ORDER : Heard Sri Vedula Venkata Ramana, learned Counsel representing the writ petitioner, Sri A.Rajashekar Reddy, learned Assistant Solicitor General, representing respondent No.1, and Sri Wajid Ali Kamil, learned Counsel representing respondent No.2. 2. This Court issued Rule Nisi on 22.02.2007 and in W.P.M.P.No.4163 of 2007 interim direction was granted. Counter affidavits are filed by both respondents 1 and 2. 3. The writ petitioner, Srinidhi Electro Mechanics, represented by its Proprietor filed the present Writ petition for a writ of mandamus or any other appropriate writ declaring the action of the first respondent contained in its letter No.DMRL/LC/WA/1354/SCRAP, dated 08.02.2007, in awarding the contract of sale of MS & SS Scrap to the second respondent without deciding the matter as per the judgment of the Hon'ble Court in W.A.No.1354 of 2006, dated 04.01.2007, as illegal, and to consequently grant reconfirming the sale letter dated 14.11.2005 in favour of the petitioner for the said metal scrap contract, and also to set aside the impugned order, and direct the first respondent to permit the petitioner to lift the said metal scrap in terms of sale order No.DMRL/MMG/DISP/SALE/10/2005-2006 dated 14.11.2005 and grant such other relief as it deems fit in the circumstances of the case. 4. Sri Vedula Venkata Ramana, learned Counsel representing the writ petitioner had taken this Court through the contents of the affidavit filed in support of the writ petition and also the respective stands taken in the counter affidavits filed by respondents 1 and 2 as well. Learned Counsel would point out that initially the second respondent - M/s.Ruby and Company was no where in the picture. But now, by virtue of the impugned order, an offer was made in favour of the second respondent on the ground that the same is the highest offer. This is not a justifiable offer. Learned Counsel also had drawn the attention of this Court to the prayer made and the impact thereof. While elaborating his submissions, the learned Counsel would contend that the power of judicial review can be well exercised by the writ Court under Article 226 of the Constitution of India not only in relation to the pre-contractual disputes but also in relation to the post-contractual disputes. The Counsel also placed reliance on certain decisions to substantiate his submissions. 5. While elaborating his submissions, the learned Counsel would contend that the power of judicial review can be well exercised by the writ Court under Article 226 of the Constitution of India not only in relation to the pre-contractual disputes but also in relation to the post-contractual disputes. The Counsel also placed reliance on certain decisions to substantiate his submissions. 5. Sri Raja Shekar Reddy, learned Assistant Solicitor General, had taken this Court through the counter affidavit filed by respondent No.1 and pointed out relevant paragraphs of the order made in the Writ Appeal and would maintain that in the light of the same, though the name of respondent No.2 had not been specifically referred to, inasmuch as the term or expression of the complaint had been specified in the said order, and inasmuch as the offer had been made, in the light of such higher offer the impugned order cannot be void and fault, especially, in the light of the interest of the public exchequer involved. Learned Counsel also would submit that this is not a case where any illegality or legal infirmity had been pointed out in the decision making process. Even if two views are possible, such errors always need not be corrected by a writ Court and in the interest of the public and also the public exchequer since the public exchequer is getting more revenue, especially in the light of the limitations imposed on this Court while exercising the power of judicial review in contractual field, the Writ Petition is liable to be dismissed. Learned Assistant Solicitor General had also placed reliance on certain decisions. 6. Sri Wajid Ali Kamil, learned Counsel representing respondent No.2 had explained the facts and circumstances and also made certain submissions relating to open tender and limited tender and would maintain that in the light of the facts and circumstances since at the instance of respondent No.2 only the said order in the Writ Appeal had been made, there is no illegality in the impugned order, and hence, the Writ Petition has to be dismissed. Learned Counsel also placed reliance on certain decisions. 7. Heard the learned Counsel and perused the material placed before this Court and the records. 8. The Proprietor of Srinidhi Electro Mechanics has sworn to the affidavit filed in support of the Writ Petition. Learned Counsel also placed reliance on certain decisions. 7. Heard the learned Counsel and perused the material placed before this Court and the records. 8. The Proprietor of Srinidhi Electro Mechanics has sworn to the affidavit filed in support of the Writ Petition. It is averred that the office of the first respondent had called for a limited tender vide Tender Notification No.DMRL/MMG/DISP/Sale/10/2005/2006 and on receipt of the limited tender intimation, the petitioner had submitted its quotation dated 10.11.2005 for items 1, 2, 3, 4, 6 and 7 along with earnest money deposit of Rs.2,32,000/-. After finalization of the tenders, the first respondent had accepted the quotation of the petitioner in respect of items 6 and 7 i.e., M.S.Scrap and Stainless Steel Scrap and issued a sale order dated 14.11.2005 in respect of the said items. The petitioner submits that item Nos.4 and 5 are Scrap of Pure copper and Plastic quoted scraper for which items also, after called for limited tenders, sale order was issued and the successful party was permitted to lift the scrap. However, after issuance of sale order dated 14.11.2005 in favour of the petitioner, and the petitioner depositing an amount of Rs.22 lakhs and also tax amount of Rs.88,000/- on 12.12.2005, no letter was issued to the petitioner granting permission to lift the scrap from the premises of the first respondent. Since the first respondent had failed to issue delivery order, the petitioner got issued legal notice on 