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TMI Blog1979 (5) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... cance in a modern welfare State which is com mitted to egalitarian values and dedicated to the rule or law. But these questions cannot be decided in the abstract. They can be determined only against the back-ground of facts and hence we shall proceed to State the facts giving rise to the appeal. On or about 3rd January, 1977 a notice inviting tenders for putting up and running a second class restaurant and two Snack bars at the International Airport Bombay was issued by the 1st respondent Which is a corporate body constituted under the International Airport Authority Act, 43 of 1971. The notice stated in the clearest terms in paragraph (1) that "Sealed tenders in the prescribed form are here by invited from Registered IInd Class Hoteliers having at least 5 years' experience for putting up and running a IInd Class Restaurant and two Snack bars at this Airport for a period of 3 years". The latest point of time upto which the tenders could be submitted to the 1st respodent was stipulated in Paragraph 7 of the notice to be 12 p.m. On 25th January, 1977 and it was provided that the tenders would be opened on the same date at 12.30 hours. Paragraph (8) of the notice made it clear that " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary, 1977 requested the 4th respondents to inform by return of post whether they were a "registered IInd Class Hotelier having at least 5 years experience" and to produce documentary evidence in this respect within 7 days. The 4th respondents pointed out to the Airport officer by their letter dated 22nd February, 1977 that they had, in addition to what was set out in their earlier letter dated 24th January, 1977, experience of running canteens for Phillips India Ltd. and Indian oil Corporation and moreover, they held Eating House Licence granted by the Bombay Municipal Corporation since 1973 and had thus experience of 10 years in the catering line. It appears that before this letter of the 4th respondents could reach Airport officer, another letter dated 22nd February, 1977 was addressed by the Airport officer once again requesting the 4th respondents to produce documentary evidence to show if they were ''a registered Ilnd Class Hotelier having at least 5 years experience". The 4th respondents thereupon addressed another letter dated 26th February, 1977 to the Director pointing out that they had considerable experience of catering for various reputed commercial houses, clubs, mess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of A. S. Irani the Ist respondent could not arrange to hand over possession of the sites to the 4th respondents. Meanwhile one K. S, Irani who owned Cafe Excelsior filed Suit No. 6544 of 1977 in the City Civil Court, Bombay against the respondents challenging the decision of the Ist respondent to accept the tender of the 4th respondents and took out a notice of motion for restraining the 1 st respondent from taking any further steps pursuant to the acceptance of the tender. K. S. Irani obtained an ad- interim injunction against the respondents but after hearing the respondents, the City Civil Court vacated the ad-interim injunction and dismissed the notice of motion by an order dated 10th october, 1977. An appeal was preferred by K. S. Irani against this order, but the appeal was dismissed by the High Court on 19th october, 1977. Immediately thereafter, on the same day, the Ist respondent handed over possession of two, sites to the 4th respondents and the 4th respondents proceeded to set up snack bars on the two sites and started business of catering at the two snack bars. These two sites handed over to the 4th respondents were different from the sites occupied by A.S. Irani, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be settled and it was fixed at Rs. 4.50O/- per month by mutual agreement between the parties. But it seems that the 4th respondents were not destined to be left in peace to run the two snack bars and soon after the dismissal of the appeal of A. S. Irani on l9th october, 1977 and the failure of A. S. Irani to obtain an ad interim mandatory injunction in the suit filed by him against the 1st and the 4th respondents, the appellant filed writ petition No. 1582 of 1977 in the High Court of Bombay challenging the decision of the 1st respondent to accept the tender of the 4th respondents. The writ petition was moved before a Single Judge of the High Court on 8th November, 1977 after giving prior notice to the respondent and after hearing the parties, the learned Single Judge summarily rejected the writ petition. The appellant preferred an appeal to the Division Bench of the High Court against the order rejecting the writ petition and on notice being issued by the Division Bench, the 1st and the 4th respondents filed their respective affidavits in reply showing cause against the admission of the appeal. The Division Bench after considering the affidavits and hearing the parties rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch he admittedly did not satisfy. The action of the 1st respondent in accepting the tender of the 4th respondents had, therefore the effect of denying him equality of opportunity in the matter of consideration for award of the contract and hence it was unconstitutional as being in violation of the equality clause. This contention of the appellant was sought to be met by a threefold