Devinder Gupta ( 1 ) ON the basis of recommendations of a Committee constituted by the Chairman and Managing Director of Indian Airlines respondent No. 2, decided to sell five aircraft (VT-EAI. VT-ECP, VT-ECS, VT-EDR and VT-EDS) for which purpose in February/march, 1995 an advertisement was inserted in international and Indian newspapers. Offers were received from four parties. The total sum of offers for the five aircraft was around Rs. 7. 8 crores which was on an average of Rs. 1. 36 crores per aircraft. Since the offers received were too low, respondent No. 2, on 14th August, 1995 issued limited tender (annexure P-1)to65 parties in India and abroad calling upon them to submit their offers latest by 24th August. 1995. In response five parties submitted their offers, two of whom were Indian and remaining three were international parties. Indian parties being Sahara India Airlines (Petitioner No. 2) and M/s Blue Dart Express (P) Ltd. (respondent No. 5) (hereinafter referred to as the Sahara and the Blue Dart respectively ). ( 2 ) THE highest offer for five aircraft as a package was received from an international party, namely, M/s Solair, Singapore for Rs. 23. 62 crores but this offer made was without the requisite deposit of earnest money and was not considered. M/s Blue Dart submitted the highest offer of Rs. 12. 40 crores for the two aircraft (VT- EDR and VT-EDS ). The petitioner. Sahara, gave an offer of Rs. 9. 25 crores as a package for five aircraft. After analysing the offers the Committee decided to hold discussions with the petitioner and respondent No. 5. On 28th May, 1995 both the petitioner and respondent No. 5 were advised to submit their best offers by 6th September, 1995. Likewise the three foreign parties were also asked to give their best offers. All five parties responded. Their-offers were opened on 6. 9. 1995. Petitioner s highest offer as a package for all five aircraft was for Rs. 19 crores as against Rs. 9. 61 crores and Rs. 7. 71 crores by the two foreign parties. Respondent No. 5 quoted for only two aircraft at Rs. 13. 00 crores. The Committee discussed the offers with the petitioner on 7. 9. 1995 and efforts were made to make the petitioner drop his condition of purchasing the aircraft as a package. Petitioner did not agree. Offer of petitioner thereafter was negotiated. 71 crores by the two foreign parties. Respondent No. 5 quoted for only two aircraft at Rs. 13. 00 crores. The Committee discussed the offers with the petitioner on 7. 9. 1995 and efforts were made to make the petitioner drop his condition of purchasing the aircraft as a package. Petitioner did not agree. Offer of petitioner thereafter was negotiated. The petitioner agreed to revise its offer for ive aircraft from Rs. 19. 00 crores to Rs. 20. 5 crores. Memorandum of Understanding (Annexure 111) was thereafter entered into with petitioner No. 2 on 7. 9. 1995. As per the memorandum of understanding sale of the five aircraft to the petitioner was to be subject to the approval of the Board of respondent No. 2 and the Government. Memorandum of understanding (for short Mou) further clarifies that in case approval is not received by 30. 9. 1995, extendible by mutual consent to 10. 10. 1995, the deposit of Rs. 95 lakhs made by the petitioner with respondent No. 2 as well as the bank guarantee furnished as per the Mou will be released to the petitioner without any further liability on respondent No. 2. These facts are not in dispute. ( 3 ) IT is the petitioner s case that on 30. 9. 1995 when the petitioner requested through its letter to advise the exact date of delivery and payment for the five aircraft, the petitioner for the first time learnt that not only the Memorandum of Understanding with petitioner has been rejected but respondent No. 2 was also in the process of delivering the two aircraft to respondent No. 5. Petitioner s grievance is that the Board of Directors in its meeting held on 29. 9. 1995 have taken a decision to reject the petitioner s offer and to accept the offer of respondent No. 5 for the two aircraft. This action of respondent No. 2 is under challenge by the petitioner in this writ petition filed under Article 226 of the Constitution of India. ( 4 ) THE petitioner has contended that respondent No. 2 has acted arbitrarily in rejecting the memorandum of understanding dated 7. 9. 1995, which had been entered into after detailed negotiations. The same could be rejected only for sufficient and reasonable cause and by giving a reasoned order. ( 4 ) THE petitioner has contended that respondent No. 2 has acted arbitrarily in rejecting the memorandum of understanding dated 7. 9. 1995, which had been entered into after detailed negotiations. The same could be rejected only for sufficient and reasonable cause and by giving a reasoned order. Since no reasons exist and no reasons have been disclosed, the order of rejecting the memorandum of understanding is arbitrary and violative of petitioner s right under Articles 14 and 19 (1) (g) of the Constitution of India. It is contended that it also violates the principles of fair play and natural justice. Entering into the memorandum of understanding gave rise to a legitimate expectation in petitioner s favour that the other formalities in respect of the memorandum of understanding would be completed and formal approval would be issued. In view of the legitimate expectation the impugned order dated 29. 9. 1995 rejecting the memorandum of understanding is arbitrary, illegal, null and void. The petitioner s case further is that respondent No. 2 not only arbitrarily rejected the memorandum of understanding arrived at with the petitioner on 7. 