26.12.2005 requesting the first respondent to issue appropriate orders lifting the metal scrap. While so, the first respondent vide its letter dated 22.12.2005, had cancelled the sale order dated 14.11.2005 on the ground that due to administrative reasons the sale order is cancelled. Along with the said letter, the two demand drafts i.e., for Rs.22 lakhs and Rs.88 thousand were returned. The petitioner submits that when once the first respondent had issued a sale order, there had been a finalization of the contract and hence cancellation of the contract due to administrative reasons does not arise. Challenging the cancellation order dated 22.12.2005, the petitioner filed W.P.No.9964 of 2006 contending that the action of the first respondent in cancelling the sale order was illegal and that the petitioner should be permitted to lift the metal scrap in terms of the sale order dated 14.11.2005. Challenging the cancellation order dated 22.12.2005, the petitioner filed W.P.No.9964 of 2006 contending that the action of the first respondent in cancelling the sale order was illegal and that the petitioner should be permitted to lift the metal scrap in terms of the sale order dated 14.11.2005. In the said Writ Petition, the second respondent herein got impleaded as a party respondent contending that in some other earlier tender notification, it has quoted higher than the quotation of the petitioner for the metal scrap and hence it is an interested party in the Writ Petition. The petitioner further submits that in respect of the subject metal scrap, the second respondent had never participated in the tender process since it was not issued the intimation of the limited tender notification. It could have been open to the second respondent to challenge the system of limited tender and requiring the first respondent to substitute the same by open tender notification. It is submitted that in the past, on several occasions, the first respondent had caused limited tender notifications and awarded contract to the highest tenderors therein. For that matter, even in the present tender notification also, in respect of items 4 and 5, the contract was awarded and material was allowed to be lifted. The proposal of the first respondent that hereafter it would like to sell the metal scrap through the metal scrap trading corporation, is a decision for future and the same cannot invalidate the sale order that was issued to the petitioner. The petitioner further submits that the first respondent in its counter affidavit in W.P.No.9964 of 2006 had stated that it has received some complaint about formation of a cartel by the tenderors for which a preliminary enquiry was conducted but nothing adverse was noted against the petitioner. Thus no reasons were given by the first respondent in the counter affidavit also which was the basis for cancellation of the sale order. However, the said Writ Petition was dismissed by a learned single Judge of this Court and hence the petitioner had carried the matter by way of an appeal in W.A.No.1354 of 2006. By judgment dated 04.01.2007, the said appeal was allowed and the operative portion of the Division Bench Judgment is as below: "...In our opinion, the reason assigned by the learned single Judge for declining relief to the appellant is legally unsustainable. By judgment dated 04.01.2007, the said appeal was allowed and the operative portion of the Division Bench Judgment is as below: "...In our opinion, the reason assigned by the learned single Judge for declining relief to the appellant is legally unsustainable. Although the affidavits filed by Dr.A.K.Tripathi are conspicuously silent about the background in which the Director decided to cancel the sale order and the stock phrases likely 'administrative reasons' and 'exigencies' have been used to justify the cancellation of the sale order, a careful reading of the order under challenge makes it clear that on receipt of an anonymous complaint, the Director got conducted an enquiry through the Board of Officers and then cancelled the sale order issued in favour of the appellant. Undisputedly, the report of the Board of Officers did not contain any adverse finding against the appellant. Therefore, it is not possible to decipher as to how that report could be made basis for taking a decision seriously affecting the right of the appellant to lift the scrap in furtherance of the sale order... In the result, the appeal is allowed. The order of the learned Single Judge is set aside. As a sequel to this, the decision of the Director to cancel the sale order issued in favour of the appellant is quashed. However, keeping in view the peculiar facts of this case, we direct the competent authority ie., the Director to pass fresh order in the matter within a period of fifteen days from the date of receipt of a copy of this order through the office of Assistant Solicitor General. The representative of the appellant and the complainant are directed to appear before the competent authority on 09.01.2007. The officer concerned shall make available the adverse material to the representative of the appellant by 10.01.2007 and pass appropriate order by 23.01.2007 after hearing the representatives of the parties." 9. Further it is stated that pursuant to the said judgment, the petitioner appeared before the first respondent and submitted the representation dated 17.01.2007 (since no hearing took place before the first respondent on 09.01.2007 for non receipt of the order copy of this Court) and requested the first respondent to confirm the sale order as the anonymous letters are baseless. Further it is stated that pursuant to the said judgment, the petitioner appeared before the first respondent and submitted the representation dated 17.01.2007 (since no hearing took place before the first respondent on 09.01.2007 for non receipt of the order copy of this Court) and requested the first respondent to confirm the sale order as the anonymous letters are baseless. The petitioner submits that the representative of the second respondent was also present but it was noticed that the complainant after issue of sale order in favour of the petitioner was one Sri Vikas