ORDER Dipak Misra, J. In this writ petition preferred under Article 226 of the Constitution of India the challenge is to the decision taken by the respondent Nos. 1 to 5, the authorities of the South Eastern Railway, vice Annexure-P-4 dated 17-4-2001 whereby the said functionaries have decided to award 30,000 cubic meter additional quantities to M/s Rani Sati Granite Company, Mahendragarh at the rate of Rs. 367/- per cu.m. on the basis of Tender Notice No. W/A/T/138/2000-01. The facts as have been unfolded are that the South Eastern Railway invited tenders for supply, delivery and stacking of 1,50,000 cu.m. machine- crushed-track-ballast as per the Railway specification at Anuppur Depot, District Shahdol from outside the railway line and loading into railway wagons. The Notice Inviting Tender (in short 'NIT') has been brought on record as Annexure- P-1. As per the NIT the eligibility criteria was successful completion of supply of cu.m. of track ballast in Depot in 12 months in any one of last 3 years and the tenderer was also required to submit a royalty clearance certificate for the ballast supply. The further condition laid down in the NIT was that the tenderer must have the annual turn over of atleast Rs. 1 crore in any of the last three assessment years. In response to the NIT nine tenderers gave their offers. A chart has been shown in the writ petition indicating their names and the comments/remarks of the authorities. It is putforth that petitioners Nos. 1 and 2 were declared to be qualified besides also one J.B. Construction. As far as others were concerned their offers not accepted as they had not fulfilled the conditions precedent. According to the writ petitioners the offer given by the petitioner No. 1 being the lowest was accepted at the rate of Rs. 371/- per cu.m. after due negotiations. The acceptance letter dated 23-2-2001 has been brought on record as Annexure-P-2. The work order was executed in his favour and after that he started the work of supply, delivery and stacking at Anuppur Depot. It is putforth that agreement was executed with the respondent No. 1 by the respondents and in the agreement it was stipulated that in case there is any variation it will be admitted to a limit of 50% subject to observance of paragraph 1268 of the Engineering Code. It is putforth that agreement was executed with the respondent No. 1 by the respondents and in the agreement it was stipulated that in case there is any variation it will be admitted to a limit of 50% subject to observance of paragraph 1268 of the Engineering Code. Clause 3 of agreement and paragraph 1268 of the Engineering Code deal with the variation and the circumstances under which the same would come into play. It is averred in the petition that while this was the situation Annexure-P-4 was issued recommending that 30,000 cu.m. ballast supply work order would be allotted in favour of respondent No. 6 whose tender was rejected particularly for the reason that he was not eligible to submit the tender. It is putforth that discretion used by the authorities is unfair, illegal and totally in violation of the law governing the field. It is urged in the petition that the respondents could not have ordered for awarding the work without following the due process of law. Alternatively, it is pleaded that the quantity of 30,000 cu.m. as detailed in Annexure-P-4 is only 20% of 1,50,000 cu.m. of ballast and, therefore, Clause 3 of the agreement is fully attracted, and hence, it was mandatory on the part of the respondent No. 1 to award the said work in case the same was found necessary by the respondents to the petitioner No. 1 alone at the rate of Rs. 371/- per cu.m. On getting the information about the aforesaid illegal act the petitioner informed the railway authorities that he was willing to supply cu.m. ballast at the rate of Rs. 367/- per cu.m., though tender was finally accepted at the rate of Rs. 371/- per cu.m. The respondents did not accede to the proposal of the petitioner though it was made prior to the issue of memorandum dated 17-4-2001 and no communication whatsoever was made. It is urged that whole action of the respondent No. 1 is without any justification and it was obligatory on their part to invite tenders for the work as the value of the same exceeded Rs. 15 lacs. It is also putforth that the entire action of the authorities smacks of arbitrariness, unreasonableness and hence, impermissible in law. A return has been filed by the respondents Nos. 15 lacs. It is also putforth that the entire action of the authorities smacks of arbitrariness, unreasonableness and hence, impermissible in law. A return has been filed by the respondents Nos. 1 to 5 contending, inter alia, that the writ petition at the instance of the petitioners is not maintainable as the petitioner No. 2 is the son of petitioner No. 1 and another son of petitioner No. 1 has filed a writ petition in the High Court of Chhattisgarh at Bilaspur. It is stated that as all the members of the family belong to Joint Hindu Family, therefore, the writ petitions by the petitioners in two High Courts are net to be entertained. It is the further case of the respondents that the rights of the petitioners have not been curtailed and, therefore, they cannot be regarded as persons aggrieved to file this writ petition. It is putforth that recommendations in favour of M/s Rani Sati Granite Company have been made by the Committee for awarding of contract for 30,000 cu.m. ballast at the rate of Rs. 367/- per cu.m. which was lower than the rates quoted by the petitioners. The recommendation has been given to confer an opportunity to new comers to gain experience in the field and such an act is permissible in paragraph 1257 of Indian Railway Code for Engineering Department which provides for taking such action for the purpose of development. It