PETITIONER: <NAME> Vs. RESPONDENT: THE STATE OF PUNJAB AND ANOTHER DATE OF JUDGMENT: 11/12/1958 BENCH: <NAME>, K.N. BENCH: <NAME>, K.N. <NAME>, SUDHI RANJAN (CJ) <NAME>, S.K. GAJENDRAGADKAR, P.B. <NAME>, M. CITATION: 1959 AIR 512 1959 SCR Supl. (1) 792 CITATOR INFO : RF 1967 SC 212 (26) R 1968 SC 754 (20) RF 1970 SC 150 (11) RF 1973 SC1461 (450,566) RF 1975 SC 446 (6) R 1982 SC1126 (9,11) R 1983 SC 937 (32) F 1985 SC 421 (26) ACT: <ORG>-Act passed by provisional <ORG>- Constitutional validity-Presidents' power of adaptation- <ORG>, if authorised to delegate power to <ORG> Government-Rules, validity of-Institution of enquiry- Competence of the State Government <ORG> Act (LXI of 1951), ss. 3, 4-- All India Services (Discipline and Appeal) Rules, r.5 --Constitution of India, Arts. 312, 392. HEADNOTE: The point for determination in this appeal was whether the All India Services Act , (LXI of 1951), enacted by the provisional <ORG>, was a constitutionally valid legislation. As there was only one <ORG> during the transitional period, the President in exercise of his powers under Art. 392 of the Constitution passed the Constitution (Removal of Difficulties) Order No. II, on January 26, 1950, and made, amongst others, an adaptation of Art. 312(1) omitting the following therefrom,-" XXX if <ORG> has declared by resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in the national interest to do so XXX ". The appellant, who was appointed to <ORG> in 1949, held the post of Superintendent of Police in the Punjab in 1957 when he was reverted as Assistant Superintendent of Police and informed that action was proposed to be taken against him under r. 5 of the All India Services (Discipline and Appeal) Rules, 1955, framed under s. 3 Of the All India Services Act , (LXI of 1951). He was, thereafter, placed under suspension and an Officer was directed to hold a departmental enquiry against him. On receipt of notice of the said enquiry, he moved <ORG> under Art. 226 of the Constitution and challenged the constitutional validity of the Act and the legality of the enquiry. <ORG> held against him and hence this appeal. It was contended on behalf of the appellant, (1) that the President had exceeded his power under Art. 392 in amending Art. 312 in the way he did; (2) that the provisional <ORG> was incompetent to enact the impugned Act as there was no compliance with the condition precedent to such an Act being passed under Art. 312; (3) that the Rules were repugnant to Art. 312 as they were made at a time when the adaptation was no longer in force; (4) that the <ORG> had no authority to delegate its function under Art. 312 to <ORG> (5) that, at any rate, S. 3 Of the Act was vitiated by excessive delegation and (6) that the Punjab Government had no authority under the Rules to institute the proceedings. 793 Held, that the contentions were all without substance and must be rejected. The power given to the President by Art. 392 Of the Con- stitution was wide enough to enable him to make any adapta- tion by way of modification, addition or omission he considered necessary or expedient with respect to a particular Article and if he did so in one way and not the other, it could not be said that he had exceeded his power. As the adaptation of Art. 312 by omission of the condition precedent was thus valid, no question of any compliance with it could arise and the provisional <ORG> was quite competent, to pass the impugned Act. <CITATION> ,  S.C.R. 89, held inapplicable. The reappearance of the omitted part of Art. 312 before the framing of the Rules by <ORG> under the Act, could in no way affect their validity since the Act itself was valid and a permanent measure and the Rules derived their force from the Act. It was well settled that the <ORG> was competent to delegate to other authorities the power to frame rules to carry out the purposes of the law made by it. Such delegation could also be made to an executive authority within certain limits. Re The Delhi Laws Act , 1912,  S.C.R. 747 and <CITATION> ,  1 S.C.R. 290, relied on. Use of such expressions as " <ORG> may by law provide " or " <ORG> may by law confer " by the Constitution did not necessarily mean that delegation was wholly excluded. It would be a matter for determination in each case whether the intention was that the entire provisions were to be made by law without recourse to any rules framed under the power of delegation. The numerous and varied provisions contemplated by Art. 312 made it impossible to hold that they were all intended to be enacted as statute law and nothing was to be delegated to the executive authorities. It was not correct to suggest that the Article laid down a mandate prohibiting <ORG> from delegating authority to <ORG> to frame rules for the recruitment and conditions of <ORG>. Nor was there any substance in the contention that S. 3 Of the Act was vitiated by excessive delegation of power and the Act did not lay down any policy. Section 4 of the Act read with s. 3(2) Of the Act showed that there was no delegation of power to <ORG> under s. 3(1) Of the Act in excess of what was justified by the special circumstances of the case. There was no basis for the contention that <ORG> and not the Punjab Government could institute the enquiry. Rule 5 Of the Rules showed that the enquiry was to be initiated in all cases by the Government under which the 100 794 Officer concerned served, although the punishment as required by Rule 4(1) might have to be ultimately imposed by <ORG>. JUDGMENT:

CIVIL APPELLATE, JURISDICTiON: Civil Appeal No. 426 of 1958. Appeal by special leave from the judgment and order dated July 30, 1958, of <ORG> in Civil Writ Application No. 732 of 1958.

<NAME>, <NAME> and <NAME>, for the appellant.

<NAME>, Advocate-General for the State, of Punjab, <NAME>, Additional Advocate-General for the State of Punjab and <NAME>, for respondent No. 1. <NAME> and <NAME>, for the Intervener.

1958. December 11. The Judgment of the Court was delivered by WANCHOO, J.-This appeal by special leave raises the question of the constitutionality of the All-India Services Act , (LXI of 1951) (hereinafter called the Act). The appellant was appointed to <ORG> on October 1., 1949, and posted to the State of Punjab. He held charge as Superintendent of Police in various districts but was reverted as Assistant Superintendent of Police in August 1957, and was eventually Posted to Dharamsala in March 1958. In the same month he was informed that it was proposed to take action against him under r. 5 of the All-India Services (Discipline and Appeal) Rules, 1955, (herein. after called the Rules), framed under s. 3 of the Act. He was thereafter

-placed under suspension under r. 7 of the Rules pending disciplinary proceedings against him, and <NAME> was appointed enquiry officer to hold the departmental enquiry against him. Notice was issued to him by the Enquiry Officer in July 1958. He thereupon immediately made an application under Art. 226 of the Constitution before <ORG> challenging the constitutionality of the Act and the legality of the enquiry against him. The application was dismissed on July 30, 1958, and his application for a certificate to appeal to this Court was dismissed next day. Thereupon he came to this Court and was granted special leave.