argument on behalf of the 1 st and the 4th Respondents. The first head of the argument was that grading is given by the E Bombay City Municipal Corporation only to hotels or restaurants and not persons running them and hence there can be a 2nd grade hotel or restaurant but not a 2nd grade hotelier and the requirement in paragraph (1) of the notice that a tenderer must be a registered 2nd grade hotelier was therefore a meaningless requirement and it could not be regarded as laying clown any condition of eligibility. It was also urged that in any event what paragraph (] ) of the notice required was not that a person tendering must have 5 years' experience of running a 2nd grade hotel, but he should have sufficient experience to be able to run a 2nd grade hotel and the 4th respondents were fully qualified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and two snack bars. These were the rival contentions urged on behalf of the parties and we shall now proceed to discuss them in the order in which we have set them out. Now it is clear from paragraph (1) of the notice that tenders were invited only from "registered 2nd Class hoteliers having at least 5 years' experience". It is only if a person was a registered 2nd Class hotelier having at least 5 years' experience that he could, on the terms of paragraph (1) of the notice, submit a tender. Paragraph (1) of the notice prescribed a condition of eligibility which had to be satisfied by every person submitting a tender and if, in a given case, a person submitting a tender did not satisfy this condition, his tender was not eligible to be considered. Now it is true that the terms and conditions of the tender form did not prescribe that the tenderer must be a registered IInd Class hotelier having at least 5 years' experience nor was any such stipulation to be found in the form of the agreement annexed to the tender but the notice inviting tenders published in the newspapers clearly stipulated that tenders may be submitted only by registered llnd Class hoteliers having at least 5 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph (1) of the notice. It is true that the phraseology used by the Ist respondent to express its intention was rather inapt but it is obvious from the context that the expression "registered llnd Class hotelier" was loosely used to denote a person conducting or running a IInd Class hotel or restaurant. It may be ungrammatical but it docs not offend common-sense to describe a person running a registered IInd grade hotel as a registered IInd grade hotelier. This meaning is quite reasonable and does not do any violence to the language and makes sense of the provision contained in paragraph (1) of the notice. We must, in the circumstances, hold that, on a proper construction, what paragraph (1) of the notice required was that only a person running a registered llnd Class hotel or restaurant and having at least 5 years' experience as such should be eligible to submit a tender. This was a condition of eligibility and it is difficult to see how this condition could be said to be satisfied by any person who did not have five years' experience of running a IInd Class hotel or restaurant. The test of eligibility laid down was an objective test and not a subjective one. What the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepting their tender was in contravention of paragraph (1) of the notice. It was suggested on behalf of the 1st and the 4th respondents that there was nothing wrong in the 1st respondent giving the contract to the 4th respondents since it was competent to the 1st respondent to reject all the tenders received by it and to negotiate directly with The 4th respondents for giving them the contract and it made no difference that instead of following this procedure, which perhaps might have resulted in the 4th respondents offering a smaller licence fee and the 1 st respondent suffering a loss in the process, true 1 st respondent accepted The tender of the 4th respondents. We do not think there is any force in this argument. It is true that there was no statutory or administrative rule requiring the 1st respondent to give a contract only by inviting tenders and hence the 1st respondent was entitled to reject all the tenders and, subject to the constitutional norm laid down in Art 14, negotiate directly for entering into a contract. Paragraph (8) of the notice also made it clear that the 1st respondent was not bound to accept any tender and could reject all the tenders received by it. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of eligibility, while so far as the 4th respondents 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 were 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 the 4th respondents was vitiated by any legal infirmity. Now, there can be no doubt that what paragraph (1) of the notice prescribed was a condition of eligibility which was required to be satisfied by every person submitting a tender. The condition of eligibility was that the person submitting a tender must be conducting or running a registered 2nd class hotel or restaurant and he must have at least 5 years' experience as such and if he did not satisfy this condition of eligibility his tender would not be eligible for consideration. This was the standard or norm of eligibility laid down by the 1 st respondent and since the 4th respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial and commercial activities by the State, the