Agarwal and not the second respondent. Thus there were no obligations on the part of the first respondent to consider the request of the second respondent, as the second respondent was nowhere in the race in the subject tender. On the date of hearing, i.e., 17.01.2007, they were shown the anonymous letter written by M/s.Vikas Agarwal, Musheerabad but no other material as to what action was taken on that complaint was shown. Since no adverse material was supplied to them, they had nothing to reply, and hearing on 17.01.2007 was posted to 13.02.2007 and they were asked to revise their quotation about the metal scrap. On that day, the second respondent was also given chance to quote its rate for the metal scrap. When they had repeated that since their quoted rate remains the same which stood agreed too as per the sale order dated 14.11.2005, they cannot revise or improve their rate. However, the second respondent, who was not at all entitled to quote, had willfully quoted a higher rate in respect of items 6 and 7 of the original tender notification. Based on that, the first respondent had issued the impugned letter (obviously anti dated 08.02.2007 since it was sent by post on 15.02.2007 and received by them on 17.02.2007) granting the contract to the second respondent and asking the second respondent to lift the metal scrap. The petitioner submits that the action of the first respondent contained in its letter dated 08.02.2007 is not only arbitrary but also contemptuous. What was directed to be decided by this Court was about the basis for cancellation of the sale order in favour of the petitioner dated 14.11.2005. This Court has never decided the first respondent to conduct an interse auction/bidding between the petitioner and the second respondent. What was directed to be decided by this Court was about the basis for cancellation of the sale order in favour of the petitioner dated 14.11.2005. This Court has never decided the first respondent to conduct an interse auction/bidding between the petitioner and the second respondent. In fact the second respondent was not participant in the tender nor it was complainant against the sale order of the petitioner. Thus, in any view of the matter, the action of the first respondent in not confirming the sale order in favour of the petitioner (as it was done on 14.11.2005), is arbitrary and irrational. Now the second respondent may lift the metal scrap at any time since the respondents are acting in collusion with each other. 10. The first respondent filed the counter affidavit sworn to by the Director of DMRL, Hyderabad, which would fall under the Ministry of Defence. It is averred that after issuance of the sale order dated 14.11.2005, due to complaints received directly as well as through DRDO Head Quarters against the sale of scrap, the Department issued a cancellation order on 22.12.2005. Therefore, there was no necessity to issue a delivery order to lift the scrap. It is also stated that as per the guidelines issued by DRDO Head Quarters, the competent authority (Director, DMRL) has the power to cancel the sale order at any stage without assigning any reason. However, the petitioner filed W.P.No.9964 of 2006 contending that the action of the Director in cancelling the sale order was illegal. In the mean time, M/s.Ruby & Company (respondent No.2) was impleaded as per the Court order dated 28.08.2006 in W.P.M.P.No.18333 of 2006. This Court dismissed the petition and the extracts of the judgment are as under: "...the first respondent (i.e., Director, DMRL) had stopped the tender process due to certain alleged irregularities in tender process and finally thought fit to invite fresh tenders by adopting open tender method. The said procedure adopted by the first respondent cannot be said to be either arbitrary or illegal. From the counter-affidavit filed on behalf of the first respondent, it also appears that the first respondent issued directions to MSTC for floating fresh tenders by order dated 03.05.2006. In the circumstances, it is left open to the first respondent to process and finalize the tenders following due process of law. From the counter-affidavit filed on behalf of the first respondent, it also appears that the first respondent issued directions to MSTC for floating fresh tenders by order dated 03.05.2006. In the circumstances, it is left open to the first respondent to process and finalize the tenders following due process of law. It is also open to the petitioner to participate in response to the tenders that may be floated by MSTC, in which event, the same shall be considered in accordance with law alone. So far as the second respondent (i.e., M/s.Ruby & Company) is concerned, it is opined that the dispute raised by the second respondent is in no way connected to the issue involved in the main writ petition. The tenders floated by MSTC and the first respondent herein are different and, therefore, the grievance of the second respondent deserves no consideration in this writ petition. The Writ Petition is accordingly disposed of. No costs." 11. Further it is stated that the petitioner had again appealed to the Division Bench, vide W.A.No.1354 of 2006, wherein M/s.Ruby & Company was also involved. The extracts of the judgment are as under: "...the decision of the Director to cancel the sale order issued in favour of the appellant is quashed. However, keeping in view the peculiar facts of this case, we direct the competent authority ie., the Director to pass fresh order in the matter within a period of fifteen days from the date of receipt of a copy of this order through the office of Assistant Solicitor General. The representative of the appellant and the complainant are directed to appear before the competent authority on 09.01.2007. The officer concerned shall make available the adverse material to the representative of the appellant by 10.01.2007 and pass appropriate order by 23.01.2007 after hearing the representatives of the parties." 