<NAME> appearing for the appellant has raised the following six points in support of the appeal : (1), The amendment made by the President in Art. 312 of the Constitution by virtue of his power under Art. 392 by the Constitution (Removal of Difficulties) Order No. II of 26th January, 1950, was in excess of the power conferred on him under Art. 392;

(2)It was not within the competence of the provisional <ORG> to enact the Act in 1951, as there was no compliance with the condition precedent to such an Act being passed under Art. 312;

(3)The Rules when promulgated in 1955 were bad as they were repugnant to Art. 312 as the amendment made by the President by the Constitution (Removal of Difficulties) Order No. 11 had ceased to have force and Art. 312 stood in 1955 as originally enacted in the Constitution ; (4) Art. 312 laid a mandate on <ORG> to make a law regulating the recruitment and conditions of service of all- India services created under that Article and <ORG> could not delegate this function to the Central Government, and, therefore, s. 3 of the Act was invalid; (5)In any event, the delegation made by s. 3 of the Act was excessive and, therefore, section 3 should be struck down; and (6)The Punjab Government has no authority to institute these proceedings under the Rules. Re. 1, 2 & 3. These three points may conveniently be taken together. Article 392- provides that "the President may, for the purpose of removing any difficulties, particularly in relation to the transition from the provisions of the Government of India Act, 1935, to the provisions of this Constitution, by order direct that this Constitution shall, during such period as may be specified in the order, have effect subject to such adaptations, whether by way of modification, addition or omission, as he may deem to be necessary or expedient ; provided that no such order shall be made after the first meeting of <ORG> duly constituted under Chapter 11 of Part V ". The purpose of this provision is obvious from the very words in which it was made. Further Art. 379 provided that " until both <ORG>s of <ORG> have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body functioning as <ORG> of the Dominion of India immediately before the commencement of this Constitution shall be the provisional <ORG> and shall exercise all the powers and perform all the duties conferred by the provisions of this Constitution on <ORG> ". As there was only one <ORG> during the transitional period, there were bound to be difficulties in the application of the Constitution, which envisaged a bicameral legislature. Consequently, the President passed the Constitution (Removal of Difficulties) Order No. II on January 26, 1950, by which among other adaptations, he made an adaptation in Art. 312 also, to this effect:-

"In clause (1), omit 'if <ORG> has declared by resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in the national interest so to do".

This order was to come into force at once and was to continue until both Houses of <ORG> had been duly constituted and summoned to meet for the first session under the provisions of the Constitution. After removal of the omitted words, Art. 312 read as follows:-

" (1) Notwithstanding anything in Part XI, <ORG> may by law provide for the creation of one or more all-India services common to the Union and the States, and subject to the other provisions of this Chapter, regulate the recruitment, and the conditions of service of persons appointed, to any such service.

(2)The services known at the commencement of this Constitution as <ORG> and <ORG> shall be deemed to be services created by <ORG> under this article." It is urged that though the President undoubtedly had power to make adaptations, he exceeded that power inasmuch as he omitted the words mentioned above from Art. 312 altogether. It is suggested that the adaptation would have been proper, if in Art. 312 , as it originally stood in the Constitution, the words " Council of States " had been substituted by the words " provisional <ORG> ", so that instead of a resolution of <ORG> a resolution of the provisional <ORG> would have been necessary for the creation and regulation of recruitment and conditions of service of an all-India service common to the Union and the States. Reliance in this connection is placed on <CITATION> (1), where dealing with an adaptation made in Art. 368 , by the same order, this Court observed that " the adaptation leaves the requirement of a special majority untouched ". It is urged that if the President had made the adaptation in the way suggested by learned counsel that would have left the requirement of a resolution supported by requisite majority untouched and would have been within the power of the President; but inasmuch as the entire portion was omitted the President had exceeded his power. It is enough to say that <NAME> case (1) does not lay down that if the adaptation in Art. 368 had been made in some other manner it would have been invalid and unconstitutional. Reference to the fact that adaptation left the requirement of a special majority untouched was made obviously for the purpose of emphasising that there was no real ground of grievance and not for indicating that in the absence of the retention of that provision the adaptation would have been bad. Indeed, it was pointed out in that 'case that Art. 392 was widely expressed and an order could be made under that Article for the purpose of removing any difficulties. The nature of the adaptation to be made is also equally widely expressed and it may be by way of (1) S.C.R. 89.

modification, addition or omission. In the case of Art. 368 the President thought it necessary or expedient that the adaptation should be by modification. In the case of Art. 312 , however, he thought it necessary or expedient that the adaptation should be by way of omission of certain words from that Article. The power given to the President under Art. 392 was very wide and it-cannot be said that he -could make the adaptation in one way and not in another. It was left to him to consider whether the adaptation should be by way of modification, addition or omission; and if he thought it necessary or expedient with respect to a particular Article that adaptation should be by way of omission it cannot be said that he had exceeded his power. We are, therefore, of opinion that the Act cannot be declared unconstitutional on the ground that the President had exceeded his power under Art. 392 and that if he had not done so a resolution of the provisional <ORG> would have been necessary with the requisite majority before any law could be undertaken to regulate the recruitment and the conditions of service of an all-India service. Once it is held that the adaptation made by the President in Art. 312 was within his power, there is very little left in the other two points raised by Mr. <NAME>. It is said that the provisional <ORG> was not competent to pass the Act in 1951, because the condition precedent for passing such a law had not been, as required by Art. 312 , complied with. This means in other words that a resolution with the requisite majority had Dot been passed by the provisional <ORG>; but this condition would not be there once those words were validly removed by the order of the President under Art. 392 , and the provisional <ORG> would have power to pass the Act without any resolution being passed before the law was made.

The further argument that the Rules were promulgated in 1955 when the words omitted by the Constitution (Removal of Difficulties) Order No. II had reappeared in Art. 312 and were, therefore, repugnant to Art. 312 inasmuch as there was no resolution of <ORG>, as required by that Article, is, in our opinion, completely baseless. The reappearance of these words in Art. 312 has nothing to do with the vires of the Rules. The rules were framed under the power given to <ORG> by the Act, and if the Act was valid when it was passed, <ORG> would have power to frame rules under it, as it is a permanent measure. The Rules framed in 1955, therefore, cannot be challenged on the ground that the omitted words reappeared in Art. 312. The Rules derive their force from the Act and the form in which Art. 312 emerged, after the Constitution (Removal of Difficulties) Order No. 11 came to an end in 1952, would not have any effect on the Rules. There is no force, therefore, in any of these three points, and we reject them. Re. 4.

It is contended that Art. 312 lays down a mandate on <ORG> to make the law itself regulating the recruitment and the conditions of service of all-India services, and therefore, it was not open to <ORG> to delegate any part of the work relating to such regulation to <ORG> by framing Rules for the purpose. Now, it is well settled that it is competent for, the legislature to delegate to other authorities the power to frame rules to carry out the purposes of the law made by it was so held by the majority of Judges in Re The Delhi Laws Act , 1912 (1). The Delhi Laws case was, further examined in <CITATION> . <ORG>, Patna (2), and the delegation was held to go to the extent of authorising an executive authority to modify the law made but not in any essential feature. It was also observed that what constitutes essential feature cannot be enunciated in general terms. It is, therefore, clear that delegation of legislative functions can be made to executive authorities within certain limits. In this case s. 3 of the Act lays down that <ORG> may, after consultation with the Governments of the States concerned, make rules for the regulation of (1)  S.C.R. 747.