is setforth that keeping the said Code in view the respondents have given preference to the new comers so that competition would not be confined to limited numbers of competitors and there can be induction of new members/competitors. It is the further stand of the respondents that the recommendations made in favour of new comers is genuine, reasonable and unarbitrary. It is also putforth that the offers of others could not be considered as the petitioner was regarded as the lowest tenderer and was given the work order. Accordingly to the said respondents the Tender Committee after due consideration in order to develop a new source and thereby to generate competition in the field of ballast work which is a recurring type of work wanted to introduce new-comers. It has also been pleaded that the experience of M/s Rani Sati Granite Company in stone pitching and construction of rock toe was the base of recommendation of the Committee. It has also been pleaded that the experience of M/s Rani Sati Granite Company in stone pitching and construction of rock toe was the base of recommendation of the Committee. It is also putforth that Railway Board has issued letters dated 23/27-1-1979 and 22-1-1990, Annexures-R-5 and R-6 respectively, which indicate that if there are offers by persons who are in the competitive zone and if the railway is satisfied with the unapproved from which are capable of executing order, then purchase orders to the extent of 20% can be placed on such firms on trial/development basis as an education order. If the new supplier who has quoted competitive rate is having the required capacity then the orders can be placed on consideration and with the approval of the competent authority and the same has been done in the case and therefore, there is no illegality in placing order with respondent No. 5. A reference has been made to Clause 17 of the agreement which deals with the right of railway to deal with the tenders. A rejoinder affidavit has been filed by the petitioners putting forth that the stand relating to the relationship between the present petitioners and the petitioner in Chhattisgarh High Court at Bilaspur has nothing to do with the list in the present writ petition. As far as the territorial jurisdiction of this Court is concerned it is putforth that the concerned Depot is situated at Anuppur in the State of Madhya Pradesh and definitely the High Court of Madhya Pradesh would have the jurisdiction for the same. The justification given by the railway administration by placing reliance on paragraph 1257 of the Engineering Code has been seriously commented in the rejoinder affidavit highlighting that the said paragraph is not applicable to the case at hand and an attempt has been made to confer the benefit on respondent No. 6 without any basis. It is also putforth that respondents have themselves violated and infringed the guidelines which they have issued. A reference has been made to Annexure-R-8, an extract of guidelines from the Code of Engineering which deals with variation in quantity of work during the execution of work. It is also putforth that respondents have themselves violated and infringed the guidelines which they have issued. A reference has been made to Annexure-R-8, an extract of guidelines from the Code of Engineering which deals with variation in quantity of work during the execution of work. In said paragraph it is clearly stipulated that if in such eventuality as detailed arises the competent authority is required to negotiate with the existing contractor for arriving at the reasonable rate for the additional quantity of work and if the same is not found to be in order or impracticable, then in that eventuality, two modes are to be taken recourse to, namely, (i) inviting fresh tenders for the extra quantity; (ii) negotiating the rate for the extra quantities not only with the existing contractor, but also with all the tenderers who had initially quoted for the work. It is urged that from the said alternatives it is ex facie clear that the respondents ought to have negotiated the rate with the three eligible contractors and would not have taken steps to negotiate and confer the benefit on an ineligible tenderer. I have heard Mrs. Shobha Menon, learned Counsel for the petitioners, Mr. R.K. Gupta, learned Counsel for respondents Nos. 1 to 5, and Mr. Umakant Sharma, learned Counsel for respondent No. 6. It is submitted by Mrs. Menon that when State largesse are awarded a proper procedure has to be followed and it cannot be distributed at the whims and caprice of the authorities. It is urged by her that as per the clause of the agreement the petitioner was entitled to be called for negotiation and when the petitioner gave the offer at the rate of Rs. 367/- per cu.m. the same should have been honoured by the railway administration and arbitrary conferment of benefit should not have been done. Learned Counsel further urged that reliance by the respondents on various guidelines are of no assistance inasmuch as the work which is to be done is of new type of work and the respondent No. 6 has not indicated that he is doing it by adopting any kind of new technology and, therefore, clause or paragraphs which are relied upon by the railway administration to justify their actions are untenable and unsustainable. Mr. Mr. R.K. Gupta, learned Counsel for the respondents, on the contrary, has contended that the petitioner does not have the inherent right to be called for negotiation and the railway has the discretion to reject any offer. It is urged by him that as an experimental basis the respondent No. 6 has been conferred with the work to expand the horizon of competitors and to curtail any kind of monopoly. It is further putforth by him that on proper consideration a decision was taken to award the limited work in favour of respondent