R. DAYAL, J. ( 1 ) THE State of Sikkim, impleaded as respondent No. 1, sanctioned the works for repairs of the drinking water pipeline of the Simik Dongeythang area at an estimated cost of Rs. 3. 19 lakhs in July 1994. In pursuance of Circular No. 54 (25)Home/ 90/35 dated 24-9-1991, issued by the Government of Sikkim, Home Department, Gangtok, according to which all works not exceeding Rs. 5. 00 lakhs are to be executed through the nominees of the Panchayat/ MLAs, work order was directed to be issued to the petitioner who was the nominee of the Panchayat. But, the work order was issued not in favour of the petitioner but in favour of respondent No. 2. The petitioner issued notice demanding justice; but to no effect. The petitioner has alleged that the work order was issued in favour of respondent No. 2 in an illegal manner since respondent No. 2 was not even the nominee of the Panchayat or of MLA of the area concerned. Further, he has alleged that he had taken pains at the time of making estimates of the scheme and for that purpose he had taken Engineers to the areas where the pipe-line was damaged or had been washed away. The petitioner has also pleaded that the aforesaid circular dated 24-9-91 which was subsequently amended by another circular dated 14-2-1995 by which the value of the contract to be given to the nominees of the Panchayat/mla was increased to Rs. 10. 00 lakhs has given rise to discontentment among the village people, as it had given powers to the Panchayat to nominate a person of its choice and in the absence of any norms or standards, it encouraged discrimination and arbitrariness. According the petitioner, the aforesaid policy became an instrument to give contracts to the persons of the choice of the Head of the Departments which is contrary to democratic principles. Further, he has alleged that the State Government did not disclose on what grounds the works had been awarded to respondent No. 2, instead of the petitioner and that respondent No. 2 was not even the nominee of the Panchayat/mla. Further, he has alleged that the State Government did not disclose on what grounds the works had been awarded to respondent No. 2, instead of the petitioner and that respondent No. 2 was not even the nominee of the Panchayat/mla. He has prayed for issue of writ of mandamus or any other appropriate writ to cancel the work order issued in favour of respondent No. 2 and for issue of an appropriate order directing respondent No. 1 to issue work order in favour of the petitioner or in the alternative for a declaration that the notifications dated 24-9-1991 and 14-2-1995 are illegal and contrary to the provisions of Article 14 of the Constitution and the Sikkim Financial Rules and to quash the same. ( 2 ) RESPONDENT No. 1 has not disputed that respondent No. 1 had been nominated by the Panchayat in pursuance of the circular dated 24-9-1991, but, the work order was issued in favour of respondent No. 2. It is pleaded that an application from the petitioner endorsed by the Chief Minister was received by the department but work order had already been issued in favour of respondent No. 2, on the recommendation of the Chief Minister. The stand of the State Government is that no work order in respect of the contract work was issued in favour of the petitioner and as such he does not have any legal right whatsoever to claim the said work. Further contention of respondent No. 1 is that the circular dated 24-9-1991 amended on 14-2-1995 is merely an administrative instruction not having any statutory force and, is, therefore, not enforceable at law and does not confer any legal right in favour of the petitioner. It is denied that the circular has given rise to discontentment amongst the villagers or that the policy of the Government has encouraged discrimination or arbitrariness. It is stated that the work is of an urgent nature, as it involves repair of water pipeline to supply drinking water to the villagers and as there is no other source of drinking water available to the villagers, and so the work has to be completed at the earliest and, accordingly, the Government nominated respondent No. 2 and issued the work order to him. Respondent No. 2 has, in his counter, pleaded that he was issued the work order, being the nominee of the Chief Minister, in pursuance of the circular and he had already completed about 60-65% of the work in question. ( 3 ) WE have heard Shri N. B. Kharga, Advocate on behalf of the petitioner, Miss K. Chuki, Govt. Advocate on behalf of respondent No. 1 and Mr. B. Sharma, Advocate on behalf of respondent No. 2. Learned counsel for the petitioner has submitted that the petitioner has the locus standi to bring the petition because his nomination had been approved in pursuance of the circular dated 24-9-1991. He has also submitted in the alternative that the circular is discriminatory and confers arbitrary power on the Government to award contracts which is violative of Art. 14 of the Constitution. On the other hand, Miss Chuki has submitted that since the petitioner was not awarded the contract, he did not have the locus standi to bring the petition. Further, she has submitted that since the circular is in the nature of an administrative instruction not having statutory force, the petitioner is not entitled to make any claim founded on the circular. According to her, the circular is valid. Learned counsel for respondent No. 2 has supported the stand taken by the learned Government Advocate and has further submitted that respondent No. 2 has already completed about 65% of the work and if at this stage he is prevented from completing the work, he will suffer immense loss. ( 4 ) WE are of the view that since the name of the petitioner was once approved for award of the work in his favour, it cannot be said that he does not even have the locus standi to bring the present petition to make the claim for the award of the contract in his favour. We are of the view that the petitioner has the locus standi to bring the petition. ( 5 ) SINCE the controversy centres round the circular dated 24-9-1991, Government of Sikkim, Home Department, we reproduce the same :"government OF SIKKIM home DEPARTMENT gangtok no. 54 (25)Home/ 90/35 dated : 24/09/1991 circular in supersession of all previous circulars and orders on the subject, the State Government hereby prescribes the following procedure for execution of works through Panchayat/ MLA nominees and registered/enlisted contractors :-1. 