B. C. VARMA, J. ( 1 ) THE petitioner, M/s. MALCA Construction Pvt. Ltd. is registered as Class A-IV contractor with the respondent no. 1, M. P. Housing Board. On 23-12-1988, the Housing Board issued notice inviting tenders for the construction of M. P. State Corporation's building on Jail Road, Bhopal. The value of the work was shown as 8. 55 crores and the earnest money required to be deposited was Rs. 4. 27,500 -. This was to accompany the tender in the shape of demand draft in a separate envelope. Time for completion of the work was as mentioned as 36 months, including rainy season. The tender documents could be made available on payment of Rs. 250/ -. Eight contractors, including the petitioner and respondents Nos. 3, 4 and 5, submitted their tenders. The petitioner's offer was of Rs. 8,37,88,767/-, that of respondent No. 3, Hindustan Steel Construction Works Ltd. (HSCL) was of Rs. 9,07,29,005/-, and that of respondent No. 4, V. K. Construction Ltd. , was of Rs. 8,52,29,210/ -. The tender of respondent No. 5 was still higher. On 16-2-1989 and 17-2-1989, a meeting of the tenderers was convened after the tenders were opened on 8-2-1989. This was for the purpose of fixing and notifying unified terms and conditions. After a considered negotiations and discussion between all the 8 tenderers, the unified terms and conditions were agreed uponand communicated to the tenderers vide Annexure-A-4. By this communication, the tenderers were entitled to re-quote their terms with reference to their original offers. Such offers were also required to be submitted in a sealed cover. On receipt of such revised offers in terms of the unified conditions, the tenders were again opened on 3-4-1989. The petitioner's bid of Rs. 8,37,88,767- was found to be the lowest among those who participated in the tender (Annexure-A-5 ). In spite of this, the tender committee in its meeting held on 10-5-1989, after taking into consideration certain factors (with which we shall deal later at a suitable place), recommended that the tender made by Hindustan Steel Construction Ltd. at Rs. 9,06,13,005/- be accepted. This recommendation of the tender committee was placed in a special meeting of the Housing Board held on 3-6-1989. 9,06,13,005/- be accepted. This recommendation of the tender committee was placed in a special meeting of the Housing Board held on 3-6-1989. The Board, vide its resolution No. 679/85-6-89 (Annexure-R-1) observed that offers of only such tenderers should taken into account, who had within the preceding five years, undertaken the construction work of at least 50 percent of the cost of work in question or have experience of work at least of the value of Rs. 4. 28 crores. In the alternative, it was suggested that if any tenderer has, in a given year, raised a construction of the value of Rs. 2. 85 crores, then he too be brought within the zone of consideration. Applying this criteria, it was found on the basis of data supplied by the tender committee that three tenderers, including the petitioners, could not be considered as they did not fulfil the above conditions. The following five tenderers were held to be eligible:- (1) V. K. Construction Works Ltd. (2) M/s. Ansal Properties and Industries. (3) M/s. Hindustan Steel Construction Ltd. (4) M/s. National Project Construction Corporation Ltd. , and (5) M/s. M. S. Khurana. It was found that out of the aforesaid five contractors, the minimum price quoted was that of M/s. V. K. Construction Works Ltd. and as M/s. Hindustan Steel Construction Ltd. was found to be a Government of India undertaking, it was decided to offer the work to M/s. Hindustan Steel Construction Ltd. at the above cost. On refusal of M/s. Hindustan Steel Construction Ltd. , to take up the work for that amount, it was decided to extend that offer to National Project Construction Corporation Ltd. (respondent No. 5) and upon its refusal, to extend the same to M/s. V. K. Construction Works Ltd. (respondent No. 4 ). M/s. Hindustan Steel Construction Ltd. (respondent No. 3) accepted the offer and consequently an agreement (Annexure-R-7) has been executed between the Housing Board and HSCL pursuant to which, on 3-7-1989, the work order has also been issued in its favour. The petitioner is aggrieved by this action of extending the contract to HSCL for Rs. 8,52,29,210/-, when, while fulfilling all the conditions in the tender notice, the petitioner was agreeable to take up the construction work for a considerably low amount i. e. at Rs. 8,37,88,767 / -. The petitioner is aggrieved by this action of extending the contract to HSCL for Rs. 8,52,29,210/-, when, while fulfilling all the conditions in the tender notice, the petitioner was agreeable to take up the construction work for a considerably low amount i. e. at Rs. 8,37,88,767 / -. ( 2 ) WHILE the petitioner attacks and questions the legality and propriety of the aforesaid