the tender of the petitioner with mala fide intention. it is further alleged that the petitioner has been discriminated against and that the authorities have acted arbitrarily, unreasonably and in utter violation of the terms and conditions laid down in the tender notice. it is also alleged that the action of the state is against public policy, as it could not be in the public interest to make payment in foreign currency, namely, danish kroner, in this case.3. the facts giving rise to this petition are that subsequent to the date of decision to set up a carcass utilisation plant and liquid nitrogen plant, a notice inviting tenders (nit) was published on 19-11-1994 for the project which was to be on turn-key basis. a corrigendum thereto was published on 29-12-1994. in response. fifteen firms indudingthe petitioner and opposite party no. 3 submitted their tenders. on 11-1-1995, the tender papers were opened and after scrutinisation thereof, thirteen were rejected and two, namely, that of the petitioner and opposite party no. 3, were found to be in order. accordingly, they were short-listed. thereafter, the purchase committee met on 29-4-1995 when the tender of opposite party no. 3 was partly accepted and in respect of certain item, a decision was taken by the committee to publish a fresh nit for the same. thereafter on 19-10-1995, the slate and opposite party no. 3 entered into a memorandum of understanding. on 28-11-1995. opposite party no. 2 moved the central government for approval of its action. these facts are not disputed.4. the petitioner's case is that though it was invited for negotiation, it was kept out and opposite party no. 3 was selected clandestinely by adopting a secret procedure. moreover, according to the petitioner, it has been discriminated against, as in all fairness, its total offer, which was lower than that of opposite party no. 3, ought to have been accepted, moreso, when acceptance of its tender would have saved foreign exchange, as payment to m/s. h.m. haarslev is required to be made in danisn kroner. it is the further case of the petitioner that in view of the corrigendum, the purchase committee was wrong in insisting upon an imported plant in breach of the terms and conditions of the nitand this was probably in order to keep the petitioner out. accordingly, the petitionerprays for quashing the contract awarded in favour of opposite party no. 3 which, according to the petitioner, was done in an arbitrary and unreasonable manner.5. the petition is opposed by the opposite parties, inter alia, on the ground that the contract has been awarded to opposite party no. 3 in terms of a decision taken by a group of experts in the line who after due consideration and evaluation of the tender papers submitted by the petitioner and opposite party no. 3, preferred that of the latter. the reason for preferring the tender of opposite party no. 3 was that the price offered by it was lowerand that the equipment main/principal mentioned in schedule i was manufactured by m/s. h. m. haarslev, a company of international repute. the award of contract in respect of the other items to opposite party no. 3 is justified on the ground that since the main equipment, i.e. by dry rendcrer, was to be supplied by opposite party no, 3, it was thought proper to obtain the ancillary equipments from that very company for a smooth erection and commissioning of the plant, as it was felt that erection of one plant by two rival tenderers may give rise to various complicacies, for in case of malfunctioning, one will blame the other and then it would be difficult for the state to fix responsibility as to who is at fault. according to the state, a mere perusal of the minutes of the purchase committee meeting held on 18-3-1994 (annexure-a to the counter-affidavit filed by opposite parties 1 and 2) would negative the contention of ihe petitioner that it was kept out of consideration and the decision was arrived at after eliminating its lender. the committee was consisting of experts and their decision to select imported machinery manufactured by a firm of international repute, cannot be said to be unreasonable nor can the payment in foreign currency be said to be opposed to public policy within the meaning of section 23 of the indian contract act. the project, according to the state, is under the world bank loan and as the machinery is imported, remittance has to be made in foreign exchange. it is further stated that the price of the dry renderer was quoted in danish kroner and as such, the conversion value thereof in rupee has to be remitted and as per the international mercantile practice, if the value of rupee falls, naturally some more amount in rupee has to be remitted. but, this cannot mean that the price of the machine has gone up because what is paid as the rupee equivalent to the price of the machine which in danish kroner remains the same. it is the further case that as the matter relates to a contract and as the decision has been arrived at after considering the case of the petitioner as well as opposite party no. 3, the court should not interfere in a proceeding under article 226 of the constitution of india. it is also the submission that the decision is of a