54 (25)Home/ 90/35 dated : 24/09/1991 circular in supersession of all previous circulars and orders on the subject, the State Government hereby prescribes the following procedure for execution of works through Panchayat/ MLA nominees and registered/enlisted contractors :-1. (a) All works not exceeding Rs. 5. 00 lakhs (civil works) shall be executed through the nominees of the Panchayat/ MLAs. Such nominee should be an experienced local person of Panchayat area who may or may not be an enlisted contractor. (b) Such nominations should be made jointly by the concerned Panchayats and area MLA. In the event of any differences or nonconsultation amongst the Panchayats and area MLAs, the decision of the Hon'ble Chief Minister shall be final. (c) All departments will intimate such schemes of value of civil work not exceeding Rs. 5. 00 lakhs to the concerned Panchayats and area MLAs who will then jointly recommend nominees for its execution. (d) The area MLA will be responsible for the timely and quality execution of all such works costing up to Rs. 5. 00 lakhs (civil works) entrusted to nominees of Panchayats / MLAs. 2. (a) All works costing more than Rs. 5. 00 lakhs and up to Rs. 20. 00 lakhs (civil works) shall be put on tender at the district level and in the district headquarters. (b) All registered/enlisted contractors in the State will be eligible to tender for such works. 3. All works costing more than Rs. 20. 00 lakhs (civil works) will be tendered at the State level and at the Head Office of the concerned Departments at Gangtok. 4. The concerned departments will ensure strict supervision of all such works executed through Panchayat/mla nominees and contractors. 5. This procedure will come into force with immediate effect. All tender works within Rs. 5-20 lakhs which have not already been allotted and commenced shall be retendered as per the procedure laid down herein. 6. All departments will strictly comply with the above instructions. Sd/- (P. K. Pradhan)chief Secretary. "this circular was later amended vide another Circular No. 54 (170)Home/95/6 dated 14/02/1995, whereby the ceiling for the works to be awarded on nomination basis was increased from Rs. 5. 00 lakhs to Rs. 10. 00 lakhs due to the general increase in price level over the intervening period, which runs as under :"government OF SIKKIM home DEPARTMENT gangtok no. "this circular was later amended vide another Circular No. 54 (170)Home/95/6 dated 14/02/1995, whereby the ceiling for the works to be awarded on nomination basis was increased from Rs. 5. 00 lakhs to Rs. 10. 00 lakhs due to the general increase in price level over the intervening period, which runs as under :"government OF SIKKIM home DEPARTMENT gangtok no. 54 (170)Home/96/6 dated : 14/02/1995 circular subject : AWARD OF WORK ON NOMINATION BASIS. Attention is invited to the Government decision contained in Home Department's Circular No. 54 (25)Home/90/ 35 dated 24/09/1991 spelling out the policy for award of certain works on nomination basis. The Government has studied this matter and has now decided that these orders will continue to be in force in all respects except that the ceiling for such works to be awarded on nomination basis will increase from Rs. 5. 00 lakhs to Rs. 10. 00 lakhs in view of the general increase in price level over the intervening period. 2. All Departments are requested to immediately initiate action in respect of award of works which have so far been held up. Sd/- (K. A. Varadan)chief Secretary. "a perusal of circular dated 24-9-1991, as stands amended by the circular dated 14-2-1995, would show that in respect of works not exceeding Rs. 10. 00 lakhs, works are to be awarded to the nominees of the Panchayat and the MLA concerned and in case of any differences or non-consultation between them, the decision about the person who is to be awarded the contract is to be taken by the Chief Minister. Thus the recipient of the contract is to be either the joint nominee of the Panchayat and MLA or of the Chief Minister. This arbitrarily excludes others from being considered for the contract. This exclusion of others should also result in award of contracts on terms which may not be the best terms in public interest. Relying upon R. D. Shetty v. International Airport Authority of India, (1979) 3 SCC 489 : (AIR 1979 SC 1628), the Supreme Court observed in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir, (1980) 4 SCC I : (AIR 1980 SC 1992), that with the growth of the welfare State, new forms of property in the shape of the Government largesse are developing such as jobs, contracts, licences, quotas, mineral rights etc. , with the result that more and more of our wealth consists of these new forms of property. