JUDGMENT B.M. Lal, J.
1. Heard Sri W.H. Khan, learned counsel for the petitioner on the question of admission and stay.
2. By this petition under Article 226 of the Constitution petitioner seeks an order, direction or writ in the nature of mandamus commanding the respondents not to hold auction for granting the contract of Tahbazari rights of Nai Basti Sabjimandi, Deoria for the year 1997-98 rather to allow the petitioner to work the said contract on deposit of Rs. 3,11,779.50 p. for the same.
3. It appears that for the year 1994-95 said contract was granted to the petitioner, through auction for an amount of Rs. 2,05,000/-. Thereafter he succeeded ir getting a letter dt. 23-3-1995 issued from Joint Secretary, Government of Uttar Pradesh to the effect that if the said contract is given to the petitioned for 3 years on increases of 15% per year from the respective preceding years, the Government has no objection. Accordingly for the year 1995-96 said contract was granted to the petitioner on an increase of 15% from the preceding year. However, for the year 1996-97 said contract was granted to one Surya Nath Yadav through auction, which was challenged by the petitioner but ultimately writ petition was withdrawn. Now, for the year 1997-98, the auction is likely to be held, hence this petition.
4. Learned counsel for the petitioner contended that no auction should be held for granting the aforesaid contract, rather the same must be granted in favour of petitioner on increase of 15% from the preceding year, on the basis of aforesaid letter of Joint Secretary, Government of U. P.
5. Having heard learned counsel for the petitioner and having perused the record it appears that nothing has been brought on record or suggested that settlement of such contracts by increasing 15% amount as stated above, is statutorily recognised mode on this mode finds place in the relevant statutory provisions made for regulating grant of such contracts. Secondly the said contract was not worked by the petitioner for the year 1996-97 nor was granted to him rather it was granted to some Surya Nath Yadav. Therefore, even if some letter of Joint Secretary is there in favour of petitioner, that letter cannot override the statutory provisions and fundamental provisions of Article 14 of the Constitution of India.
6. In this context it may be observed that time and again this Court has ruled that public largesse are not to be disposed of or settled in favour of persons concerned through negotiations which is a mode violative of Article 14 of the Constitution of India as it deprives other contractors from offering bids and from entering into arena of open competition. The Apex Court has also ruled in catena of decisions that while granting Government contracts where the element 'public' is involved, transparency and equality must be maintained so that the public exchequer may not suffer any loss and the public at large may not raise fingers on the authorities concerned that while settling such contracts through negotiations, the public property is frittered, or looted or grabbed. Therefore, for ensuring fairness in the transactions of settling contracts three modes are prescribed and they are by auction, by tender and by negotiations. Thus, for settling contracts first mode prescribed is by auction and therefore, first of all endeavour must be made to settle contracts by holding public auction but some how or the other in case it is not possible to settle the contracts by holding auctions then the authorities should resort to the second mode i.e. by tenders, meaning thereby mostly the contracts must be settled by public auction or tender. But in case, i.e. in rarest of rare exceptional cases where it is not possible to hold public auction or tender then after assigning sound and cogent reasons on account of which it is not reasonably practicable to hold public auction or tender, the authorities may switch on the third mode i.e. negotiations. The rationale and reasoning behind it, is to safeguard public interest, to ensure fairness and transparency in the transaction and to avoid arbitrariness and malice etc.
7. The Apex Court in E.P. Rajappa's case, Ramanna's case, Kasturi Lal's case, Sachchidanand Pandey's case and numerous other cases ruled that in granting public largesse, the Governmental action must satisfy the 3 tests i.e. non-arbitrariness, action with reasons and action in public interest and if an action of State or its instrumentality is found to be unreasonable, arbitrary or not in public interest, that has to be struck down.
8. In Haji T.M. Hassan Rawther v. Kerala Financial Corporation, AIR 1988 SC 157, Apex Court ruled that the public properly owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. Observance of the rule, not only fetches the highest price for the property but also ensures fairness in the activities of the State and public authorities. The State and the public authorities should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. But that is not the only rule. There may be situations necessitating departure from the rule, but then, such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience.
9. In Ram and Shyam Company v. State of Haryana, AIR 1985 SC 1147 Apex Court ruled that the Government is not free like an ordinary individual in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable, to be struck down, unless it Can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational unreasonable or discriminatory.
10. In Mahabir Auto Stores v. Indian Oil Corporation, AIR 1990 SC 1031 Apex Court ruled that the State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercise of power. Therefore, the action of State organ can be checked under Article 14. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So whatever be the activity of the public authority, it should meet the test of Article 14 of the Constitution.
11. In view of the legal position explained above we are of the considered opinion that while granting public largesse and awarding contracts, quotas licences etc., the State and its instrumentalities must adopt the two well recognised modes i.e. public auction or inviting tenders as a matter of rule because public interest is the paramount consideration. It is not all that the public justice is done but it must appear to have been done. No action of the authorities in this respect should give appearance of any bias, jobbery, nepotism or favouritism. The action of the authorities must satisfy the test of Article 14 of the Constitution as indicated above. Only in rarest of rare exceptional cases where observance of the rule indicated above is not at all reasonably practicable, the authorities may adopt the mode of negotiations but that too after assigning the compelling reasons necessitating departure from the rule and those compelling reasons must be rational and should not be suggestive of discrimination. The observance of this rule would not only fetch the public revenue but would naturally curtail the rate of tax being imposed on the public.
12. The executive or constitutional functionaries while discharging their public duties or functions statutory or non statutory, do not have any power, authority or jurisdiction to distribute public largesse to the persons of their own choice at the cost of public exchequer depriving others from competing in open competition. They will have to observe certain precepts arid principles as indicated above.
13. In this back drop, if the case of the petitioner in the present case is tested on the touch stone mentioned above, the prayer of the petitioner that the contract in question be granted to him on the increase of 15% from the preceding year and that no auction be held for granting the said contract, does not appeal to the reason at all rather the practice of granting contract by increasing 15% from the preceding year has to be deprecated and given complete go by with a view to ensure the transparency and fairness in the transactions. The writ petition thus, tails and is therefore, dismissed.
14. Before parting with the case it is also necessary to make clear that although a citizen has a fundamental right to carry on a trade or business, he has no fundamental right to insist upon the Government or any other individual for doing business with him. (See Krishnan Kakkanth v. Government of Kerala 1996 (9) JT (SC) 489 : (AIR 1996 SC 128). Therefore, the petitioner in the instant case cannot insist upon the Government to settle the contract in question in his favour without holding auction or inviting tenders.
15. This Court has come across several such cases where the authorities have chosen to settle the contracts through negotiations for the reasons best known to them. This Court is also conscious of its own limitations. Therefore, the interest of public exchequer being involved in such eases and the Judiciary also being accountable to public as it also represents the authority of the Stale, this Court directs that necessary instruction be issued to all the concerned departments that the practice of granting contracts through the negotiations be given complete go bye so as to ensure transpracency and fairness and only in rarest of rare exceptional cases it may be adhered to but only to the extent indicated in this case above. Copy of this order be sent to the Chief Secretary Government of U.P. for issuing instructions as directed above.