12. It is also stated that the averment of the petitioner that M/s.Ruby & Company is not the "Complainant" and one Sri Vikas Agarwal is the "Complainant" is incorrect, because of the following reasons: i) It is known that Sri Vikas Agarwal is non-existing as per verifications carried out by the Director, DMRL, and is already brought out in the preliminary enquiry report, which was also presented to this Court and also he was not a party in the Court cases. ii) This Court has directed the appellant and the complainant to meet the Competent Authority (Director) on a specified date. However, the copies of judgments were given to the lawyers of M/s.Srinidhi and M/s.Ruby & Co., only and also directly to M/s.Ruby & Co., and not to Sri Vikas Agarwal. iii) From the above, it is beyond doubt that this Court only meant M/s.Ruby & Co., to appear before Competent Authority as Complainant. 13. It is also stated that it is incorrect on the part of the petitioner to say that 'on several occasions' limited tender notifications were done by the Department. Generally, the Department disposes the scrap through M/s.MSTC Limited. This is a very special case where the limited tender mode was opted by the Department, because of the urgent need of space as well as due to an earlier court case, being W.P.No.1711 of 2005, before this Court. 14. It is further submitted that in this limited tender, delivery order was issued to the highest bidder to lift the material under item Nos.4 and 5. It may be noted that the complaints about the irregularities or malpractice in the tendering process were received by the Director, DMRL, later only. 15. In paragraph 2 of the counter affidavit of respondent No.1, in reply to paragraph 3 of the affidavit of the writ petition it is averred that Sri M.Upender Reddy, Proprietor, M/s.Srinidhi Electro Mechanics, appeared before the Director, DMRL, on 17.01.2007 and as per this Court's directive, the adverse materials/documents were made available to him to meet the process of natural justice. All the office records were perused including the Preliminary Enquiry Report, and after hearing the petitioner and the complainant, impugned order dated 08.02.2007 was passed. The circumstances under which the decision to cancel the order was taken were explained. The point that it was not a measure of punishment was also explained to them. After going through all the adverse material, they submitted their letter dated 17.01.2007 with a request to consider their hardships and reissue the sale order and to allow them to lift the material. It is not correct on the part of the petitioner to say that "no adverse material was supplied to us" as it had perused the entire file. After going through all the adverse material, they submitted their letter dated 17.01.2007 with a request to consider their hardships and reissue the sale order and to allow them to lift the material. It is not correct on the part of the petitioner to say that "no adverse material was supplied to us" as it had perused the entire file. It is also not correct to state that the hearing has been posted to 13.02.2007, as the complete hearing was over on 17.01.2007 itself. However, on 13.02.2007, the petitioner called on the Director, DMRL, and was enquiring whether any order was issued as per this Court's directions or not, to which the Department replied that already the order has been issued by the Director on 08.02.2007. It is not correct to submit that the impugned order dated 08.02.2007 was antedated. The authorized representative of the complainant/respondent No.2 also appeared before the Director on 19.01.2007. He had informed about his earlier participation in the open auction conducted by M/s.MSTC Limited, Visakapatnam, and the rejection of his offer, on technical reasons, in respect of MS Scrap, even though it was the highest bidder offering the rate of Rs.35,786.92 per ton. It expressed its readiness to buy the existing MS Scrap even today at the same rate. It complained that, though its offer for MS Scrap was the highest in the open tender, yet it was not invited to participate in the Limited Tender. It further requested to consider its offer @ Rs.35,786.92 per ton for MS Metal Scrap and @ Rs.57,111/- per ton for Stainless Steel Scrap, which was placed before the Court, which is much higher than the RGP fixed by the Department and also higher than the market rate. It submitted its letter dated 19.01.2007. Therefore, as per the directives of this Court, a fresh and an appropriate decision was taken to issue sale order to M/s.Ruby & Co., Hyderabad, so as to fetch more amount to the Government. The petitioner alleged that the order of the Director dated 08.02.2007 is arbitrary and contemptuous, which is totally incorrect. The Director has obeyed the orders of this Court and passed a fresh order only on public interest. It is also not correct to say that the Director conducted an interse auction and bidding between the parties, as the parties met the Director on the different dates as mentioned above. 16. The Director has obeyed the orders of this Court and passed a fresh order only on public interest. It is also not correct to say that the Director conducted an interse auction and bidding between the parties, as the parties met the Director on the different dates as mentioned above. 16. While replying to the averments made in paragraphs 4 and 5, it is stated that as per the order No.DMRL/LC/WA/1354/SCRAP dated 08.02.2007, sale order (No.DMRL/MMG/DISP/Tender/10/2005-2006 dated 20.02.2007) was issued to M/s.Ruby & Company. However, as per the order of this Court dated 22.02.2007 in W.P.M.P.No.4163 of 2007 in W.P.No.3261 of 2007 further proceedings of the sale order was withheld pending disposal of the Writ Petition by this Court. It is also stated that while quashing the cancellation order this Court had not directed the competent authority to reconfirm the sale order dated 14.11.2005 in favour of the petitioner. On the other hand, this Court had directed the petitioner and the second respondent to meet the competent authority and also directed the competent authority to pass fresh/appropriate orders after hearing the representatives of both the parties. Treating both the parties at par, the order No.DMRL/LC/WA/1354/SCRAP, dated 08.02.2007, was issued and is as per the directions of this Court as well as to get maximum price advantage. 