ORDER V. Gopala Gowda, J.— The Petitioners in all these cases who are the lessees who had enjoyed the exploitation of the minor mineral on the basis of Lease Deeds executed by the first Respondent-Senior Geologist in respect of different extent of lands which are clearly mentioned in the Writ Petitions have filed these Writ Petitions challenging the constitutional validity of the impugned notification dated 16.10.2000 produced at Annexure-A. They have sought for issuance of a Writ of Mandamus to quash the same on the ground that the said notification is unconstitutional as the same is violative of Rule 21 of the Karnataka Minor Mineral Concession Rules, 1994 for the reason that they filed applications before the first Respondent for grant of renewal of lease in respect of the lands in question in their favour as they had acquired the vested legal right for grant of renewal of lease hold rights. Therefore these Writ Petitions are filed urging various legal contentions contending that the impugned notification pertains to Ordinary sand. It deals with fresh applications under Rule 21(2), which deals with renewals for non-specified minor mineral. Ordinary sand is a non-specified minor mineral. The amendment rules has not dealt with the leases that has been expired before the amendment of the impugned rule came into force and the renewal applications have been filed long back before the first Respondent as they have acquired a legal right. The first Respondent did not consider the applications of the Petitioners in pursuance of the impugned Rule. Therefore, under the Rules, there was a deemed lease in respect of each one of the Petitioners in respect of the land in question. The Revision proceedings were initiated by the Petitioners before the Director of Mines and Geology. Impugned revision petitions have been allowed directing the first Respondent to consider the applications for grant of renewal of leases in their favour. During pending consideration of the applications by the first Respondent on the basis of the orders passed in the revision petitions under Rule 53 by the Revisional Authority, the impugned notification has been issued by the third Respondent-State which has infringed the fundamental rights and the statutory rights guaranteed to the Petitioners as referred to above. Therefore the learned Counsel Mr. Gopalakrishna on behalf of the Petitioners submits that the impugned notification is liable to be quashed. 2. The learned Government Pleader Mrs. Therefore the learned Counsel Mr. Gopalakrishna on behalf of the Petitioners submits that the impugned notification is liable to be quashed. 2. The learned Government Pleader Mrs. Shoba Patil appearing on behalf of the Respondents has sought to justify the impugned notification placing reliance upon the judgment of the Apex Court reported in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, AIR 1979 SC 1628 in the case of Ramana Dayaram Setty v. The International Airport Authority of India and Ors., contending that the minor mineral is the property of the State. Section 15 of the MMRD Act of 1957 confers power upon the State Government to frame rules to regulate the extraction both specified and non-specified minor mineral in the State by granting lease hold rights in favour of eligible person. It is contended that in exercise of power by the State Government under Section 15 of the MMRD Act, 1957, the rules referred to above have been framed and notification has also been issued to sell the non-specified minor mineral namely the ordinary sand in public auction. The Apex Court in the case referred to supra has succinctly laid down the law, after considering the earlier judgments of the Apex Court where it has been held that the public property should be protected and no rights can be conferred upon the individuals without following the procedure of conducting public auction either to grant licence or lease hold rights to exploit the minor minerals available in the State by collecting royalty charges as it would amount to violation of Article 14 of the Constitution of India. Therefore, the learned Government pleader submits that the impugned notification is issued strictly in conformity with the law laid down by the Apex Court and Section 15 of the MMRD Act. The State Government has got every power to make the rules. The Rule 21(2) of the Rules of 1994 has been amended by the State Government in exercise of its legislative power under Section 15 of the MMRD Act. Therefore, it is urged that this Court should not interfere with it as the same would affect the public interest. Therefore the learned Government Pleader seeks to submit that the Writ Petitions are liable to be dismissed. 3. Therefore, it is urged that this Court should not interfere with it as the same would affect the public interest. Therefore the learned Government Pleader seeks to submit that the Writ Petitions are liable to be dismissed. 3. The learned Government Pleader further submits that there cannot be two sets of rules governing persons in whose favour the lease hold rights were already granted and the period of lease had expired and after that they have filed applications requesting for grant of renewal of leases in respect of the lands for grant of lease hold rights after grant of renewal. The other area where fresh lease hold rights are required to be granted for non-specified minerals in favour of eligible persons should be by conducting public auction. 