R. K. ABICHANDANI, J. ( 1 ) THE petitioners seek to challenge orders dated 7th May 1993 as arbitrary and violative of article 14 of the Constitution of India as also contrary to the terms under clause 48. 2 of the agreement dated 7th May 1991 which was entered into between the parties by which contract was awarded to the petitioner no. 1 for a period of two years from the date of commencement of work extendable for a period of one year at the discretion of the Commission. ( 2 ) THE petitioner no. 1 a partnership firm was carrying on business of operating the loading terminal at Hazira and loading LPG and NGL into tankers and rail wagons. A contract for management of operation running maintenance and quality control of LPG and NGL transfer and loading by tankers and rail wagons at the Hazira Gas Processing Complex of respondent no. 2 was awarded to petitioner no. 1 earlier on 4. 6. 1988 and was valid upto 2nd March 1990 being extendable at the option of the Commission upto a period of one year or part thereof as provided in clause 7. 2 of the agreement. The duration of the contract was extended for one year as per clause 7. 2 of that agreement with effect from 2. 3. 1990. Thereafter respondent no. 2 floated another tender for the period commencing from 1991 in respect of the same work. Under the previous contract the petitioner has done work at the rate of Rs. 5. 35 paise per M. T. In the fresh bid petitioner no. 1 quoted Rs. 7. 00 per M. T. There were however negotiations between the respondent no. 2 and the petitioner no. 1 and the petitioner no. 1 agreed to take the contract at the old rate of Rs. 5. 35 per M. T. for the contract period of two years extendable for one more year at the discretion of the Commission. The tender of petitioner no. 1 as revised came to be accepted and a fresh agreement was executed on 7. 5. 1991. The duration of the contract was two years from the date of the commencement of work as per clause 48. 1 of the agreement. Under clause 48. The tender of petitioner no. 1 as revised came to be accepted and a fresh agreement was executed on 7. 5. 1991. The duration of the contract was two years from the date of the commencement of work as per clause 48. 1 of the agreement. Under clause 48. 2 the contract could be extended for a period of another one year at the discretion of the Commission under the same revised terms and conditions. The period of two years was to expire on 2nd April 1993 It appears that before the completion of the two year period respondent no. 2 on 26th January 1993 invited fresh tenders. It appears that in response to this invitation even the petitioner no. 1 had given its bid. It however appears that the respondent no. 2 decided to invite fresh tenders for the works and the tenders already received were not acted upon. It appears that petitioner no. 1 also gave his bid in response to the fresh tenders being invited. It appears that the fresh bid of the petitioner no. 1 was @ Rs. 6. 40 per M. T. while the lowest bid was @ Rs. 4. 25 per M. T. The matter was carried at the interim stage before the Appellate forum in Letters Patent Appeal No. 268 of 1993. It appears from the order made therein on 30th June 1993 that an offer was given to petitioner no. 1 to have the works contract extended at the lowest tender rate of Rs. 4. 25 per M. T. The petitioners however were not prepared to accept the offer as recorded in the said order of the Appellate Bench. It appears that in the meantime by a communication dated 31st March 1993 an extension of the contract was given to the petitioner no. 1 for a period not exceeding three months with effect from 3 April 1993 after the expiry of two year term on 2nd April 1993. The Commission reserved its right to terminate the contract of the extended period by giving 15 days notice at any point of time. ( 3 ) WHEN the petitioners asked for an extension for one year by communication dated 7th May 1993 they were informed that the respondent no. 2 could extend the contract for a period of one year or for a duration of less than one year. ( 3 ) WHEN the petitioners asked for an extension for one year by communication dated 7th May 1993 they were informed that the respondent no. 2 could extend the contract for a period of one year or for a duration of less than one year. The above orders dated 31st March 1993 and 7th May 1993 have been challenged in this petition. The fresh contract has admittedly been given to another party after expiry of the three-month extended period and that party has not been impleaded in this petition. ( 4 ) IT was strongly contended by Mr. Bhagat learned counsel appearing for petitioners that the Commission could not have granted extension for a period of less than one year in view of the wordings of clause 48. 2 of the agreement. He submitted that the petitioner no. 1 who had quoted the rate of Rs. 7. 00 per M. T. had revised its rate to Rs. 5. 