JUDGMENT : B.P. Das, J. - The petitioner in this writ petition under Articles 226 and 227 of the Constitution of India calls in question the legality and validity of Annexure-13, i.e., the order dated 30.8.2001 passed by the Chief Executive Officer of Central Electricity Supply Company of Orissa Ltd. (in short "the CESCO") in cancelling the work orders placed with the petitioner for supply of materials for diversion of 33 K.V. lines on 132 K.V. D/C. towers (Annexure-4) and for diversion of 33 K.V. Double Circuit line on 132 K.V. Double Circuit Towers at Jagatpur due to widening of N.H. No. 5 (Annexure-5) and directing recovery of the amount advanced from the petitioner by way of encashment of its bank guarantee, as well as Annexure-12, i.e., the order dated 31.8.2001 passed by the Executive Engineer, Cuttack Electrical Division, Cuttack of CESCO, pursuant to the order in Annexure-13. The petitioner also seeks a direction to the opposite parties to allow it to complete the works under the work orders vide Annexures 4 and 5. 2. The petitioner in the writ petition has stated that it is a partnership firm and is a licensed electrical contractor. It undertakes execution of various electrical, civil and maintenance works under Public Sector Undertakings and various Departments of the Government. It has been empanelled as a contractor on rate contract basis for erection and commissioning of 33 K.V. and 220 K.V. transmission lines and sub-stations. 3. For widening National Highway No. 5 from Jagatpur to Chandikhole, necessity arose for shifting of the existing 33 K.V. Electric line on 132 K.V. Double Circuit Towers at Jagatpur for which the National Highway Authority placed funds with O.P. No. 1-CESCO for carrying out the aforesaid work. For the purpose, the CESCO called upon approved electrical rate contractors to submit their quotations for the above works and the petitioner-firm being one such contractor submitted two price quotations - one for supply of materials and the other for construction of 4 Nos. of 132 K.V. D/C. Towers. The aforesaid included excavation, concreting, erection, stringing of lines along with the cost of four Nos. of 132 K.V. Double Circuit Towers and other materials for shifting of 33 K.V. line due to the widening of N. H. No. 5 at Jagatpur. Admittedly, an estimate was prepared and the same was approved by the Superintending Engineer (Clearing and Monitoring) Section, Bhubaneswar. of 132 K.V. Double Circuit Towers and other materials for shifting of 33 K.V. line due to the widening of N. H. No. 5 at Jagatpur. Admittedly, an estimate was prepared and the same was approved by the Superintending Engineer (Clearing and Monitoring) Section, Bhubaneswar. There is also no dispute that the Team Leader, Cuttack Electrical Division, CESCO, addressed a tetter dated 23.7.2001 to the petitioner, vide Annexure-3, from which it appears that though the petitioner quoted the lowest rates for excavation, concreting, erection, stringing along with cost of 4 Nos. of 132 K.V. D/C. towers and other materials for shifting of 33 K.V. lines along N. H. No. 5 at Jagatpur, after negotiation on the quoted rates in presence of the officers of the CESCO, the petitioner agreed to execute the work at 7.5% less than the quoted rates and at the request of the petitioner the opposite parties agreed that 15% of the total order value would be paid to the petitioner in advance against bank guarantee of the same value. The work orders were thereafter issued by the Team Leader, C.E.D., CESCO, Cuttack, by letters, vide Annexures 4 and 5, in token of acceptance of which the petitioner addressed the letter dated 26.7.2001 (Annexure-6). Pursuant to the terms and conditions set out in the work orders vide Annexures 4 and 5, the petitioner furnished bank guarantee to the tune of Rs. 5,48,215/- which was also accepted by the opposite parties vide Annexure-7. As the work was very urgent in nature and was required to be completed within one month, i.e.. by 31,8.2001, the petitioner took immediate steps tor-approval of the lay-out and profile With tower schedule. The further case of the petitioner is that on receipt of the work orders, the petitioner immediately placed orders for supply of P.B. and P.O. type towers with one Hirakud Industrial Works Ltd., which agreed to supply the required towers. The petitioner in order to execute the work also mobilised its men and machineries like concrete mixture, vibrators, excavators, trucks etc. and undertook fabrication work and collected materials like chips, cement, rods etc. amounting to Rs. 6 lakhs approximately. The petitioner in order to execute the work also mobilised its men and machineries like concrete mixture, vibrators, excavators, trucks etc. and undertook fabrication work and collected materials like chips, cement, rods etc. amounting to Rs. 6 lakhs approximately. In order to complete the work within the stipulated time and when the work was fast progressing in the aforesaid manner, the Executive Engineer (Elect.), Cuttack Electrical Division, CESCO, O.P. No. 3, addressed a letter dated 21.8.2001 (Annexure-9) with a copy to the petitioner intimating that construction and erection of towers in question would not be taken up till the profile and tower schedule were approved by Superintending Engineer, E.H.T.C. Circle, Bhubaneswar. The petitioner has stated that as the CESCC did not have the necessary approved profiles, the matter was referred to Grid Corporation of Orissa Ltd. ("GRIDCO? in short), which fixed the profiles and