JUDGMENT : M. C. GARG, J.:- Both the petitioners who participated in the tender floated by the second respondent for two options (i) for operation, maintenance, and management of warehousing (ii) for setting up the manufacturing facilities are aggrieved of the second respondent having awarded the tender to third respondent only for the first option even though they were the single bidder and sufficient bids had not been received in accordance with the tender notice. 2. Both these writ petitions raise common question of law i.e. "whether second respondent was justified in awarding contract for the first option of the tender notice to the third respondent alone despite there being only single bid in this regard ?" 3. The second respondent issued NIT bearing No. 12366 dated 19th of October, 2010. The said tender was issued for the purpose of operation and maintenance, and management of warehousing or for setting up the manufacturing facilities for a period of thirty years at SEZ Pithampur, District -Dhar. The said tender was published in English (Free Press Journal) as well Hindi daily (Nai Dunia). As per NIT, last date for submission of tender form was 29th of October, 2010 and the tender was to be opened on 30th of October, 2010 at 4 p.m. 4. It would be appropriate to take note of publication inviting tender. The said tender was published in English (Free Press Journal) as well Hindi daily (Nai Dunia). As per NIT, last date for submission of tender form was 29th of October, 2010 and the tender was to be opened on 30th of October, 2010 at 4 p.m. 4. It would be appropriate to take note of publication inviting tender. Notice as given in Hindi reads as under :- e-iz- vkS|ksfxd dsUnz fodkl fuxe ¼ba½ fy- izFke ry Qzhizsl gkml] 3@54] izsl dkEiysDl] ,-ch- jksM+] bUnkSj dz- vkSdsfofu@b@blbZtsM@2010@12366 fnukad 19-10-2010 f}rh; fufonk vkea=.k os;jgkml ds lapkyu] la/kkj.k izca/ku ,oa mi;ksx gsrq fufonk vkea=.k e-iz- vkS|ksfxd dsUnz fodkl fuxe ¼ba½ fy- bUnkSj }kjk fo’ks”k vkfFkZd iz{ks= Qsl&1] ihFkeiqj] ftyk /kkj esa 2 gsDVj Hkwfe ij fufeZr osvjgkml ¼3932 oxZehVj½ ds fu;ekuqlkj lapkyu] la/kkj.k] izca/ku ,oa mi;ksx gsrq miyC/k gSA fodYi ¼1½ osvjgkmflax gsrq 3 o”kZ vof/k ds iV~Vs ij ,oa fodYiA ¼2½ esU;qQsDpfjax ds fy, 30 o”kZ dh vof/k ds iV~Vs ij miyC/k gSA fodYi ¼1½ esa ik= ,oa i;kZIr fufonk;sa ugha vkus dh fLFkfr esa fodYi ¼2½ ij fopkj fd;k tk;sxkA fufonk dh ‘krZ fufonk izi= esa n’kkZ;s vuqlkj jgsxhA fufonk izi= fnukad 19-10-2010 ds i’pkr~ fdlh Hkh dk;kZy;hu fnol ,oa le; esa jkf’k :- 15]000@& tek dj dk;kZy; ls izkIr fd;s tk ldsaxsA fufonk izi= dk fodz; fnukad 29-10-2010 lk;a 4-00 cts rd fd;k tk,xkA Hkjh gqbZ lhycan fufonk;sa fnukad 30-10-2010 vijkUg 4%00 cts rd e; /kjksgj jkf’k ds tek dh tk ldrh gSA /kjksgj jkf’k osvj gkmflax ds fy, vkosnu djus ij :- 50]000@& ds ;k esU;wQsDpfjax ds fy, 30 o”kZ dh vof/k ds iV~Vs ds fy, vkosnu djus ij 2]00]000@& dh jkf’k ds jk”Vªh;d`r cSad ds MhMh@,QMhvkj ds :i esa ekU; dh tkosxhA osvj gkmflax ds fy, vkosnu djus ij cSad lkyosalh :- 5 yk[k tks ‘ksM;wYM@jk”Vªh;d`r cSad ls tkjh dh xbZ gks ,oa 12 ekg ls iqjkuh u gks] Hkh izLrqr djuh gksxhA fufonk iziz= ds fyQkQk 1 ,oa 3 fnukad 30-10-2010 dks lka; 4-30 cts [kksys tkosaxsA ;g laf{kIr fufonk gSA fufonk dh vU; ‘krZ fufonk izi= esa miyC/k gSA ;g fufonk fuxe dh csolkbZV www.mpakvindore.com ij Hkh miyC/k gSA csolkbZV ls MkmuyksM dj fufonk izLrqr djus dh fLFkfr esa bldk ewY; :- 15]000@& dk cSad Mªk¶V izLrqr djus ij gh fufonk ekU; dh tkosxhA TIME TABLE AND MILESTONES Milestones Time Dates Date for issue of Tender Documents During office hours 19-10-10 Last date for receipt of Tender by MPAKVN 16.30 Hrs. 29-10-10 Opening of the Cover 1 -General Information and Cover 3-Earnest money 16.30 Hrs. 30-10-10 Opening of the Cover 2 -Commercial Offer 16.30 Hrs. Date will be intimated after scrutiny of technical offer 5. Conditions of NIT enables the second respondent to have two options. First option was for operation, maintenance and management of warehousing. The second option was for setting up manufacturing facilities. In the NIT itself, it was provided that if eligible and sufficient bids are not received for the first option, then the NIT would be considered for the second option i.e. for setting up manufacturing facilities. 6. The petitioners submitted their tenders for the second option only. The second respondent despite having not received sufficient number for the first option instead of re-tendering, or proceeding with considering the tender for the second option, decided to award tender for the first option to the third respondent even though he was the only bidder for that option i.e. to say, only single bid was received for the first option by the second respondent. Neither second respondent thought it appropriate to re-tender for the first option nor the second respondent proceeded with consideration of the bid for the second option, even though for the said option, there were three bidders including the petitioner. It is submitted that in this case, as only one bid was opened for the first option, second respondent as per tender condition was bound to go for the second option i.e. to consider tender for setting up manufacturing facilities. 