35 per M. T. on an understanding that the extension that would be given after two years would be for one full year and not for any lesser duration. He submitted that when the respondent no. 2 decided to grant an extension it could not have granted the same for less than one year. He submitted that the course adopted by the respondent no. 2 would amount to arbitrary termination of the contract. He also submitted that the process of re-tender that is inviting fresh tenders was mala fide and with a view to ensure that a particular partys bid was considered and therefore the action of respondent no. 2 in not allowing the petitioner no. 1 to continue with the contract for a full period of one year by way of extension was mala fide. ( 5 ) THE learned counsel Mr. Mehta appearing for the respondent no. 2 contended that the revised offer which was given by the petitioner no. 1 has no connection whatsoever with the aspect of extension of one year. He submitted that fresh tenders were invited in January 1993 which displayed a clear intention of the respondent no. 2 not to grant extension. He submitted that since the tender of the person who had quoted lowest rate has been accepted it cannot be said that the respondent no. 2 had acted arbitrarily. He submitted that fresh tenders were invited in January 1993 which displayed a clear intention of the respondent no. 2 not to grant extension. He submitted that since the tender of the person who had quoted lowest rate has been accepted it cannot be said that the respondent no. 2 had acted arbitrarily. He contended that the matter was within the realm of contract and therefore this Court ought not to entertain the petition. ( 6 ) THE relevant clause 48. 2 around which the arguments have centred reads as under :48 Duration of Contract. 48. 2 However the said contract can be extended for a period of another one year on expiry of the period at 48. 1 above under the same rates terms and conditions at the discretion of the Commission. Undisputedly the period of two years which was envisaged for the duration of contract under clause 48. 1 was due to expire on 2nd April 1993 It is also not in dispute that in January 1993 the respondent no. 2 had invited offers for giving fresh contract for the same work. It is therefore clear that the respondent no. 2 did not intend to extend the period of two years by one more year. The petitioner no. 1 had admittedly participated in the fresh bids and therefore obviously was aware of the intention of the Commission not to grant one years extension as stipulated in clause 48. 2. The attempt on the part of the petitioner no. 1 to connect the revised offer of Rs. 5. 35 which came to be accepted by the respondent no. 2 by its letter dated 3rd April 1991 with the stipulation regarding extension of one year is futile because no right was conceded by the respondent no. 2 in favour of the petitioner no. 1 for extending the term of the contract by one year at the option of the petitioner. It is clear from the wordings of the above clause 48. 2 that the question of extension was left entirely to the discretion of the Commission. The Commission did not intend to exercise the discretion of granting extension for one year in favour of the petitioner which is evident from the fact that it had already invited fresh offers as far back as in January 1993. Clause 48. 2 that the question of extension was left entirely to the discretion of the Commission. The Commission did not intend to exercise the discretion of granting extension for one year in favour of the petitioner which is evident from the fact that it had already invited fresh offers as far back as in January 1993. Clause 48. 2 left it entirely to the discretion of the Commission whether or not to grant extension and the Commission cannot be compelled to grant one full years extension. Discretion to grant extension for one year would in the context mean discretion to grant extension upto one year. In view of this discretion that the Commission had under clause 48. 2 it cannot be said that the respondent no. 2-Commissioner acted arbitrarily in not extending the contract for a further period of one full year. In this view of the matter the submissions made by the learned counsel for the petitioner cannot be accepted. ( 7 ) A reference was made on behalf of the respondents to the decision of this Court in Chhaganlal Lavjibhai Kalaria vs. Chairman and Managing Director Bharat Petroleum Corporation 1993 (1) G. L. H. 797 in support of the contention that Article 14 of the Constitution of India could not be attracted at any stage beyond the threshold at which the contract is entered into with the State. In Chhaganlal Lavjibhai Kalaria (supra) it was noted that the judgment in the case of Kumari Shrilekha Vidhyarthi vs. State of U. P AIR 1991 SC 537 was rendered by two Honourable Judges of the Supreme Court while the earlier ruling in Messrs Radhakrishna Agarwal vs. State of Bihar AIR 1977 SC 1496 was rendered by three Honourable Judges of the Supreme Court. There is an indication in C. L. Kalarias case (supra) about conflict between these two decisions. In Radhakrishna Agarwals case the Supreme Court found that the allegations on which violation of Article 14 of the Constitution of India could be based were neither properly made nor established. The Supreme Court in paragraph 20 of the judgment in terms found that the case before it did not raise any question of discrimination at least at the stage of entry into the contractual field which can attract Article 14 of the Constitution of India. The Supreme Court in paragraph 20 of the judgment in terms found that the case before it did not raise any question of discrimination at least at the stage of entry into the contractual field which can attract Article 14 of the Constitution of India. The Supreme Court held in Radhakrishna Agarwals case (supra) that Article 14 of the Constitution of India imported a limitation or imposed an obligation upon the States executive power under Article 298 of the Constitution of India. All constitutional powers carry corresponding obligations with them. The Supreme Court recognised this as the rule of law which regulated the operation of organs of Government functioning under a Constitution and re-affirmed this principle referring to the earlier decision in Erusian Equipment and Chemicals Ltd. vs. State