(2) [1955] 1 S.C.R. 290.

recruitment and conditions of service of persons appointed to an all-India service. It also lays down that all rules made under this section shall be laid for not less than fourteen days before <ORG> as soon as possible after they are made, and shall be subject to such modifications, whether by way of repeal or amendment, as <ORG> may make on a motion made during the session in which they are so said. Mr. <NAME> contends that no delegation whatsoever was possible under Art. 312 and that the Constitution required that <ORG> should itself frame the entire law relating to the regulation of recruitment and the conditions of service of all-India services. We have, therefore, to see whether there is anything in the words of Art. 312 which takes away the usual power of delegation, which ordinarily resides in the legislature. Stress in this connection has been laid on the words " <ORG> may by law provide " appearing in Art. 312. It is urged that these words should be read to mean that there is no scope for delegation in a law made under Art. 312. Our attention in this connection was drawn to words used in Art. 245 , which are " <ORG> may make laws ". It is said that the words used in Art. 312 are in a special form, which import that <ORG> must provide by law for regulation of recruitment and the conditions of service and cannot delegate any part of it to other authorities. Reference was also made to the words used in Art. 138 (1 ), (namely , <ORG> may by law confer);  Art. 138 (2 ), (namely , <ORG> may by law provide);  Art. 139 , (namely , <ORG> may by law confer); and Art. 148 (3 ), (namely , as may be determined by <ORG> by law). In contrast to these Articles, our attention was drawn to the words of Art. 173 (c ), (namely , by or under any law made by <ORG> ), and Art. 293 (2 ), (namely , by or under any law made by <ORG>). It is urged that when the Constitution uses the words " may by law confer " or " may by law provide ", no delegation whatsoever is possible. We are of opinion that these words do not necessarily exclude delegation and it will have to be seen in each case how far the intention of the Constitution was that the entire provision should be made by law without recourse to any rules framed under the power of delegation. Let us, therefore, examine Art. 312 from this angle, and see if the intention of the Constitution was that regulation of recruitment and conditions of service to an all-India service should only be by law and there should be no delegation of any power to frame rules. Regulation of recruitment and conditions of service requires numerous and varied rules, which may have to be changed from time to time as the exigencies of public service require. This could not be unknown to the Constitution makers and it is not possible to hold that the intention of the Constitution was that these numerous and varied rules should be framed by <ORG> itself and that any amendment of these rules which may be required to meet the difficulties of day-to-day administration should also be made by <ORG> only with all the attending delay which passing of legislation entails. We are, therefore, of opinion that in the circumstances of Art. 312 it could not have been the intention of the Constitution that the numerous and varied provisions that have to be made in order to regulate the recruitment and the conditions of service of all-India services should all be enacted as statute law and nothing should be delegated to the executive authorities. In the circumstances we are of opinion that the words used in Art. 312 in the context in which they have been used do not ex- clude the delegation of power to frame rules for regulation of recruitment and the conditions of service of -India services. We cannot read Art. 312 as laying down a mandate prohibiting <ORG> from delegating authority to <ORG> to frame rules for the recruitment and the conditions of service of all-India services. We, therefore, reject this contention.

Re. 5.

The argument in this connection is that even if delegation is possible, there was excessive delegation in this case, and, therefore, the Act should be struck down. The Act is a short, Act of four sections. The  first section deals with the short title, the second section defines the expression " all-India Service ", and the third section gives power to <ORG> to frame rules for regulation of recruitment and ,the conditions of service after consultation with the Governments of the States concerned, and lays down that all rules so framed shall be laid before <ORG> and shall be subject to such modifications as <ORG> may make. Section 4 which is important is in these terms-

" All rules in force immediately before the commencement of this Act and applicable to an all-India service shall continue to be in force and shall be deemed to be rules made under this Act."

It is urged that this Act lays down no legislative policy or standard at all and everything is left to <ORG>. In this connection reference was made to the following observations of Mukherjea, J. (as he was then), in Re The Delhi Laws Act , 1912 (1)at p. 982 " The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. It is open to the legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy. I So long as a policy is laid down and a standard established by statute no constitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the legislation is to apply'."

It is said that in this case <ORG> did not even exercise the essential legislative function inasmuch as it did not determine or choose the legislative policy and formally enact that policy into a binding rule of conduct. Apparently, if one looks at the Act, there seems to be some force in this contention. But a close reading of s. 4 of the Act and its scope, purpose and (1)  S.C.R. 747.

effect will show that this is not a case where the legis- lature has failed to lay down the legislative policy and formally to enact that policy into a binding rule of con- duct. What does s. 4 in fact provide ? Undoubtedly there were rules in force immediately before the Commencement of the Act which governed the two all India services covered by it and the legislature adopted those rules and said in s. 4 that they shall continue to be in force. Thus though s. 4 appears on the face of it as one short section of four lines, it is in effect a statutory provision adopting all the rules which were in force at the commencement of the Act, governing the recruitment and the conditions of service of the two all-India services. The section certainly lays down that the rules already in force shall be taken to be rules under the Act; but that was necessary in order to enable <ORG> under s. 3 to add to, alter, vary and amend those rules. There is no doubt, however, that s. 4 did lay down that the existing rules will govern the two all-India services in the matter of regulation of recruitment and conditions of service, and in so far as it did so it determined the legislative policy and set up a standard for <ORG> to follow and formally enacted it into a binding rule of conduct. Further, by s. 3 <ORG> was given the power to frame rules in future which may have the effect of adding to, altering, varying or amending the rules accepted under s. 4 as binding. Seeing that the rules would govern the all-India services common to <ORG> and the <ORG> Government provision was made by s. 3 that rules should be framed only after consulting the <ORG> Governments. At the same time <ORG> took care to see that these rules were laid on the table of <ORG> for fourteen days before they were to come into force and they were subject to modification, whether by way of repeal or amendment on a motion made by <ORG> during the session in which they are so laid. This makes it perfectly clear that <ORG> has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate. Therefore, reading s. 4 along with s. 3(2) of the Act it cannot be said in the special cir- cumstances of this case that there was excessive delegation to <ORG> by s. 3(1) . We are, therefore, of opinion that the Act cannot be struck down on the ground of excessive delegation.

Re. 6.

The last contention is that <ORG> has no authority to institute these proceedings under the Rules. It would be necessary in this connection to refer to the Rules. Rule 3 provides for penalties, which are seven in number. Rule 4 provides for the authorities, who can impose the penalties, and three of the penalties, namely, dismissal, removal or compulsory retirement, can only be imposed by <ORG>, while the other four penalties can be imposed by <ORG>. Rule 5 provides the procedure for imposing penalties. The argument is that as in this case the charge against the appellant is serious, he is likely to be dismissed or removed or compulsorily retired, and therefore, <ORG> should have instituted enquiry in this case. We are of opinion that there is no force in this contention. In the first place, it cannot be postulated at the very outset of the enquiry whether there would be any punishment At all, and even if there is going to be punishment, what particular punishment out of the seven mentioned in r. 3 would be imposed. Therefore, even on the assumption that the <ORG> which has to impose the punishment must also institute the enquiry, it cannot be said at this stage that <ORG> which can impose at least four out of seven penalties is not the proper <ORG> to institute the enquiry. In the second place, a perusal of r. 5 shows that the intention is that the enquiry would be instituted by the <ORG> under which the officer is serving even in cases where the penalty is to be imposed by <ORG>. Rule 4(2) shows that so far as the four penalties which could be imposed by <ORG> are concerned, the institution of the enquiry is by the <ORG> under whom such officer was serving at the time of commission of such act or omission which renders him liable to punishment. Rule 2(b) defines ,<ORG>", and the third clause thereof lays down that in the case of a member of service serving in connection with the affairs of a State, the <ORG> would be the <ORG> of that State. The appellant was serving in connection with the affairs of the State of Punjab, and in his case therefore the <ORG> for the purpose of r. 5 which provides procedure for imposing penalties would be <ORG>. It is <ORG>, therefore, which could take the steps provided in r. 5. Rules 5(1) to 5(8) provide the procedure for such enquiries and the word " government " used in these sub-rules means in the present case, <ORG>, for the appellant was-serving in connection with the affairs of the State of Punjab. Rule 5(9) provides for what is to happen after the enquiry is over, and it lays down that after the enquiry has been completed and after the punishing authority has arrived at a provisional conclusion in regard to the penalty to be imposed, if the penalty proposed is dismissal, removal, compulsory retirement or reduction in rank, the member of the service charged shall be supplied with a copy of the report of enquiry and be given a further opportunity to show cause why the proposed penalty should not be imposed on him., The very fact that in this rule the word <ORG>' is not used and instead the words punishing authority ' are used shows that the question Of punishment arises after the enquiry is over and the relevant <ORG> would then consider that question; and if punishment is to be one of the three provided in r. 4(1) the report of the enquiry officer would have to be forwarded to <ORG> so that it may determine the provisional punishment and communicate it to the officer concerned along with the report of the enquiry officer to comply with the provisions of Art. 311(2). So far as the institution of the enquiry is concerned, r. 5 contemplates that it will be instituted by the <ORG> of the State in connection with the affairs of which the officer is serving. In this case the appellant was serving in connection with the affairs of the State of Punjab, and, therefore, <ORG> would have authority to institute the enquiry against him. The Central <ORG> would only come into the picture after the enquiry is concluded and if it is decided to impose one of the three punishments mentioned in r. 4(1). This contention must also be rejected. We, therefore, dismiss the appeal with costs to the State of Punjab.

