JUDGMENT Hon’ble Amitava Lala, A.C.J.—This writ petition has been filed by the petitioner praying for the following reliefs : “(i) to issue a writ, order or direction in the nature of certiorari quashing the advertisement dated 19.12.2007 issued in newspaper Amar Ujala (Annexure-4 to the writ petition) in so far as it relates to plot mentioned at Serial No. 4, situate at A-Block, Lajpat Nagar, Ghaziabad. (ii) to issue a writ, order or direction in the nature of mandamus directing the respondents to accept remaining 75% of the bid amount from the petitioner as per the auction proceedings dated 20.11.2007 and to execute relevant documents as per the terms of auction sale. (iii) to issue any other suitable writ, order or direction which the Hon’ble Court may deem fit and proper in the facts and circumstances of the instant case. (iv) to award costs of this petition to the petitioner.” 2. Briefly stated facts giving rise to the present writ petition, according to the petitioner, are that the Ghaziabad Development Authority, Ghaziabad (hereinafter referred to as the ‘GDA’), which is “State” within the meaning of Article 12 of the Constitution of India, is a development authority notified under Section 4 of the Uttar Pradesh Urban Planning And Development Act, 1973 (hereinafter in short called as the ‘Act, 1973’). By way of advertisement published sometime in October, 2007 in newspaper ‘Hindustan’ the GDA invited bids for settlement of various plots by auction sale. Pursuant to said advertisement the petitioner, who is a qualified Doctor, not only having graduation i.e. M.B.B.S. but also having post-graduation in surgery i.e. M.S., participated in the auction for the plot mentioned at item No. 6 in the advertisement, which is located at A-Block, Lajpat Nagar, Ghaziabad and reserved for nursing home. As per the conditions mentioned in the advertisement, the petitioner deposited draft/s for a sum of Rs. 13,00,000/- towards earnest money for participating in the auction. On 20th November, 2007 auction was held, wherein the bid of the petitioner for Rs.11,450/- per square meter against the reserved price of Rs.11,000/- per square meter was found highest, therefore, the auction committee provisionally accepted the bid of the petitioner and as per Clause-3 of the terms and conditions of auction sale, directed him to deposit 25% of the total bid amount after deducting the sum already deposited towards earnest money. Accordingly, the petitioner deposited Rs. Accordingly, the petitioner deposited Rs. 20,26,000/- more on 20th November, 2007 itself to meet the 25% of the bid amount, in respect of which GDA authorities also issued receipts clearly mentioning that the amount being deposited by the petitioner is towards 25% of the bid amount. As per Clause-4 of the terms and conditions of auction sale, remaining 75% amount was to be deposited without interest within two months from the date of allotment letter or in six half yearly instalments with 12% interest. Surprisingly, again on 19th December, 2007 another advertisement has been issued by the GDA in a newspaper ‘Amar Ujala’ re-advertising the plot in question for auction to be held on 9th January, 2008 fixing the bid money of the petitioner i.e. Rs.11,450/- per square meter as reserved price. 3. According to the petitioner, after coming across such an advertisement he tried to know the reason therefor, but nothing was disclosed to him by the authorities of GDA; the petitioner being fully eligible participated in the auction and his bid having been found highest one was accepted, pursuant to which he deposited 25% of the bid amount and has also complied with all the terms and conditions of auction sale, therefore, without issuing any show cause notice and without providing any opportunity of hearing and without calling him to renegotiate for sale of the plot in question, issuance of impugned advertisement for re-auction of the plot in question is result of illegal, arbitrary and colourable exercise of power and without any justification. Mr. M.K. Gupta, learned counsel appearing for the petitioner, has submitted that since a concluded contract had come into existence between the parties, it was not open for the GDA to take a unilateral decision for re-auction of the plot in question without any notice or opportunity of hearing to the petitioner, and the issuance of fresh advertisement is a deliberate attempt to defeat a contract concluded in favour of the petitioner. The petitioner also submitted that by way of a letter dated 1st January, 2008 he raised protest but no heed was paid to it by the GDA authorities. 4. The petitioner also submitted that by way of a letter dated 1st January, 2008 he raised protest but no heed was paid to it by the GDA authorities. 4. Against this background, the petitioner has filed this writ petition, wherein initially by order dated 8th January, 2008 a Division Bench of this Court, while directing the parties to file respective affidavits, was pleased to give an interim protection to the petitioner by directing that till the next date of listing, auction scheduled for 9th January, 2008 may take place but the same may not be finalized. 5. The respondents-GDA authorities have filed a counter affidavit saying that bid of the highest bidder is provisionally accepted at the fall of hammer by the auction committee and immediately 25% of the bid amount is to be deposited, but the auction committee submits a report to the Vice Chairman of GDA (hereinafter in short called as the ‘Vice Chairman’) with its recommendation for acceptance or rejection thereof and it is prerogative of the Vice Chairman to accept the bid or not. It is only after acceptance of bid by the Vice Chairman that bidder has to deposit the remaining amount as per the conditions but in case of non-acceptance of bid, the instalment of remaining amount would not be deposited. The auction committee taking into account the location of the plot considered the bid of the petitioner less than the prospective bid and recommended for disapproval thereof with a further recommendation for