No. 6 and hence, the same cannot be found fault with. Mr. Umakant Sharma, learned Counsel for respondent No. 6 while adopting the stand of the railway administration, has contended that the respondent No. 6 has been chosen so that it can be in the fray in times to come and prove his metal so that the Railway Administration gets better offers in respect of future works. The learned Counsel further submitted that the action of the railway is in consonance with the instructions and guidelines in vogue and in absence of any dissonance the order passed by the railway authorities cannot be lanceted. Before I proceed to deal with the obtaining factual matrix it is apposite to refer to certain decisions of the Apex Court relating to grant of State largesse. In the case of Mahabir Auto Stores and others Vs. Indian Oil Corporation and others, their Lordships held as under:-- "12. It is well settled that every action of the State or an instrumer tality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Radha Krishna Agrawal vs. State of Bihar. It appears to us, at the outset, that in the facts and circumstances of the case, the respondent company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of the State organ under Article 14 can be checked. See Radha Krishna Agrawal vs. State of Bihar at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant considerations; it depends upon facts and circumstances of a particular transaction whether hearing is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa vs. Slate of Tamil Nadu, Maneka Gandhi vs. Union of India, Ajay Hasia vs. Khalid Mujib Sehravardi, R.D. Shetty vs. International Airport Authority of India and also Dwarkadas Marfatia and Sons vs. Board of Trustees of the Port of Bombay. In this connection reference may be made to E.P. Royappa vs. Slate of Tamil Nadu, Maneka Gandhi vs. Union of India, Ajay Hasia vs. Khalid Mujib Sehravardi, R.D. Shetty vs. International Airport Authority of India and also Dwarkadas Marfatia and Sons vs. Board of Trustees of the Port of Bombay. It appears to use rule of reason and rule against arbitrariness and discrimination rules of fair play and natural justice are part of rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance or reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case." In the case of Tata Cellular Vs. Union of India, their Lordships expressed as under:-- "85. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness of favouritism. However, it must be clearly stated that there are inherent limitations in exercise of the power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review." In the case of center For Public Interest Litigation and Another Vs. Union of India and Others, their Lordships laid immense emphasis on fairness, reasonableness and unarbitrariness. From the aforesaid enunciation of law it is quite vivid that State largesse cannot be dealt with by the executive in exercise of absolute discretion. Certain principles are to be adhered to and public interest has to be given the paramount consideration. Public interest has to be given priority so that the executive decision can stand scrutiny. The action must be done in such a fair manner so that it should not exhibit any kind of appearance of bias, nepotism or favoritism. The action should be absolutely transparent. Nothing should be done to fit a particular act to a permissible compartment when the authorities are aware that the action is impermissible. Nothing should be done to get an action validated by adopting the path of pretence or guise. The whole thing must speak for itself. The present factual matrix is to be tested on the anvil of the aforesaid settled position of law. It is not in dispute that the respondent No. 6 was not eligible and, therefore his offer was not considered. The learned Counsel for the petitioner has proponed that the eligible persons cannot be conferred the benefit by taking recourse to a method which apparently appears innocuous but actually is not so. The learned Counsel has also submitted that the respondent No. 6 was totally unqualified as he has failed to submit the document indicating successful completion of supply of 25,000 cu.m. of track ballast in Depot in 12 months in any one of last three years and also failed to submit the requisite documents before the railway administration. The learned Counsel has placed reliance on paragraph 1257 of the Engineering Code. The learned Counsel has placed reliance on paragraph 1257 of the Engineering Code. The said paragraph reads as under:-- "At certain times, contract may have to be placed to promote indigenous development of new technology/techniques, such contracts are called development orders and in the placement of such orders the rules applicable normally in such cases can be relaxed and certain concessions may be granted. The concessions may include (i) an advance commitment for placement of orders to meet the further demand for a period of 2 or 3 years provided the rate/prices are reasonable; (ii) a commitment indicating a progressively diminishing quantum of orders for a specified period. The rate/price to be accepted will depend on factors like nature of item/work development cost involved etc. and price preference, evaluated on individual cases on the merits of the case." Mr. Gupta, learned Counsel for the respondents Nos. 1 to 5, has submitted that on the basis of the said clause the Railway had the unfettered discretion to place the orders with respondent No. 6. The learned Counsel has also referred to Clause 17 of the General Conditions of Contract.And Standard Specifications which has been brought on record as Annexure-R-9. Clause 17 reads as under:-- "17. Right of Railway to deal with tenders. The Railway reserves the right of not to invite tenders for any work or works, or to invite open or limited tenders, and when tenders are sailed, to accept a tender in whole or in part or reject any tender or all tenders without assigning reasons for any such action." Mrs. Menon, learned Counsel for the petitioners has drawn the attention of this Court to paragraph 1268 of the Code which has been brought on record as Annexure-R-8. The said paragraph reads as under:-- "1268. Variation in quantity of work during the execution of work.