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. The law has, however, not been slow to recognise the importance of this new kind of wealth and the need to protect individual interest in it and with that end in view, it has developed new forms of protection. "the discretion of the Government has been held to be not unlimited in that the Government cannot give largess in its arbitrary discretion or at its sweet will or on such terms as it chooses in its absolute discretion. There are two limitations imposed by law which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which largess may be granted and the other, in regard to the persons who may be recipients of such largesse. " So far as the first limitation is concerned, the State, unlike a private individual, cannot act as it pleases in the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of selfgain in any action taken by him, it is always open to him under the law to act contrary to his self interest or to oblige another in entering into a contract or dealing with his property. But, the government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the Government is still the government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. The constitutional power conferred on the government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. "it must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State". Dealing with the second limitation on the discretion of the government in grant of largess, the Court reiterating the observations in R. D. Shetty v. International Airport Authority (supra) said that the Government is not free like an ordinary individual, in selecting the recipients for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well established that the government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. Where the government is dealing with the public whether by way of giving jobs or entering into contracts or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or irrelevant. The Government action must not be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance. In Rashbihari Panda v. State of Orissa, (1969) 1 SCC 414 : (AIR 1969 SC 1081), the Supreme Court held that the scheme adopted by the Government first of offering to enter into contracts with certain named licensees, and later inviting tenders from licensees who had in the previous year carried out their contracts satisfactorily is liable to be adjudged void on the ground that it unreasonably excludes traders in Kendu leaves from carrying on their business. The Court said that the right to make offers being open to a limited class of persons it effectively shut out all other persons carrying on trade in Kendu leaves and also new entrants into that business. It was ex facie discriminatory, and imposed unreasonable restrictions upon the right of persons other than existing contractors to carry on business. Again, it was held in Erusian Equipment and Chemicals v. State of West Bengal, (1975) 1 SCC 70 : (AIR 1975 SC 266), that an ordinary individual can choose not to deal with any person, but the Government cannot choose to exclude persons by discrimination. The activities of the Government have a public element and, therefore, there should be fairness and equality. Relying on these decisions, we are of the view that the circular dated 24-9-1991 which arbitrarily excluded persons other than the nominees of the Panchayats and MLAs concerned or, in a given situation, of the Chief Minister, is violative of Art. 14 of the Constitution. ( 6 ) MISS Chuki submitted that the question as to how contract should be awarded is one of policy which is essentially to be decided by the Government and so long as there is no violation of any fundamental right or the principles of natural justice are not offended, the Court should not interfere with the decision of the government and in this connection relied upon State of Maharashtra v. Lok Shikshan Sanstha, (1971) 2 S CC 410 : (AIR 1973 SC 588); Premium Granites v. State of Tamil Nadu, (1994) 2 SCC 691 : (AIR 1994 SC 2233) and State of Uttar Pradesh v. U. P. University Colleges Pensioners' Association, (1994) 2 SCC 729 : (AIR 1994 SC 2311 ). There can be no dispute with the legal proposition submitted by the learned counsel. However, this does not help the case of the State as we have already held that the circular in question is in violation of Art. 14 of the Constitution. ( 7 ) NEXT submission made by Miss Chuki is that the impugned circular dated 24-9-1991 has no statutory basis as it is merely in the nature of administrative instruction and so the Courts are not to exercise its power of judicial review in the matter and has relied on certain authorities. First decision relied upon is State of Assam v. Ajit Kumar Sarma, AIR 1965 SC 1196. First decision relied upon is State of Assam v. Ajit Kumar Sarma, AIR 1965 SC 1196. In that case concerned rules which did not have statutory force had been framed by the Government in order to give revised grants to private colleges to enable them to give higher scales of pay etc. to their teachers in accordance with the recommendations of the University Grants Commission. One such rule, inter alia, provided that an employee desiring to seek election to the legislative body shall be on compulsory leave without pay from the date of filing of his nomination till the end of the academic session or till the expiry of the term of office to which he may be elected as the case may be. The respondent who was a teacher and had contested election contended that the rule being merely an administrative instruction should not be applied to him. It was held that where such conditions of grant-in-aid are laid down by mere executive instructions, it is open to a private college to accept these instructions or not to accept them. If it decides not to accept these instructions it will naturally not