tower schedule for approval. The petitioner then addressed a letter on 23.8.2001 vide Annexure-10 to O.P. No. 3 requesting him to extend the completion time as, though the N.H. Authority completed the demarcation relating to the positioning of the towers on 16.8.2001 and lay-out of the foundation was marked, no work could be started in view of the instructions to stop work as per Annexure-9. On 30.8.2001 the General Manager (Elect.) of the GRIDCO intimated O.P. No. 3 that after checking, the profile and tower schedule were found to be generally in order, vide Annexure-11. According to the petitioner, while the petitioner was about to commence the work, it received a letter dated 31.8.2001 from O.P. No. 3 vide Annexure-12 disclosing therein that the work orders issued in favour of the petitioner stood cancelled and the petitioner was required to refund the advance payment failing which recovery by way of encashment of the bank guarantee furnished by the firm was directed. The petitioner also received a copy of letter dated 30.8.2001 of the Chief Executive Officer of CESCO vide Annexure-13 indicating cancellation of the work orders in question. 4. According to the petitioner, there was no rhyme or reason nor was there any fault or wrong on the part of it to cancel the work orders issued in its favour and to recover the amount advanced in connection with the work in question by encashing the bank guarantee furnished in favour of CESCO. 4. According to the petitioner, there was no rhyme or reason nor was there any fault or wrong on the part of it to cancel the work orders issued in its favour and to recover the amount advanced in connection with the work in question by encashing the bank guarantee furnished in favour of CESCO. Further, the petitioner has never defaulted in execution of the work and took all reasonable steps for completion of the work considering the urgency involved in the same. The petitioner has taken all steps and has also spent a huge amount in order to execute the work, cancellation of which would prejudice the petitioner and it would suffer heavy loss which is irreparable. 5. The petitioner has filed an additional affidavit enclosing certain documents as Annexures 14 to 18. Annexures-14 and 15 are the detailed work orders issued on 1.8.2001 by the Team Leader, C.E.D., CESCO, in favour of the petitioner-firm.. Annexure-16 is the copy of the note-sheet from which it appears that on 31.7.2001 the Managing Director of the CESCO had approved both the estimate and the orders placed by the Team Leader, C.E.D. with the petitioner-firm. Annexure-17 is the document by which O.P. No. 3 forwarded the profile and tower schedule for approval to the Superintending Engineer, E.H.T., Construction Circle. Annexure-18 is the order placed by the petitioner with Hirakud Industrial Works Ltd. for supply of PB + 3 and PC + 3 towers in connection with the execution of the work in question. 6. A counter affidavit has been filed by O.P. Nos. 1, 3 and 4, i.e. CESCO, its Executive Engineer (Electricals), Cuttack, Electrical Division, and the Superintending Engineer (Elect.) Electrical Circle, Cuttack, respectively, taking various stands. It has been stated that since the work involved more than Rs. 36 lakhs and the Team Leader without inviting tenders negotiated only with the petitioner, the same is against the guidelines issued by the Orissa State Electricity Board vide Annexure-D/3, which is also followed by the CESCO. It has also been stated that M/s. AES Company, which had taken over the management of CESCO, withdrew itself from the management, and an l.A.S. Officer of the State Govt. was appointed as the Chief Executive Officer of the CESCO for its management, following an order of the Orissa Electricity Regulatory Commissioner. It has also been stated that M/s. AES Company, which had taken over the management of CESCO, withdrew itself from the management, and an l.A.S. Officer of the State Govt. was appointed as the Chief Executive Officer of the CESCO for its management, following an order of the Orissa Electricity Regulatory Commissioner. After the Chief Executive Officer assumed charge on 27.8.2001, the aforesaid irregularity as well as the complaints received from certain quarters were brought to his notice in consideration of which a decision was taken to cancel the work orders issued in favour of the petitioner and encashment of the bank guarantee for the advance given. It was also proposed to float tenders as per the guidelines adopted by the CESCO for execution of the aforesaid work. That apart, it is further stated in the counter affidavit that the petitioner has not disclosed that it has handed over the tower line materials within the stipulated time. As regards placement of orders for supply and collection of materials by the petitioner, it has been stated that the opposite parties are not aware of the same. Placement of orders does not mean that the petitioner has supplied the materials. According to the opposite parties, since the materials have not been supplied within the stipulated period, which has expired long back, the question of commencement of the work without materials does not arise. The opposite parties have justified the action taken by the Chief Executive Officer and submitted that an open tender would be floated for the work in question in which the petitioner is free to participate. It is not disputed by the opposite parties that the work orders had been issued in favour of the petitioner. 