committee which consisted of two experts from the state and two from outside the state and it is these experts who preferred the offer of opposite party no. 3 to be better than that of the petitioner. it cannot, therefore, be said that the decision is erroneous orarbitrary because it is not one arrived at by eliminating the petitioner. therefore, the question of discriminating the petitioner does not arise. there is also nothing to the minutes of the purchase committee meeting to indicate any flaw in the decision making process. the decision, therefore, ought to be upheld.6. the case of opposite party no. 3 m/s.food processing equipments company is that m/s. h-m. haarslev are the principal company and it is the agent of that company in india and in that capcity it has quoted the price of a dry renderer of which it is the exclusive distributor in the country. rebutting the expertise of the petitioner, it is stated that after the nit, the petitioner had approached the danish firm for technology/know-how about the dry renderer which along with a video cassette was sent to the petitioner, as is clear from annexures a/3, b/3, c/3 and d/3. it is also averred that even m/s. meyn of holland, the foreign supplier of the petitioner also obtained technological know-how from the danish firm. as is clear from annexure-e/3. it is the case of opposite party no. 3 that being the exclusive distributor of m/s h. m. haarslev of denmark, there was a technological tie-up between opposite party no, 3 and m/s. h. m. haarslev and all purchases in the country are being executed generally by opposite party no. 3 and m/s. h. m. haarslev and the final test and commissioning of the plant is to be made in presence of the technical experts from m/s. h. m. haarslev. it is the further case that as the offer made by it was found to be belter by a committee of experts, it was accepted in preference to that of the petitioner.7. an additional affidavit was filed by opposite parly no. 3 pointing out that whereas the price offered by the petitioner fora dry renderer made by it was rs.35,76,500/-, the price of the imported plant quoted by opposite party no. 3 was dkk 6,53,455 (danish kroner), i.e. rs. 33,97,000/-, which was lower than that of the petitioner. it was also contended that after acceptance of its tender, as the petitioner has taken refund of its earnest money deposit, it has no right to challenge the grant in favour of opposite party no. 3.8. one of the contentions of the petitioner is that in view of the corrigendum to the nit, the committee was not justified in selecting imported machinery and thereby spending foreign exchange, when a unit manufactured by them was available against rupee payment and which unit was also backed by an international manufacturer, i.e. m/s. meyn of holland. to this, the reply of opposite party no. 3 is that if in the opinion of the experts, imported machinery was better and preferable to that offered by the petitioner, it cannot be said that their decision is tainted with mala fide or that it was just to keep the petitioner out of consideration. the committee consisted of dr. v. gnanaprakasam, vice-chancellor, tanuvas, madras, dr. n. kondaiah, jt. commissioner (m and mp), department of ah and d, government of india, dr. m. jithender reddy, spl. officer (meat), a. p. state meet and poultry developmeni corporation, hyderabad and dr. babu ram, a. c. (cu), department of ah and d. this committee met under the chairmanship of dr. p. n. bhat, animal husbandry commissioner, government of india, on 18-3-1994 for approving the estimates arrived at by the department for establishment of the carcass utilisation centre in various parts of the country. one of the decisions arrived at by this committe was that attempt should be made for exemption of import duly which indicates that emphasis was given on an imported machine, as is revealed from the discussions recorded. it is not disputed by the state that the nit dated 19-11-1994 was for an imported dry renderer with automatic control system and that in the corrigendum dated 29-12-1994, the word 'imported' was omitted. but, this, explains the learned advocate-general, was not with the purpose of banning the purchase of an imported machine. rather, it was for the purpose of considering the offers made by indigenous manufacturers. moreover, the corrigendum was on the instruction of the central government which are contained in d.o. no. 6-5-92 (meat) from the office of the joint commissioner (m and mp), government of india, to the effect that as the tender schedule did not contain adequate details for establishing the centre and the machinery proposed do not ensure an effective plant and for the purpose the specifications and terms and conditions may be altered to ensure establishment of a better centre with the purpose of more efficientcarcassutilisation centre. thus, the contention that it was to prohibit the purchase of imported machinery, is not correct.9. we have perused annexure-f to the counter filed by opposite parties 1 and 2. it is a comparative statement showing the offers made by different firms for a dry renderer mentioned in schedule i to the nit. this shows that the offer made by the petitioner for a