get the grant-in-aid which is contingent on its accepting the conditions contained in the instructions. On the other hand, if the college accepts the conditions contained in the instructions, it receives the grant-in-aid. That is, however, a matter between the Government and the private college concerned. Such conditions and instructions as to grant-in-aid confer no right on the teachers of the private colleges and they cannot ask that either a particular instruction or condition should be enforced or should not be enforced. It was further pointed out that it is only for the governing body of the colleges to decide whether to carry out any direction contained in mere administrative instructions laying down conditions for grant-in-aid. It was further pointed out that it is certainly not open to a teacher to insist that the governing body should not carry out the instruction. This authority is of avail since the non-statutory rules there did not violate any fundamental right of any person and the concerned Government employee obviously did not have the right to say whether the governing body of the college should or should not obey the non-statutory rule. The next authority relied upon is G. J. Fernandez v. State of Mysore, AIR 1967 SC 1753. The next authority relied upon is G. J. Fernandez v. State of Mysore, AIR 1967 SC 1753. There one of the questions was whether the rules in the Mysore Public Works Department Code were not followed. It was held that the instructions contained in the Code were mere administrative instructions and were not statutory rules and so they did not confer any right on anybody and a tenderer could not claim any right on the basis of administrative instructions. Further, it was pointed out that if these are mere administrative instructions, it may be open to the Government to take disciplinary action against its servants who do not follow these instructions but non-observance of such administrative instructions does not confer any right on any member of the public like a tenderer to ask for a writ against Government by a petition under Art. 226 of the Constitution. This authority is also not applicable to the facts of the present case. In that case grievance was that the administrative instructions were not followed. On the other hand, the question here is whether the administrative instructions contained in the given submission should not be followed since their observance would amount to the breach of the fundamental right of equality enshrined in Art. 14 of the Constitution. Since administrative instructions in that case were merely in the nature of guidance to its employees and their non-observance did not amount to violation of any fundamental right, the test applied in that case would certainly be different from the one that would be applicable to the present case. Administrative instructions are of two types : One, which are in the nature of mere guidelines issued to the Government servants not giving rise to any legal right in favour of the petitioners; the other, which give rise to a legal right in favour of the petitioners. In respect of the latter type, there is no rationale for the contention that the Court should not interfere even if the instructions infringe any fundamental right of the petitioner. In respect of the latter type, there is no rationale for the contention that the Court should not interfere even if the instructions infringe any fundamental right of the petitioner. If the Government can be prevented from doing an act which would infringe a fundamental right, which the Government proposes to do on the basis of a statutory rule, there is absolutely no reason why the Court should not injunct such an act from being done merely because such act is intended to be done on the basis of a rule, but not having statutory force. The Supreme Court observed in J. R. Raghupathy v. State of Andhra Pradesh, (1988) 4 SCC 364 : (AIR 1988 SC 1681) : "it is well settled that mandamus does not lie to enforce departmental manuals or instructions not having any statutory force, which do not give rise to any legal right in favour of the petitioner". Further, it was pointed out : "in the ultimate analysis, the present trend of judicial opinion on the question as to whether a 'prerogative' power is reviewable or not depends on whether its subject matter is suitable for judicial control". We, therefore, do not find any merit in the submission that the Court should not exercise its power of judicial review in the present case merely because the impugned circular does not have statutory force. ( 8 ) WE are, therefore, of the view that paragraph 1 of the impugned circular is in violation of Art. 14 of the Constitution and, therefore, mandamus should issue directing the Government not to award contracts as per the stipulations laid in that paragraph. It will be open to the Government to formulate any procedure for award of contracts which would give equal opportunity in compliance of Art. 14. However, in the present case as has been pointed out earlier more than 60% of the work has already been done by respondent No. 2 and the work is of an urgent nature as it involves repair of water pipeline, water from which is to be used for drinking purpose by the villagers. So, if respondent No. 2 is not allowed to complete this work, the award of work as per the new scheme which is still to be formulated may take considerable time which may be detrimental to public interest. So, if respondent No. 2 is not allowed to complete this work, the award of work as per the new scheme which is still to be formulated may take considerable time which may be detrimental to public interest. Apportionment of the value