9. 1995 but further directed the sale of the two aircraft to respondent No. 5 without giving formal offer to the petitioner in respect of the individual bid for the two aircraft. The petitioner having enhanced its composite bid from Rs. 19 crores to Rs. 20. 5 crores, the same matched to the bid of respondent No. 5 for the two aircraft. Respondent No. 2 acted arbitrarily in going back from the commitment made. The petitioner acted on the representation contained in Mou and changed its position by furnishing bank guarantee. Respondent No. 2 could not have acted in a manner in rejecting the petitioner s bid. Even if the Board of Directors of respondent No. 2 decided to sell two out of the five aircraft, it was necessary with the settled law of dealing with the disposal of public and State properties that the petitioner ought to have been taken into confidence since the petitioner had met the highest bid as against respondent No. 5 and the petitioner s offer ought to have been accepted. Decision of the Board of Management has been challenged on the ground that there has been total non- application of mind in rejecting the petitioner s bid. Decision of the Board of Management has been challenged on the ground that there has been total non- application of mind in rejecting the petitioner s bid. ( 5 ) THE writ petition came up before the court on 30. 9. 1995. The petitioner insisted upon an interim order in its favour on the ground that in spite of memorandum of understanding having been arrived at with the petitioner in respect of the five aircraft which were offered for sale, respondent No. 2 had decided to accept the bid of respondent No. 5 in respect of only two aircraft, namely. VT-EDR 21168 and VT- EDS 21164. ignoring the bid of the petitioner, which was matching with that of respondent No. 5. By way of interim directions, respondent No. 2 was restrained from parting with the possession of the two aircraft to respondent N. 5. It was made clear as a condition precedent to the grant of ex parte ad interim order that the petitioner shall be liable to compensate the respondent for any loss or damage suffered by them, on account of the order in the event of the petition and/or the application for grant of ad interim writ being rejected. ( 6 ) PARTIES have now exchanged their respective affidavits. Basic facts are not in dispute. Respondents 2 to 4 in their counter affidavit have taken up a stand that after the memorandum of understanding was entered into with the petitioner, the Board of respondent No. 2 in its 14th Meeting held on 29. 9. 1995 discussed the same and considered the other offers. On a careful consideration of the facts and keeping in view the commercial expediency a conclusion was arrived at that the highest offer received for the two aircraft was from respondent No. 5 amounting to Rs. 13 crores. Petitioner No. 2 had offered a total amount of Rs. 19 crores for five aircraft as a package, which included a sum of Rs. 11. 50 crores for the two aircraft. Increase in the offer by petitioner No. 2 by Rs. 1. 5 crores to a total amount of Rs. 20. 5 crores cannot be attributed solely to the above two aircraft since the offer was for purchase of five aircraft as a package. Even if it is so attributed it will only be equal to the offer of respondent No. 5. 1. 5 crores to a total amount of Rs. 20. 5 crores cannot be attributed solely to the above two aircraft since the offer was for purchase of five aircraft as a package. Even if it is so attributed it will only be equal to the offer of respondent No. 5. Before rejecting the offer of petitioner No. 2, the Board also considered another aspect that respondent No. 5 had offered to buy the aircraft after relinquishing the interiors of aircraft such as seats, loose equipments, rear galleys. passengers service units and toilets. ( 7 ) COPY of the minutes of the Board s meeting discussing the memorandum of sale has been annexed with the counteraffidavit as Annexure A. The Board of Directors noticed that the three aircraft had already undergone ageing modifications Keeping in view the upward trend in the market, it decided to re-tender the same, in order to get the best price. It also been noticed a fact that the two aircraft in question had to undergo 20 years mandatory modifications in October, 1995. One of the aircraft was also due to Check II Inspection and in case these aircraft were not sold in early October, 1995, respondent No. 2 was likely to spend another amount of Rs. 1. 50 crores. The Board, keeping in view the dead line for sale with respect to the two aircraft and also the fact that one of the aircraft was also due for Check II Inspection decided to offer only the two aircraft forsale for which offer of respondent No. 5 was taken as the the highest offer. It also noticed the fact that the offer of petitioner No. 2 was made with respect to five aircraft as a package, whereas respondent No. 5 had made offer only for two aircraft. Offer of respondent No. 5 on the ground of commercial expediency was considered as financially beneficial and lucrative and, was accepted by the Board of Directors subject to the approval of Government of India. In view of this all the other offers were rejected and decision was taken to re-advertise the remaining three aircraft. ( 8 ) WE have heard at length the parties in support of their versions. The law with respect to the judicial review in exercise of contractual