TMI Blog1979 (5) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ther a corporation is acting as instrumentality or agency of Government. It is a question not entirely free from difficulty. It is not possible to formulate an all-inclusive or exhaustive test which would adequately answer this question 'there is no cut and dried formula, which would provide the correct division of corporations into those which are instrumentalities or agencies of Government and those which are not. It may, therefore, be possible to say that where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregegnated with governmental character. But where financial assistance is not so extensive, it may not by itself, without anything more render the corporation an instrumentality or agency of government, for there are many private institutions which are in receipt of financial assistance from the State and merely on that account, they cannot be classified as State agencies. Equally a mere finding of some control by the State would not be determinative of the question "since a State has considerable measure of control under its police power over all types ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptance of the tender will rest with the Airport Director who does not bind himself to accept any tender and reserves to himself the right to reject all or ally of the tenders received without assigning any reasons therefore " There were six tenders received by the 1st respondent in response to the notice and one of them was from the 4th respondents of offering a licence fee of Rs. 6666.66 per month, and the others were from Cafe Mahim, Central Catering Service, one A. S. Irani, Cafe Seaside and Care Excelsior offering progressively decreasing licence fee very much lower than that offered by the 4th respondents. The tenders were opened in the office of the Airport Director at 12.30 p.m. On 25th January, 1977 and at that time the 4th respondents were represented by their sole proprietor Kumaria. A. S. Irani was present on behalf of himself, Cafe Mahim, Cafe Seaside and Cafe Excelsior and there was one representative of Central Catering Service. The tenders of Cafe Mahim, Central Catering Service, Cafe Seaside and Cafe Excelsior were not complete since they were not accompanied by the respective income tax certificates, affidavits of immovable property and solvency certificates, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and banks and They also held an Eating House Catering Establishment (Canteen) Licence as also a licence issued under the Prevention of Food Adulteration Act. The 4th respondents stated that their sole proprietor Kumaria had started his career in catering line in the year 1962 at Hotel Janpath, Delhi and gradually risen to his present position and that he had accordingly "experience equivalent to that of a IInd Class or even 1st Class hotelier." This position was reiterated by the 4th respondents in a further letter dated 3rd March, 1977 addressed to the Director. This information given by the 4th respondents appeared to satisfy the 1st respondent and by a letter dated 19th April, 1977 the 1st respondent accepted the tender of the 4th respondents on the terms and conditions set out in that letter. The 4th respondents accepted these terms and conditions by their letter dated 23rd April, 1977 and deposited with the 1st respondent by was of security a sum of Rs. 39,999.96 in the form of fixed Deposit Receipts in favour of the Ist respondent and paid to the 1st respondent a sum of Rs. 6666.66 representing licence fee for one month and other amounts representing water, electricity and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause A. S. Irani refused to vacate the sites in his occupation. So far as the site for the restaurant was concerned, the Ist respondent could not hand over the possession of it to the 4th respondents presumably because there was no other appropriate site available other than the one occupied by A. S. Irani. Since A. S. lrani refused to hand over possession of the sites occupied by him to the Ist respondent, even though his contract had come to an end, and continued to carry on the business of running the restaurant and the snack bars on these sites, the Ist respondent was constrained to file suit No. 8032 of 1977 against A. S. Irani in the City Civil Court at Bombay and in that suit, an injunction was obtained by the 1st respondent restraining A. S. Irani from running or conducting the restaurant and the snack bars or from entering the premises save and except for winding up the restaurant and the snack bars. A. S. Irani preferred an appeal against the order granting the injunction, but the appeal was rejected and ultimately a petition for special leave to appeal to this Court was also turned down on 31st July, 1978. This was, however, not to be the end of the travails of the 4t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal in limine on 21st February, 1978. The appellant thereupon filed a petition for special leave to appeal to this Court and since it was felt that the questions raised in the appeal were of seminal importance, this Court granted special leave and decided to hear the appeal at an early date after giving a further opportunity to the parties to file their respective affidavits. That is how the appeal has now come before us for final hearing with full and adequate material placed before us on behalf of both the parties. The main contention urged on behalf of the appellant was that in paragraph (1) of the notice inviting tenders the 1st respondent had stipulated a condition