17. In the counter affidavit filed by respondent No.2, substantially, the same stand had been taken, and further, after making certain averments in paragraphs 3, 4, 5 and 6 of the counter affidavit it is also stated in paragraph 7 that this respondent did not know about the said Limited Tender at the time it was floated, and also at the time when Tenders were awarded to the bidders. If this respondent had known of such a surreptitious and colourable exercise being indulged in by the first respondent, this respondent would have taken steps to challenge such a questionable Limited Tender proposal, where the highest bidder of MS Metal Scrap in the open Tender which took place immediately preceding the Limited Tender, was not invited to participate in the Limited Tender, which was floated only to a few chosen parties. It is also stated that be that as it may, this respondent made representations to the Officials of the first respondent Company about the colourable exercise indulged in by their staff in floating a Limited Tender without inviting the highest bidder of the Open Tender immediately preceding the alleged Limited Tender. This respondent also lodged a written complaint with respondent No.1 against the award of Limited Tender. Upon coming to know about the cancellation of Tender to the writ petitioner and subsequent filing of W.P.No.9964 of 2006, this respondent got itself impleaded in the said writ petition in order to bring out the true position of facts concerning the Tender before this Court. It is further stated that the rate offered by respondent No.2 as compared to the rate at which the Limited Tender was awarded to the writ petitioner, would fetch additional revenue of Rs.7,39,346/- to respondent No.1 in respect of MS Metal Scrap alone, apart from bringing additional taxes to the Government. Further it is stated that the said Writ Petition No.9964 of 2006 was dismissed by the learned Single Judge by orders dated 29.11.2006. Thereafter, the writ petitioner preferred W.A.No.1354 of 2006 before the Division Bench of this Court. After hearing this respondent, the learned Division Bench was pleased to pass orders, dated 04.01.2007, wherein the Division Bench despite setting aside the orders of the learned Single Judge, held, however, that keeping in view the peculiar facts of the case, the Director of respondent No.1 should hear the writ petitioner and respondent No.2 herein, and pass fresh orders within fifteen days of the receipt of its order. The representatives of the appellant and the Complainant (this respondent) were directed to appear before the Director of the first respondent Organization on 09.01.2007. The order of the learned Division Bench further directed the Officer of respondent No.1 to make available all the adverse material to the representative of the appellant by 10.01.2007 and after hearing the appellant and the complainant, being respondent No.2, appropriate orders be passed on 23.01.2007. It is stated that respondent No.1 called respondent No.2 and the writ petitioner also and after hearing both sides fresh order was made whereby tender was awarded to the second respondent. It is stated that respondent No.1 called respondent No.2 and the writ petitioner also and after hearing both sides fresh order was made whereby tender was awarded to the second respondent. Further it is stated that the offer made by the second respondent as compared to the offer made by the petitioner would bring additional revenue of Rs.10,17,121/- to the first respondent apart from additional taxes to the Government. Hence, it is stated that the impugned order does not suffer from any illegality whatsoever. 18. In Noble Resources Ltd. v. State of Orissa1 at paragraphs 15, 18 and 27 it was observed as under: 15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court's scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 18. It may, however, be true that where serious disputed questions of fact are raised requiring appreciation of evidence, and, thus, for determination thereof, examination of witnesses would be necessary; it may not be convenient to decide the dispute in a proceeding under Article 226 of the Constitution of India. 27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited. 19. Learned Assistant Solicitor General placed reliance on Rajasthan Housing Board v. G.S.Investments2, wherein at paragraph 10 it was observed as under: "10. 27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited. 19. Learned Assistant Solicitor General placed reliance on Rajasthan Housing Board v. G.S.Investments2, wherein at paragraph 10 it was observed as under: "10. The other question which requires consideration is what are the contours of power which the High Court would exercise in a writ petition filed under Article 226 of the Constitution where the challenge is to cancellation of an auction held by a public body where the prime consideration is fairness and generation of public revenue. This question has been examined in a catena of decisions of this Court. In a recent decision rendered in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd.( (2005)6 SCC 138 ) where after consideration of several earlier decisions, the Bench to which one of us was a party, summarised the legal principle as under in paras 11 to 15 of the said Report: (SCC pp. 147-48) " 11 . The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-Judge Bench in Tata Cellular v. Union of India[ (1994)6 SCC 651 : AIR 1996 SC 11 ]. It was observed that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that 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. (See para 85 of the Report, SCC para 70.) 12 . 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. (See para 85 of the Report, SCC para 70.) 12 . After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing of decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.) 13 . In Sterling Computers Ltd. v. M&N Publications Ltd. (1993)1 SCC 445 : AIR 1996 SC 51 it was held as under: (SCC p. 458, paras 18-19) ' 18 . While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the "decision-making process". ... By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Court have inherent limitations on the scope of any such enquiry. But at the same time ... the courts can certainly examine whether "decision-making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. 