JUDGMENT V. Sivaraman Iyer, J. 1. Petitioner who claims to be an experienced contractor with good reputation, having sufficient resources, tools etc., and to have satisfactorily completed various contracts under the Government and other Public Sector Undertakings, had submitted his tender pursuant to Ext. P-1 notification issued by the first respondent. Petitioner had complied with all the terms of Ext. P-1 having purchased the tender form on payment of Rs. 100 deposited Rs. 20,000 as earnest money and submitted its tender forms before the last date viz., 26th September 1985. There were 11 tenderers, including the petitioner. The tenders were opened at 3-30 p.m. on 27th September 1985 before the first respondent. The offers made by the tenderers ranged from Rs. 8,69,000 to Rs. 44,00,000 for the same work. Petitioner's was the second lowest tender, Rs. 14,31,500. On 19th November 1985, petitioner received Ext. P-2 letter, requiring him to furnish further particulars like detailed procedure to be adopted by the petitioner for cleaning the pond within the stipulated time, details of equipments owned by it to be deployed for the job like, dredgers, excavator loaders, tippers pumps etc., number of personnel to be deployed on the job including supervisory staff, and its lowest revised offer for execution of the job. Petitioner is said to have furnished all the details. Since the petitioner was executing the same work under work order No. 13 of 1985 on a tonnage basis, he made Ext. P-3 submission requesting that he may be permitted to resume the work on the usual terms. Petitioner stated that substantial investments had been made by him to carry on the work. Petitioner submits that notwithstanding his reply to Ext. P-2 and the request contained in Ext. P-3 the second respondent, who had not tendered for the work, was chosen for the award of the contract. Petitioner asserts that the second respondent had not complied with any of the conditions contained in Ext. P-1 notification. He maintains that the first respondent, though registered as a company, is an instrumentality of the State, and therefore answers the definition of Article 12 of the Constitution of India. It is the further case of the petitioner that the first respondent is bound to act reasonably and not arbitrarily in the matter of award of contracts. P-1 notification. He maintains that the first respondent, though registered as a company, is an instrumentality of the State, and therefore answers the definition of Article 12 of the Constitution of India. It is the further case of the petitioner that the first respondent is bound to act reasonably and not arbitrarily in the matter of award of contracts. Reference is made to the decisions of the supreme court reported in A.I.R. 1974 S.C. 266, and A.I.R. 1979 S.C. 1628, to make out that even in the matter of award of contracts, the State and its instrumentalities should act fairly, without discrimination, and without unfairness. Award of the contract to the second respondent, notwithstanding the fact that the respondent had not offered its tender pursuant to Ext. P1, being in total disregard of the standards fixed for award of the contract, is said to be arbitrary and discriminatory and vitiated by absence of good faith. Petitioner, therefore, seeks the issue of a writ of mandamus directing the first respondent to forebear from awarding the work to anybody other than those who had duly submitted tenders in accordance with the stipulations contained in Ext. P1, to consider the tender of the petitioner on its merits and with fairness, and award the work to the petitioner. 2. The defence of the first respondent to the plea against award of the work in favour of the second respondent is quite simple. Ext. P-1 notification is said to have been issued since manual operations of removal of sludge from the cooling pond were found to be unsatisfactory. As per work order dated 16th March 1985, the petitioner was awarded the work of removal and transportation of sludge with the stipulation that the work should be completed by 30th April 1985. Petitioner could not keep up the target. It could not improve its performance in spite of letter dated 9th April 1985. A further letter dated 20th May 1985 also did not evoke any favourable response. The work was, therefore, stopped by communication dated 24th May 1985. The tenders which were opened on 27th September 1985 were considered by a tender-committee of the first respondent consisting of the General Manager (Works), Deputy General Manager (F and A), and Deputy General Manager (Engineering) on 15th November 1985. The work was, therefore, stopped by communication dated 24th May 1985. The tenders which were opened on 27th September 1985 were considered by a tender-committee of the first respondent consisting of the General Manager (Works), Deputy General Manager (F and A), and Deputy General Manager (Engineering) on 15th November 1985. It is said to have been found that the tenderers