Appeal dismissed.


PETITIONER: <ORG>. Vs. RESPONDENT: <ORG> AND ORS. DATE OF JUDGMENT12/01/1993 BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) KASLIWAL, N.M. (J) CITATION: 1996 AIR 51 1993 SCR (1) 81 1993 SCC (1) 445 JT 1993 (1) 187 1993 SCALE (1)36 ACT: Constitution of India : Articles 12, 14, 19, 32, 136, 226 and 298. Government contracts--Judicial review--<ORG> primarily concerned with infirmity in decision making process--Urgency of disposal by courts of such matters--Necessity for. Telephone directories--Publication of--Contract termed 'supplemental contract' granted--Held amounted to grant of fresh contract in garb of 'supplemental contract'. HEADNOTE: The three appeals arose out of disputes relating to the publication of telephone directories of <ORG> a <ORG>. The <ORG> introduced a new concept of "yellow pages' in telephone directories, and these yellow pages were to contain advertisement under different headings. The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in the white pages of the telephone directory, supply the same free of cost to the for its subscribers, and pay royalty to the <ORG> in connection with printing of such directories. Tenders for publication of the directories for Delhi and Bombay were invited. Tender of <ORG> respondent No. 2 in the Writ Petition and appellant in one of the appeals (CA.No. 91 of 1993) was accepted, and an agreement dated 14th March, 1987 was executed. <ORG>, respondent No. 3 to the Writ Petition and appellant in one of the other appeals (CA No. 90, of 1993) was a subsidiary of <ORG>. Under the original agreement <ORG> was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately, pay an amount of Rs. 20.16 crores as royalty to the <ORG>, supply the directories free of cost to subscribers. <ORG> also furnished a 82 ` performance guarantee for a sum of Rs. one crore, and was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue, to be published in November/December every year. <ORG> was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold the extra entries in the white pages, the rates to be fixed by the <ORG> for each issue of the directory, and such rates to be printed for general information. It was stipulated that if <ORG> committed default or breach of the agreement or failed in the due performance thereof, the <ORG> shall be entitled to recover from the <ORG> by way of compensation or liquidated damages and amount calculated at the rate of Rs. One lakh for every day or part thereof for the delay beyond the stipulated date. The <ORG> without prejudice to other rights could by notice in writing determine the contract. <ORG> defaulted and committed breach of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987. For the year 1987, Delhi issue was published after a delay of seven months and Bombay issue after six months, and the Delhi issue of 1988 was published only in August, 1990, a delay of two years. There was no publication of the directories for Delhi for the years 1989, 1990 and 1991, and in respect of Bombay for the years 1988, 1989, 1990 and 1991. A supplemental agreement was entered on 26th September, 1991 between <ORG>, <ORG>, <ORG> and <ORG> appellant in one of the appeals (CA. No. 89 of 1993). Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with <ORG>. By this supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the <ORG> over and above the royalty stipulated in the original agreement by the <ORG>. Under the agreement dated 14th March, 1987 the royalty which was payable was Rs. 20.16 crores for the period 1987 to 1991, but under the supplemental agreement Sterling was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 83 crores. A Writ Petition was flied questioning the validity and legality of the supplemental agreement on different grounds including the ground of mala fide. It was contended by the petitioners that under the grab of a supplemental agreement a fresh contract was awarded to Sterling for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract. It was asserted by the petitioners that in the process of entering into the supplemental agree- ment the <ORG>, which is a public undertaking and a "State' within the meaning of Article 12 of the constitution, had suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the <ORG> or to the public in general. <ORG> contested the writ petition, contending that the supplemental agreement was a result of a bona fide commercial decision free from any bias or malice, that the original contract for the years 1987 to 1991 had been awarded to <ORG> after inviting tenders, but <ORG> having gone bankrupt, no money could have been realised from it. The termination of the original contract was no remedy although repeated contraventions and breaches had been committed by the <ORG> inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991. In order to salvage Rs. 20.16 crores which was payable to the <ORG> under the original agreement dated 14th March, 1987 by the <ORG> and which had not been paid, a decision was taken by the <ORG> to enter into a supplemental agreement and to allow the <ORG>/UNI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997-98 apart from the supplementary directories. <ORG> allowed the writ petitions, and came to the conclusion that the supplemental agreement dated 26th September, 1991 cannot be held to be an extension of the original agreement dated 14th March, 1987, and that the supplemental agreement was tainted with malice the object being to provide unjust enrichment to <ORG>/<ORG>/Sterling. In the appeals to this <ORG>, it was contended on behalf of the 84 appellants that the supplemental agreement was entered into by the <ORG> taking into consideration the circumstances then existing which had been examined at the highest level and as such a <ORG> should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into the supplemental agreement also involved a question of policy, and it was pointed out that the contract had been awarded in the year 1987 to <ORG> on an experimental basis on such terms and conditions on which in past directories had not ever been published, and that the real experiment was as to how the directories' could be published without incurring any cost by <ORG>. On behalf of the Writ Petitioners it was stated that they were prepared to pay to the <ORG> an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the <ORG>/(JDI/Sterling have undertaken to pay only Rs. 10 crores as royalty. Dismissing the appeals, this court HELD:1. Ile publication of directories by the <ORG> is not just a commercial venture, the primary object is to provide service to the people. [92F] 2.The norms and procedures prescribed by Government and indicated by <ORG>s have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose. [92F] 3.The action or the procedure adopted by the authorities which can be held to be a 'State' within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the state can be judged and tested in the light of Article 14 of the Constitution. <NAME> v. 7he International Airport Authority of India,' AIR 1979 SC 1628; <CITATION> , AIR 1980 SC 1992; <CITATION> , AIR 1981 SC 344; <CITATION> , AIR 1985 SC 1147; <CITATION> , AIR 1988 SC 157; <CITATION> , AIR 1990 SC 1031 and <CITATION> ., AIR 1991 SC 537, referred to. [92-H-93-A] 4. Public authorities, at times It Is said must have the same liberty 85 as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution In many cases for years. That is why the courts have impressed that even in contractual matters the public authority should not have unfettered discretion. [91G-H, 92A] 5.In contracts having commercial elements, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue But even in such matters they have to follow the norms recognised by courts while dealing with public property. [92B] 6.Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purposes of taking a decision its to whom the contract is to be awarded and at what terms. If the decisions have been taken in bone fide manner although not strictly following the norms laid down by the <ORG>s, such decisions are upheld. [92C] 7.Public authorities are essentially different from those of private persons. Even while taking decision in respect of commercial transactions a publicauthority must be guided by relevant considerations and not by irrelevant ones. If such decision is influenced by extraneous considerations which it ought not to have been taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias. [102H, 103A] 8.While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the <ORG> is concerned primarily as to whether there has been any infirmity in the 'decision making process'. By way of judicial review the <ORG> cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state. <ORG>s have inherent limitations on the scope of any such enquiry. But the <ORG>s can certainly examine whether "decision making process' was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. [95C-E-F] 86 Chief Constable of <ORG> v. <NAME>,  3 All ER 141, referred to. 9.In the facts and the circumstances of the instant case, it has to be held that the <ORG> has applied the "irrelevant considerations' doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it had failed to take into account considerations which were necessarily relevant ie. following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and had taken into account irrelevant considerations. [101H, 102A] 10.Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract.'[102F] 11.The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the <ORG> and due to the condonation of delay on the part of the <ORG>/<ORG>. There was no justification on the part of the <ORG> to become benevolent by entering into the supplemental agreement with no apparent benefit to the without inviting fresh tenders from intending persons to perform the some job for the next five years. [102G] 12.The supplemental agreement is really a fresh agreement with fresh terms and, conditions which has been entered by <ORG> without inviting any tender for the same. It has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988- 1991, and for Delhi for the years 1989-1991 although they had collected several crores or Rupees for the advertisements for the directories to be published in the aforesaid years. [103D-E] 13.It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years. Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance. The cost of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself Is deferred. This process not only affects the public exchequer but even the public In general 87 who are deprived of availing the facilities under different projects. As such, it need not be impressed that while exercising the power of judicial review in connection with contractual obligations, <ORG>s should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases become counter- productive by causing injury to the public in general. [106AB] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 89-91 of 1993.