of eligibility by providing that a person submitting a tender must be a "registered IInd class Hotelier having at least 5 years experience." This was a condition of eligibility to be satisfied by every person submitting a tender and if in case of any person, this condition was not satisfied, his tender was ineligible for being considered. The 1st respondent, being a State within the meaning of Art. 12 of the Constitution or in any event a public authority, was bound to give effect to the condition of eligibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this respect since they had over 10 years' experience in catering to canteens of well known companies, clubs and banks. It was further contended in the alternative that paragraph (8) of the notice clearly provided that the acceptance of the tender- would rest with the Airport Director who did not bind himself to accept any tender and reserved to himself the right to reject all or any of the tenders without assigning any reasons therefor and it was, therefore, competent to the 1st respondent to reject all the tenders and to nogotiate with any person it considered fit to enter into a contract and this is in effect and substance what the 1st respondent did when he accepted the tender of the 4th respondents. The second head of argument was that paragraph (1) of the notice setting out the condition of eligibility had no statutory force nor was it issued under any administrative rules and, therefore, even if there was any departure from the standard or norm of eligibility set out in that paragraph, it was not justiciable and did not furnish any cause of action to the appellant. It was competent to the 1st respondent to give the contract to any one it thought fit and it was not bound by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s' experience and this tender notice was also included amongst the documents handed over to prospective tenderers when they applied for tender forms. Now the question is, what is the meaning of the expression "registered Ilnd Class hotelier", what category of persons fall within the meaning of this description ? This is a necessary enquiry in order to determine whether the 4th respondents were eligible to submit a tender. It is clear from the affidavits and indeed there was no dispute about it that different grades are given by the Bombay City Municipal Corporation to hotels and restaurants and, therefore, there may be a registered Ilnd Class Hotel but no such grades are given to persons running hotels and restaurants and hence it would be inappropriate to speak of a person as a registered llnd Class hoteIier. But on that account would it be right to reject the expression "registered IInd Class hotelier" as meaningless and deprive paragraph (1) of the notice of any meaning and effect. We do not think such a view would be justified by any canon of construction. It is a well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of eligibility required has that the person submitting a tender must have 5 years' experience of running a II Class hotel, as this would ensure by an objective test that he was capable of running a Il Class restaurant and it should not be left to the Ist respondent to decide in its subjective discretion that the person tendering was capable of running such a restaurant. If therefore, a person submitting a tender did not have at least 5 years' experience of running a II Class hotel, he was not eligible to submit the tender and it would not avail him to say that though he did not satisfy this condition, he was otherwise capable of running a IInd Class restaurant and should, therefore, be considered. This was in fact how the 1 st respondent itself understood this condition of eligibility. When the 4th respondents submitted their tender along with Their Letter dated 24th January, 1977, it appeared from the documents submitted by the 4th respondents that they did not have 5 years' experience of running a II Class restaurant. The 1st respondent by its letter dated l5th February 1977 required the 4th respondents to produce documentary evidence to show that they were "registered II Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut here the 1st respondent did not reject the tenders outright and enter into direct negotiations with the 4th respondents for awarding the contract. The process of awarding a contract by inviting tenders was not terminated or abandoned by the 1st respondent by rejecting all the tenders but in furtherance of the process, the tender of the 4th respondents was accepted by the 1st respondent. The contract was not given to the 4th respondents as a result of direct negotiations. Tenders were invited and out of the tenders received, the one submitted by the 4th respondents was accepted and the contract was given to them. It is, therefore not possible to justify the action of the 1st respondent on the ground that the 1st respondent could have achieved the same result by rejecting all the tenders and entering into direct negotiations with the 4th respondents. That takes us to the next question whether the acceptance of the tender of the 4th respondents was invalid and liable to be set aside at the instance of the appellant. It was contended on behalf GI the 1st and the 4th respondents that the appellant had no locus to maintain the writ petition since no tender was submitted by him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents did not satisfy this standard or norm, it was not competent to the 1st respondent to entertain the tender of the 4th respondents. It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those