7. The petitioner submits that the second respondent being an instrumentality of the State is an authority under Article 12 of the Constitution of India and as such cannot act in arbitrary manner, but is required to follow transparent procedure for the purpose of awarding contract. Therefore, they were obliged to follow the conditions of NIT i.e. to say if sufficient tenders were not received for the first option then to go for the second option or to re-tender for the first option. Anything contrary to this would tantamount to discriminate or violate principles of equality as enshrined under Article 14 of the Constitution of India and as such the said action on the part of the second respondent would be illegal and would liable to be quashed. 8. Anything contrary to this would tantamount to discriminate or violate principles of equality as enshrined under Article 14 of the Constitution of India and as such the said action on the part of the second respondent would be illegal and would liable to be quashed. 8. It is the contention of the petitioner that instead of proceedings as per the assurance, second respondent suddenly and abruptly opened financial bid on 3rd of February, 2011 for the first option i.e. for operation, maintenance and management of warehousing which option exercised by second respondent was illegal and without jurisdiction. It is submitted that if there was only one bid for the first option, second respondent could not have considered the bid for the first option and second respondent was having no option, but to opt for the second option and should have accepted the tender for the second option. 9. It is submitted that if the second respondent wanted to consider the tender for the first option only and there were insufficient bids, the second respondent ought to have cancelled the entire tender process and could have initiated for re-tendering process, which was not done. 10. In both the Writ Petitions, common prayer has been prayed by the petitioner to the following effect: i) Quash the impugned action of respondent No. 2 in considering the tender for first option i.e. for operation, maintenance and management and direct the respondent No. 2 to consider the tender for second option for SEZ Phase-I, Phithampur, District - Dhar. ii) In the alternative, entire tender No. 12366 dated 19-10-2010 be quashed and the respondent No. 2 be directed to initiate new tender for SEZ, Phase-I, Phithampur, District- Dhar for the purpose of warehousing, and or setting up manufacturing facilities. iii) Any other order or direction may be issued which this Hon'ble Court deems fit in the premises aforesaid. iv) Allow this petition with costs. 11. Basically the Writ Petitions are based upon the submissions that in absence of receiving sufficient tender for the first option, second respondent was not entitled to award tender for the first option to the third respondent who was the only bidder (single bidder) and rather it was incumbent upon second respondent to have opted for second option 12. 11. Basically the Writ Petitions are based upon the submissions that in absence of receiving sufficient tender for the first option, second respondent was not entitled to award tender for the first option to the third respondent who was the only bidder (single bidder) and rather it was incumbent upon second respondent to have opted for second option 12. It has been submitted that in the facts and circumstances of this case, the impugned action of respondent No. 2 in considering the tender for the first option i.e. for operation, maintenance and management of warehousing at SEZ, Phase-I, Pithampur, District - Dhar on the basis of single bid is illegal and discriminatory, thus violative of Article 14 of the Constitution of India, therefore, the second respondent is required to be restrained by means of writ of mandamus not to award the tender of work in terms of the first option to the third respondent being the only bidder and, to invite fresh tender for the said option, in case the second respondent so want or in the alternative, to proceed and consider bids received for the second option. 13. Vide order passed on 14th of February, 2011, interim orders were passed in W.P. No. 1641/2011 restraining the respondents No. 1 and 2 from issuing letter of intent in favour of the third respondent, if the same has not already been issued and if the same has already been issued, the agreement be not executed, if not already executed. 14. Vide order dated 27th of April, 2012, Writ Petition No. 1641/2011 was also directed to be listed along with Writ Petition No. 1639/2011 which contains the similar prayer and similar pleadings. Respondent No. 1 has adopted the reply filed by second respondent in terms of order passed on 25th of June, 2012. 15. Before we discuss the reply filed by the respondents, we may also take note of the tender documents which were issued by second respondent pursuant to NIT. 16. Respondent No. 1 has adopted the reply filed by second respondent in terms of order passed on 25th of June, 2012. 