dry renderer was of m/s meyn. holland and that made by opposite party no. 3 was of m/s. h. m. haarslev, denmark. from the facts on record, il is apparent that the one offered by opposite party no. 3 was imported while that by the petitioner was an indigenous product, because in paragraph 3 of the petition, it is specifically stated that the petitioner manufactures, sells and gives after-sale service to render the plants with inherited technology and know-how from m/s. meyn machine fabric of holland. during the course of hearing also, this was not disputed. thus, these were the two offers to be considered by (he purchase committee. what is to be seen is, whether or not the purchase committee considered the rival claims, or whether it accepted ihe tender of opposite party no. 3 after eliminating the petitioner. the best way to approach this question would, we feel, be to reproduce/extract the relevant portion from the minutes of the purchase committee meeting which was contained in annexure-a to the counter filed by opposite parties i and 2. it reads thus :'7. the question of purchase of dry renderer was limited to two firms, viz. m/s. damania industries ltd., and m/s. food processing equipments company. the rate quoted by m/s. damania industries ltd., for the dry renderer is of meyn, holland make whereas that of m/s. food processing equipments company is of h. m. haarslev denmark make. the consultant offered their views that both are acclaimed as renowned firms in manufacturing of cercass utilisation and meat processing plant. the rate quoted by m/s. food processing equipments company is the lower. the committee also noted that the firm has obtained an order for services equipment from ivri, bhopal. the consultants mentioned that the overseas suppliers m/s. h. m. haarslev denmark is a competent manufacturer of such equipments and have the necessary technological background. taking these facts into account the committee decided to recommend the placing of order for dry renderer on m/s. food processing equipments company for h. m. haarslev denmark make as per specification at annexure 'a'.8. as regards schedule j and k these were discussed in thread-bare by the members of the committee. since the carcase utilisation plant is first of its kind in orissa and there are not many plants in the country, the committee felt that the company to whom the order is to be placed should do a turn key job. the consultants were of the view that since the main equipment i.e. dry renderer would be coming from m/s. food processingequipmentcompany, other ancillary equipments required under schedule j. and k. should be procurred from the same source to avoid complications of installation, commissioning and trial run of the plant as a whole. moreover, the firm can be held responsible for successful commissioning .....,'10. thus, the contention that the tender of opposite party no. 3 was blindly accepted, cannot also he accepted, for, we find from the minutes of the purchase committee meeting that certain items were recommended to be re-tendered as the rate quoted was not found to be competitive. the relevant extract relating to this reads thus :'9. as regards steam boiler the committee agreed with the views of consultants that since the rates quoted by m/s. food processing equipments company delhi was high and it was decided that director of a. m. and v. s. may invite a separate tender for that item.'likewise, finding the cost of an imported stitching machine to be high, the committee recommended for procurring an indigenous bag stitching machine by re-tender.11. from the above-quoted extract, it is clear that the tendersof both, the petitioner and opposite party no. 3, were considered and the fact that the consultants were of the view that the manufacturers of dry renderer quoted by both of them were renowned firms, negatives the contention of the petitioner that it was kept out of consideration and that the tender of opposite party no. 3 was accepted by eliminating the petitioner. the mere fact that out of the two tenders submitted on behalf of reputed manufacturers one was preferred, cannot imply or mean that the other was discriminated against. since only one dry renderer was to be purchased, necessarily the committee had to take a decision of selecting one out of the iwo. this they did. very action cannot, we feel, be termed as mala fide, for, if it were so, it would never be possible to select one out of the two because whoever is not selected would raise a grievance with the result that no decision would ever be possible.12. ii may be stated that in matters like the one at hand, the power of the court in exercise of its writ jurisdiction is limited. in tata cellular v. union of india, air 1996 sc 11, the apex court has observed thus :'93. the duty 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 or5. abused its powers. 94. therefore, it is not for the court to determine whether a particular policy orparticular decision taken in the fulfilment 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 undestand correctly the law that regulates his decision-making power and must give effectto it. (ii) irrationality, namely, wednesburyunreasonableness.