Standards on pain of invalidation of an act in violation of them. This rule was enunciated by Mr Justice Frankfurter in Viteralli v. Seton (359 U. S. 535: 3 Law.Ed. (Second series) 1012) where the learned Judge said: "An executive agency must be rigorously held to the standards by which it professes its action to be judged. Accordingly, if dismissal from employment is based on a define(l procedure, even though generous beyond the requirement that bind such agency, that procedure must be scrupulously observed. This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword. This Court accepted the rule as valid and applicable in India in A. S. Ahuwalia v. Punjab ([1975] 3. S. C. R. 82) and in subsequent decision given in Sukhdev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affection of some right or denial of some privilege. To-day the Government, is a welfare State, is the regulator and dispenser of special services and provider of a large number of benefits, including jobs contracts, licences, quotas, mineral rights etc. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationship to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare. Then again, thousands of people are employed in the State and the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cences only in favour of those having grey hair or belonging to a particular political party or professing a particular religions faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual We agree with the observations of Mathew, J., in V. Punnan Thomas v. State of Kerala(AIR 1969 Kerala 81) that: "The Government is not and should not be as free as an individual in selecting the recepients for its largess. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal". The same point was made by this court in Erusian Equipment and Chemicals Ltd. v. State of West Bengal([1975] 2 S.C.R. 674) where the question was whether black-listing of a person without giving him an opportunity to be heard was bad ? Ray, C. J., speaking on behalf of himself and his colleagues on the Bench pointed out that black-listing on a person not only affects his reputati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. Now, it is obvious that the Government which represents the executive authority of the State, may act through the instrumentality Or agency of natural persons or it may employ the instrumentality or agency of juridical persons to carry out its functions. In the early days, when the Government had limited functions, it could operate effectively through natural persons constituting its civil service and they were found adequate to discharge governmental functions, which were of traditional vintage. But as the tasks of the Government multiplied the advent of the welfare State, it began to be increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often of specialised and highly technical character. The inadequacy of the civil service to deal with these new problems came to be realised and it became necessary to force a new instrumentality or administrative device for handling these new problems. It was in these circumstances and with a view to supplying this administrative need that the public corporation came into being as the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Companies Act 1956 or the Societies Registration Act 1860. Where a Corporation is wholly controlled by Government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government. But ordinarily where a corporation is established by statute, it is autonomous in its working, subject only to a provision, often times made, that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matter. So also a corporation incorporated under law is managed by a board of directors or committee of management in accordance with the provisions of the statute under which it is incorporated. When does such a corporation become an instrumentality or agency of Government? Is the holding of the entire share capital of the Corporation by Government enough or is it necessary that in addition, there should be a certain amount of direct control exercised by Government and, if so, what should be the nature of such control ? Should the functions which the corporation is charged to carry out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem in question in this case was established by private donation in 1882, but by 1944, 99 per cent of the system's budget was supplied by the city, title to the library property was held by the city, employees there paid by the city payroll officer and a high degree of budget control was exercised or available to the city government. On these facts the Court of Appeal required the trustees managing the system to abandon a discriminatory admission policy for its library training courses. It will be seen that in this case there was considerable amount of State control of the library system in addition to extensive financial assistance and it is difficult to say whether, in the absence of such control it would have been possible to say that the action of the trustees constituted State action. Thomas P. Lewis has expressed the opinion in his article on "The meaning of State Action" (60 Colombia Law Review 1083) that in this case "it is extremely unlikely that absence of public control would have changed the result as long as 99% of the budget of a nominally private institution was provided by government. Such extensive governmental support should be sufficient identification with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate". Of course, with the growth of the welfare State, it is