Lahiri. J.:- The core question posed in this writ application is the ambit of power of the State Government under Section 138(2) of the Assam Panchayati Raj Act, 1972 as amended. 2. The Executive Committee of the Morigaon Mahkuma Parishad settled the hat in question with the petitioner. One of the tenderers Rupen Bordoloi, Respondent No. 5, preferred an application u/s. 138(2) of "the Act" questioning the validity of the settlement but he made the petitioner as the sole Respon­dent. Of course the Mahkuma Parishad was a formal Respon­dent, The Government in exercise of its powers u/s. 138(2) of "the Act" heard the matter, wherein admittedly Rupen and the petitioner figured as the parties to the proceedings and none else, apart from the Mahkuma Parishad. The State Government considered the case of Respondent No. 5, Rupen Bordoloi, who figured as the petitioner therein and rejected his case. There­after, the Government considered the case of Abdul Karim, one of the co-tenderers and those of the petitioner and other ten­derers and found that Abdul Karim was entitled to get the settlement of the bazar. The reasons subscribed by the Govern­ment in favour of respondent No. 6 prima-facie appear to be reasonable and just. The Government held that Abdul Karim had landed property, and therefore, more secured than the peti­tioner and others. The second reason was that the tender of Abdul was the highest amongst the three combatants. The third ground in favour of Karim was that the Mahkuma Parishad had left out of consideration his tender on obviously wrong construc­tion; of the provisions of "the Rules" framed under "the Act" and the tender notice. The Executive Committee had outright rejected the tender of Karim as he had allegedly misdescribed the name of the bazar as "Gopalghat" instead of "Gopalar-ghat" in column 3 of his tender. Undoubtedly, this could not have been a valid ground for rejection of his leader. From the name itself and other descriptions of the tender of Respondent No. 6, Abdul Karim, it was evident that he had submitted the tender for "the hat in question" i. e. "Gopalar Ghat" bazar and no other bazar. Therefore, apparently the impugned order of the Government was correct but there was a fatal error of jurisdiction committed by the Government rendering the impugned order as invalid. 3. It has been very rightly pointed out by Mr. Therefore, apparently the impugned order of the Government was correct but there was a fatal error of jurisdiction committed by the Government rendering the impugned order as invalid. 3. It has been very rightly pointed out by Mr. Chaliha, learned counsel for the petitioner that the State Government has a large and wide discretionary power under section 138(2) of the Act. It can "give such order as may deem necessary" after examination of the records of the proceedings. According to Mr. Chaliha, learned counsel for the petitioner, Respondent No. 6 (Abdul Karim) was not a party to the appeal before the Government nor did he appear or figured as a party "suo-Moto". Learned counsel submits that the Government, while considering the records of the proceeding in exercise of the power u/s. 138(2) of "the Act" could maintain the order of settlement, set it aside, remit it back for fresh settlement or could grant settlement to any tenderer qualified to obtain the tender. The discretionary powers conferred on the State Government, accor­ding to Mr. Chaliha, learned counsel for the petitioner, are large and wide, in the sense that it could exercise "co-extensive power" with the Settling authority. However, the power delegated could not be exercised arbitrarily by the power holder. The function of the Government being quasi-judicial it was bound to follow the principles of natural justice and could make the order affor­ding reasonable opportunity to the parties. The first contention of the petitioner is that the impugned order is bad as Respon­dent No. 6 Abdul Karim was not a party to the proceedings and the Government had no jurisdiction to make the settlement with him as he was not a party to the proceedings. The second contention is that the State Government could not have passed the order directing settlement of the bazar in favour of Abdul Karim Respondent No. 6 as he was, at all relevant time a defaulter of Government loan and as such "disqualified to get the settlement". Counsel points out the averment of petitioner in paragraph 17 of the petition as well as paragraph 3 of his Additional affidavit. In both the Affidavits the petitioner categorically stated that Res­pondent No. 6 Abdul Karim had been a defaulter of co-operative loan, at all relevant period, and, as such, he was disqualified to get the settlement. 4. Counsel points out the averment of petitioner in paragraph 17 of the petition as well as paragraph 3 of his Additional affidavit. In both the Affidavits the petitioner categorically stated that Res­pondent No. 6 Abdul Karim had been a defaulter of co-operative loan, at all relevant period, and, as such, he was disqualified to get the settlement. 