19 . Court have inherent limitations on the scope of any such enquiry. But at the same time ... the courts can certainly examine whether "decision-making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. 19 . If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then court cannot act as an Appellate Authority by substituting its opinion in respect of selection made for entering into such contract.' 14 . In Raunaq International Ltd. v. I.V.R. Construction Ltd.[ (1999)1 SCC 492 ] it was observed that the award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of the ability to deliver the goods or services as per specifications. 15 . The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd.[ (2000)2 SCC 617 ] and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere." 20. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere." 20. Reliance was also placed on Ram and Shyam Company v. State of Haryana3 wherein in paragraphs 11, 12, 14 and 18 it was observed as under: "11. It was never disputed nor could it have been disputed that minerals vest in the State. The minor minerals vest in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vest in the Union. "Minor minerals" have been defined in The Mines and Minerals (Regulation and Development) Act, 1957, to mean "building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral". Minor minerals vest in the State in which the land is situated. The first respondent State of Haryana notified that an auction would be held for mineral quarries of Faridabad District. The appellant gave his bid at the auction so notified. It is an admitted position that his was the highest bid. Anyone conversant with auction would not be naive enough to believe that one can go on raising his own bid. His was the highest bid in the amount of Rs 3,87,000 p.a. Though the Presiding Officer accepted the bid of the appellant, being the highest bid at the auction, yet the State Government in exercise of the power conferred by clause (4) of sub-rule (2) of Rule 30 declined to confirm the same presumably under the belief that the highest bid did not represent the adequate lease rent which the State Government was entitled to get. The right of the State Government not to confirm the bid as also its action of not confirming the highest bid of the appellant is not questioned. Therefore, various decisions laying down that the Government is not bound to accept the highest bid, to which our attention was drawn by Mr P.P. Rao, learned counsel for the fourth respondent are of no relevance in this case. Therefore, various decisions laying down that the Government is not bound to accept the highest bid, to which our attention was drawn by Mr P.P. Rao, learned counsel for the fourth respondent are of no relevance in this case. This Court in Trilochan Mishra v. State of Orissa ( (1971) 3 SCC 153 ), State of U.P. v. Vijay Bahadur Singh ( (1982) 2 SCC 365 ) and State of Orissa v. Harinarayan Jaiswal ( (1972) 3 SCR 784 : (1972) 2 SCC 36 ) held that the Government is under no obligation to accept the highest bid and that no rights accrue to the bidder merely because his bid happened to be the highest. The Court also observed that the Government had the right, for good and sufficient reason, not to accept the highest bid but even to prefer a tenderer other than the highest bidder. In Vijay Bahadur Singh case the Court further observed that the power conferred on the Government by the Act to refuse to accept the highest bid, cannot be confined to inadequacy of bid only. There may be variety of other good and sufficient reasons to reject the same. The appellant has no grievance that even though his was the highest bid, the same was not accepted nor Mr Sorabjee on his behalf contends that the highest bid of the appellant was rejected on grounds which are either irrelevant or extraneous. This aspect therefore need not detain us any more. 12. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficient activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. In this connection we may profitably refer to Ramana Dayaram Shetty v. International Airport Authority of India ( (1979) 3 SCR 1014 : (1979) 3 SCC 489 ) in which Bhagwati, J. speaking for the Court observed: (SCC p. 506, para 12) "It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Gov ernment departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory." At another place it was observed that the Government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated. It was further observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. It was further observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought, in Kasturi Lal Lakshmi Reddy v. State of J&K ( (1980) 3 SCR 1338 : (1980) 4 SCC 1 ) while upholding the order of the Government of Jammu and Kashmir dated April 27, 1979 allotting to the second Respondent 10 to 12 lakhs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under: (SCC p. 13, para 14) "Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The government , therefore , cannot , for example , give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it , unless of course there are other considerations which render it reasonable and in public interest to do so. " (emphasis supplied) At one stage, it was observed that the Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well-settled that the Government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that Respondent 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy. The law is now well-settled that the Government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that Respondent 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. Only a blind can refuse to perceive it. 14. What happened in this case must open the eyes both of the Government as well as the people at large. How an uncontrolled exercise of executive power to deal with socialist property in which entire community's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal. Conceding that on