returning the amount deposited by the petitioner. The auction committee further recommended for re-auction of the plot in question on 9th January, 2008 which was approved by the Vice Chairman. The auction held on 20th November, 2007 has been cancelled after due permission of the Vice Chairman. According to the respondent authorities, pursuant to such approval, 25% amount i.e. Rs. 33,26,000/- was refunded to the petitioner vide Cheque No. 502480 dated 27th December, 2007 and the cheque was sent through speed post with letter dated 2nd January, 2008 on the address of the petitioner, but the same was referred back unanswered with a remark that ‘Doctor Sahab has gone outside and has directed not to receive any letter from GDA’. As per Clause- 3 (vi) of the terms and conditions mentioned in the brochure, Vice Chairman has authority to cancel any auction and the decision of the Vice Chairman is final. As per Clause- 3 (vi) of the terms and conditions mentioned in the brochure, Vice Chairman has authority to cancel any auction and the decision of the Vice Chairman is final. Any auction bidder cannot question the decision of the Vice Chairman. The petitioner also having signed the declaration at the time of submission of bid, has no right or authority to approach this Court unless the decision is otherwise illegal and against the terms and conditions of the allotment. It has been further submitted that pursuant to auction notice dated 19/20th December, 2007 auction was held, wherein out of two participated bidders the bid of M/s. Yashoda Health Care Pvt. Ltd, 113, Gandhi Nagar, Ghaziabad has been found highest at Rs. 12,000/- per square meter against the reserved price of Rs.11,450/- per square meter, who has also deposited 25% of the bid amount i.e. Rs. 34,85,250/-. However, such an auction sale has not been finalised on account of the interim order dated 8th January, 2008 passed by this Court. The petitioner has not taken part in the auction held on 9th January, 2008. GDA has authority to re-auction any plot before the same is finalized according to the terms and conditions. There is no illegality or arbitrariness in re-auction of plot already auctioned. As per re-auction, the GDA is getting Rs. 6,38,550/-, @ Rs.550/- per square meter, more than the amount the petitioner had offered. The respondents have further contended that the petitioner has levelled baseless and scandalous allegations without any proof and further for the reliefs claimed in the instant writ petition, the writ petition is not maintainable and is liable to be dismissed. 6. M/s. Yashoda Health Care Pvt. Ltd., who is the highest bidder in the subsequent auction sale, has been impleaded as respondent No. 4 in the present writ petition, on whose behalf Mr. Ashwani Kumar Misra, learned Advocate, has put in appearance and made his submissions. 7. From the aforesaid it is apparent that only two grounds have been taken by the authorities for cancelling the bid of the petitioner; (i) prospective value of the plot in question, and (ii) power of the Vice Chairman under Clause 3 (vi) of the terms and conditions mentioned in the brochure to accept or reject any bid. 8. 7. From the aforesaid it is apparent that only two grounds have been taken by the authorities for cancelling the bid of the petitioner; (i) prospective value of the plot in question, and (ii) power of the Vice Chairman under Clause 3 (vi) of the terms and conditions mentioned in the brochure to accept or reject any bid. 8. We have gone through Clause- 3(vi) of the terms and conditions mentioned in the brochure, in the garb of which the GDA has cancelled the bid of the petitioner. Such clause is as follows: “3 (vi). The Vice Chairman may accept or reject any bid including the highest bid after considering the recommendation of the Auction Committee and his decision in this behalf shall be conclusive and final which shall not be questioned by any auction purchaser. Vice Chairman shall not be bound to accept the recommendation of the Auction Committee.” 9. From a bare perusal of such a clause it is apparent that the decision of the Vice Chairman shall be based upon consideration of recommendation of the auction committee. However, in the instant case the report of the auction committee has not been annexed either by the petitioner or by the GDA authorities, from which we could know as to what was the reason which compelled the auction committee to recommend for cancellation of bid offered by the petitioner, particularly when the bid offered by the petitioner @ Rs. 11,450/- per square meter was more than the reserved price and subsequent to cancellation to put the plot in question for re-auction against the reserved price of Rs.11,450/- i.e. the amount offered by the petitioner. If the prospective value of the plot was high, what was the occasion for the GDA to fix the reserved price at Rs.11,000/- per square meter in the auction held on 20th November, 2007 and when in such auction the petitioner offered the highest bid @ Rs.11,450/- per square meter, immediately thereafter to put the plot in question for re-auction fixing the reserved price @ Rs.11,450/- per square meter. 10. Mr. Gupta has cited several judgements before us and we have gone through all such judgements. 10. Mr. Gupta has cited several judgements before us and we have gone through all such judgements. We find from Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries, 1993 (1) SCC 71 , that even though the authority has the right to reject any tender, including the highest tender, and thereafter negotiate with all the tenderers to procure the highest price for the commodity, yet the right has to be exercised reasonably and not arbitrarily, otherwise the credibility of the procedure of sale by inviting tenders would be lost. A higher price than the quoted in the highest bid cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution, of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure, which is ‘fair-play in action’. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. The inadequacy may be for several reasons known in the commercial field. Inadequacy of the price quoted in the highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good. In Union of India and others v. Dinesh Engineering Corporation and another, 2001 (8) SCC 491 , it has been held that there is no dispute that there is a power of the authority but that does not give any arbitrary power to the authority to reject the bid offered by a party merely because it has that power. A public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognised by Courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution. From M/s. Star Enterprises and others v. City and Industrial Development Corporation of Maharashtra Ltd. and others, 1990 (3) SCC 280 , we find that a three Judges’ Bench of the Supreme Court has held that judicial review of administrative action has become expansive and is becoming wider day-by-day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector undertakings have grown up, the stake 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. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrative superior and by the judicial process. In Kalu Ram Ahuja and another v. Delhi Development Authority and another, 2008 (10) SCC 696 , the Supreme Court has held factually in respect of a development authority that the appellants therein participated in the auction and gave the highest bid, which was rejected by the Vice Chairman of the concerned authority. The communication does not make a mention of the reason which may have prompted the Vice Chairman to reject the bid given by the appellants. No other record has been produced before the Court to show that the decision of the Vice Chairman was based on rational and tangible reasons and was in public interest. Therefore, there is no escape from the conclusion that the decision of the authority concerned was wholly arbitrary. 11. Mr. Gupta has contended before us that the petitioner’s bid @ Rs. 11,450/- per square meter against the reserved price fixed by the GDA @ Rs.11,000/- per square meter was accepted by the auction committee in the auction held on 20th November, 2007. 11. Mr. Gupta has contended before us that the petitioner’s bid @ Rs. 11,450/- per square meter against the reserved price fixed by the GDA @ Rs.11,000/- per square meter was accepted by the auction committee in the auction held on 20th November, 2007. However, in the subsequent auction held on 9th January, 2008 the GDA fixed the reserved price @ Rs. 11,450/- per square meter wherein two bidders participated and the offer of the respondent No. 4 herein @ Rs.12,000/- per square meter was the highest one. Out of two bidders who participated in the subsequent auction made by the GDA, the second one is virtually shadow. Mr. Gupta has further submitted that the GDA had earlier fixed the price of the area knowing fully well the location and prospective value of the plot in question and if there was a marginal price difference to dislodge the petitioner’s claim, the sanctity prescribes for giving reasons and an opportunity should have been given to the petitioner to meet such difference, if any. 12. Mr. A.K. Misra, learned Counsel appearing for the subsequent auction purchaser, the respondent No. 4 herein, has submitted before us that two competitors had participated both in the first and second auctions. No contract was concluded with the first bidder i.e. petitioner herein. Therefore, the petitioner has no right or claim on the basis of his offer made in the first auction. In support of his contention he has cited several judgements before us. 13. From Tata Cellular v. Union of India, 1994 (6) SCC 651 , we find that a three Judges’ Bench of the Supreme Court has held that the principles of judicial review would apply to the exercise of contractual powers by the Government bodies in order to prevent arbitrariness or 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 under Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. 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 under 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 of the Constitution if the Government tries to get the best price 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. 14. In support of the contentions of the GDA, Mr. Ved Vyas Misra, learned Counsel appearing for the GDA, has also relied upon paragraph-94 of such judgement for the following reasons: “94. The principles deducible from the above are : (1) The modern trend points to judicial restraint in administrative action. (2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. (3) 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. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a 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 principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.” 15. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.” 15. In Meerut Development Authority v. Association of Management Studies and another, 2009 (6) SCC 171 , the Supreme Court has held that a tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, it must be unconditional; must be in the proper form, the person by whom the tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations. It is so well settled in law and needs no restatement at our hands that disposal of the public property by the State or its instrumentalities partakes the character of a trust. The method to be adopted for disposal of public property must be fair and transparent providing an opportunity to all the interested persons to participate in the process. It is so well settled in law and needs no restatement at our hands that disposal of the public property by the State or its instrumentalities partakes the character of a trust. The method to be adopted for disposal of public property must be fair and transparent providing an opportunity to all the interested persons to participate in the process. The authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reason, such as, the highest bid not representing the market price but there cannot be any doubt that the authority’s action in accepting or refusing the bid must be