power of the executive Government to affect the lives of the people is steadily growing. The attainment of socio-economic justice being a conscious end of State policy, there is a vast and inevitable increase in the frequency with which ordinary citizens come into relationship of direct encounter with State power-holders. This renders it necessary to structure and restrict the power of the executive Government so as to prevent its arbitrary application or exercise. Whatever be the concept of the rule of law, whether it be the meaning given by Dicey in his "The Law of the Constitution" or the definition given by Hayek in his "Road to Serfdom' and 'Constitution of liberty" or the exposition set-forth by Harry Jones in his "The Rule of Law and the Welfare State", there is, as pointed out by Mathew, J., in his article on "The Welfare State, Rule of Law and Natural Justice" in "democracy Equality and Freedom," "substantial agreement is in justice thought that the great purpose of the rule of law notion is the protection of the individual against arbitrary exercise of power, wherever it is found". It is indeed unthinkable that in a democra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ? Can they be regarded as gratuity furnished by the State so that the State may withhold, grant or revoke it at its pleasure ? Is the position of the Government in this respect the same as that of a private giver? We do not think so. The law has not been slow to recognise the importance of this new kind of wealth and the need to protect individual interest in it and with that end in view, it has developed new forms of protection. some interests in Government largess, formerly regarded as privileges, have been recognised as rights while others have been given legal protection not only by forging procedural safeguards but also by confinding/structuring and checking Government discretion in the matter of grant of such largess. The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted, as pointed out by Prof. Reich in an especially stimulating article on "The New Property" in 73 Yale Law Journal 733, "that Government action be based on standards that are not arbitrary or unauthorised." "The Government cannot be permitted to say that it will give jobs or ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure." This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Policy. that corporations were created by Government for setting up and management of public enterprises and carrying out other public functions. Ordinarily these functions could have been carried out by Government departmentally through its service personnel, but the instrumentality or agency of the corporations was resorted to in these cases having regard to the nature of the task to be performed. The corporations acting as instrumentality or agency of Government would obviously be subject to the same limitations in the field of constitutional and administrative law as Government itself, though in the eye of the law, they would be distinct and independent legal entities. If Government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through the instrumentality or agency of corporations should equally be subject to the same limitations. But the question is how to determine whether a corporation is acting as instrumentality or agency of Government. It is a question not entirely free from difficulty. A corporation may be created in one of two ways. It may be either established by stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentalities or agencies of Government and those which are not. The analogy of the concept of State action as developed in the United States may not, however, be altogether out of place while considering this question. The decisions of the court in the United States seem to suggest that a private agency, if supported by extraordinary assistance given by the State, may be subject to the same constitutional limitations as the State. Of course, it may be pointed out that "the State's general common law and statutory structure under which its people carry on their private affairs, own property and contract, each enjoying equality in terms of legal capacity, is not such State assistance as would transform private conduct into State action". But if extensive and unusual financial assistance is given and the purpose of the Government in giving such assistance coincides with the purpose for which the corporation is expected to use the assistance and such purpose is if public character, it may be a relevant circumstance supporting an extensive that the corporation is an instrumentality or agency of Government. The leading case on the subject in the United States is Kerr v. Eneck Pratt Free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State control may afford an indication that the Corporation is a State agency or instrumentality. It may also be a relevant factor to consider whether the corporation enjoys monopoly status which is State conferred or State protected. There can be little doubt that State conferred or State protected monopoly status would be highly relevant in assessing the aggregate weight of the corporation's ties to the State. Vide the observations of Douglas, J., in Jackson v. Metropolitan Edison Co. (419 U. S. 345: 42 L. ed. 2nd 477) There is also another factor which may be regarded as having a bearing on this issue and it is whether the operation of the corporation is an important public function. It has been held in