4. After hearing the learned Counsel for the parties, I have perused the impugned notification, Rule 21(2) and provisions of Section 15 of the MMRD Act, 1957 and the judgment of the Apex Court referred to supra and also the Division Bench unreported judgment of this Court rendered in Writ Appeal No. 3326 of 1997 disposed of on 15.1.1998. The contentions of the learned Counsel for the Petitioners that the State Government has no power to frame Rules or amend the rule particularly the impugned rule contending that the Petitioners are different class of persons when compared to the others who will be seeking for grant of lease hold rights in respect of exploiting non-specified minor mineral of sand as the rights are already accrued in their favour cannot be accepted by this Court for the simple reason that mere filing of applications by them pursuant to the said Rule for grant of renewal of licences do not confer a right upon them. The applications are required to be considered by the first Respondent keeping in view the provisions which will be prevailing as on the date of consideration of the applications though the Revision Petitions were allowed by the Revisional Authority in exercise of his power under Rule 53 of the Rules, the State Government has framed the impugned rules. The applications are required to be considered by the first Respondent keeping in view the provisions which will be prevailing as on the date of consideration of the applications though the Revision Petitions were allowed by the Revisional Authority in exercise of his power under Rule 53 of the Rules, the State Government has framed the impugned rules. On the other hand, the first Respondent cannot consider the applications of the Petitioners for grant of renewal of leases in favour of the Petitioners for the reason that the first Respondent is required to take necessary steps to auction the right either of licence or lease hold rights of exploiting non specified minor minerals of sand in question for grant of the lease hold rights in favour of the eligible persons in public auction. In this view of the matter, the contention of the Petitioners is devoid of merits and therefore the various legal contentions urged by the learned Counsel for the Petitioners is liable to be rejected. The impugned rule has been examined with reference to Section 15 of the MMRD Act, 1957, which provisions confers power upon the State Government to make rules. The State Government in exercise of its power has amended the impugned rule by issuing the notification and the same has been amended to the following effect. Rule 21(2)(a) provides that, "nothing in this Rule shall apply to grant quarrying lease to ordinary sand on the ground that sand shall be by auction in accordance with the provisions of Chapter IV-A of the Rules. The said Rule is in conformity with the law laid down in the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, AIR 1979 SC 1628 referred to supra. The relevant paragraphs in the said case are extracted as hereunder for the purpose of appreciating the rival contentions urged by the learned Counsel on behalf of the parties. 20. Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as government. 20. Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such Corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance. 21. This rule also flows directly from the doctrine of equality embodied in Article 14. It is now well settled as a result of the decisions of this Court in E.P. Royappa Vs. State of Tamil Nadu and Another, AIR 1974 SC 555 and Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, AIR 1978 SC 597 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore act arbitrarily in entering into relationship, contractual or otherwise with a third party but its action must conform to some standard or norm which is rational and non-discriminatory. This principle was recognised and applied by a Bench of this Court presided over by Ray, C.J., in Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, AIR 1975 SC 266 where the learned Chief Justice pointed out that 'the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality or opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting - A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling - It is true that neither the Petitioner nor the Respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods'. It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational or non-discriminatory ground. 22. It is interesting to find that this rule was recognised and applied by a Constitution Bench of this Court in a case of sale of kendu leaves by the Rashbihari Panda etc. Vs. State of Orissa, AIR 1969 SC 1081 . The trade of kendu leaves in the State of Orissa was regulated by the Orissa Kendu Leaves (Control of Trade) Act, 1961 and this Act created a monopoly in favour of the State so far as purchase of kendu leaves from growers and pluckers was concerned. Vs. State of Orissa, AIR 1969 SC 1081 . The trade of kendu leaves in the State of Orissa was regulated by the Orissa Kendu Leaves (Control of Trade) Act, 1961 and this Act created a monopoly in favour of the State so far as purchase of kendu leaves from growers and pluckers was concerned. Section 10 of the Act authorised the Government to sell or otherwise dispose of kendu leaves purchased in such manner as the Government might direct. The Government first evolved a scheme under which it offered to renew the licences of those traders who in its view had worked satisfactorily in the previous year and had regularly paid the amounts due from them. The scheme was challenged and realising that it might be struck down, the Government withdraw the scheme and instead, decided to invite tenders for advance purchases of kendu leaves but restricted the invitation to those individuals who had carried out contracts in the previous year without default and to the satisfaction of the Government. This method of sale of kendu leaves was also challenged by filing a writ petition on the ground inter alia it was violative of Articles 14 and 19(1)(g) and this challenge, though negatived by the High Court, was upheld by this Court in appeal. The Court pointed out that the original scheme of offering