did not possess the necessary mechanised equipments to remove the sludge in quickest possible manner. The details given by them of the operations were found to be insufficient to arrive at a decision. It was therefore decided that it was not desirable to award the work to any of the tenderers. It was further decided that limited tenders may be invited from all tenderers requesting them to furnish details regarding mechanical equipments owned by them, detailed methods to be adopted for removal of sludge within the quickest possible time, the personnel/technicians to be deployed for the same and their lowest offers. Ext. R-1 (a) evidences that decision. Accepting the lowest tenderer, whose offer was not found to be genuine, others were required to furnish further details by letters in the nature of Ext- P-2. In Ext. R-1 (b) dated 8th November 1985, the tender-committee decided that the Dredging Corporation of India, and the second respondent Diggers India Ltd., may also be requested to furnish similar details as called for in Ext. P-2. Ext. R-1 is the same as Ext. P-2. In response to Exts. R-1 (b) and (c), the second respondent offered to undertake the work for Rs. 9,87,000. The petitioner refused to reduce its offer from Rs. 14,31,500. Since the tender-committee was satisfied that the second respondent had necessary equipments, and its offer was the lowest, it was decided in Ext. R-1 (d) dated 2nd December 1985, to award the work to the second respondent. On the basis of the above facts, it is asserted by the first respondent that it proceeded fairly in awarding the contract to the second respondent, with the result that a better equipped contractor was chosen. The acceptance of its offer for completion of the work will result in a saving of Rs. 4 lakhs to the first respondent. It is also asserted that the first respondent was fully satisfied that the second respondent is an experienced contractor. 3. The acceptance of its offer for completion of the work will result in a saving of Rs. 4 lakhs to the first respondent. It is also asserted that the first respondent was fully satisfied that the second respondent is an experienced contractor. 3. Counsel for the petitioner submits that the petitioner is entitled to be awarded the work as per the offer made by it in pursuance of Ext. P-1 notification, since his was the lowest among the genuine offers. Refusal to accept that offer amounted to discrimination and lack of fair play. It is asserted that the norms of conduct contained in Ext. P-1, should bind the respondents as much as they should bind the tenderers. Any departure therefrom for the purpose of selecting a non-tenderer is said to be unfair and discriminatory. References are specifically made to the following observations in EE. and C. Ltd., v. State of W. B. A.I.R. 1975 S.C. 266 Equality of opportunity should apply to matters of public contracts. The state has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination Counsel for the petitioner also relied on the observations contained in the decision of the International Airport Authority case A.I.R. 1975 S.C. to the following effect. "It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them." Reliance is also placed on clause 3 of the conditions governing contracts offered by the respondents. The manner in which tenders can be dealt with competently by the respondents is said to be that the tenders should be in the prescribed form, in double sealed covers with the name of the work superscribed, and should be received upto 14 hrs on the last day fixed in the notification. Such tenders as are not received in time should not be considered and have to be summarily rejected, except in cases where the tenders are sent by registered post sufficiently in advance of last date specified of its receipt, reserving however the right to accept or reject the tenders in its own discretion. Such tenders as are not received in time should not be considered and have to be summarily rejected, except in cases where the tenders are sent by registered post sufficiently in advance of last date specified of its receipt, reserving however the right to accept or reject the tenders in its own discretion. On the basis of clause 3, which is said to be a condition of all tender notifications, it is submitted that a non-tenderer, who had not submitted his tender as prescribed in the condition, had not paid for the purchase of the tender forms, had not deposited earnest money and had not even made an offer as required by Ext. P-1 should not have been chosen for award of the contract. Departure from the standards fixed generally in the conduct of the company in entering into contracts is said to be discriminatory and arbitrary. 