power by Governmental bodies is well settled. In view of this all the other offers were rejected and decision was taken to re-advertise the remaining three aircraft. ( 8 ) WE have heard at length the parties in support of their versions. The law with respect to the judicial review in exercise of contractual power by Governmental bodies is well settled. We need not refer to any of the decisions except making reference to the broad principles laid down in Ramana Dayaram She International Airport Authority of India and others, (1979) 3 SCC 489 ; M/s Kasturi Lal Lakshmi Reddy, Represented by its partner Shri Kasturi Lal, Ward No. 4, Palace Bar, Poonch, Jammu and others v. State ofjammu and Kashmir andanother (1980) 4 SCC 1 : Union of India and others v. Hindustan Development Corporation and others (1993) 3 SCC 499; and New Horizons Limited and another v. Union of India and others (1995) 1 SCC 478 that in the matter of entering into a contract the State does not stand on the same footing as a private person, who is free to enter into a contract with any person he likes. The State in exercise of its various functions is governed by the mandate of Article 14 of the Constitution, which excludes arbitrariness in State action and requires the State to act fairly and reasonably. Its action must be in confirmity with the standards or norms which are not arbitrary, irrational or irrelevant. The facets of irrationality as were noticed and laid down by the Supreme Court in Tata Cellular v. Union of India (1994) 6 SCC 651 were duly considered by a Division Bench of this court in Larson and Toubro Ltd. and another v. Union of India and others 59 (1995) DLT 99 of which one of us (Dr. M. K. Sharma. J)was a party. In view of the principles laid down it is open to the court to review the decision maker s evaluation of the facts but the court will intervene only where the facts taken as a whole could not logically warrant the conclusion of the decision makers. If the weight of the facts pertaining to one course of action is overwhelming than a decision the other way cannot be upheld. The decision would also be recorded as unreasonable if it is partial and unequal in its operation as between the same class. If the weight of the facts pertaining to one course of action is overwhelming than a decision the other way cannot be upheld. The decision would also be recorded as unreasonable if it is partial and unequal in its operation as between the same class. It is in the light of this decision in law that the decision of the Board of Directors is required to be examined. ( 9 ) THE Board discussed the Mou as also the offers. It found that the tenders for sale of the aircraft were issued on number of occasions and on each occasion offer had improved. Attention of the Board was drawn by one of its members that there was likelihood of aircraft market increasing in India significantly and that the aircraft were likely to fetch higher value if the company re-advertises the same since they could be used as freighters. Since two of the aircraft were due to undergo 20 years mandatory modifications in October, 1995 and one of the two aircraft was also due for Check II Inspection it was decided that in case these two aircraft are not sold before October, 1995 in that case the company was likely to spend an amount of Rs. 1. 50 crores. In this background the two offers of Sahara, (the petitioner), and Blue Dart (respondent No. 5) were considered and it came to the conclusion that the offer of Blue Dart was superior to that of the petitioner. The decision of the Board of Management is reproduced in its own words as follows: "the highest offer received for these two aircraft was from M/s Blue Dart of Rs. 13 crores. M/s Sahara India had offered a total amount of Rs. 19 crores for the five aircraft as a package which included a sum of Rs. 11. 50 crores tor these two aircraft. M/s Sahara increased their offer during new sections by Rs. 1. 5 crores to a total of Rs. 20. 5 crores. This amoun, of Rs. 1. 5 crores cannot be attributed solely to the above two aircraft Even if it is so attributed it would only be equal to the offer of M/s Blue Dart. On the other hand M/s Blue Dart offered to buy the aircraft after relinquishing the interiors of the aircraft such as. 20. 5 crores. This amoun, of Rs. 1. 5 crores cannot be attributed solely to the above two aircraft Even if it is so attributed it would only be equal to the offer of M/s Blue Dart. On the other hand M/s Blue Dart offered to buy the aircraft after relinquishing the interiors of the aircraft such as. seats loose equipment, rear galleys, passenger service units and toilets Taking facts mentioned above into consideration, the Board was of the view that offer of M/s Blue Dart was superior to that of M/s Sahara India. The Board took the following decisions:- I) The Management was authorised to sell VT-EDR and EDS to M/s Blue Dart subject to the approval of Government which is required vide letter No AV. 180431/3/94-ACIE dated the 23rd of May, 1995. II) All other offers were rejected. The MOD with M/s Sahara be cancelled. III) The Company re-advertise for selling the remaining aircraft. " ( 10 ) THERE is no dispute as regards the fact and as regards the various offers, which have been made from time to time by the petitioner. This aspect was also brought to the notice of the Board of Management. We have been shown the agenda and memoranda put up in the 14th meeting of the Board of Management held on 29th September, 1995 which also contains the comparative