to enter into contracts with the old licencees and to renew their terms was open to grave objection, since it sought arbitrarily to exclude many persons interested in the trade and the new scheme under which the Government restricted the invitation to make offers to those traders who had carried out their contracts in the previous year without default and to the satisfaction of the Government was also objectionable, since the right to make tenders for the purchase of kendu leaves being restricted to a limited class of persons, it effectively shut out all other persons carrying on trade in kendu leaves and also the new entrants into that business and hence it was ex facie discriminatory and imposed unreasonable restrictions upon the right of persons other than the existing contractors to carry on business. Both the schemes evolved by the Government were thus held to be violative of Articles 14 and 19(1)(g) because they gave rise to a monopoly in the trade in kendu leaves to certain traders and singled out other traders for discriminatory treatment'. The argument that existing contractors who had carried out their obligations in the previous year regularly and to the satisfaction of the Government formed a valid basis of classification bearing a just and reasonable relation to the object sought to be achieved by the sale, namely, effective execution of the monopoly in the public interest, was also negatived and it was pointed out that: "exclusion of all persons interested in the trade, who were not in the previous year licencees, is ex facie arbitrary; it had no direct relation to the object of preventing exploitation of pluckers and growers of kendu leaves, nor had it any just or reasonable relation to the securing of the full benefit from the trade to the State". The Court referred to the offer made by a well known manufacturer of bidis for purchase of the entire crop of kendu leaves for a sum of Rs. 3 crores which was turned down by the government and expressed its surprise that no explanation was attempted to be given on behalf of the State as to why such an offer, from which the State stood to gain more than Rs. 1 crore, was rejected by the Government. It will be seen from this judgment that restricting the invitation to submit tenders to a limited class of persons was held to be violative of the equality clause, because the classification did not bear any just and reasonable relation to the object sought to be achieved, namely, selling of kendu leaves in the interest of the general public. The standard or norm laid down by the Government for entering into contracts of sale of kendu leaves with third parties was discriminatory and could not stand the scrutiny of Article 14 and hence the scheme was held to be invalid. The Court rejected the contention of the Government that by reason of Section 10 it was entitled to dispose of kendu leaves in such manner as it thought fit and there was no limitation upon its power to enter into contracts for sale of kendu leaves with such persons it liked. The Court rejected the contention of the Government that by reason of Section 10 it was entitled to dispose of kendu leaves in such manner as it thought fit and there was no limitation upon its power to enter into contracts for sale of kendu leaves with such persons it liked. The Court held that the Government was, in the exercise of its power to enter into contracts for sale of kendu leaves, subject to the constitutional limitation of Article 14 and it could not act arbitrarily in selecting persons with whom to enter into contracts and discriminate against others similarly situate. The Court criticised the Government for not giving any explanation as to why an offer for a large amount was not accepted, the clearest implication being that the Government must act in the public interest; it cannot act arbitrarily and without reason and if it does so, its action would be liable to be invalidated. This decision wholly supports the view we are taking in regard to the applicability of the rule against arbitrariness in State action. 24. The Respondents also relied on the decision of this Court in Trilochan Mishra, etc. Vs. State of Orissa and Others, AIR 1971 SC 733 . The complaint of the Petitioner in that case was that the bids of persons making the highest tenders were not accepted and persons who had made lesser bids were asked to raise their bids to the highest offered and their revised bids were accepted. The Constitution Bench negatived this complaint and speaking through Mitter, J., observed (at p. 739 of AIR): With regard to the grievance that in some cases the bids of persons making the highest tenders were not accepted, the facts are that persons who had made lower bids were asked to raise their bids to the highest offered before the same were accepted. Thus there was no loss to Government and merely because the Government preferred one tender to another no complaint can be entertained. Government certainly has a right to enter into a contract with a person well known to it and specially one who has faithfully performed his contracts in the past in preference to an undesirable or unsuitable or untried person. Government certainly has a right to enter into a contract with a person well known to it and specially one who has faithfully performed his contracts in the past in preference to an undesirable or unsuitable or untried person. Moreover, Government is not bound to accept the highest tender but may accept a lower one in case it thinks that the person offering the lower tender is on an overall consideration to be preferred to the higher tenderer. We fail to see how this observation can help the contention of the Respondents. It does not say that the Government can enter into contract with anyone it likes arbitrarily and without reason. On the contrary, it postulates that the Government may reject a higher tender and accept a lower one only when there is a valid reason to do so, as for example, where it is satisfied that the person offering the lower tender is on an overall consideration preferable to the higher tenderer. There must be some relevant reason for preferring one tenderer to another, and if there is, the Government can certainly enter into contract with the former even though his tender may be lower but it cannot do so arbitrarily or for extraneous reasons. 