4. It appears to me that there is considerable force in the submission made on behalf of the respondents that the petitioner had proved himself to be incapable of handling the work of removing sludge in the cooling pond by reason of its previous conduct. It was precisely for the reason of its incapacity that Ext. P-1 notice had to be issued inviting tenders. It is asserted that it was due to the absence of necessary equipments that petitioner had to resort to manual process instead of mechanised procedure for removal of sludge. It was perfectly open to the respondent-company to decide whether the removal shall be under taken by manual processes or by mechanised processes. Once it was decided in its discretion that past experience required that such removal should be by mechanised process, it was fully within the competence of the respondent-company to insist that the tenderers should satisfy the company of the availability of necessary equipments, technical personnel etc., with them. Even if one of the tenderers had offered the lowest rates, it was still open for the respondents to reject any of the offers, if it was reasonably satisfied that even the lowest rate was excessive or exorbitant. If this discretion is not available to the State and its instrumentalities, what is quite likely to happen is that bidders may form themselves into cartels and manipulate the bids so unreasonably as to profiteer from the gullibility of the State. If this discretion is not available to the State and its instrumentalities, what is quite likely to happen is that bidders may form themselves into cartels and manipulate the bids so unreasonably as to profiteer from the gullibility of the State. Article 14 of the Constitution of India does not cast an obligation on the State to be foolhardy or gullible in its commercial transactions. It does not require the State to be oblivious of the sharp practices of adventurers and speculators who collude with each other in exaggerating the offers for State contracts, nor does it outlaw reasonable circumspection in the State in its financial and commercial transactions. It has been emphasised repeatedly that public authorities entering into commercial transactions are equally bound to consider viability of the transaction and its commercial profitability. Article 14 of the Constitution does not require the State or its instrumentalities to be profligate in ordering the conduct of financial affairs. They should rather be frugal in such matters. A complaint that the State did not throw away as much money as it could have by accepting exorbitant offers for the reason that they happened to be the lowest cannot be countenanced under Article 14 of the Constitution of India. Ordinarily, it is as much open to State and its instrumentalities as private individuals to be circumspect in their financial dealings. I would rather say that it is obligatory on the part of the State and its instrumentalities to be scrupulously careful in saving the last paisa for the State in its commercial adventures. Not that the State shall be stingy, but it has to be frugal; not that it shall be miserly, but it has to be cost-effective. It shall never be a victim of profiteers. I cannot find fault with the respondent if it insisted that the tenderer who shall be awarded the work, shall be fully equipped, shall have necessary technical personnel with expertise and also that the terms offered by it shall be competitive. It shall never be a victim of profiteers. I cannot find fault with the respondent if it insisted that the tenderer who shall be awarded the work, shall be fully equipped, shall have necessary technical personnel with expertise and also that the terms offered by it shall be competitive. If the State insists upon any one of these for the purpose of benefiting itself in regard to any one of the relevant considerations, rejects all the tenders, departs from the normal procedure, and settles the contract after giving a fair opportunity to the tenderers to suitably amend their offers, I cannot treat such conduct as violative of Article 14 of the Constitution of India or as unfair in any manner. 5. Counsel for the respondents seems to be right in relying upon the decision of the Supreme Court in State of U. P. v. Vijay Bahadur Singh A.I.R. 1982 S.C. 1234. Where it was held, that the Government's power to refuse or accept the highest bid could not be confined only to situation where the price offered was considered inadequate. He has rightly placed considerable reliance on the following observations: "The Government had the right, for good and sufficient reason, we may say, not to accept the highest bid but even to prefer a tenderer other than the highest bidder, the High Court was clearly in error in holding that the Government could not refuse to accept the highest bid except on the ground of inadequacy of the bid. Condition No. 10 does not so restrict the power of the Government not to accept the bid. There is no reason why the power vested in the Government to refuse to accept the highest bid should be confined to inadequacy of bid only. There may be a variety of good and sufficient reasons apart from inadequacy of bids, which may impel the Government not to accept the highest bid. In