(iii) procedural impropriety.' again, in a recent decision of the apex court in asia foundation and construction ltd. v. trafalgar house construction (p.) ltd., (1997) i scc 738, after quoting these two paragraphs (paragraphs 93 and 94) it has also observed thus : 'therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose.....' 13. it, therefore, follows that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. however, there are inherent limitations to the scope of interference as the court does not sit in appeal over the decisions arrived at but is only concerned with the manner in which those decisons have been taken. the right to refuse the lowest or any other lender is always available to the government. but, the principles laid down in article 14 of the constitution of india 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. if, however, the said power is exercised for any collateral purpose, the exercise of that power will be struck down. the case in hand is not one where the petitioner's offer was not considered. on the contrary, it was considered along with that of opposite party no. 3 and the committee decided to go in for an imported plant. thus, it cannot be said that the decision taken by the authorities was arbitrary or was taken secretly without considering the petitioner's case.14. the next question which arises for consideration is, whether the action of the purchase committee in placing orders for other items on opposite party no. 3 is unjustified as the total rate quoted by the petitioner was lower than that quoted by opposite party no. 3. as regards the dry renderer, it is more or less an admitted position that the rate quoted by opposite party no. 3 was lower. this contention has to be judged by considering the fact that what was lo be set up was acarcass and by-products utilisation centre on a turn-key basis, i.e. the entire plant, if we term it so, was to be set up of which a dry renderer is the principal equipment (so we are informed). the committee was of the opinion that since the principal equipment was to be supplied by opposite party no. 3, it was but appropriate that the ancillary equipments be also obtained from opposite party no. 3 so that it can be held responsible for the successful establisment and commissioning of the plant. obviously, this was thought more practical because if two rival tenderers were involved in setting up of a composite plant, they may start working at cross-purpose, there may not be team spirit between (hem and ultimately in case of malfunctioning of the plant, it would be difficult to hold any one responsible as one would blame the other for the mistake/defects. this is the reason for preferring opposite party no. 3 to supply the items mentioned in schedule j and k to the nit which, we feel, was a practical one and the concerned authorities cannot really be blamed for the view it look; moreso considering the fact that the total cost of the plant was near about a crore of rupees and any malfunctioning would have meant good money going down the drain. the committee also cannot be blamed for the apprehension they had because it is quite possible that two rival tenderers may not have worked in harmony and may not have also kept pace with each other in the smooth commissioning of the plant. thus, though the total tender of opposite party no. 3 was higher, considering the fact and circumstances under which the orders for supply of items as per schedules j and k were aiso placed on opposite party no. 3 which was to supply the dry renderer, the action of the purchase committee cannot be said to be arbitrary or unjustified. moreover, the working group on slaughter houses and carcass utilisation centre at its 6th meeting held on 28-9-i995 at krishi bhawan, new delhi had also taken the following decision :' 1. purchase of standard type complete boiler along with accessories and installation should be considered from the same party on whom orders have been placed for rendering plant and other machinery so that turn key establishment of the total plant arid its performance guarantee could be ensured. retendering of boiler may be avoided as it may result in delay of the implementation of the project.'15. in erisian equipment and chemicals ltd. v. state of west bengal, air 1975 sc 266, the apex court has observed that the slate can enter into contract with any person it chooses. it has further observed that no person has a fundamental right to insist that the government must enter into a contract with him. a citizen has a right to earn livelihood and to pursue any trade. a citizen has a righl to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling. but, this does not help the present petitioner, for it is not a case where, as observed earlier, its offer was not considered. thus, the averment that the petitioner was not given equal treatment, cannot be accepted.16. action of the state is also assailed on the ground that it is opposed to public policy, as payment is to be made in foreign currency. we are afraid, we cannot accept this submission. since the dry renderer and some other items are to be imported, it is but natural that the price thereof has to be paid in the currency of the country from which it is purchased, in