action in entering into an agreement for the work in question with HSCL (respondent No. 4), for a higher price than the one quoted and offered by the petitioner, on the ground that in extending the contract in favour of HSCL, the terms and conditions of the tender notice have been varied and different criteria have been adopted and thus an arbitrariness has entered into this transaction, and has ultimately brought about an unreasonable restraint on free trade in extending the offer by private negotiations in favour of one individual the Housing Board and the HSCL contend that the criterion evolved by the Housing Board (Annexure-R-1) is within the ambit of the various terms and condition of the tender notice and in fact there had been no deviation from any of the terms and condition of the tender notice. Pointing out the details to be furnished, as required by the various clauses of the tender notice, it was submitted in support of the impugned action that those terms really prescribe the eligibility qualifications, while laying down the criteria as per Annexure-R-1. The respondent Board has acted strictly in accordance with those terms. The suggestion, therefore, is that there had been no deviation from the terms and conditions of the tender notice and the petitioner's attack in that behalf is wholly unjustified. The learned Advocate-General, appearing for the Housing Board, submitted that on the facts placed on record, no mala fide can be attributed to any authority of the Board, which has acted very fairly and in best interest of the Board on the basis of information solicited through and supplied by the tenderers. The Court should decline to interfere with the impugned action which action cannot be called arbitrary. Looking to the time factor and the public interest to be served by erecting the building within a span of three years, the acceptance of the tender of a more experienced and capable person, even though of a higher denomination, cannot be termed as arbitrary. Looking to the time factor and the public interest to be served by erecting the building within a span of three years, the acceptance of the tender of a more experienced and capable person, even though of a higher denomination, cannot be termed as arbitrary. Shri Tiwari, learned counsel, appearing for the HSCL (respondent No. 3), added that the instant case is not of sale or purchase of some articles, but the purpose is entirely different, i. e. , raising of the building within the stipulated period for public purpose. The respondents thus support the action in granting the contract in favour of respondent No. 3, HSCL. ( 3 ) THE moot question for decision, therefore, is whether there had been in fact deviation from the terms of the tender notice, while laying down the criteria contained in the recommendation of the tender committee, vide Annexure-A-6, and also by the Board in its resolution No. 679/85-6-89, contained in Annexure-R-1. It has further to be seen whether in view of such criteria, acceptance of a higher offer than the one made by the petitioner can be said to be arbitrary. To appreciate this contention, it will be necessary to refer to some portions of the tender documents and the notice, inviting tenders (NIT ). In the notice, inviting tenders (extract of which is Annexure-R-7), the details required to be furnished by the tenderers have been listed thus:-"1. Income-tax clearance certificate. 2. List of works executed and in hands. 3. List of Engineers, Technical persons with their qualifications and experience in employment of contractor/firm. 4. List of plants and machineries in working conditions and in possession of contractor/firm. 5. Copy of registration in Housing Board. 6. Power of attorney (in case of firm only ). "under Cl. 3. 9 of the tender form, a tenderer is further required to supply the following information:-"list of works in progress. Tenders must be accompanied by a list of contracts already held by the contractor at the time of submitting the tender in the Board and elsewhere showing therein : (1) The amount of each contract; (2) Balance of work remaining to be done; (3) The amount of solvency certificate produced by him at the time of enrolment in the Housing Board. "this requirement is not without purpose. This information required to be supplied by a tenderer would apparently show his capability, experience as also expertise. "this requirement is not without purpose. This information required to be supplied by a tenderer would apparently show his capability, experience as also expertise. These considerations certainly become material and assume importance in exercise of choice, among the various tenderers. In view of the magnitude of the proposed construction, the necessity of the building and the duration fired for its completion, the exercise of choice based upon the above factors cannot be termed as