Judgment : A.M. Badar, J. 1. Heard. Rule. With consent of parties, Rule is made returnable forthwith. 2. By the instant petition, the petitioner, which is a private limited Company, is praying for quashing and setting aside the tender notice No. 31/201314, published by the respondent No.1 – Maharashtra Industrial Development Corporation, Mumbai (For short, “the MIDC”), and for declaring that the action of the respondent No.1 in inviting fresh tenders for the work which was already tendered by it, is contrary to the principles of natural justice and fair play. 3. Facts, necessary for deciding the instant petition can be summarized as under: In response to tender notice bearing No. 17/2013-14, issued by the respondent No.1 – MIDC, the petitioner company which is A-Class Electrical contractor, has submitted its tender for providing, erecting and commissioning of 33/11kv sub station, 2 x 10 MVA Transformer and 6 outgoing feeder substation in SEZ of Shendra Five Star Industrial Area in District Aurangabad. The tender process was in two stages. First stage involved technical evaluation and the second stage involved financial evaluation of the bids submitted by the tenderers. It is case of the petitioner that for this work estimated to cost Rs. 9,49,54,598/-, apart from the petitioner company, 8 other contractors had also submitted their offers. As scheduled, technical bids were opened and out of 9 tenders, only 3 tenders including that of the petitioner company, were found to be eligible and qualified for opening of financial bids. On 5.12.2013, upon opening the financial bids submitted by the eligible tenderers, it was found that the petitioner company has quoted rates 19.25% below the estimated cost, whereas, other two tenderers, namely, Jaikumar Enterprises and Veena Electricals Pvt. Ltd, had quoted rates respectively 9% and 18%, below the estimated cost of the tender work. As bid of the petitioner company was lowest, the Superintending Engineer (respondent No.2) and the Executive Engineer (respondent No.3) of the MIDC recommended the higher authorities that the tendered work be given to the petitioner company. The petitioner was expecting that as its bid was the lowest, it will be accepted. However, to the surprise of the petitioner, respondent No.1 MIDC published a tender notice bearing No. 31/201314, in local daily newspaper dated 26.2.2014. The petitioner was expecting that as its bid was the lowest, it will be accepted. However, to the surprise of the petitioner, respondent No.1 MIDC published a tender notice bearing No. 31/201314, in local daily newspaper dated 26.2.2014. By this tender notice No. 31/2013-14, respondent MIDC, invited tenders for the same work which was included in tender notice No. 17/2013-14, in which process, the petitioner company was found to have quoted the lowest rate. According to the petitioner, in this way, respondents have exercised power in arbitrary manner with malafide intention and ulterior motive, just to favour one of the contractors, who was disqualified in technical bid regarding tender notice No.17/201314. Under the influence of unsuccessful tenderer, the respondent MIDC, according to the petitioner, decided to recall the entire tender process, by adopting the procedure which is totally unfair to the petitioner. The Petitioner further contended that if respondents are allowed to continue with the tender process in pursuance to the tender Notice No. 31/2013-14, then, future prospects of the petitioner would be affected, causing injustice to him. 4. The petition came to be opposed by filing affidavit in reply by respondents. It is not disputed by the respondents that after scrutiny of the tenders received in pursuance to the tender Notice No. 17/2013-14, only 3 tenderers were found to be eligible for opening their financial bids. According to respondents, after noticing this fact at the time of opening of technical bids, the bidders who were found to be ineligible as well as their agents started protesting and created huge mess in the office of respondents. Hence, according to respondents, the process of opening of financial bids which was scheduled on the same day, was required to be postponed to the next day. Respondents further contended that the financial bid of the petitioner was found to be lowest and, hence, record and proceeding was forwarded to the office of the Chief Executive Officer and Chief Accounts Officer of the respondent Corporation. At this juncture, it is appropriate to quote the stand of the respondents whereby they are justifying cancellation of the tender process initiated vide tender Notice No.17/2013-14. The relevant portion of para.8 of the affidavit in reply tendered by the respondents reads thus:- “... At this juncture, it is appropriate to quote the stand of the respondents whereby they are justifying cancellation of the tender process initiated vide tender Notice No.17/2013-14. The relevant portion of para.8 of the affidavit in reply tendered by the respondents reads thus:- “... according to the policy and guidelines for the opening of tenders need to be followed, according to procedure the total process of opening tender has to be completed on the same day, but, in the present case due to the mess created by the some of non selected bidders and their agents compel to postpone that. This fact was brought to the notice of higher authorities. After considering all this aspect and the circumstances, unfortunately, to maintain the transparency and to follow the proper process of opening tenders according to the procedure, the corporation has taken a decision to cancel the earlier notice No.17/2013-14. The said decision also communicated to the concern parties. ...” 5. The petitioner company then submitted its affidavit in rejoinder and contended that when the copy of the petition was served on respondents on 1.3.2014, after seeking adjournment for 2 weeks, for the first time, on 3.3.2013, respondents communicated to the petitioner its decision to cancel the tender process initiated while Tender Notice No.17/201314, that too, without assigning any reasons. The petitioner further contended in rejoinder that in fresh tender notice, earlier tender conditions have been relaxed in order to favour the unqualified bidders, who participated in the earlier tender process. It was further averred on affirmation that respondent MIDC is acting under political influence and for extraneous consideration. 