4. The State Government exercising powers u/s. 133 (2) of "the Act" may make any order as it may deem necessary, after examining the records of the proceedings. However, the extraor­dinary power does not include conferment of power or function to make an order of settlement in favour of a stranger, i. e. a non-tenderer. It has co-extensive power with the Settling autho­rity subject to the limitations under which the settling authority could settle. The settling authority could not settle a hat with a non-tenderer, so the State Government acting u/s. 138 (2) cannot settle the bazar with a non-tenderer. 5. Be that as it may, the core question is whether the State government can make the order of settlement with a tenderer who is not a party to the proceedings ? If so, under what circum­stances ? In our opinion, ordinarily, while exercising the powers u/s. 138 (2) the State Government should not make settlement with a person who is not a party before it. The reasons are- first, that if the settlement is made in favour of the person, who is not a party to the proceedings, although a clearly qualified tenderer, he might not accept the order of settlement. Secondly the power can be exercised only after giving reasonable oppor­tunities to the parties to the proceedings why the settlement should not be made in favour of the person, not a party to the proceedings. In the instant case, admittedly Abdul Karim was not a party to the proceedings. Fortunately for the State Government Abdul Karim appears to have shown his inclination to accept the settlement. What would have happened if Abdul Karim would have refused to accept the settlement ? It would have put the entire settlement proceeding in a disarray, as Karim was granted settlement after setting aside the settlement of the petitioner, this aspect of the matter need be carefully scrutinized by the State Government. Let us now consider the meet of the matter. It would have put the entire settlement proceeding in a disarray, as Karim was granted settlement after setting aside the settlement of the petitioner, this aspect of the matter need be carefully scrutinized by the State Government. Let us now consider the meet of the matter. In the instant case, the petitioner complains that he did not get any opportunity whatsoever to place before the authority about the basic disqualification of Abdul Karim, namely, his disqualification for being a defaulter in respect of Government loan or loan from a co-operative society. It is clear that the petitioner did not get any opportunity to show that Karim was so disqualified to get the settlement. We are also convinced that if the petitioner would have been given the opportunity of knowing that the State Government was inclined to grant settlement in favour of respondent Abdul Karim, the parties to the proceedings would have certainly placed the disqualifications before the autho­rity. However, the petitioner did not get that opportunity. Now, in view of the disqualification alleged in paragraph 17 of the petition and paragraph 3 of the Additional affidavit of the peti­tioner, we are confirmed that the Respondent No. 6 could not have obtained the order of settlement from the Government. In view of the disqualification, a person cannot get settlement of a hat under "the Act" and "the Rules" framed there under. Under these circumstances we are constrained to hold that Respondent No. 6 was disqualified to obtain settlement and as such the impu­gned order cannot be sustained. 6. We would like to state here in clear terms that while exercising the power u/s. 138, if the State Government desires to grant settlement to a person who is not a party to the procee­ding, it must issue notice to the party to appear and ascertain whether he likes to get the settlement. Further opportunities should also be given to the parties to the proceedings to show cause why the settlement should not be made in favour of the added party. Only after giving such opportunities to the parties the State Government could exerise the power of offering settle­ment to a person who was not a party to the proceedings. 7. For the foregoing reasons, we have no hesitation in coming to the conclusion that the impugned order is bad and is liable to be quashed. Only after giving such opportunities to the parties the State Government could exerise the power of offering settle­ment to a person who was not a party to the proceedings. 7. For the foregoing reasons, we have no hesitation in coming to the conclusion that the impugned order is bad and is liable to be quashed. However, Respondent No. 6 Abdul Karim has suffered pecuniary and other loss and it is a fit case in which cost should be awarded in his favour although the petition is allowed. 8. In the result, while allowing the writ petition and setting aside the impugned order and making the rule absolute we direct the petitioner to pay a cost of Rs. 1,200/to Respondent No. 6 within 2 months from today. 9. In view of the fact that the settlement is going to expire by June, 1983 we direct that the order of the Executive Committee of the Morigaon Mahkuma Parishad should be given effect and the petitioner be allowed to continue with the settle­ment till the expiry of the terms of the settlement.