15. Before we discuss the reply filed by the respondents, we may also take note of the tender documents which were issued by second respondent pursuant to NIT. 16. Some of the terms of tender documents require to be taken note of to understand the real intention of the second respondent in issuing the tender notice which reads as under : "Object of present document : MPAKVN is looking for an experienced entrepreneur to operate, maintain and manage the warehouse facility through the Operation, Maintenance and Management Contract (in short OMM Contract) as per the scope provided in Annexure-B and alternatively in case feasible bids for warehousing is not received to the satisfaction of the tender committee for leasing of the facility as per allotment of land rules to the bidder whose offer is highest for the Civil constructions on the demised land." 17. A reading of aforesaid makes it very clear that if suitable and sufficient tenders were not received by the second respondent for the first option, then they were obliged to go for the second option or to invite fresh tender for the first option. 18. Now, coming to the reply filed on behalf of the respondents, we find that insofar as second respondent is concerned, in the preliminary submissions, it has been submitted that: In pursuance of the above objectives to set up warehouse at SEZ Indore, a tender was invited by publishing notice inviting tender (NIT) in Dainik Bhashkar on 12-7-2008 and the work order for design, fabricates, supplying, erection of pre-engineering steel warehouse at SEZ Indore was awarded to the successful contractor M/s Assardas Construction Pvt. Ltd., Indore. Thus, since inception, the property was constructed as warehouse for the purpose of providing common facility of warehousing to the industries in SEZ. A copy of the Tender Notice and work Order to show that the suit property was constructed for the purpose of warehousing are Annexure as Annexure R/1. That the suit property was constructed specifically for the purpose of warehousing, therefore for the purpose of operation, maintenance and management of the same tenders were in Mited in past, however no bidder took part in the tender process, therefore the warehouse was lying idle. That the suit property was constructed specifically for the purpose of warehousing, therefore for the purpose of operation, maintenance and management of the same tenders were in Mited in past, however no bidder took part in the tender process, therefore the warehouse was lying idle. Since, no bidder came forward for operation and management of the warehouse, a second bid was invited and notice inviting tenders were published in Nai Dunia and Free Press Indore on 20-10-2010 mainly for warehousing and alternatively, in case no sufficient bid is received for warehousing then for the use of manufacturing activities. It was made clear in the tender document itself that the second option shall be considered only if the sufficient offer for warehousing is not received. Copy of NIT is placed with the petition. 19. A bare reading of the aforesaid fortify the stand of the petitioner that the tender was invited initially to consider the tender for the first option and if eligible and sufficient tenders were not received for the first option, then to consider the tenders for the second option. 20. It is thus clear that the second respondent was obliged to go for the second option, if they had not received sufficient tender for the first option and were not entitled to award tender for the first option, as single bid cannot be said to be sufficient bid in terms of notice inviting tenders. 21. It may be observed here that even though there is mention that tender was issued after failing to receive sufficient bids pursuant to first tender, there is nothing in the tender notice to suggest that if sufficient bids are not received, then even single bid would be considered for the first option. 22. No separate reply has been filed by the first respondent to have simply adopted the reply of the second respondent, but the third respondent has filed its separate reply. In the said reply, there is no specific reply to the basic submission of the petitioner that the notice inviting tender required second respondent to proceed with the second option if eligible and sufficient bids were not received by them for the first option. Admittedly, in this case only one bid was received for the first option and therefore, the said bid could not have considered as sufficient in terms of the notice inviting tender. 23. Admittedly, in this case only one bid was received for the first option and therefore, the said bid could not have considered as sufficient in terms of the notice inviting tender. 23. Learned counsel appearing for the petitioner submitted that in this case the very fact that the tender notice inviting tender is very specific that the tenders had been invited for two options i.e. (i) for operation, maintenance, and management of warehousing (ii) for setting up the manufacturing facilities. It has been submitted that the NIT was very clear that if sufficient bid is not received from eligible persons for the first option, second respondent would proceed to go for the second option. 24. As such, it has been submitted that once only one bid was received by the second respondent for the first option, they were obliged to consider second option and were not entitled to accept single bid of the third respondent for the first option as the bid of third respondent cannot be considered as sufficient. 25. It has been submitted that the second respondent is State and/or instrumentality of the State within the meaning of Article 12 and are not entitled to discriminate or act in arbitrary fashion as has been done by the them in this case. It is submitted that the arbitrary action on the part of the second respondent strikes at the root of the equality and therefore their action in awarding work to third respondent is violative of Article 14 of the Constitution of India and as such, such action on their part is liable to be set aside. 