the United States in a number of cases that the concept of private action must yield to a conception of State action where public functions are being per formed. Vide Arthur S. Miller: "The Constitutional Law of the Security State" (10 Stanford Law Review 620 at 664). It was pointed out by Douglas, J., in Evans v. Newton(382 U S. 296: 15 L. ed 2nd 373) that "when private individuals or groups are endowed by the State with powers or functions governmental in nature, they become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- and aggrieved by her conviction she carried the matter right upto the Supreme Court contending successfully that by reason of the action of the corporation her religious liberty had been denied. The Supreme Court held that administration of private property such as a town, though privately carried on, was, nevertheless, in the nature of a public function and that the private rights of the corporation must, therefore, be exercised within constitutional limitations and the conviction for trespass was reversed. The dominant theme of the majority opinion written by Mr. Justice Black was that the property of the corporation used as a town not recognisably different from other towns, lost its identification as purely private property. It was said that a town may be privately owned and managed but that does not necessarily aIlow the corporation to treat it as if it was wholly in the private sector and the exercise of constitutionally protected rights on the public ,street of a company town could not be denied by the owner. "The more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the statutory and cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rumentality of Government. We have referred to some of these factors and they may be summarised as under: whether there is any financial assistance given by the State, and if so, what is the magnitude of such assistance whether there is any other form of assistance, given by the State, and if so, whether it is of the usual kind or it is extraordinary, whether there is any control of the management and policies of the corporation by the State and what is the nature and extent of such control, whether the corporation enjoys State conferred or State protected monopoly status and whether the functions carried out by the corporation are public functions closely related to governmental functions. This particularisation of relevant factors is however not exhaustive and by its very nature it cannot be, because with increasing assumption of new tasks, growing complexities of management and administration and the necessity of continuing adjustment in relations between the corporation and Government calling for flexibility, adapt ability and innovative skills, it is not possible to make an exhaustive enumeration of the tests which would invariably and in all cases provide an unfailing answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as well as philosophically an essential element of equality or non-arbitrariness is protected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory. This principle was recognised and applied by a Bench of this Court presided over by Ray, C.J., in Erusian Equipment and Chemicals v. State of West Bengal (supra) where the learned Chief Justice pointed out that "the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person The Government cannot choose to exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year without default and to the satisfaction of the Government. This method of sale of kendu leaves was also challenged by filing a writ petition on the ground inter alia that it was violative of Articles ]4 and 19(1)(g) and this challenge, though negatived by the High Court, was upheld by this Court in appeal. The Court pointed out that the original scheme of offering to enter into contracts with the old licences and to renew their terms was open to grave objection, since it sought arbitrarily to exclude many persons interested in the trade and the new scheme under which the Government restricted the invitation to make offers to those traders who had carried out their contracts in the previous year without default and to the satisfaction of the Government was also objectionable, since the right to make tenders for the purchase of kendu leaves being restricted to a limited class of persons, it effectively shut out all other persons carrying on trade in kendu leaves and also the new entrants into that business and hence it was ex-facie discriminatory and imposed unreasonable restrictions upon the right of persons other than the existing contractors to carry on business. Both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it could not act arbitrarily in selecting persons with whom to enter into contracts and discriminate against others similarly situate. The Court criticized the Government for not giving any explanation as to why an offer for a large amount was not accepted, the clearest implication being that the Government must act in the public interest; it cannot act arbitrarily and without reason and if it does so, its action would be liable to be invalidated. This decision wholly supports the view we are taking in regard to The applicability of the rule against arbitrariness in State action. B We may also in this connection refer to the decision of this Court in C. K. Achuthan v. State of Kerala([1959] Supp. 1 S C. R. 787), where Hidayatullah, J., speaking on behalf of The Court made certain observation which was strongly relied upon on behalf of the respondents. The facts of this case were that the petitioner and the 3rd respondent Co-operative Milk Supply Union, Cannanore, submitted tenders for the supply of milk to the Government hospital at Cannanore for the year 1948-49. The Superintendent who scrutinised the tenders accepted that of the petitioner and communicated the reasons for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the Government must necessarily be entitled to make a choice. But that does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and Must not be unreasoned or unprincipled. The respondents also relied on the decision of this Court in Trilochan Mishra v. State of Orissa & ors.