25. There was also one other decision of this Court in State of Orissa and Others Vs. Harinarayan Jaiswal and Others, AIR 1972 SC 1816 . Which was strongly relied upon on behalf of the Respondents. There the Respondents were the highest bidders at an auction held by the Orissa Government through the Excise Commissioner for the exclusive privilege of selling by retail country liquor in some shops. The auction was held pursuant to an order dated 6th January, 1971 issued by the Government of Orissa in exercise of the power conferred under Section 29(2) of the Bihar and Orissa Excise Act, 1915 and Clause (6) of this Order provided that "no sale shall be deemed to be final unless confirmed by the State Government who shall be at liberty to accept or reject any bid without assigning any reason therefor". The Government of Orissa did not accept any of the bids made at the auction and subsequently sold the privilege by negotiations with some other parties. The Government of Orissa did not accept any of the bids made at the auction and subsequently sold the privilege by negotiations with some other parties. One of the contentions raised on behalf of the Petitioners in that case was that the power retained by the Government "to accept or reject any bid without any reason therefor" was arbitrary power violative of Articles 14 and 19(1) and (g). This contention was negatived and Hegde, J., speaking on behalf of the Court observed (at p. 1822 of AIR): The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence quite naturally, the legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicial review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Government's power to sell the exclusive privilege set out in Section 22 was not denied. It was also not disputed that these privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. It will be seen from these observations that the validity of Clause (6) of the Order dated 6th January, 1971 was upheld by this Court on the ground that having regard to the object of holding the auction, namely, to raise revenue, the Government was entitled to reject even the highest bid, if it thought that the price offered was inadequate. The Government was not bound to accept the tender of the person who offered the highest amount and if the Government rejected all the bids made at the auction, it did not involve any violation of Article 14 or 19(1)(g). This is a self-evident proposition and we do not see how it can be of any assistance to the Respondents. 5. This is a self-evident proposition and we do not see how it can be of any assistance to the Respondents. 5. In view of the law laid down by the Apex Court in its various judgments which are referred to in detail in the said judgment, the amendment of the Rule 21(2)(a) is perfectly in conformity with the Judgments of the Apex Court and the same is in the interest of the public. Therefore the impugned notification is neither arbitrary nor unreasonable nor takes away the fundamental rights or statutory rights of the Petitioner. The fundamental rights guaranteed to the Petitioners are subject to the regulation of the rights of the citizens of the country under Article 19(6) of the Constitution of India. The exercise of power by the State legislature under Section 15 of the MMRD Act, 1957 to amend the Rule is in conformity with the legislative power and the rule is in conformity with law laid down by the Apex Court in the case of Ramana Dayaram Setty. Therefore, it cannot be said that the rule is arbitrary and unreasonable. The rights of the Petitioners have been regulated by incorporating Rule 21(2)(a) of the Rules, 1994. Hence the contention urged in this regard must also fail. The contention regarding Section 28(3) of the Act must also fail for the reason that non-laying of the notification before the house of the legislature which is mandatory under the above said provisions of the Act and it cannot be accepted in view of the judgment rendered in the case of Atlas Cycle Industries Limited v. State of Haryana, reported in AIR 1979 SC 1149 . 6. For the reasons stated supra, the contentions urged on behalf of the Petitioners that there is a discrimination between the lessees in whose favour the lease hold rights have been granted in respect of non-specified sand whereas in respect of building stone and granite stone, there is no procedure of conducting the public auction and granting either licence or lease hold rights is contemplated in the Rules and hence there is a discrimination between the Petitioners and other applicants seeking for grant of lease hold rights in respect of the aforesaid item in respect of which the Division Bench of this Court reported in 1993 (3) KarLJ 520 in the case of Bhimappa @ Bhima Naik v. State of Karnataka and Ors., and Anr. unreported order of this Court in Writ Appeal No. 3326 of 1997, dated 15.1.1998 has considered the legal submission and answered accordingly, which Judgment is an answer to the legal submission with regard to the alleged discrimination. As I have already recorded a finding that there is no unreasonableness on the part of the State Government in amending the rule in exercise of its legislative power, therefore also this contention must fail. 7. For the reasons stated supra, the Petitioners must fail. Accordingly the petitions are dismissed.