From the Judgment and Order dated 30.9.1992 of <ORG> in W.P. No. 1872 of 1992.

<NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, Ms. <NAME> and <NAME> for the Appellant. <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME> and <NAME> for the Respondents.

<NAME> for the Intervener.

The following Judgment of the Court was delivered by <ORG> Leave granted.

Three appeals have been filed against the same judgment of <ORG> by which the Writ Petition filed on behalf of the petitioners/respondents (hereinafter referred to as "the writ-petitioners") was allowed. The dispute relates to the publication of the telephone directories of <ORG>, a <ORG> (hereinafter referred to as "the <ORG>").

A new concept of yellow pages in the telephone directories was introduced by <ORG>. The yellow pages were to contain advertisements under different headings. The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in white pages of the telephone directory. The contractor was to print the directories and supply the same free of cost to the <ORG> for its subscribers and had to pay royalty to the <ORG> in connection with printing of such directories.

Tenders for publication of the directories for Delhi and Bombay were invited. Tender of <ORG> (hereinafter referred to as 'the <ORG>, the 2nd respondent to the Writ Petition and appellant in one of the appeals) was accepted and an agreement dated 14th March, 1987 was executed. <ORG> (hereinafter referred to as 'the <ORG>', the 3rd respondent to the Writ Petition and appellant in one of the appeals) is a subsidiary of <ORG>. Under the original agreement <ORG> was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately and was to payan amount of Rs. 20.16 crores as royalty to the <ORG> and to supply the <ORG> directories free of cost with reference to the number of subscribers. <ORG> also furnished a performance guarantee for a sum of Rs. one crore. <ORG> was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue. The annual issue of the directory was to be published in November/December every year. <ORG> was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold and extra entries in the white pages. The rates of such advertisements were to be fixed by the <ORG> for each issue of the directory and such rates had to be printed for general information. It was also stipulated that if <ORG> committed any default or breach of the terms and conditions of the agreement or failed in the due performance thereof within the time fixed (which was the essence of the contract), the <ORG> shall be entitled to recover from the <ORG> by way of compensation or liquidated damages an amount calculated at the rate of Rs. one lakh for every day or part thereof for the delay beyond the stipulated date in respect of the item which was not completed or finished and delivered completely to the <ORG> on the stipulated date as mentioned in the contract. In view of clause 22 of the agreement, the <ORG> without prejudice to other rights could by notice in writing determine the contract.

It is an admitted position that <ORG> defaulted and committed breach of the terms of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987. For the year 1987, Delhi issue was published after a delay of seven months and that of Bombay after six months. So far Delhi issue of the directory for the year 1988 is concerned, it was published only in August, 1990 after a delay of two years. Under the agreement <ORG> was to publish directories every year for Delhi and Bombay separately during the period of contract from 1987 to 1991. They were also required to publish supplementary directory each year for Delhi as well as Bombay. But there was no publication of directories for Delhi- for the years 1989, 1990 and 1991. Similarly there was no publication of directories in respect of Bombay for the years 1988, 1989, 1990 and 1991.

On 26th September, 1991 a supplemental agreement was entered between <ORG>, <ORG>, <ORG> and <ORG> (hereinafter referred to as "<ORG>" appellant in one of the appeals). Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with <ORG>. It may be mentioned that by this date the period of the original agreement dated 14th March, 1987 between the <ORG> and the <ORG> had expired, still the supplemental agreement states that "subject to <ORG>/<ORG> and Sterling successfully completing the unexecuted job relating to printing of Bombay and Delhi telephone directories within the stipulated time frame and other stipulations in the agreement <ORG> shall extend the original contract for three more issues each for Delhi and Bombay, i.e., seven main issues of Bombay and six main issues of Delhi of the said directories to be brought out hereafter". The agreement further stipulated that all terms and conditions contained in the original agreement and the memorandum of understanding would be the integral part of the supplemental agreement and all obligations of <ORG>/<ORG> and rights and privileges and powers provided for <ORG> thereunder and under the law shall be applicable and available to and binding on the parties to the supplemental agreement as if the same were the part of the supplemental agreement. It was also said that if there was any inconsistency or contradictions vis-a-vis the original agreement, the memorandum of understanding read with supplemental agreement shall prevail and would have overriding effect. By the supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the <ORG> over and above the royalty stipulated in the original agreement by the <ORG>. As mentioned above the original royalty which was payable under the agreement dated 14th March, 1987 was Rs. 20.16 crores for the period 1987 to 1991 but under the supplemental agreement Sterling was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 crores. It was left to the <ORG>/<ORG> to receive all revenue earnings on account (cast and future) from the advertisements and <ORG> was to be only informed about the prices as fixed.

The Writ Petition aforesaid was filed questioning the validity and legality of the supplemental agreement on different grounds including on ground of mala fide. According to the writ-petitioners under the garb of a supplemental agreement a fresh contract was awarded to <ORG> for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract. It was asserted by the petitioners that in the process of entering into the supplemental agreement the <ORG>, which is a public undertaking and a <ORG> within the meaning of Article 12 of the Constitution, has suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the <ORG> or to the public in general.