very difficult to define what functions are governmental and what are not, because, as pointed out by Villmer, L.J., in Pfizer v.Ministry of Health,( [1964] I Ch. 614 there has been, since mid-Victorian times, "a revolution in political thought and a totally different conception prevails today as to what is and what is not within the functions of Government". Douglas, J. , also observed to the same effect in New York v. United States(326 U.S. 572): " A State's project is as much a legitimate governmental activity whether it is traditional or akin to private enterprise, or conducted for profit." Cf. Helverillg v. Gerhardt (304 U.S. 405, 426, 427). A State may deem it as essential to its economy that it own and operate a railroad, a mill, or an irrigation system as it does to own and operate bridges, street lights, or a sewage disposal plant. What might have been viewed in an earlier day as an improvident or even dangerous extension of state activities may today be deemed indispensable. It may be noted that besides the so called traditional functions, the modern State operates a multitude of public enterprises and disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. . . Thus, the owners of privately held bridges, ferries, turnpikes and railroads may not operate them as freely as a farmer does his farm. Since these facilities are built and operated primarily to benefit the public and since their operation is essentially a public function, it is subject to state regulation". Mr. Justice Frankfurter, concurring, reduced the case to simpler terms. He found in the realm of civil liberties the need to treat a town, private or not, as a town. The function exercised by the corporation was in the nature of municipal function and it was, therefore, subject to the constitutional limitations placed upon State action. We find that the same test of public or governmental character of the function was applied by the Supreme Court of the United States in Evans v. Newton (supra) and Smith v. Allwight.( 321 U. S. 649.) But the decisions show that even this test of public or governmental character of the function is not easy of application and does not invariably lead to the correct inference because the range of governmental activity is broad and varied and merely because an activity may be such as may legitimately be carried on by Government, it does not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is governmental instrumentality or agency. Moreover even amongst these factors which we have described, no one single factor will yield a satisfactory answer to the question and the court will have to consider the cumulative effect of these various factors and arrive at its decision on the basis of a particularised inquiry into the facts and circumstances of each case. "the dispositive question in any stale action case," as pointed out by Douglas, J., in Jackson v. Metropolitan Edison Company (supra) "is not whether any single fact or relationship presents a sufficient degree of state involvement, but rather whether the aggregate of all relevant factors compels a finding of state responsibility." It is not enough to examine seriatim each of the factors upon which a corporation is claimed to be an instrumentality or agency of Government and to dismiss each individually as being insufficient to support a finding of that effect. It is the aggregate or cumulative affect of all the relevant factors that is controlling. G Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of black- listing has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting.... A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling....It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods." It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent were thus held to be violative of Articles 14 and 19(1)(g) because they "gave rise to a monopoly in the trade in kendu leaves to certain traders and singled out other traders for discriminatory treatment". The argument that existing contractors who had carried out their obligations in the previous year regularly and to the satisfaction of the Government formed a valid basis of classification bearing a just and reasonable relation to the object sought to be achieved by the sales namely, effective execution of the monopoly in the public interest, was also negatived and it was pointed out that: "exclusion of all persons interested in the trade, who were not in the previous year licencees, is ex facie arbitrary; it had not direct relation to the object of preventing exploitation of pluckers and growers of kendu leaves, nor had it any just or reasonable relation to the securing of the full benefit from the trade, to the State". The Court referred to the offer made by a well known manufacturer of bidis for purchase of the entire crop of kendu leaves for a sum of Rs. 3 crores which was turned down by the Government and expressed its surprise that no explanation was attempted to be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic Health. The resulting contract in favour of the petitioner was, however, subsequently cancelled by issuing a notice in terms of clause (2) of the tender, in pursuance of the policy of the Government that in the matter of supply to Government Medical Institutions the Co-operative Milk Supply Union should be given contract on the basis of prices filed by the Revenue Department. The petitioner challenged The decision of the Government in a petition under Article 32 of the Constitution on the ground inter alia that there had been discrimination against him vis-a-vis the 3rd respondent and as