free from arbitrariness or favouritism. In M/s. A.H.S. Projects Pvt. Ltd. v. State of U.P. and others, 2005 (4) ESC (All) 2460, a Division Bench of this Court has virtually held similarly on the basis of various judgements inclusive of Tata Cellular (supra), therefore, this requires no repetition of the submission. However, from an unreported judgement of a Division Bench of this Court delivered in Civil Misc. Writ Petition No. 34190 of 2000 (Jagmohan Bhola and others v. Vice-Chairman, Ghaziabad Authority and another) dated 28th November, 2005, factually we find that the Vice Chairman of the concerned authority cancelled the auction in public interest and directed that a fresh auction be held to fetch the price equivalent to the price offered in the earlier auction or the price higher than that. Again in such judgement the principle propounded by Tata Cellular (supra) was followed in coming to conclusion. Ultimately, Mr. A.K. Misra relied upon another unreported judgement of a Division Bench of this Court, presided over by one of us (Amitava Lala, J.), delivered in Civil Misc. Writ Petition No. 21964 of 2008 (M/s. Dasmesh Communication, Mirzapur and others v. Bharat Sanchar Nigam Limited and others) dated 18th November, 2009, to establish that the Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. The decision must not only be tested by the application of Wednesbury principle of reasonableness including its other facets, but must be free from arbitrariness not affected by bias or actuated by mala fides. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. The decision must not only be tested by the application of Wednesbury principle of reasonableness including its other facets, but must be free from arbitrariness not affected by bias or actuated by mala fides. There are inherent limitations in the exercise of power of judicial review in respect of contractual powers. The State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose. Factually therein, it was held that the decision is taken by 5 members of the committee exclusive of Chairman. Plurality should be respected. It is very difficult to accept the submission of the petitioner (therein) that 5 members at a time have done an arbitrary action against all eligible candidates. Before acceptance of their bid or expression of interest, no question of discrimination is available amongst the candidates. Therefore, a preferential right at the time of fresh selection, if others are similarly situated, can only be the best of legitimate expectations but nothing more and nothing less than that. 16. In reply thereto, Mr. Gupta has contended that the decision is only restricted for better price. No objective satisfaction on the cogent materials has been shown. No exemplar was available for the purpose of fixation of price. There is a difference between no material and some material and if no material is available, the decision of the authority is totally arbitrary in nature. 17. In most of the cases executing or not executing the contract, the Court follows the principles laid down in various judgements inclusive of the principle laid down in Mahabir Auto Stores and others v. Indian Oil Corporation and others, AIR 1990 SC 1031 : 1990 (3) SCC 752 , to determine whether the action is arbitrary, unreasonable, unfair, etc. or not. Even then the Court goes by the assessment finding out element of such nature. or not. Even then the Court goes by the assessment finding out element of such nature. But in the instant case when we find that the dispute is restricted to availability of better price by the GDA and when the allegation is no objective satisfaction by it on the cogent materials, we have to find out whether any mechanism is available to draw the line or not. It is well settled position of law that the Government is the guardian of the finances of the State. Therefore, when financial benefit on the basis of better price is the sole question, we do not think that there is any dearth of power of the State to consider the matter in accordance with Section 41 of the Act, 1973. Since Section 41 of the Act, 1973 gives certain controlling powers of the State Government over and above the Chairman and Vice-Chairman of the authority, we do not want to finalise the issue but leave it open to the State Government to come to a conclusion in this respect. For the purpose of ready reference, Section 41 of the Act, 1973 is quoted hereunder : “41. Control by State Government.—(1) The Authority, the Chairman or the Vice-Chairman shall carry out such directions as may be issued to it from time to time by the State Government for the efficient administration of this Act. (2) If in, or in connection with, the exercise of its powers and discharge of its functions by the Authority, the Chairman or the Vice Chairman under this Act any dispute arises between the Authority, the Chairman or the Vice-Chairman and the State Government the decision of the State Government on such dispute shall be final. (3) The State Government may, at any time, either on its own motion or on application made to it in this behalf, call for records of any case disposed of or order passed by the Authority or the Chairman for the purpose of satisfying itself as to the legality or propriety of any order passed or direction issued and may pass such order or issue such direction in relation thereto as it may think fit: Provided that the State Government shall not pass an order prejudicial to any person without affording such person a reasonable opportunity of being heard. (4) Every order of the State Government made in exercise of the powers conferred by this Act shall be final and shall not be called in question in any Court.” 18. Hence, we refer the matter to the State Government to take a decision upon giving fullest opportunity of hearing to all concerned and to pass appropriate order in accordance with law within a period of one month from the date of communication of this order. 19. Accordingly, the writ petition is disposed of, however, without imposing any cost. Hon’ble S.N.H. Zaidi, J.—I agree. ————