( [1971] 3 S. C. C. 153) The complaint of the petitioner in that case was that the bids of persons making the highest tenders were not accepted and persons who had made lesser bids were asked to raise their bids to the highest offered and their re vised bids were accepted. The Constitution Bench negatived this complaint and speaking through Mitter, J., observed: "With regard to the grievance that in some cases the bids of persons making the highest tenders were not accepted, The facts are that persons who had made lower bids were asked to raise their bids to the highest offered before the same were accepted. Thus there was no loss to Government and merely because the Government preferred one tender to another no complaint can be entertained. Government certainly has a right to enter in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved: "The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence quite naturally, the legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in on auction sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicial review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Governments power to sell the exclusive privilege set out in section 22 was not denied. It was also not disputed that these privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate." It will be seen from these observations that the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... templated by Article 12 which fall within the definition of 'State' ? on this question considerable light is thrown by the decision of this Court in Rajasthan Electricity Board v. Mohan Lal ([1967] 3 S C, R 377). That was a case in which this Court was called upon to consider whether the Rajasthan Electricity Board was an 'authority' within the meaning of the expression "other authorities" in Art. 12. Bhargava, J., delivering the judgment of the majority pointed out that the expression "other authorities" in Art. 12 would include all constitutional and statutory authorities on whom powers are conferred by law. The learned Judge also said that if anybody of persons has authority to issue directions the disobedience of which would be punishable as a criminal offence, that would be an indication that that authority is 'State'. Shah, J., who delivered a separate judgment, agreeing with the conclusion reached by the majority, preferred to give a slightly different meaning to the expression "other authorities". He said that authorities, constitutional or statutory, would fall within the expression "other authorities" only if they are invested with the sovereign power of the State, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such statutory or public duty." (emphasis supplied). It is difficult to see how this decision can be of any help in deciding the present issue before us. This was not a case where Praga Tools Corporation claimed to be an instrumentality of government or an 'authority' within the meaning of Article 12. The only question was whether a writ of mandamus could lie and it was held that since there was no duty imposed on Praga Tool Corporation by statute, no writ of mandamus could issue against it. The second decision to which we must refer is that in Heavy Engineering Mazdoor Union v. State of Bihar([1969] 3 S. C. R 995). The question which arose in this case was whether a reference of an industrial dispute between the Heavy Engineering Corporation Limited (hereinafter referred to as the 'Corporation') and the Union made by the State of Bihar under section 10 of the Industrial Disputes Act, 1947 was valid. The argument of the Union was that the industry in question was "carried on under the authority of the Central Government" and the reference could, therefore, be made only by the Central Government. The Court held that the words "under the authority" mean "pursuant to the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since Hindustan Steel Limited, which was a distinct and independent legal entity, was not a department of the Government and could not be regarded as State for the purpose of Article 311(2). It may be noted that the Court was not concerned with the question whether Hindustan Steel Limited was an 'authority' within the meaning of Articlc 12. Lastly, we must refer to the decision in Sarbhajit Tewari v. Union of India & ors.