such, there was contravention of Article 14 of the Constitution. The Constitution Bench rejected this contention of the petitioner and while doing so, Hidayatullah, J., made the following observation: "There is no discrimination, because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, to fulfil contracts which they wish to be performed. When one person is choosen rather than another, the aggrieved party cannot claim the protection of Article 14, because the choice of the person to fulfil a particular contract must be left to the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his contracts in the past in preference to an undesirable or unsuitable or untried person. Moreover, Government is not bound to accept the highest tender but may accept a lower one in case it thinks that the person offering the lower tender is on an overall consideration to be preferred to the higher tenderer." We fail to see how this observation can help the contention of the respondents. It does not say that the Government can enter into contract with anyone it likes arbitrarily and without reason. On the contrary, it postulates that the Government may reject a higher tender and accept a lower one only when there is valid reason lo do so, as for example, where it is satisfied that the person offering the Lower tender is on an overall consideration preferable to the higher tenderer. There must be some relevant reason for preferring one tenderer to another, and if there is, the Government can certainly enter into contract with the former even though his tender may be lower but it cannot do so arbitrarily or for extraneous reason. There was also one other decision of this Court in State of Orissa v. Harinarayan Jaiswal ors.( [1972] 2 S.C.C. 36) which was strongly relied upon o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, namely, to raise revenue, the Government was entitled to reject even the highest bid, if it thought that the price offered was inadequate. The Government was not bound to accept the tender of the person who offered the highest amount and if the Government rejected all the bids made at the auction, it did not involve any violation of Article 14 or 19(1)(g). This is a self-evident proposition and we do not see how it can be of any assistance to the respondents. The last decision to which reference was made on behalf of the respondents was the decision in P. R. Quenin v. M. K. Tendel ([1974] 3 S. C. R. 64) This decision merely reiterates the principle laid down in the earlier decisions in Trilochan Mishra v. State of Orissa (supra) and State of Orissa v. Harinarayan Jaiswal (supra) and points out that a condition that the Government shall be at liberty to accept or reject any bid without assigning any reason therefor is not violative of Article 14 and that "in matters relating to contracts with the Government, the latter is not bound to accept the tender of the person who offers the highest amount". Now where does it say that such a condition permits the Government to act arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal or statutory authority would be within the meaning of the expression "other authorities", if it has been invested with statutory power to issue binding directions to third parties, the disobedience of which would entail penal consequence or it has the sovereign power to make rules and regulations having the force of law. This test was followed by Ray, C.J., in Sukhdev v. Bhagat Ram (supra). Mathew, J., however, in the same case, propounded a broader test, namely, whether the statutory corporation or other body or authority, claimed to fall within the definition of State', is as instrumentality or agency of Government: if it is, it would fall within the meaning of the expression 'other authorities' and would be State'. Whilst accepting the test laid down in Rajasthan Electricity Board v. Mohan Lal (supra), and followed by Ray, C. J., in Sukhdev v. Bhagat Ram (supra), we would, for reasons already discussed, prefer to adopt the test of Governmental instrumentality or agency as one more test and perhaps a more satisfactory one for determining whether a statutory corporation, body or other authority falls within the definition of 'State'. If a statutory corporation, body or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed itself to the question whether the Corporation could be said to be carrying on business pursuant to the authority of the Central Government. The answer to this question was obviously 'no' because the Corporation was carrying on business in virtue of the authority derived from its memorandum and articles of association and not by reason of any authority granted by the Central Government. The Corporation, in carrying on business, was acting on its own behalf and not on behalf of the Central Government and it was therefore not a servant or agent of the Central Government in the sense that its actions would bind the Central Government. There was no question in this case whether the Corporation was an instrumentality of the Central Government and therefore an 'authority within the meaning of Article 12. We may point out here that when we speak of a Corporation being an instrumentality or agency of Government, we do not mean to suggest that the Corporation should be an agent of the Government in the sense that whatever it does should be binding on the Government. It is not the relationship of principal and agent which is relevant and material but wether the Corporation is an instrum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his discussion, whether the 1st respondent, namely, the