of the work already done by respondent No. 2 may also pose some problems. Therefore, for this work and other works where work orders have already been issued and work has also commenced, this judgment should not come in the way of the execution of such work orders. Since the petitioner got contract in pursuance of the impugned order, he is not entitled to any relief for himself in this petition. ( 9 ) IN the result, the petitioner is not entitled to any relief. Mandamus shall issue to respondent No. 1 for not acting in pursuance of paragraph 1 of Circular No. 54 (25)Home/ 90/ 35 dated 24-9-1991 as amended by Circular No. 54 (170)Home/95/6 dated 14-2-1995, except in respect of works where work orders have already been issued and work has also commenced. No order as to costs. The petition thus stands disposed of. ( 10 ) S. N. BHARGAVA, C. J. :-I am in full agreement with the views expressed by my brother Judge but I would like to give some additional reasons as well. ( 11 ) THE impugned circular provides that the works under Rs. 5. 00 lakhs (now Rs. 10. 00 lakhs) shall be executed through the nominees of the Panchayat / M. L. As. Such nominations should be made jointly by the concerned Panchayat and the area MLA and in the event of any differences or non-consultation among the Panchayat or area MLA, the decision of the Hon'ble Chief Minister shall be final. I fail to understand as to how this procedure can be held legal, proper or even reasonable. The State has got a separate department known as Public Works Department which is expected to carry out the works of construction throughout the State and also to maintain all the Government buildings. By this circular, the State Government has abdicated its power to Panchayats / MLAs to nominate as to who will execute the work meaning thereby, that it will be for the politicians to select a person for executing the construction works in the State up to Rs. 5. 00 lakhs (now Rs. 10. 00 lakhs ). By this circular, the State Government has abdicated its power to Panchayats / MLAs to nominate as to who will execute the work meaning thereby, that it will be for the politicians to select a person for executing the construction works in the State up to Rs. 5. 00 lakhs (now Rs. 10. 00 lakhs ). I have not come across such a guideline in my long legal career of nearly 40 years. This seems to be a unique procedure adopted in the State of Sikkim. It is true that Sikkim was a separate entity till 1975 but after merger with India, it has become a part of India and it is high time, the State should come in the main stream with the whole country. Things should be done here as in the other parts of the country. No special consideration or guidelines of this nature can be adopted merely because such a procedure prevailed for the last 3-1/2 years. It need not be upheld when it is against the fundamental principles of administration. How can the powers of the State Government to decide as to who should be granted the construction work be abdicated to either M. L. A. or to the Panchayat ? The State Government cannot distribute largesse for its political ends. In that case, an MLA having influence over the Panchayat can get the work allotted to his close relatives, friends, political workers and the money will have to be paid by the government without having any control over the quality of the work. An MLA may not be an expert in construction works or of supervising and keeping the quality of work under control. If the work is executed by the nominee of the Panchayat / MLA, the government will have no direct control over such persons. The contractor may or may not obey the directions or the instructions of the concerned government department as they are not responsible to the Government. In our present democracy, the only qualification needed for being an MLA is that he should have attained the age of 21 years. It is impossible to expect from every MLA to supervise the work and to bear upon himself the responsibility of executing the work in time and of standard quality. This is nothing but a short cut for distributing Government largesse to politicians for their political gains. It is impossible to expect from every MLA to supervise the work and to bear upon himself the responsibility of executing the work in time and of standard quality. This is nothing but a short cut for distributing Government largesse to politicians for their political gains. It cannot be permitted in a country which is governed by the rule of law and where democracy prevails. It is nothing but a camouflage meant to legalise political patronage. ( 12 ) WITH the increase of the power of administrative bodies it has become necessary to provide guidelines for the just exercise of their power. To prevent the abuse of that power and to see that it does not amount to despotism, favouritism, courts are gradually evolving the principles to be observed while exercising such powers. The government is not like a private individual who can pick and choose a person with whom it can deal, but the Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. The democratic form of Government demands equality and absence of arbitrariness and discrimination. The activities of the Government have a public element and, therefore, there should be fairness and equality. It has been observed in International Airport Authority case (AIR 1979 SC 1628) that when the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standards and norms which are not arbitrary, irrational or irrelevant. These observations were again reiterated in Kasturi Lal's case (supra ). Thus the impugned circular cannot be allowed to be acted upon. Order accordingly. --- *** --- .