Before <ORG> the stand of the <ORG> was that the supplemental agreement was a result of a bonafide commercial decision free from any bris or malice. The original contract for years 1987 to 1991 had been awarded to <ORG> after inviting tenders but <ORG>, having gone bankrupt, no money could have been realised from it. The termination of original contract was no remedy although repeated contraventions and breaches had been committed by the <ORG> inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991. It was stated on behalf of the <ORG> before <ORG> that in order to salvage Rs. 20.16 crores which was payable to the <ORG> under the original agreement dated 14th March, 1987 by the <ORG> and which had not been paid, a decision was taken by the <ORG> to enter into a supplemental agreement and to allow the <ORG>/UDI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997-98 apart from the supplementary directories.

<ORG> came to the conclusion that supplemental agreement dated 26th September, 1991 cannot be held to be the extension of the original agreement dated 14th March, 1987. According to <ORG> the supplemental agreement was tainted with malice-the object being to provide unjust enrichment to <ORG>.

The most interesting part of the controversy is that the <ORG> having fully supported the supplemental agreement before <ORG> has filed an affidavit before this Court saying that "<ORG> has decided to accept <ORG> judgment in so far as that the procedure for the grant of contract dated 26.9.1991 to the petitioner <ORG> <ORG> Was not in keeping with the requirement of Article 14 of the Constitution and is not filing any petition for Special Leave against the said judgment. However, as far as aspersions are concerned, <ORG> does not accept the same and the same are matters of investigation and enquiry by an independent <ORG> at present." It has been further stated that subsequent events have shown that the Sterling has collected Rs. 19.59 crores approximately for advertisements in yellow pages without delivering the goods. They have also uncashed the letter of credit issued by the '<ORG>' prematurely. This collection is apart from the collection of Rs. 14 crores against the yellow pages advertisements made by <ORG> and <ORG> during the years 1987-1991. It has been further stated that the Board of '<ORG>' had in fact even decided to terminate the contract for lapse in the performance of the obligations under the 26th September, 1991 agreement but as <ORG> has quashed the said supplemental agreement no further step was considered necessary. Ultimately it has been said in the said affidavit that <ORG>' has started the process for inviting fresh public tenders and for that purpose advertisement has already been issued.

Mr. <NAME>, appearing for the writ-petitioners before us, stated on behalf of the writ-petitioners that they are prepared to pay to the '<ORG>' an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the UIP/UDI/ Sterling have undertaken to pay only Rs. 10 crores as royalty. At times it is said that public authorities must have the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution in many cases for years. That is why the <ORG> have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by <ORG> while dealing with public property. It is not possible for <ORG> to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by justice <NAME>, that <ORG> while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive. But in normal course some rules must exist to regulate the selection of persons for awarding contracts. In such matters always a defence cannot be entertained that contract has been awarded without observing the well settled norms and rules prescribed, on basis of the doctrine of "executive necessity". The norms and procedures prescribed by Government and indicated by <ORG> have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose as in the present case. The publication of directories by the <ORG> is not just a commercial venture; the primary object is to provide service to the people.

The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the State can be judged and tested in the light of Article 14 of the Constitution, is settled by the judgments of this court in the cases of <CITATION> , AIR 1979 SC 1628; <CITATION> & kashmir, AIR 1980 SC 1992; <CITATION> , AIR 1981 SC 344; <CITATION> , AIR 1985 SC 1147; <CITATION> , AIR 1988 SC 157; <CITATION> , AIR 1990 SC 1031 and <CITATION> ., AIR 1991 SC

537. it has been said by this Court :-

"It must follow as a necessary corollary from this proposition that the <ORG> cannot act in a manner which would benefit a private party at the cost of the State: such an action would be both unreasonable and contrary to public interest. The <ORG>, therefore, cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so."

[ <CITATION> .] There is nothing paradoxical in imposing legal limits on such authorities by Courts even in contractual matters because the whole conception of unfettered discretion is inappropriate to a public authority, who is expected to exercise such powers only for public good. According to the appellants, the supplemental agreement was entered into by the <ORG> taking into consideration the circumstances then existing which had been examined at the highest level and as such a Court should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into supplemental agreement also involved a question of policy. It was pointed out that the contract had been awarded in the year 1987 to <ORG> on an experimental basis on such terms and conditions on which in past directories had not ever been published. The real experiment was as to how the directories could be published without incurring any cost by the <ORG>. The publisher being given the right not only to reimburse itself from the advertisements published in the yellow and white pages but was also to pay royalty to the <ORG>. It was further pointed out that from the resolutions of the <ORG>. It shall appear that the authorities 'were concerned that the experiment aforesaid must succeed. With that object in view, another opportunity was given to <ORG>/UDI/Sterling through the supplemental agreement to publish the directories for Delhi and Bombay. That decision should not be examined by this Court like a court of appeal.

It is true that by way of judicial review the <ORG> is not expected to act as a court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case. In the book Administrative Law, Prof. <NAME> has said:

"The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority which parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds, it acts ultra vires. The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which legislature is presumed to have intended. The decisions which are extravagant or capricious cannot be legitimate. But if the decision is within the confines of reasonableness, it is no part of the court's function to look further into its merits. With the question whether a particular policy is wise or foolish the court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority."

But in the same book Prof. <NAME> has also said:-

"The powers of public authorities are therefore 'essentially different from those of private persons. A man making his will may, subject to any rights of the dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.

There are many cases in which a public authority has been held to have acted from improper motives or upon irrelevant con- siderations, or to have failed to take account. of relevant considerations, so that its action is ultra vires and void." While exercising the power of judicial review, in respect of contracts entered into on behalf of the <ORG>, the <ORG> is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to the case of Chief Constable of <ORG> v. <NAME>, [1982] 3 All ER 141, where it was said that 'The purpose of judicial review- "... is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorized or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court."

By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state. <ORG> have inherent limitations on the scope of any such enquiry. But at the same time as was said by <ORG> in the aforesaid case, Chief Constable of <ORG> v. <NAME> (supra), the <ORG> can certainly examine whether 'decision making process" was reasonable, rational not arbitrary and violative of Article 14 of the Constitution. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the <ORG> and the public, then <ORG> cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the <ORG> cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by court amounts to encroachment on the exclusive right of the executive to take such decision. In support of the stand that it was open to the <ORG> to negotiate with <ORG> for purpose of publication of the directories for Delhi and Bombay without inviting tenders, reliance was placed on behalf of the appellants on the judgments of this <ORG> in the cases of <CITATION> ,  3 SCR 1338; <CITATION> ,  1 SCR; <CITATION> ,  2 SCC 295 and <CITATION> ,  3 SCC 91.

From the facts of the case of <NAME> (Supra) it shall appear that every year the <ORG> used to auction the blazes in different forests. Most of the contractors bidding at the auction had their factories outside Jammu & Kashmir. A decision was taken that from the year 1979-80 onwards resin extracted from its forests should not be allowed to be exported outside the territories of the <ORG> and should be utilised only by industries set up within the <ORG>. There were certain forests which were out of access on account of their distance from the roads and no contractor could be found for taking tapping contracts even on the basis of royalty. The Chief Conservator of Forests and other Forest Officers at a meeting took a decision which was also confired at a subsequent meeting, between the Forest Minister, the Forest Secretary and the Chief Conservator of Forests, that the blazes for such inaccessible areas should be allotted to some private party. In view of that decision the second respondent who had earlier addressed a letter to <ORG> offering to set up a factory for manufacture of resin turpentine oil and other derivatives in the <ORG> and had sought for allotment of 10,000 metric tonnes of resin annu was sanctioned the allotment of 11.85 lacs blazes in the inaccessible areas for a period of 10 years on the terms and conditions set out in the order. This was challenged in the aforesaid case. This Court said that whatever be its activity, the <ORG> is still the <ORG> and is, subject to restraints inherent in its position and as such every activity of the <ORG> which has a public element in it must be reasonable and not arbitrary. However, the allotment of the contract in favour of the second respondent was upheld. It was pointed out that the blazes were situated in inaccessible areas and in spite of the offers given no bidders were attracted and as such the <ORG> had no option but to allot the said contract on basis of the offer made by the second respondent.