of West Bengal AIR 1975 SC 266 at page 268. In Kumari Shrilekha Vidhyarthis case (supra) the Supreme Court found that bringing the State activity in contractual matters also within the purview of judicial review is inevitable and was a logical corollary to the stage already reached in the decisions rendered by the Supreme Court. It was observed that having fortunately reached this point we should not now turn back or take a turn in a different direction or merely stop there. In our opinion the two recent decisions in Dwarkadas Marfatia and Sons vs. Board of Trustees of the Port of Bombay (1989) 3 SCC 293 and Mahabir Auto Stores vs. Indian Oil Corporation (1990) 3 SCC 752 also lead in the same direction without saying so in clear terms. It would be noticed that when the decision in Radhakrishna Agarwals case was rendered Article 14 was eclipsed due to emergency proclamations. However in Radhakrishna Agarwals case the Supreme Court found that the allegations on which violation of Article 14 of the Constitution of India could be based were neither properly made nor established. The disputed questions of facts emanating from the terms of the contract which could be appropriately decided only by leading evidence would rightly be not dealt with under Article 226 of the Constitution of India and the proper recourse for the parties when such issues are raised would be to resort to a civil suit as held in Messrs Radhakrishna Agarwals case (supra ). ( 8 ) IT would appear from the decisions of the Apex Court that there has been progressive application of Article 14 of the Constitution of India in the field of contractual law to stem arbitrary action on the part of the State and its agencies. Such progress in application of the vital constitutional provisions as reflected in the decision in Srilekha Vidhyarthis case (supra) cannot be regarded as conflict with the earlier decision in Radhakrishna Agarwals case. Non-arbitrariness is the essence of the rule of law as embodied in Article 14 of the Constitution of India and no sphere of State action would be immune to scrutiny by judicial review for preventing abuse of power. ( 9 ) THE authority which is State under Article 12 of the Constitution of India has a duty to act fairly. The authority like the respondent no. 2 gets its contractual capacity through a statute. Being creature of the statute it must not arbitrarily act in its dealings with the citizens. It is duty bound to observe the norms of fair play and justice. The matters which are purely contractual in nature and involve no element of discretion whatsoever would obviously be regulated by the stipulations contained in the agreement. Where however discretion is vested in a statutory body even under a contract it should not be arbitrarily exercised. In the instant case there has not been any arbitrary action in issuing the impugned orders on the part of the respondent no. 2 since it was left entirely to the Commission under clause 48. 2 either to grant extension or not to grant extension of the contract. The petitioners were fully aware of the stipulations contained in clause 48. 2 and while entering into the contract they had conceded full discretion to the respondent no. 2 either to extend the contract or not to do so after the expiry of initial period of two years. It therefore cannot be said that in not extending the duration of the contract for a full period of one year the respondent no. 2-Commission acted arbitrarily. Though the matter is in the realm of the contract I have chosen to test the action of the respondent no. It therefore cannot be said that in not extending the duration of the contract for a full period of one year the respondent no. 2-Commission acted arbitrarily. Though the matter is in the realm of the contract I have chosen to test the action of the respondent no. 2 on the anvil of Article 14 of the Constitution of India on the aspect of extension as the duty to act fairly justly and reasonably would also extend to contractual matters as held by the Supreme Court in Kumari Shrilekha Vidhyarthi vs. State of U. P. (1991) 1 Supreme Court Cases 212. ( 10 ) AS regards the allegations of mala fide action on the part of the respondent no. 2 it will be noticed that as stated in the affidavit-in-reply filed by the respondent no. 2 the offer of the party which did not submit the bankers draft along with the tender was already rejected in the earlier tender. Even thereafter when fresh tenders were invited the tender of the said party was again rejected as per the bid evaluation criteria and therefore the allegation made by the petitioner no. 1 that it was with a view to ensure that the bid of the other party was considered and accepted the process of re-tender was done falls to the ground. As stated by the respondent no. 2 in its affidavit-in-reply the process of re-tender was done only because there was no fair competition. There is no reason to doubt this ground put forth by the respondent no. 2 in its affidavit. There is therefore no substance in the allegations of mala fide made in the petition. ( 11 ) THERE is no merit in the petition on the grounds of arbitrariness and mala fide which were the only grounds urged. If there are other disputed questions arising from the terms of the contract which are not dealt with in this decision it will be open to the petitioners to take recourse to the civil proceedings by way of a suit as staled by the learned counsel for the petitioners. ( 12 ) UNDER the above circumstances there is no substance in this petition and the petition is rejected. Rule is discharged with no order as to costs. Petition Rejected. .