weighty and valid considerat ions, the highest bid can be rejected by the State, one such consideration which can be foreseen is that the highest bid does not represent the adequate market price of the concession, yet before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder. In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of the truth, which was not undertaken, would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is impermissible. Even though repeatedly, this Court has said that the State is not bound to accept the highest bid, this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder. In the absence of it the approach must be as clearly laid down by the Constitution Bench of this Court in K.N. Guruswamy v. State of Mysore ( (1955) 1 SCR 305 : AIR 1954 SC 592 : 1954 SCJ 642). In that case, the appellant and the fourth respondent were rival liquor contractors for the sale of the liquor contract for the year 1953-54 in the State of Mysore. The contract was auctioned by the Deputy Commissioner under the authority conferred upon him by the Mysore Excise Act, 1901. The appellant's bid was the highest and the contract was knocked down in his favour subject to formal confirmation by the Deputy Commissioner. The fourth respondent was present at the auction but did not bid. Instead of that he went direct to the Excise Commissioner and made a higher offer. The Excise Commissioner cancelled the sale in favour of the appellant and directed the Deputy Commissioner to take action under the relevant rule. The latter accepted the tender of the respondent. The appellant moved the High Court for a writ of mandamus which was dismissed. In appeal by the certificate, it was urged on behalf of the State that the Deputy Commissioner acted within the ambit of his powers under the relevant rule w hich gave him an absolute discretion either to reauction or to act otherwise and no fetters are placed upon the "otherwise" method. The court negatived this contention observing that arbitrary improvisation of an ad hoc procedure to meet the exigencies of a particular case is ruled out. Therefore, the grant of the contract to the fourth respondent was wrong. Repelling the contention that a writ petition at the instance of the appellant would not be maintainable, the Constitution Bench observed as under: "The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else. Here we have Thimmappa who was present at the auction and who did not bid - not that it would make any difference if he had, for the fact remains that he made no attempt to outbid the appellant. Here we have Thimmappa who was present at the auction and who did not bid - not that it would make any difference if he had, for the fact remains that he made no attempt to outbid the appellant. If h e had done so it is evident that the appellant would have raised his own bid. The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the back of those interested and anxious to compete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this writ with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely, the elimination of favouratism and nepotism and corruption: not that we suggest that that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the legislature in its wisdom has endeavoured to avoid. All that is part and parcel of the policy of the legislature. None of it can be ignored. We would therefore in the ordinary course have given the appellant the writ he seeks. But, owing to the time which this matter has taken t o reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing), there is barely a fortnight of the contract left to go. We were told that the excise year for this contract (1953-54) expires early in June. A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law." 18. The position that emerges is this. Undoubtedly Rule 28 permits contract for winning mineral to be granted by the Government by auction or tender. It is true that auction was held. It is equally true that according to the State Government, the highest bid did not represent the market price of the concession. It is open to the State to dispose of the contract by tender. Undoubtedly Rule 28 permits contract for winning mineral to be granted by the Government by auction or tender. It is true that auction was held. It is equally true that according to the State Government, the highest bid did not represent the market price of the concession. It is open to the State to dispose of the contract by tender. Even here the expression "tender" does not mean a private secret deal between the Chief Minister and the offerer. Tender in the context in which the expression is used in Rule 28, means "tenders to be invited from intending contractors". If it was intended by the use of the expression "tender" in Rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question. The language ordinarily used in such rules is by public auction or private negotiations. The meaning of the expression "private negotiations" must take its colour and prescribe its content by the words which precede them. And at any rate disposal of the State property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. Viewed from this angle, the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason. The writer has indulged into allegations, the truth of which was not verified or asserted. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair-play in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be read in the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action. Application of the minimum principles of natural justice in such a situation must be read in the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action. That having not been done, the grant in favour of the fourth respondent must be quashed." 