The case of <CITATION> (supra) related to grant of liquor licences. The procedure adopted for such grant were being challenged as being violative of Article 14 of the Constitution. It was said by this Court:-

"But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by <ORG> for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the cornmodify allow a large measure of latitude to <ORG> in determining its policy of regulating, manufacture and sale of liquor would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what <ORG> has done, unless it appears to be plainly arbitrary, irrational or mala fide." But even in that case it was said:- No one can claim as against the state the right to carry on trade or business in liquor and the <ORG> cannot be compelled to part with its exclusive right or privilege or manufacturing and selling liquor. But when the <ORG> decides to grant such right or privilege to others the <ORG> cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor."

The execution of the supplemental agreement cannot be considered at par with the grant of a liquor licence, which related to any economic policy.

So far the case of <CITATION> (supra) is concerned, in a public interest litigation the grant of lease in favour of <ORG> for establishment of <ORG> at Calcutta had been challenged. It was said:-

"It is to be seen that in the present case no one has come forward alleging that he has been discriminated against and his fundamental right to carry on business had been affected. The very nature of the construction and establishment of <ORG> is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them. The decision taken by <ORG> was an open decision well known to everyone in the hotel business. Yet no one except the <ORG> and <ORG> had come forward with any proposal. We have it in the record that <ORG> already had <ORG> in Calcutta while <ORG> were making their own private negotiations and arrangements for establishing <ORG>. In the circumstances, particularly in the absence of any leading hoteliers coming forward, <ORG> was perfectly justified in entering into negotiation with the <ORG> and <ORG> instead of inviting tenders." But at the same time it was said:-

"On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established : Stateowned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public action or by inviting tenders. Though that is the ordinar y rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism."

In the case of <CITATION> , (supra), a piece of land had been received by <ORG>, Jalgaon, by way of gift. Initially it had been put to the use <ORG>, as a cotton and wholesale fruit and vegetable market. in terms of the gift, in order to put the land in a better and more profitable use <ORG> contemplated a project comprising, inter alia, erection of a commercial complex They also persuaded for change in the terms of the deed of gift subject to condition that heirs should be given five shops free of cost in the commercial complex The scheme contemplated that a developer would execute the entire project at his own cost and would make allotments to the shopkeepers to whom <ORG> had given assurances of alternative accommodation at fixed rates. The developer was also to provide the 17 floors of the administrative building free. of cost to the municipality. The choice of the respondent No. 6 as developer for the project aforesaid was questioned. This Court arrived at the following conclusion:-

"In regard to the allegation that the project scheme was tailored to suit respondent 6 alone or that the project as put to tender did not admit of tenders on fixed comparable parameters, we find no merit. <NAME>

<NAME> submitted that the tender papers were prepared by reputed architects and the precise points on which comparative quotations were invited were specifically incorporated in the tender papers. The point again is that no other tenderer expressed any grievance. The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation. The charge of arbitrariness cannot be upheld. Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity` which evidences the decision granted, of course, the power.' From the facts of the aforesaid case it shall appear that <ORG> had invited competitive proposals as to the ways in which the potentiality of the land could commercially be exploited and had also competitive plans and designs and ultimately respondent No. 6 was entrusted with the execution of the said scheme.

The cases aforesaid on which reliance was placed on behalf of the appellants, have also reiterated that once the <ORG> decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14; the executive does not have an absolute discretion, certain precepts and principles have to be followed, the public interest being the paramount consideration. It has also been pointed out that for securing the public interest one of the methods recognised is to invite tenders affording opportunity to submit offers for consideration in an objective manner. However, there may be cases where in the special facts and circumstances and due to. compelling reasons which must stand the test on Article 14 of the Constitution, departure of the aforesaid rule can be made. This <ORG> while upholding the contracts by negotiation in the cases referred to above has impressed as to how in the facts and circumstances of those cases the decisions taken by the <ORG> and the authorities concerned were reasonable, rational and in the public interest. The decisions taken in those cases by the authorities concerned, on judicial scrutiny were held to be free from bias, discrimination and under the exigencies of the situation then existing to be just and proper. On the basis of those judgments it cannot be urged that this court has left to the option of the authorities concerned whether to invite tenders or not according-to their own discretion and to award contracts ignoring the procedures which are basic in nature, taking into account factors which are not only irrelevant but detrimental to the public interest.

From the statements made in the affidavit filed on behalf of the <ORG> before that High Court and from the relevant minutes of <ORG> <ORG> which were produced before <ORG> during the course of the hearing and copies thereof have also been produced by one of the appellants before this Court, it appears that the <ORG> in its 28th meeting held on 28.12.1990 considered the default made by <ORG> in not publishing the directories in terms of the agreement every year. The <ORG> took note of the fact that <ORG> had run into financial difficulties and cash flow problem. The banks who had advanced loans to them have not yet received back the payments. The paper mills were not willing to supply paper on credit. The printing presses were also not prepared to print the directories without getting advance payments. In this background the <ORG> considered the three options (1) to invoke the penalty clause and print the Directory by the <ORG> at the risk and cost of the <ORG>. (ii) provide the necessary loan secured or unsecured to print the directories, (iii) to terminate the contract and award the work to some other contractor. The matter was again considered in the 29th meeting of the <ORG> held on 29th March, 1991 where a note was put up saying that if the contract with the <ORG> was terminated and a decision was taken to go in for a fresh tender the following problems may arise (i) <ORG>/UDI may put legal obstacles in retendering,

(ii) the response for printing and delivering the directories free of cost and also paying royalty may be poor from the parties, considering the failure of the present experiment and prohibitive increase in the cost of paper and printing, (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence. The <ORG> in its 29th meeting discussed the aforesaid agenda and took a decision that <ORG> has no option but to grant loan to <ORG> to help them to print out the directories. The <ORG> also felt that grant of the loan to <ORG> was quite risky but the said distress measure had to be taken to avoid any stalemate and was in the large interest of the <ORG>. The matter was further discussed in the 31st meeting of the <ORG> held on 6th August, 1991. The agenda note for this meeting after stating the aforesaid circumstances said that <ORG> had approached <ORG> once again with a package of proposals in supersession of their all requests/proposals made earlier, so that they may be bailed out of their financial problems and assuring uninterrupted supply of directories for the revised period of contract. The note recorded that proposal had also been received from <ORG> through <ORG> to print and publish the directories of the <ORG> with their financial support. A decision was taken in order to enable the <ORG> to salvage the contract and get the job executed without further delay and to avoid consequent inconvenience to the customers, to negotiate on revised terms with <ORG>/<ORG>. There is no dispute that the <ORG> in its 32nd meeting held on 19th August, 1991 approved the new terms and conditions, and took a decision that an extension of the contract be given to <ORG> and <ORG> for printing the 13 issues of directories for Delhi and Bombay. On basis of that decision the impugned supplemental agreement was executed on 26th September, 1991. In the facts and the circumstances of the present case it has to be held that the <ORG> has applied the "irrelevant considerations" doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it has failed to take into account considerations which were necessarily relevant i.e.