( [1975] 1 S. C. C. 485) where the question was whether the Council of Scientific and Industrial Research was an 'authority' within the meaning of Article 12. The Court no doubt took the view on the basis of facts relevant to the constitution and functioning of the council that it was not an 'authority', but we do not find any discussion in this case as to what are the features which must be present before a corporation can be regarded as an 'authority' within the meaning of Article 12. This decision does not lay down any principle or test for the purpose of determining when a corporation can be said to be an 'authority'. If at all any test can be gleaned from the decision, it is whether the Corporation is 'really an agency of the Government". The Court seemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port upto the appointed date and declared to be capital expenditure by the Central Government shall be treated as the capital provided by the Central Government to the 1st respondent and all sums of money due to the Central Government in relation to the airport immediately before the appointed date shall be deemed to be due to the 1st respondent. The 1st respondent is also given the power to institute or continue all suits and other legal proceedings instituted or which could have been instituted by or against the Central Government for any matter in relation to the airport and every employee holding any office under the Central Government immediately before the appointed date solely or mainly for or in connection with the affairs of the airport shall be treated as on deputation with the 1st respondent. Sub-section (1) of section 12 also enacts similar provisions with regard to the air navigation services and the buildings used exclusively for such services immediately before the appointed date. The functions of the 1st respondent are specified in section 16: sub-section (l) provides that, subject to the rules, if any, made by the Central Government in this behalf, it shall be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpowered by section 34 lo supersede the 1st respondent under certain specified circumstances. Section 35 gives power to the Central Government to give directions in writing from time to time on questions of policy and provides that the 1 st respondent shall in the discharge of its functions, and duties, be bound by such directions. Section 36 confers rule making power on the Central Government for carrying out the purposes of the Act and power to make regulations is conferred on the 1st respondent under section 37. Section 39 provides that any regulation made by the 1st respondent under any of the clauses (g) to (m) of sub-section (2) of section 37 may make it Penal to contravene such regulation. lt will be seen from these provisions that there are certain features of the 1st respondent which are eloquent and throw considerable light on the true nature of the 1st respondent. In the first place, the chairman and members of the 1st respondent are all persons nominated by the Central Government and the Central Government has also the power to terminate their appointment as also to remove them in certain specified circumstances. The Central Government is also vested with the power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent and they leave no doubt that the 1st respondent is an instrumentality or agency of the Central Government and falls within the definition of 'State' both on the 'narrow view taken by the majority in Sukhdev v. Bhagat Ram (supra) as also on the broader view of Mathew, J., adopted by us. It is, therefore, obvious that both having regard to the constitutional mandate of Article 14 as also the judicially evolved rule of administrative law, the 1st respondent was not entitled to act arbitrarily in accepting the tender of the 4th respondents, but was bound to conform to the standard or norm laid down in paragraph 1 of the notice inviting tenders which required that only a person running a registered IInd Class hotel or restaurant and having at least S years' experience as such should be eligible to tender. It was not the contention of the appellant that this standard or norm prescribed by the 1st respondent was discriminatory having no just or reasonable relation to the object of inviting tenders namely, to award the contract to a sufficiently experienced person who would be able to run efficiently a IInd class restaurant at the airport. Admittedly the standard or norm was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut has been put up by A. S. Irani for depriving the 4th respondents 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 the 4th respondents was fired by K. S. Irani, proprietor of Cafe Excelsior, who filed a suit challenging the decision of the 1st respondent to accept the tender of the 4th respondents, but in this suit he failed to obtain an interim injunction and his appeal was dismissed by the High Court on 19th October, 1977. It is significant that when the tenders were opened in the office of the Airport Director, Cafe Excelsior was 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 the 4th respondents was accepted as far back as 19th April, 1977, K. S. Irani did not adopt any proceedings immediately but filed the suit only after A. S. Irani was informed by the Airpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the appellant is that he was not aware of the acceptance of the tender of the 4th respondents but that is a rather naive explanation 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 the 4th respondents 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 the 4th respondents and during this period, the 4th respondents 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 the 4th respondents at the instance of the appellant. The position would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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