21. The principal grievance ventilated by the learned Counsel for the writ petitioner is that the second respondent who was nowhere in the picture initially entered the arena at a later point of time and got advantage though it has no locus since the complainant referred to in W.A.No.1354 of 2006 by the Division Bench may be in relation to Sri Vikas Agarwal and definitely not in relation to the second respondent. It is no doubt true that the Division Bench observed that the representative of the appellant and the complainant are directed to appear before the competent authority on 09.01.2007. The Division Bench in W.A.No.1354 of 2006 in fact observed as under: "The applicability of the rules of natural justice to purely administrative action has been recognized by the Supreme Court in several judgments including those of State of Orissa v. Dr Binapani Dei4, Bhagat Raja v. Union of India5 A.K.Kraipak v. Union of India6, Maneka Gandhi v. Union of India7, S.L.Kapoor v. Jagmohan8, Swadeshi Cotton Mills v. Union of India9 and Ogla Tellis v. Bombay Municipal Corporation10. By applying the ratio of these judgments to the facts of this case, we hold that the cancellation of the sale order issued in favour of the appellant is vitiated due to violation of the rules of natural justice and is liable to be quashed. In the result, the appeal is allowed. The order of the learned Single Judge is set aside. As a sequel to this, the decision of the Director to cancel the sale order issued in favour of the appellant is quashed. However, keeping in view the peculiar facts of this case, we direct the competent authority ie., the Director to pass fresh order in the matter within a period of fifteen days from the date of receipt of a copy of this order through the office of Assistant Solicitor General. However, keeping in view the peculiar facts of this case, we direct the competent authority ie., the Director to pass fresh order in the matter within a period of fifteen days from the date of receipt of a copy of this order through the office of Assistant Solicitor General. The representative of the appellant and the complainant are directed to appear before the competent authority on 09.01.2007. The officer concerned shall make available the adverse material to the representative of the appellant by 10.01.2007 and pass appropriate order by 23.01.2007 after hearing the representatives of the parties." 22. Though the name of the second respondent has, as such, not been specified, in the light of the specific stand taken in the counter affidavits of both respondents 1 and 2, this Court is of considered opinion that the contention that respondent No.2 would not fall within the expression of the complainant referred to by the Division Bench, cannot be accepted. The specific stand taken in the Writ Petition is that the impugned order was not made in accordance with the judgment made in W.A.No.1354 of 2006, dated 04.01.2007. The impugned order dated 08.02.2007 reads as under: "IN THE MATTER OF SALE OF SCRAP BY D.M.R.L.HYDERABAD Sub: Sale of MS & SS Metal Scrap - Reg. Ref: 1. Order of the Hon'ble High Court of A.P, in W.A.No.1354 of 2006, dated 04.01.2007. 2. Representation of M/s.Sreenidhi Electro Mechanics, Hyderabad, Dt.17.01.2007. 3. Representation of M/s.Ruby & Company, Hyderabad, Dt.19.01.2007. In pursuance of the Order of the Hon'ble High Court of A.P in W.A.No.1354 of 2006, dt.04.01.2007, I called both M/s.Sreenidhi Electro Mechanics, Hyderabad, and M/s.Ruby & Company, Hyderabad, on 17.01.2007 and 19.01.2007 respectively. As per the direction in 1st reference above, I placed the entire adverse materials before the Appellant. I had discussion with both of them, and they have offered their prices for the purchase of Scrap and submitted their letters ref. Above 2 and 3. As per their respective offers of M/s.Sreenidhi Electro Mechanics, Hyderabad, requested for reissuance of the Sales order, where as the M/s.Ruby & Company reaffirmed the offer of an amount of Rs.35,786.92 per Metric ton for M.S.Metal Scrap and Rs.57,111/- for Metric ton of SS Scrap which they had placed before the Hon'ble Court, which is much higher than the RGP fixed by the Department and also higher than the present market rate. In view of the above and to fetch more amount to the Government, I hereby giving this offer to the M/s.Ruby & Company, Hyderabad, to purchase the 25 M.tons of SS Scrap and 50 M.Tons of MS. Scrap. On receipt of this order M/s.Ruby & Company has to meet Division Head of MMG, DMRL, Hyderabad, and obtain necessary sales order as per Government Rules and comply the necessary terms and conditions therein within a period of 10 days. In case of failure to comply the above conditions within a period of 30 days from the date of receipt of this order, Director DMRL, Hyderabad, reserves the right to cancel the order, without any prior notice. This order is passed in pursuance of the Directions of the Hon'ble Court order. No.DMRL/LC/WA/1354/Scrap Dt.08.02.007. XXX (Dr.A.M.SRIRAMA MURTHY) DIRECTOR Copy to, M/s.Sreenidhi Electro Mechanics, Hyderabad. M/s.Ruby & Company, Hyderabad." 23. It is no doubt true that initially the second respondent was not in the picture. But the events had been explained in detail and under what circumstances, the order in the Writ Appeal also had been made was further explained. It is no doubt true that normally when a party is not a competing party initially, at a subsequent point of time permitting such party to have the advantage may cause some prejudice to the original party. But here is a peculiar case where in a prior Writ Petition an order made by the learned Single Judge was carried by way of Writ Appeal and the order as specified supra had been made in the Writ Appeal referred to above. In pursuance thereof, taking into consideration the competitive claims, when discretion had been exercised and a beneficial offer had been preferred, keeping the benefit to the public exchequer in view by the concerned authority, such discretion exercised by the authority cannot be found fault. Even otherwise, in the realm of contractual field in view of the limitations imposed on a writ court while exercising the power of judicial review under Article 226 of the Constitution of India, especially, keeping in mind the benefit derived to the public exchequer, this Court is not inclined to interfere with the impugned order. 24. It is needless to say that the Writ Petition is devoid of merits, and the same accordingly shall stand dismissed. However, in the peculiar facts and circumstances, the parties to bear their own costs