arbitrary. Instead, the above considerations ensure fulfilment of the contract and completion of the building within the stipulated period. It will lessen the possibility of extension of time for completion of the contract and consequent escalation of the price. At the same time we also find a special condition relating to the contract and notified in the tender notice to the following effect :-"all the conditions of the tender notice will be binding on the contractors in addition to the conditions of the contract in the prescribed form. " this further indicates that the information solicited under the various clauses of the tender notice, as mentioned above, are not just by the way or superfluous, but have to be taken into account as very relevant consideration for acceptance of a particular offer. We, therefore, do not agree with the learned counsel for the petitioner that while rejecting its tender, there has been any variation or deviation from the conditions mentioned in the tender notice, and for that reason the rejection of the petitioner's tender and acceptance of that of the respondent No. 3 is illegal. We may usefully refer to a passage from the of quoted decision on the subject in Ramanna v. I. A. Authority of India, AIR 1979 SC 1628 . In that case, sealed tenders in the prescribed form were invited from registered IInd class hoteliers having at least 5 years' experience for putting up and running a IInd Class Restaurant and two snack bars at the Air Port for a period of three years. It was held in para. 7, at page 1634 of the report that five years' experience was a condition of eligibility and the condition could not be said to be satisfied by a person, who did not have that experience of five years of running a IInd Class hotel or restaurant. It was held in para. 7, at page 1634 of the report that five years' experience was a condition of eligibility and the condition could not be said to be satisfied by a person, who did not have that experience of five years of running a IInd Class hotel or restaurant. It was observed :-"the test of eligibility laid down was an objective test and not a subjective one. What the condition of eligibility required was that the person submitting a tender must have 5 years' experience of running a IInd Class hotel, as this would ensure by an objective test that he was capable of running a IInd Class restaurant and it should not be left to the Ist respondent to decide in its subjective discretion that the person tendering was capable of running such a restaurant. "these observations support our conclusion that the various clauses, referred to in the notice inviting tenders and the tender form itself are binding upon the tenderers, in addition to the terms of the agreement, furnish an objective test and eliminate the subjective discretion of the Housing Board in making a choice. The importance of experience, expertise, capacity, etc. , as required by the aforesaid clauses in the tender notice, in view of the aforesaid dictum of the Supreme Court, cannot be minimised. ( 4 ) SHRI Ravish Agrawal, learned counsel for the petitioner, is not right in saying that the petitioner has been kept out of consideration and that the recommendation made by the tender committee, which to some extent, does cause variation in the conditions of the tender, have been taken into account in preferring respondent No. 3 to the petitioner. What we find from the document, Annexure-R-1, containing the relevant resolution No. 679 85-6-89, is that the Board has only taken into consideration the material collected by the tender committee and has not accepted or acted upon the recommendations made. Instead, the Board has taken into account the information supplied by the tenderers pursuant to the notice inviting tenders and has indicated its own criteria for selecting the tenderers. The petitioner's tender and the information supplied by it were taken into account and since the petitioner did not fulfil those conditions, the contract could not be extended to it, although its tender was at a somewhat lower figure. The petitioner's tender and the information supplied by it were taken into account and since the petitioner did not fulfil those conditions, the contract could not be extended to it, although its tender was at a somewhat lower figure. The following observations of the Board's resolution are material:-it is thus clear that the petitioner's tender was also considered but as it did not fulfil the necessary qualifications, its tender could not be accepted. It will, therefore, be not just to say that the petitioner's tender was kept out of consideration. ( 5 ) LEARNED counsel for the petitioner strongly relied upon the decision in Harminder Singh v. Union of India, AIR 1986 SC 1527 , and made particular reference to paras. 