7. As it appears from the written note of submissions and arguments and counter affidavit, the work orders have been cancelled mainly on the ground that since the work involved more than Rs. 36 lakhs, the same should not have been'issued by the authorities of the CESCO without inviting tender. This has been done after the AES Company withdrew from the management of the CESCO and an I.A.S. Officer of the State Govt. was appointed as the Chief Executive Officer. The fact that the work orders had been issued to the petitioner has not been disputed. This has been done after the AES Company withdrew from the management of the CESCO and an I.A.S. Officer of the State Govt. was appointed as the Chief Executive Officer. The fact that the work orders had been issued to the petitioner has not been disputed. There is nothing in the counter affidavit to disbelieve the documents filed by the petitioner in support of its claim regarding investment of huge amount for procurement of materials. That there was delay on the part of the opposite parties for approval of the profile and tower schedule has not been denied. Annexures 14 and 15, which are the detailed work orders, contain a penalty clause, i.e., Clause 6, which stipulates that in case the supply/work order is not completed within the stipulated period, penalty ' 1/2% per week shall be charged. It is a fact that the opposite parties have not taken recourse to the aforesaid penalty clause but straightaway proceeded for termination of the work orders. As it appears from the materials on record, the work orders have been cancelled mainly on the ground that the same should not have been given by way of negotiation but should have been done by floating open tenders. Be that as it may, the opposite parties on their own volition negotiated with the petitioner. From Annexure-16, it clearly appears that the Managing Director of CESCO has given the seal of approval to the award of the contracts, i.e., the work orders, in favour of the petitioner-firm, which has not been rebutted by the opposite parties in any manner. The CESCO authorities are the public functionaries and it is expected that they should show fairness while cancelling the work orders in question. 8. Here is a case where the petitioner-firm had participated in the negotiation and was selected by the opposite parties. The Managing Director of the company also put his seal of approval to the work orders issued in favour of the petitioner. Basing on the aforesaid work orders, the petitioner, as it appears from the contents of the writ petition and various documents appended thereto, it has altered, its position to its detriment, furnished bank guarantee to the tune of more than Rs. 5 lakhs and placed orders with different firms for procurement of required materials in connection with the execution of the works and moved its men and machineries for the purpose. 5 lakhs and placed orders with different firms for procurement of required materials in connection with the execution of the works and moved its men and machineries for the purpose. All these, according to the petitioner, have been done by the petitioner by spending quite a substantial amount undisputedly, the petitioner proceeded with the work in question basing on the promise held out by the opposite parties and if at this stage the opposite parties are allowed to go back from their promises on the pretext of change in the management of the company, the petitioner is bound to suffer irreparable loss. 9. On going through the writ petition, counter affidavit and affidavits along with various documents on record and after hearing learned counsel for both the parties, I am satisfied that the impugned orders in Annexures 12 and 13 in cancelling the work orders have been passed in an arbitrary manner without assigning any cogent reason and without even allowing the petitioner to know the reason for which the work orders issued in its favour have been cancelled. The Apex Court in the case of Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, and in several other decisions held that the instrumentality of the State has to act within the ambit of Rule of Law and would not be allowed to conduct itself arbitrarily and in its dealings with the public would be liable to judicial review. 10. In the case of Star Enterprises and Others Vs. City and Industrial Development Corporation of Maharashtra Ltd. and Others, the Apex Court observed as follows: "... As the State has descended into the commercial field and giant public sector undertakings have grown up, the State of the Public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording of reasons for executive actions including cases of rejection of highest offers...." The case at hand is still worse, as after the work orders had been issued in favour of the petitioner and the petitioner had started its preparation to commence the work and invested a substantial amount, all on a sudden the work orders have been cancelled and no reason has been assigned in the impugned orders of cancellation, vide Annexures 12 and 13, issued by the opposite Parties. No communication has also been made to the petitioner regarding the reason for cancellation of the same. 11. In view of the foregoing discussions, the impugned orders in cancelling the work orders issued in favour of the petitioner and for recovery of the advance money by way of encashment of the bank guarantee, as per Annexures 12 and 13, are quashed and the writ petition is allowed. 12. There shall be no order as to cost. Final Result : Allowed