statement of offers received from five parties. Notice inviting tender provided that all the aircraft offered for sale are in air-worthy condition and are offered for sale with "as is where is" condition. Offerers were required to indicate their offers separately for each aircraft. As regards acceptance and rejection of the offer, the notice further provided that the Indian Airlines was not bound to accept the highest or any other offer received. The offer received was likely to be accepted or rejected partially or in full without assigning any reasons whatsoever and the decision of the Director (Stores and Purchase), Indian Airlines in that regard would be final and legally binding. Indian Airlines also reserved to itself the right to withdraw the offer at any time without assigning any reason whatsoever. Needless to add that in the light of this notice inviting tender, the Board of Management considered the offers, which had been received. Indian Airlines also reserved to itself the right to withdraw the offer at any time without assigning any reason whatsoever. Needless to add that in the light of this notice inviting tender, the Board of Management considered the offers, which had been received. Before it was placed comparative statement of offers received from the five parties, three parties had given their offers for five aircraft whereas two parties had given their offers respectively for 2 and 3 aircraft. We are not concerned with the three foreign offers. Thus, we are left with only two offers. The petitioner had made a bid for five aircraft as a package whereas respondent No. 5 for two aircraft only. Petitioner s bid for five aircraft as a package was of Rs. 19 crores whereas the bid of respondent No. . . . was for two aircraft of Rs. 13 crores. Board of Directors also noticed the fact that when the petitioner on 7. 9. 1995 decided to increase its bid from Rs. 19 crores to Rs. 20. 5 crores it did not specify as to against which aircraft the increase had been offered. The Board examined the offer from both the angles and even went to the extent of observing that even if the increase offered can be said to be attributable solely to the two aircraft even in that case the offer of the petitioner was equal to that of respondent No. 5 and since respondent No. 5 had offered to buy the two aircraft after relinquishing the interiors of the aircraft such as seats, loose equipment, rear galleys, passenger service units and toilets, the offer of respondent No. 5 was superior to that of the petitioner. Board of Directors being a body of experts, we while hearing the writ petition are not sitting as a court of appeal over their decision but are only concerned with the decision making process to find out as to whether the decision arrived at was reasonable and fair. The Board was presented with all relevant facts, which are undisputed and the decision of the Board of Management in having come to the conclusion that the offer of respondent No. 5. The Board was presented with all relevant facts, which are undisputed and the decision of the Board of Management in having come to the conclusion that the offer of respondent No. 5. in the facts and circumstances, all other things being equal, was superior to that of the petitioner inasmuch as it had offered to buy the two aircraft after relinquishing valuable interiors of the two aircraft such as seats, loose equipment, rear galleys, passenger service units and toilets. Moreover the petitioner had offered for purchase of five aircraft as a package and was not interested to buy the two aircraft only. The Board in first part of its discussion concluded that in view of commercial expediency it may not be advisable at this stage to dispose of the three aircraft, which amounts to withdrawal of its offer for the three aircraft. Thus, there is nothing wrong in the decision of the Board of Directors which we consider to have been arrived at fairly after taking note of all relevant factors into consideration. By merely entering into memorandum of understanding no rights can be said to have come into being in petitioner s favour since it was clearly stipulated even in the memorandum of understanding that the same was subject to the approval of the Board and Government of India. Government of India has not taken any decision and the Board has not accepted the memorandum of understanding. It is not in dispute that it was within the competence of the Board either to accept or reject the same. Decision arrived at by the Board cannot be said to be unreasonable in the facts and circumstances of this case. There is also no question of applicability of promissory estoppel also in this case since Mou specifically provided for the sale of five aircraft to the petitioners, subject to the approval of the Board and Government of India. ( 11 ) THE petition accordingly is liable to be dismissed. ( 12 ) SINCE it was due to the petitioners filing the present writ petition and obtaining ex parte order of injunction that the decision of the Board could not be given effect, which was arrived at on 29. 9. 1995, since respondent No. 2 was restrained from parting with possession of the two aircraft, it is a fit case that the petitioners must be burdened with costs. 9. 1995, since respondent No. 2 was restrained from parting with possession of the two aircraft, it is a fit case that the petitioners must be burdened with costs. The writ petition accordingly is dismissed with costs quantified at Rs. 20. 000. 00 payable by the petitioners to respondent No. 2.