International Airport Authority of India,, can be said to be an authority falling within the definition of 'State' in Article 12. It is necessary to refer to some of the provisions of the International Airport Authority Act, 1971 (hereinafter referred to as the Act) for the purpose of determining this question. Sub-section (1) of section 3 of the Act provides that the Central Government shall constitute an authority to be called the International Airport Authority of India, to whom we shall hereafter refer as the 1st respondent. Sub- section (2) states that the 1 st respondent shall be a body corporate having perpetual succession and a common seal and sub-section (3) enacts that the Ist respondent shall consist of a Chairman to be appointed by the Central Government, the Director General of Civil Aviation exofficio and not less than six and not more than thirteen members to be appointed by the Central Government. The term of office of every member of the 1st respondent is prescribed by sub-section (1) of section 5 to be 3 years, but the Central Government is given under the Proviso power to terminate the appointment of any mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airports such services and facilities as are necessary or desirable for the efficient operation of air transport services and certain specific functions to be performed by the 1st respondent are particularised in sub-section (3). These. functions were, until the appointed date, being carried out by the Central Government but now under Section 16 they are transferred to the ] st respondent. Section 20 provides that after making provision for reserve funds, bad and doubtful debts, depreciation in assets and an other matters which are usually provided for by companies, the 1st respondent shall pay the balance of its annual net profits to the Central Government. Section 21 requires the 1st respondent to submit for the approval of the Central Government a statement of the programme of its activities during the forthcoming financial year as well as its financial estimate in respect thereof at least three months before the commencement of each financial year and section 24 provides that the accounts of the 1st respondent shall be audited annually by the Comptroller and Auditor General and the accounts as certified by the Comptroller and Auditor General or any other person appointed by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the Central Government can also supersede the 1st respondent. The Central Government has also power to give directions in writing,, from time to time on questions of policy and these directions are declared binding on the 1st respondent. The 1st respondent has no share capital but the capital needed by it for carrying out its functions is provided wholly by the Central Government. The balance of the not profit made by the 1st respondent after making provision for various charges, such as reserve funds, had and doubtful debts depreciation in assets etc. does not remain with the 1st respondent and is required to be paid over lo the Central Government. The 1st respondent is also required to submit to the Central Government for its approval a statement of the programme of its activities as also the financial estimate and it must follow as a necessary corollary that the 1st respondent can carry out only such activities and incur only such expenditure as is approved by the Central Government. The audited accounts of the 1st respondent together with the audit report have to be forwarded to the Central Government and they are required to be laid before both Houses of Parliament. So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent was not entitled to depart from it and to award the contract to the 4th respondents who did not satisfy the condition of eligibility prescribed by the standard or norm. If there was no acceptable tender from a person who satisfied the condition of eligibility, the 1st respondent could have rejected the tenders and invited fresh tenders on the basis of a less stringent standard or norm, but it could not depart from the standard or norm prescribed by it and arbitrarily accept the tender of the 4th respondents. When the 1st respondent entertained the tender of the 4th respondents even though they did not have 5 years' experience of running a IInd Class restaurant or hotel, denied equality of opportunity to others similarly situate in the matter of tendering for the contract. There might have been many other persons, in fact the appellant himself claimed to be one such person, who did not have 5 years' experience of running a IInd Class restaurant, but who were otherwise competent to run such a restaurant and they might also have competed with the 4th respondents for obtaining the contract, but they were precluded from doing so by the condition of eligibility requiring five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant and snack bars. It is also a circumstance not without significance that A. S. Irani did not immediately take any proceeding for challenging the acceptance of the tender of the 4th respondents, but filed a suit in his own name only after the appeal of K. S. Irani was dismissed by the High Court on 19th October, 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 the 4th respondents pursuant to the acceptance of their tender by the 1st respondent. 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 the 1st respondent to accept the tender of the 4th respondents. Now, it ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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