26. The petitioner also submitted that even otherwise accepting single tender is violative of Article 14 of the Constitution of India, inasmuch as it does not provide fair opportunity to all concerned who could have participated in the tender. 27. On the other hand, learned counsel for the second and third respondents have submitted that in this case, tenders were invited even earlier and since those tenders did not produce fruitful result, second tender was floated in this case. As such, it was open for the second respondent to consider even single bidder for the reason that the basic objectives of the second respondent was to operate, maintain, and manage the warehouse or set up the manufacturing facilities. As such, it was open for the second respondent to consider even single bidder for the reason that the basic objectives of the second respondent was to operate, maintain, and manage the warehouse or set up the manufacturing facilities. As such, it is submitted that there is no illegality done on the part of the respondents in this case. 28. We have given our thoughtful consideration to the rival submissions. 29. In the case of Ramana Dayaram Shetty vs. International Airport Authority of India, reported in AIR 1979 SC 1628 , the Hon'ble Supreme Court was confronted with the situation when the tenders were invited for running restaurant and snacks bar where award of contract was given to a person who was not having requisite qualification. In that judgment, it was held that the Court can interfere in the matter where the tenders had been invited for running restaurant and snacks bar at the Airport and clearly stated the principle that the Government cannot accept the tender of person who did not fulfil the requisite qualification. The Court held that: The attainment of socio-economic justice being a conscious end of State policy, there is a vast and inevitable increase in the frequency with which ordinary citizens come into relationship of direct encounter with State power-holders. This renders it necessary to structure and restrict the power of the executive Government so as to prevent its arbitrary application or exercise. Whatever be the concept of the rule of law, whether it be the meaning given by Dicey in his "The Law of the Constitution " or the definition given by Hayek in his "Road to Serfdom " and "Constitution of liberty" or the exposition set forth by Herry Jones in his "The Rule of Law and the Welfare State", there is, as pointed out by Mathew, J., in his article on "The Welfare State, Rule of Law and Natural Justice" in Democracy, Equality and Freedom "substantial agreement in juristic thought that the great purpose of the rule of law notion is the protection of the individual against arbitrary exercise of power, wherever it is found". It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege. The learned Chief Justice said that when the Government is trading with the public, "the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions.... The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure." This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. 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 largess, 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 norm which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess 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 government 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. 30. 30. In the case of Vijay Kumar Gupta vs. State of Maharashtra decided on 13th March, 2008 by the High Court of Bombay, it has been held that the Government could not act like private individual in exercise of its power even with respect to contractual matters. It was held that Article 14 would be attracted wherever such action smacks of arbitrariness and violates the basic principles. 31. In the same judgment referring to earlier precedent including Ramana Dayaram Shetty (supra), the Apex Court also held that the terms and conditions of the tender should be construed from the stand point of a prudent businessman and the decision of the State authorities should also stand the test of fairness. 32. It will be appropriate to take note of the judgment delivered O. Chinnappa Reddy, J. in the case of Sachidanand Pandey vs. State of W. B., AIR 1987 SC 1109 at 1133, where after considering almost all the decisions of the Court on the subject summarized the legal propositions in the following terms : "On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established: State owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest when it is considered necessary to dispose of a property is to sell the property b\public auction or by inviting: tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism." "The public property owned by the State or by an instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favoritism or nepotism. Ordinarily, these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is not the only rule. As O. Chinnappa Reddy, J. observed, "that though that is the ordinary rule, it is not an invariable rule". There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience ". The law is, thus, clear that ordinarily all contracts by the Government or by an instrumentality of the State should be granted only by public auction or by inviting tenders, after advertising the same in well known newspapers having wide circulation, so that all eligible persons will have opportunity to bid in the bid, and there is total transparency. In our opinion this is an essential requirement in a democracy, where the people are supreme, and all official acts must be actuated by the public interest, and should inspire public confidence. 