following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and has taken into account irrelevant considerations that (i) if the contract is terminated and a decision is taken for a fresh tender, <ORG> may put legal obstacles in retendering, (ii) the response for printing free of cost and also paying the royalty may be poor (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence. <ORG> should have been conscious of the fact that admittedly <ORG> had miserably failed in performing their part of the contract for a period of five years, inasmuch as they were required to publish between the period 1987-1991 one issue of the main directory every year for Delhi and Bombay apart from supplementary. Instead of that they published for the year 1987 directories for Delhi and Bombay after a delay of seven months and six months respectively. The Delhi issue of directory for the year 1988 was published only in August, 1990. So far Bombay is concerned there was no publication for the years 1988, 1989, 1990 and 1991. The <ORG> also overlooked the fact that the period of contract had already expired and as such the <ORG> was in error in treating the supplemental agreement as only an extension of the original agreement. Learned counsel appearing for the appellants did not dispute and contest that by the supplemental agreement the period of contract which had expired in 1991 was extended upto 1997/1998 for printing the directories for Delhi and Bombay, and that the terms and conditions were different. For the period 1991-1997 additional royalty which had been agreed to be paid by the UDI/UIP/Sterling was only Rs. 10 crores whereas for the period 1987-1991 it was Rs. 20.16 crores.

Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract. The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the <ORG> and due to the condonation of delay on the part of <ORG>. There was no justification on the part of the <ORG> to become benevolent by entering into the supplemental agreement with no apparent benefit to the <ORG>, without inviting fresh tenders from intending persons to perform the same job for the next five years. Public authorities are essentially different from those of private persons. Even while taking decision in respect of commercial transactions a public authority must be guided by relevant considerations and not by irrelevant ones. If such decision is influenced by extraneous considerations which it ought not to have taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias. The contract awarded for the publication of the directories had not only a commercial object but had a public element at the same time i.e. to supply the directories to lakhs of subscribers of telephones in Delhi and Bombay, every year within the stipulated time free of cost. In such a situation <ORG> could not exercise an unfettered discretion after the repeated breaches committed by UIP/<ORG>, by entering into a supplemental agreement with the sterling for a fresh period of more than five years on terms which were only beneficial to <ORG> with corresponding no benefit to <ORG>, which they have realised only after <ORG> went into the matter in detail in its judgment under appeal. The supplemental agreement is really a fresh agreement with fresh terms and conditions which has been entered by <ORG> without inviting any tender for the same. The supplemental agreement has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991 although they had collected several crores of rupees for the advertisements for the directories to be published in the aforesaid years. We fail to understand as to how a fresh contract for a period upto 1997/1998 was awarded to <ORG> in the garb of an agreement for extension of the period of the original agreement taking into account irrelevant factors as already enumerated above. If the supplemental agreement has been executed without following the procedures which are essential in view of the repeated pronouncements of this <ORG> and taking into consideration irrelevant factors, then can it be said that "decision making process" before the supplemental agreement was entered into was consistent with the requirement of Article 14 of the Constitution? In such a situation there is no scope for argument that any interference by <ORG> shall amount to an intervention like a court of appeal. Once the process through which the supplemental agreement was executed is held to be against the mandate of Article 14 of the' Constitution, the supplemental agreement shall be deemed to be avoid. The appellants also took an objection to the maintainability of the writ application, on the ground of delay and laches. It was pointed out that supplemental agreement was entered into on 26th September, 1991 whereas the Writ Petition was filed before <ORG> on 19th May, 1992, although during this period the petitioners had full knowledge about the supplemental agreement. According to the petitioners, the supplemental agreement was kept as a guarded secret by the <ORG> as well as <ORG> and it is only in April 1992 the petitioners could know some details of the supplemental agreement. In this connection our attention was drawn to an advertisement published on 27th September, 1991 saying that official Bombay directory was being released in December, 1991 and Delhi telephone directory in January, 1992. That advertisement was given on behalf of the <ORG> only. In the body of the advertisement it was mentioned that <ORG> and <ORG> have made all necessary arrangements to ensure that every subscriber receives up-to- date directory in Delhi and Bombay in time. It was urged on behalf of the writ-petitioners that under the supplemental agreement it was the <ORG> who had been given the right to publish the directories and as such in normal course the advertisement should have been given in the paper on behalf of the <ORG> but only with an ulterior motive the advertisement was published on behalf of the <ORG>. Our attention was also drawn to several communications addressed by <ORG>, Madras, to the dif- ferent authorities of the <ORG> making enquiries as to whether the <ORG> had been entrusted with the printing of directories for Delhi and Bombay, as tenders for printing and supply of main telephone directories with yellow pages on turnkey basis were under consideration at Madras. The aforesaid queries were made in the month of December, 1991. The office of the Chief General Manager, <ORG>, on 2nd January replied to the Divisional Engineer, <ORG>, saying "perhaps, <ORG>, Corporate Office have entrusted some job of printing of telephone directories to <ORG> <ORG> Computers Ltd. In this connection, you are therefore requested to contact Chairman-cum-Managing Director, <ORG>". A letter dated 30.12.1991 was addressed by <ORG> to the Divisional Engineer, Madras Telphones, in reply to the query whether they had been entrusted with the printing and supply of telephone directories, saying "Much as we would like to provide you a copy of the order of <ORG> we are unable to do so due to certain circumstances beyond our control." Reference was made to yet another communication dated 30.12.1991 addressed by <ORG> to Deputy General Manager, <ORG>, saying that so far the <ORG> Computers were concerned "they have been allowed a sub-contract by <ORG> <ORG> for printing the directories for Delhi and Bombay", without giving the details of any such contract. It was pointed out on behalf of the the writ-petitioners that an affidavit, was filed on behalf of the <ORG>, before the Madras High <ORG> in connection with another Writ Petition on 19.4.1992, in which the details of the supplement agreement were disclosed. The Writ Petition in the Delhi High <ORG> was filed on 19.5.1992. Under the circumstances mentioned above it is difficult to reject the Writ Petition on the ground of delay and laches.

As already mentioned above, Mr. <NAME>, the learned counsel appearing for the writ-petitioners, offered an amount of Rs. 60 crores on behalf of the writ-petitioners as royalty to the <ORG> for printing the directories for Delhi and Bombay for the period of the supplemental agreement, if the said job is entrusted to them on the same terms and conditions. For that period <ORG> have offered only Rs. 10 crores as additional royalty. This Court could have considered the desirability of directing the <ORG> to consider the said offer of Rs. 60 crores on behalf of the writ-petitioners by according to us, if any such direction is given and on basis of such direction the job of printing the directories for the period in question is given to the writ-petitioners, the procedure so adopted shall suffer from the same vice. The <ORG> will enter into an agreement with the writ-petitioners without inviting tenders and without offering opportunities to others who may be interested in the printing of the directories for Delhi and Bombay. As such while affirming the judgement of <ORG>, we direct that all steps should be taken by <ORG> as early as possible for publishing the directories for Delhi and Bombay so that public in general should not suffer any more. The appeals are accordingly dismissed but in the facts and circumstances of the case there shall be no order as to costs.

Before we part with the judgment we shall like to strike a note of caution. It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years. Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance. The cost of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself is deferred. This process not only affects the public exchequer but even the public in general who are deprived of availing the facilities under different projects. As such it need not be impressed that while exercising the power of judicial review in connection with contractual obligations. Courts should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases becomes counter-productive by causing injury to the public in general.

N.V.K. Appeals dismissed.