the present case it is danish kroner. nothing has been brought to our notice that there is any restriction on the purchase and import of foreign machinery by the state. the corrigendum to the nit also does not contain any restriction of the type suggested by the learned counsel for the petitioner. by pointing out that the word 'imported' which finds place in [he nit was omitted in the corrigendum issued thereto, the learned counsel sought to canvass that the intention was that purchaseof an imported machinery was banned. however, we are not persuaded to imply this meaning to the corrigendum. on the contrary, the corrigendum gave a larger choice to the purchase committee orthe concerned authorities. had the corrigendum not been there, no tender quoting indigenous dry renderer could have been considered. however, by omitting the word 'imported' in the corrigendum, the purchase committee was enabled to take into consideration the manufacturers of indigenous dry renderer also. thus, instead of restricting the scope of consideration, the corrigendum in fact widened it. if the intention was to prohibit the consideration of imported plant, the corrigendum would have been definitely differently worded, for, had the central government prohibited the purchase of an imported dry renderer, it would have said so in so many words.17. by making a reference to the case of ramana dayaram shetty v. the international airport authorityof india, air 1979 sc 1628, it was submitted that in view of the corrigendum issued, the state was bound by the eligibility criteria set by it and was not justified in departing therefrom and preferring to an imported plant. but, we feel that instead of limiting the scope, the corrigendum in fact enlarged it thereby enabling the purchase committee to also consider an indigenous plant which, as per the original nit, it could not, as it related only to an imported plant. the fact that after considering the two tenderers, the committee thought it proper to go in for an imported plant, cannot give rise to an inference that the action was guided by any extraneous or irrelevant consideration or that it was arbitrary and not rational. the minutes of the purchase committee quoted in the earlier part of our judgment is itself sufficient to rebut the allegation. the question is, whether the decision to go in for an imported plant was arbitrary and payment therefor in foreign currency would be against the public interest, and whether the action was unreasonable? we think, not. if the experts (members of the purchase committee) were of the opinion that an imported plant was better, we would not be inclined to substitute their opinion by that of ours, for we feel that the experts were in a better position to know what was good for the project. having selected an imported plant, it cannot be said that payment of the price in foreign currency would be against the public interest; moreso when there was no bar for the same.18. the case of harminder singh arora v. union of india, 1986 (2) uj (sc) 159 : (air 1986 sc 1527) is clearly distinguishable and does not apply to the facts of the present case. that was a case relating tosupply of milk and the observations made in paragraph 29 thereof, have to be read in the context of the facts involved in that case. in the case at hand, as the question involved relates to establishment of a plant which is first of its kind in the state of orissa, many more factors were relevant including the fact that involving two rival tenderers in setting up a composite plant may not have been practical for obvious reasons.19. the action of the state is also assailed on the ground that it is unjustifiably paying more money than what was required to be paid as per the contract. though on the face of it, the submission seems attractive, it is not so when one takes a closer look at it. the price of the plant (imported) and the ancillary equipment was quoted in danish kroner. on the date when the tender was considered, the rupee equivalent to the total amount worked out on the basis of the then prevailing rate of exchange was taken into consideration and it is this resultant figure which was compared to that quoted by the petitioner. in the meantime, because of the fallen value of the rupee, the exchange rate has also changed and we are informed that though earlier, one danish kroner was equivalent to rs. 5.20, the present rate of exchange is rs. 6.50 approximately. but, this does not mean that the government is paying more than what it agreed to, for though the rupee price of the machinery may by today's exchange rate be more, the price in terms of danish kroner in which those were quoted remains the same. thus, it cannot be said that the government is paying to the manufacturer, m/s. h. m. haarslev, denmark, more than the price that was quoted by it. in foreign contracts, such a situation is bound to occur due to frequent change/fluctuation in the exchange rate and this fact cannot be taken as a ground to annul the selection of an imported dry renderer and the other ancillary equipments and moreso when a good part of the delay is because of the parties fighting out the litigation during the tendency whereof the exchange rate has