fact, to give an antithetic illustration, the very enormity of a bid may make it suspect. It may lead the Government to realise that no bona fide holder could possibly offer such a bid if he meant to do honest business. In fact, to give an antithetic illustration, the very enormity of a bid may make it suspect. It may lead the Government to realise that no bona fide holder could possibly offer such a bid if he meant to do honest business. Again the Government may change or refuse its policy from time to time and we see no reason why change of policy by the Government, subsequent to the auction but before its confirmation, may not be a sufficient justification for the refusal to accept the highest bid. It cannot be disputed that the Government has the right to change its policy from time to time, according to the demands of the time and situation and in the public interest. If the Government has the power to accept or not to accept the highest bid and if the Government has also the power to change its policy from time to time, it must follow that a change or revision of policy subsequent to the provisional acceptance of the bid but before its acceptance is a sound enough reason for the Government's refusal to accept the highest bid at an auction." In the present case, apart from the undisputed fact that the petitioner was not able to complete the previous contract within the stipulated time, there was one other factor - that the offer made by the petitioner, though the lowest, was for an amount of Rs. 14,31,500, the second respondent offered an amount of Rs. 9,87,000 for the same work. True it was that the second respondent had not made an offer pursuant to Ext. P-1. I cannot find fault with that decision rendered by the committee as contained in Ext. R-1(a) and Ext. R-1(b): nor can, I sustain the objection of the petitioner to the invitation made by the first respondent to the second respondent to participate in the proceedings as evidenced by Ext. R-1(c) letter. The action of the first respondent was motivated by a desire to choose more reliable contractors with better equipments and would be able to perform the contract at a more competitive rate than the lowest offer received pursuant to Ext. P1 notification. This anxiety to be cost-efficient cannot be considered as improper or perverse. 6. R-1(c) letter. The action of the first respondent was motivated by a desire to choose more reliable contractors with better equipments and would be able to perform the contract at a more competitive rate than the lowest offer received pursuant to Ext. P1 notification. This anxiety to be cost-efficient cannot be considered as improper or perverse. 6. The only obligation of the State or its instrumentalities in the matter of administrative actions of this nature is that the authority must act fairly, in good faith and by relevant considerations. I am satisfied that in the present case, that requirement has been fully satisfied. Petitioner was requested by Ext. P-2 to give further particulars, it was also given an opportunity thereby to lower its offer, that opportunity was not obviously availed of by the petitioner, whereas, the second respondent, who was a non-tenderer, offered a considerably lower rate. Obviously the petitioner was not taken by surprise. It stuck to the offer made by it in spite of its initial handicap that it was a contractor who had failed to perform the work within the stipulated time on the earlier occasion. The insistence upon acceptance of the offer made by the petitioner would only result in the award of the contract for over Rs. 4 lakhs in excess of the offer made by the second respondent. It should be the anxiety of this court that all tenderers get equal opportunities in their dealings with State and its instrumentalities. It should equally be the anxious concern of this court that in that process, the revenue of the State shall not be frittered away. That is the basic principle envisaged by the Supreme Court in the decision reported in Ram and Shyam Company v. State of Haryana (1985) 3 S.C.C. 267 , and the earlier decision reported in Fertilizer Corporation, Kamagar v. Union if India A.I.R. 1981 S.C. 344. 7. It is not very usual that we find that the State or is instrumentality insists upon being frugal in expenditure and absolutely circumspect in choosing the best contractor for awarding the contracts. It is a refreshing change that we find in this case. I cannot persuade myself to interfere on the basis of any technicality with this refreshing change in attitude on the part of an instrumentality of the State. The Original Petition, therefore, fails and the same is hereby dismissed. It is a refreshing change that we find in this case. I cannot persuade myself to interfere on the basis of any technicality with this refreshing change in attitude on the part of an instrumentality of the State. The Original Petition, therefore, fails and the same is hereby dismissed. There will be no order as to costs.