33. In the present case, the tender called for offers in two parts i.e. (i) for operation, maintenance, and management of warehousing (ii) for setting up the manufacturing facilities. The tender notice inviting tender as quoted above was clear and in unequivocal words reflected intention of second respondent that if eligible and sufficient number of tenders were not received for the first option, then the second respondent would proceed with the consideration of the second option. However, in this case, second respondent had not adhered to the aforesaid tender condition and rather only on the basis of one tender decided to grant tender to third respondent which precisely has been questioned by the petitioner. 34. However, in this case, second respondent had not adhered to the aforesaid tender condition and rather only on the basis of one tender decided to grant tender to third respondent which precisely has been questioned by the petitioner. 34. In the case of Nagar Nigam, Meerut vs. Al Fatheem Meat Exports Pvt. Ltd., reported in 2006(13) SCC 382 wherein the Apex Court has been pleased to observe that: The law is well-settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders from eligible persons and the notification of the public-auction or inviting tenders should be advertised in well known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money Deposit, etc. The award of Government contracts through public-auction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in Government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government; where the procurement is possible from a single source only; where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed from and such contracts may be awarded through 'private negotiations.' 35. In that case, there was sufficient condition mentioned in the tenders that since in the first tender invited sufficient offers could have been received, the authority inviting tenders kept to its right to consider even single tender if received on the second occasion for the work to be done, which is not the case with us. 36. In that case, there was sufficient condition mentioned in the tenders that since in the first tender invited sufficient offers could have been received, the authority inviting tenders kept to its right to consider even single tender if received on the second occasion for the work to be done, which is not the case with us. 36. Thus on receipt of single bid for the first option, second respondent was not entitled to grant contract to the said bidder for the first option since such exercise on the part of the second respondent was violative of the principles of equality and awarding contract to the third respondent amounted to discrimination vis-a-vis other bidders who had opted for the second option. 37. Submissions made on behalf of the respondent that it was not a case of first tender, but a second tender is of no consequence because NIT does not say that if sufficient tenders are not received for the first option then the second respondent may consider even single bid, which course of action was approved in the case of Pandrol Rahee Technologies vs. Delhi Metro Rail Corporation Ltd. passed by Competition Commission of India in Case No. 03/2010 on 7th of October, 2011. 38. In view of the aforesaid circumstances, we have satisfied that awarding the contract under the first option in favour of the third respondent who was only single bidder by the second respondent is not legal and such action on their part amounts to arbitrary exercise of power and which action on their part strike at the root of equality in terms of the words of the Hon'ble Supreme Court in the case of Ramana Dayaram Shetty (supra) and would therefore violative under Article 14 of the Constitution of India and will have to set aside. 39. Accordingly, we hold that the award of tender or the decision to award the tender to third respondent based upon single tender given by the third respondent for the first option cannot be upheld. 39. Accordingly, we hold that the award of tender or the decision to award the tender to third respondent based upon single tender given by the third respondent for the first option cannot be upheld. Consequently, we set aside the award of the contract with respect to first option to third respondent and direct the second respondent to consider floating fresh tender if at all they are interested to go ahead with award of a tender for the first option with specific terms and conditions and in the alternative, they are certainly free to consider the tender received by them for the second option in terms of the NIT. 40. With the aforesaid observations, both the writ petitions are disposed of. A copy of this order be kept in W.P. No. 1641/2011. Order accordingly.