changed. thus, the fact that more money in terms of indian rupee will be required to be paid because of change/fluctuation in exchange rate, cannot be said to be something which is beingdone contrary to public policy. what is being done is in fact in ceepingwith the established mode of international transaction where payments are to be made on the basis of the exchange rate on the relevant day. so, having decided to purchase an imported dry renderer and other ancillary equipments, the state is bound to pay for the same under the contract.20. learned counsel for the petitioner also commented upon the action of the state officials to show that even prior to the finalisation of the tender, a decision had more or less been taken to award the contract to opposite party no. 3. for this, our attention was invited to annexure-2/a to the second additional affidavit which is a letter of dr. n. kondaiah, joint commissioner of m and md, ministery of agriculture, department of animal husbandry and dairy, government of india, to dr. g.p. mohanty, director of animal husbandry and veterinary services, orissa, in which it is mentioned that as m/s. food processing equipments company (opposite party no. 3) has done good exercises and developed suitable proposals for establishing different sizes carcass utilisation centres in collaboration with their principal m/s. h. m. haarslev, denmark, their case should also be considered along with others for establishment of the centre. dr. kondaiah, we may say, was not a member of the purchase committee. he, in fact, was a member of the working group on slaughter houses of carcass and by products utilisation centre and probably in that capacity, he had given a suggestion. said letter cannot be construed as a direction or interference with the selection process as the same is done at the state level. moreover, from the minutes of the purchase committee meeting, it is clear that m/s. meyn of holland was also considered to be a reputed manufacturer and was duly considered along with opposite party no. 3.21. our attention is also invited to a letter dated 4-5-1995 of opposite party no. 3 to the director, a.h. and v.s., cuttack, wherein a reference has been made to the visit of mr. r. k. saxena to bhubaneswar on the 27th of april, 1995. in the said letter, the writer has thanked the director for the courtesy extended to mr. saxena during his visit at bhubaneswar in view of the contents of the letter, it is submitted that representative of opposite party no. 3 was hobnobbing with the director and this visit was for the purpose of advancing the case of opposite party no. 3. this letter was written after the meeting of the purchase committe and as such, the other contents of the letter relate to the terms and conditions regarding payment/mode of payment. as regards the other portion, all that it expresses is the writer's thanks for the courtesy extended to its representative when he visited bhubaneswar in connection with the tender. from the contents it appears to be a mere courtesy letter and, therefore, cannot be taken as the basis for raising a presumption of some unholy alliance between the director and opposite party no. 3. had there been any such thing, we think, the visit would have been kept secret and not reflected in a letter to become a part of the official record.22. in support of its contention that the purchase committee had entered into a negotiation with opposite party no. 3 behind the hack of the petitioner, the petitioner drew our attention to the last part of paragraph 9 of the counter filed by opposite parties 1 and 2 which reads thus :'..... as a matter of fact, date and time of the purchase committee was intimated well in advance to all the tenderers. the purchase committee, after considering the tenders, decided to award the work in favour of opposite party no. 3 and called the appropriate representative of the company selected for tender. the representative of the petitioner was also present outside. since decision had already been taken to allot the work in favour of opposite party no. 3, the question of calling the representative of the petitioner did not arise.'a mere perusal of the above paragraph is sufficient to reject the contention of the petitioner. a careful reading indicates that when the purchase committee was considering the tenders, representatives of both, i.e. the petitioner and opposite party no. 3, were present. it was after approval of the tender of opposite party no. 3 that its representative was called for discussions and as the tender of the petitioner had not been accepted, the question of calling its representative did not arise. this is what follows from the averment. of course, the paragraph is not very happily worked, but that cannot be a ground for not trying to ascertain what it seeks to convey. this averment, we feel, has to be read in the light of the minutes of the purchase committee meeting, a reference to which has already been made in the earlier part of our judgment and from which it is clear that the tender of the petitioner and also that of opposite party no. 3 received due consideration. hence the contention that there was secret negotiation between opposite party no. 3 and the