-- If during the execution of a work the initial quantities of work are expected to vary substantially a check should be made immediately by comparing the value of the revised work as per the rates quoted by the original tenderers to determine whether the decision to award the contract to a particular tenderer is vitiated by the variation in quantities. A variation between 15 to 25% depending on the nature of the particular category of work to be done would not be considered as unreasonable. A variation between 15 to 25% depending on the nature of the particular category of work to be done would not be considered as unreasonable. If such a variation of the award of the contract as between tenderers is noticed, the railway administration should immediately examine whether it is practicable to bring in a new agency to carry out the extra quantity of work keeping in view the progress of the work on the original contract and the nature and lay-out of the work. If such a course is not practicable, the reasons for the same may be recorded and approved by the competent authority and negotiations should be carried out with the existing contractor for arriving at a reasonable rate for the additional quantities of work. If, however, it is found that there will be no serious practical difficulty in meeting the additional quantity of work done by another agency, one of the followed two alternatives, as found feasible may be adopted:-- (i) inviting fresh tenders for the extra quantity; (ii) negotiating the rate for the extra quantities not only with the existing contractor, but also with all the tenderers who had initially quoted for the work." If the instructions which are in vogue are appreciated and understood in proper perspective it is quite graphic that the Railway Administration has some discretion as per paragraph 1257. The language employed in said paragraph confers right on the administration to award contracts to promote indigenous development of new technology/techniques. Such contracts are to be called Development Orders and concessions can be granted and rules can be relaxed. The question that falls for consideration is whether the order passed vide Annexure-P-4 comes within the purview of aforesaid paragraph. To appreciate the aforesaid submission it is apposite to reproduce the order passed vide Annexure-P-4 in entirety. It reads as under:-- "The tender for the subject work has been finalized at the HO's level. Accepting Authority has accepted Tender Committee's recommendation to award 30,000 cu.m. additional quantities to the lowest tenderer, M/s Rani Sati Granite Company, Manendragarh @ Rs. To appreciate the aforesaid submission it is apposite to reproduce the order passed vide Annexure-P-4 in entirety. It reads as under:-- "The tender for the subject work has been finalized at the HO's level. Accepting Authority has accepted Tender Committee's recommendation to award 30,000 cu.m. additional quantities to the lowest tenderer, M/s Rani Sati Granite Company, Manendragarh @ Rs. 367/- per cu.m. Your file and papers are returned herewith for issue of acceptance letter and further necessary action from your end." On a perusal of the same it does not appear that respondent No. 6 has done anything which would make him eligible to get the benefit of paragraph 1257 of the Code inasmuch as he had done nothing to show that he has developed indigenous technology or techniques and, therefore, the Railway should endeavour to promote the same and concession should be given. The stand of the Railway that it reserves the right of not to invite tenders for any work or works, or to invite open or limited tenders, and when tenders are called, to accept a tender in whole or in part or reject any tender or all tenders without assigning reasons for any such action as envisaged in Clause 17 is of no assistance to the Railway as that is in a different compartment altogether. On the contrary, if the fact situation is appreciated in proper perspective it becomes demonstratively perceptible that the present case would be covered under paragraph 1268 of the Code and, therefore, it would have been apposite on the part of the Railway to proceed in accordance with the said paragraph. I may hasten to add if the said paragraph is properly understood it authorises the owner to negotiate with the tenderers who had initially quoted for the work. But the term 'tenderer' would only mean whose tenders were valid and cannot be construed to include in its ambit the offers made by the tenderers who were ineligible to make an offer. In view of my preceding analysis, the grant made in favour of respondent No. 6 vide Aimexure-P-4 is quashed and the respondents Nos. 1 to 5 are directed to proceed in accordance with paragraph 1268 of the Code. Needless to emphasize, it will be in the discretion of the respondents to go for fresh tender and petitioners cannot compel the Railway to negotiate with them. 1 to 5 are directed to proceed in accordance with paragraph 1268 of the Code. Needless to emphasize, it will be in the discretion of the respondents to go for fresh tender and petitioners cannot compel the Railway to negotiate with them. The discretion entirely rests with the respondents Nos. 1 to 5. Consequently, the writ petition is allowed to the extent indicated above. However, in the peculiar facts and circumstances of the case there shall be no order as to costs. Final Result : Allowed