17, 18 and 19 of the judgment. The ratio of that decision is that if the original terms of the tender notice were changed, all the tenderers should have been given an opportunity to resubmit their tenders in conformity with the changed terms. If this is not done, it would cause serious prejudice to the other tenderers. The State or its instrumentality has to act in accordance with the conditions laid down in the tender notice. Preference to any individual contrary to the terms of the tender notice is not justified. We have indicated above that in view of the various requirements of the notice, inviting tenders and the tender notice itself, the eligibility criterion has not been changed. That being so, this decision is not of much assistance to the petitioner and does not advance its case any further. ( 6 ) IT has also been the contention on behalf of the petitioner that the contract to the respondent No. 3 has been made by private negotiations, which is not permissible and offends constitutional norms laid down in Art. 14. This contention is factually incorrect. The facts narrated by us above, would show that the Housing Board first invited tenders. The petitioner also submitted its tender. After the tenders were opened, all the tenderers were consulted and after some deliberations, they were required to make a revised offer. The petitioner participated in that negotiation and made another offer. It was then that the Board, on considerations of the merits of the tenderers, their capacity to execute the work and their experience, rejected the petitioner's tender. After the tenders were opened, all the tenderers were consulted and after some deliberations, they were required to make a revised offer. The petitioner participated in that negotiation and made another offer. It was then that the Board, on considerations of the merits of the tenderers, their capacity to execute the work and their experience, rejected the petitioner's tender. We may also refer to Annexure-R-5, filed by the respondent Board, which contains general rules and directions for the guidance of the contractors. Rule 5 of these rules says that the officer competent to dispose of the tenders shall have the right of rejecting all or any of the tenders. To these circumstances, the following observations in Ramana Dayaram Shetty's case, AIR 1979 SC 1628 , quoted in Harminder Singh's case, ( AIR 1986 SC 1527 ) (supra) squarely apply :-"it is true that there was no statutory or administrative rule requiring the 1st respondent to give a contract only by inviting tenders and hence the 1st respondent was entitled to reject all the tenders and, subject to, the constitutional norm laid down in Art. 14, negotiate directly for entering into a contract. Para. (8) of the notice also made it clear that the 1st respondent was not bound to accept any tender and could reject all the tenders received by it. But here the 1st respondent did not reject the tenders outright and enter into direct negotiations with the 4th respondent for awarding a contract. The process of awarding a contract by inviting tenders was not terminated or abandoned by the 1st respondent by rejecting all the tenders but in furtherance of the process, the tender of the 4th respondent was accepted by the 1st respondent. The contract was not given to the 4th respondent as a result of direct negotiations. Tenders were invited and out of the tenders received, the one submitted by the 4th respondent was accepted and the contract was given to them. "in the present case also, the Housing Board invited tenders and did not reject the tenders outright, nor did it enter into direct negotiations with respondent No. 3 for awarding contract. The process of awarding contract by inviting tenders was never terminated nor abandoned. The respondent No. 3 was thus not given contract by direct negotiations. This contention, therefore, is also rejected. The process of awarding contract by inviting tenders was never terminated nor abandoned. The respondent No. 3 was thus not given contract by direct negotiations. This contention, therefore, is also rejected. ( 7 ) IT, however, remains to be seen whether the act of the respondent Housing Board, in awarding contract to respondent No. 3 (HSCL) suffers from the vice of arbitrariness. A Full Bench of the Kerala High Court in V. Punnah Thomas v. State of Kerala, AIR 1969 Ker 81 , observed that "the Government is not and should not be as free as an individual in selecting the recipients for its largess. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal. '' These observations have been approved by the Supreme Court in Ramana Dayaram Shetty's case. ( AIR 1979 SC 1628 ) (supra) as also in Harminder Singh's case, ( AIR 1986 SC 1527 ) (supra ). In Harminder Singh's case, the Court observed that it is true that the Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily. In Ramana Dayaram Shetty's case, Bhagwati, J. referred to certain observations made by Hidayatullah. J. (as he then was) in C. K. Achutan v. State of Kerala, AIR 1959 SC 490 , to the effect that a contract which is held from the Government stands on no different footing from the contract held by a party and that when one person is chosen rather than another, the aggrieved party cannot claim protection of Art. 14 and observed that what Hidayatullah. J. meant to say was that because merely one person is chosen in preference to another it does not follow that there is violation of Art. 14, because the Government must necessarily be entitled to make the choice. That, however, does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned or unprincipled. That, however, does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned or unprincipled. At yet another place, in the decision in Ramana's case, the observations are that it must therefore be taken to be the law that where the Government is dealing with public whether by way of giving jobs or entering into contracts or issuing licences or granting other forms of largess, the Government cannot arbitrarily and at its sweet will like a private individual deal with any person as it pleases, but its action must be in conformity with the standard or norm, which is not arbitrary, irrational or irrelevant. Reference may also be made to the decision in Haji T. M. Hasan v. Kerala Financial Corporation, AIR 1988 SC 157 , strongly relied upon by the learned Advocate-General in support of the impugned action. In that case, the following passage from Kasturi Lal Lakshmi Reddy v. State of J. and K. , AIR 1980 SC 1992 at p. 1999, was quoted with approval:-"but one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting a reasonableness or is not informed with public interest. The burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and, therefore, the Court would not strike down Governmental action as invalid on these grounds unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied it would be the plainest duty of the Court under the Constitution to invalidate the Governmental action. This is one of the most important functions of the Court and also one of the most essentials for preservation of the rule of law. But where it is so satisfied it would be the plainest duty of the Court under the Constitution to invalidate the Governmental action. This is one of the most important functions of the Court and also one of the most essentials for preservation of the rule of law. "the following observations in Sachidanand Pandey v. State of West Bengal, AIR 1987 SC 1109 , which are quoted in Haji T. M. Hasan's case, ( AIR 1988 SC 157 ) (supra), are also noteworthy :-"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. "the Supreme Court observed in Haji T. M. Hasan's case (supra) that such instances of departure must be justified by compulsion and not by compromise. The justification should be for compelling reasons and not just for convenience. ( 8 ) THE position, in the present case, as emerges from the facts stated above, is that the building, at a very high cost, was required to he erected within three years in the capital city for M. P. State Corporation. It was, therefore, necessary to select a contractor, who could undertake such a huge contract and with the past experience could finish the job within the required period. The information solicited through the notice inviting tenders on various counts was sufficient notice to the tenderers that a tender, although lower, may be rejected, if the tenderer is found lacking in experience, capacity, etc. After the tenders were submitted, there had been a discussion, in which all the tenderers participated and then resubmitted their tenders. Thereafter, on the basis of the information received through the tender forms submitted by the tenderers, a very rational and reasonable criterion was laid down, vide Annexure-R-1. A list of five eligible tenderers was prepared and then offer was made to respondent No. 3 and, upon its failure to accept the golfer to the other eligible contractor. In our opinion, this process of selecting the tenderer and assigning job to him eliminates all kinds of arbitrariness and only shows fair play. Nothing unfair was done. The petitioner therefore, is not right in attacking the impugned action in granting contract in favour of respondent No. 3, as unfair. In our opinion, this process of selecting the tenderer and assigning job to him eliminates all kinds of arbitrariness and only shows fair play. Nothing unfair was done. The petitioner therefore, is not right in attacking the impugned action in granting contract in favour of respondent No. 3, as unfair. Instead, we are of the opinion that the same has been done, keeping in view public interest as paramount. ( 9 ) THE petition is dismissed. There shall be no order as to cost. Security amount, if any, be refunded to the petitioner. Petition dismissed. .