stale authorities, has also to be repelled.23. it was also contended that a letter of credit could not be opened in the name of m/s. h.m. haarslev which was not the tenderer and with whom there was no privity of contract. accordingly, it is submitted that the action is bad and the stale is likely to suffer as it would not be in a position to take action against m/s. h. m. haarslev in case of malfunctioning of the plant. to this, the reply of the opposite party no. 3 is that the tenderer submitted by it was on behalf of m/s. h. m. haarslev, the manufacturer, of which it (opposite party no. 3) is the sole representative in india. on going through some of the documents on record, we find that this contention to be correct. even in the letter (annexure-b/3) which was a reply of m/s. h. m. haarslev to the petitioner's letter (annexure-a/3) requesting m/s. h. m. haarslev to supply them laboratory, brochures and technological assistance for feather meat and bone meat productior m/s. h. m. haarslev has clearly mentioned that m/s. food processing equipments company (opposite party no. 3) was their representative in india. the petitioner was also informed that mr. saxena (of opposite party no. 3) will be able to assist it in case it requires further help on the subject. annexure-c/3 and d/3 are letters written by opposite party no. 3 to the petitioner on the above subject and in these letters also it is clearly, mentioned that these were in connection with the letter of the petitioner to their principal m/s. h. m. haarslev of denmark. likewise, in the letter of m/s. h.m. haarslev (annexure-q) it is specifically mentioned that m/s. food processing equipments company (o.p. no. 3) represented by r.k. saxena is their sole agent in india since 1992. thus, it follows that opposite party no. 3 being the sole representative/agent of m/s. h. m. haarslev of denmark, had submitted tender for supplying a plant manufactured by m/s. h. m. haarslev, its principal. it is for this reason, the price was quoted in danish kroner for the time to be supplied by its principal and we feel, as the payment was to be made in danish kroners, the state opened a letter of credit directly in the name of the principal probably in order to avoid payment through the representative as it involved payment in foreign currency. as is clear from the record, the letter of credit was opened at the request of m/s. h.m. haarslev and also opposite party no. 3. we, therefore, feel that the action of the state authorities in opening the letterof credit in favour of m/s. h. m. haarslev cannot be said to be unjustified.24. another circumstance on which the petitioner relies for the submission that negotiations were secretly done, is annexure-d, a fax message of m/s. h.m. haarslev which was in reply to the telefax sent by the state. as this annexure itself discloses, the state had sent the telefax on the 5th of may, 1995 which is after acceptance of the tender of opposite party no. 3. therefore, it cannot be said that this indicates secret negotiation between the slate and m/s. h. m. haarslev. this annexure-d sent by m/s. h. m. haarslev was in fact, in the nature of a confirmation that m/s. food processing equipments company (opposite party no. 3) was its representative and that it was aware that a lender for supply of m/s. h. m. haarslev machine apart from other ancillary units, was submitted by it.25. a reference is made to the case of kasturi lal lakshmi reddy v. state of jammu and kashmir, air 1980 sc 1992, wherein it has been observed thus at page 1999 :'though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. but the government is not free to act as it likes in granting largess such as awarding acontract or selling or leasing out its propety. whatever be its activity, the government is still the government and is, subject to restraints inherent in its position in a democratic society. the constitutional power conferred on the government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. every activity of the government has a public element in it and it must therefore, he informed with reason and guided by public interest. every action taken by the government must be in public interest; the government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. if the government awards a contract of leases out of otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch-stone of reasonableness and public interest and if it fails to satisfy either test it would be unconstitutional and invalid.'but, in view of what has been discussed in the foregoing paragraphs, we feel that the case at hand is not one where the action of the government authorities is arbitrary, unreasonable or opposed to public interest. hence, the principle laid down in kasturi laps case (supra) is not attracted to this case,26. in the result, the writ application is dismissed. but, before parting with the case, we may direct that opposite party no. 3, which is representing the foreign firm m/s. h. m. haarslev, denmark, shall give a written undertaking to the effect that it shall be liable for any defect or malfunctioning of the machinery supplied by its principal.there shall, however, be no order as to costs.p.k. mohanty, j.27. i agree.