6. Learned counsel for petitioner, placing reliance on the ruling in the matter of “Ramanna Dayaram Shetti Vs. International Airports Authority of India and others” reported in AIR 1979 SC 1628 , vehemently contended that the action of the respondents in cancelling earlier tender process and that too, after opening financial bids of qualified tenderers, is glaring example of unreasonable and arbitrary mode of functioning of respondent Corporation. He further contended that in the subsequent tender notice, for the same work, respondent Corporation modified the conditions of earlier tender notice so as to favour the contractors who were unsuccessful or rather failed to qualify for opening the financial bids, submitted by them. He further contended that in the subsequent tender notice, for the same work, respondent Corporation modified the conditions of earlier tender notice so as to favour the contractors who were unsuccessful or rather failed to qualify for opening the financial bids, submitted by them. The learned counsel for the petitioner further argued that the action of the respondents in rejecting the earlier tender process after it reached upto the stage of opening of financial bids of the qualified bidders, and that too without furnishing any reasons, is nothing but abuse of powers by the respondent Corporation and as such, the subsequent tender notice needs to be quashed and set aside. 7. Per contra, according to the learned counsel appearing to respondent MIDC, because of the ruckus created by some of the non selected bidders and their agents, work of opening of financial bids of qualified tenderers was postponed to the next day and this fact was brought to the notice of the higher authorities. He further submitted that some non selected bidders have submitted written objection to the respondent Corporation after considering these circumstances and for maintaining transparency, the respondent Corporation has taken a decision to cancel the tender process initiated vide tender notice No.17/201314. 8. We have carefully considered the rival submissions and the material placed on record. It is undisputed that out of total 9 tenderers, only 3 tenderers were found qualified and eligible for opening of the financial bids. Undisputedly, on 2.12.2013, technical bids submitted by all the tenderers came to be opened and it was on 4.12.2013, the petitioner company was informed by the respondents that it should send its representative on 5.12.2013 as the financial bids of the eligible tenderers were to be opened on that day. Undisputedly, the financial bid of the petitioner company was found to be the lowest and then, all of a sudden, without any intimation to the petitioner, respondents retendered the same work by publishing advertisement in a local daily on 26.2.2014. 9. It is not in dispute that prior to this retender, the petitioner was not at all informed about the result of the tender process initiated vide tender Notice No.17/2013-14. Uncontroverted averments, borne from the record go to show for the first time, it was vide letter dated 3.3.2014, respondent MIDC informed the petitioner company that earlier tender process came to be cancelled and the work was retendered. Uncontroverted averments, borne from the record go to show for the first time, it was vide letter dated 3.3.2014, respondent MIDC informed the petitioner company that earlier tender process came to be cancelled and the work was retendered. Even in this letter, dated 3.3.2014 (Annexure R1) respondent No.3 Executive Engineer has not informed any reason necessitating cancellation of the earlier tender process, in which financial bid of the petitioner was opened and found to be the lowest. 10. What is sought by the petitioner is judicial review of the decision taken by the respondent Corporation in cancelling the earlier tender process initiated vide tender Notice No.17/2013-14. The principles of judicial review are undoubtedly applicable to the exercise of contractual powers by State, in order to prevent arbitrariness or favouritism. However, such review is not that of merit of the decision. It is a review of the decision making process. Undoubtedly, respondent MIDC is an instrumentality or agency of the State Government. While exercising its powers or discretion, it is subjected to some constitutional limitations to which the State is subjected to. While dealing with public in entering into contract, action of respondent Corporation, therefore, needs to be free from arbitrariness and must be rational, fair and transparent. Article 14 of the Constitution speaks of equality before law and equal protections of laws. Therefore, in the matter of public contract, the respondent Corporation cannot choose to exclude a person by adopting extraneous or irrelevant consideration. If it does so, that will tantamount to denial of equality. Respondents MIDC, therefore, cannot act arbitrarily in entering into contractual relationship or refusing to enter into contractual relationship. 11. In the present case, without assigning any reasons, as seen from the stand of the respondent MIDC, just because ineligible tenderers and their agents created huge mess in its office, the tender process appears to have been cancelled by it. It is worthwhile to note that reasons for cancellation of the earlier tender process were not communicated to the petitioner prior to reissuing tender notice or even till the petitioner approached this Court. Reasons recorded by the respondent Corporation were not even furnished for scrutiny before this court. It is not the case of the respondents that the petitioner is in any manner ineligible or unqualified for executing the tendered work or that he is not fulfilling the conditions of tender notice. Reasons recorded by the respondent Corporation were not even furnished for scrutiny before this court. It is not the case of the respondents that the petitioner is in any manner ineligible or unqualified for executing the tendered work or that he is not fulfilling the conditions of tender notice. Even in its letter dated 3.3.2014, respondent No.3, Executive Engineer has not informed any reasons for cancellation of the tender process. 12. In the light of this factual position, much substance is found in contention of the petitioner that the decision to cancel the tender process is motivated by political as well as extraneous considerations. The petitioner has placed on record, a letter dated 9.12.2013 (Annexure C) which is issued on the letter head of a political party – Shiv Sena, whereby, the office bearer of the said political party has asked respondent MIDC to cancel the tender processes initiated vide tender notice No.17/201314. The copy of this letter is also seen to have been endorsed to the Honourable Minister for Industries, as well as the local member of the Parliament. 13. True it is that the right to refuse the lowest or other tender is always available with respondents, but the principles laid down by Article 14 of the Constitution are required to be kept in mind while accepting or refusing any tender. Right to choose cannot be considered to be an arbitrary power and if same is exercised for any colateral purposes, then, such exercise of power will have to be struck down. In the case at hand, respondents have decided to cancel the earlier tender process which has traveled upto its destination due to opening of the financial bid; in a most arbitrary manner. The reason for arriving at this decision is stated to be creation of huge mess by the unsuccessful bidders as well as for maintaining transparency. What was nontransparent in the earlier tender process is an aspect which the respondent MIDC is unable to explain. Creation of mess by unsuccessful bidders and intervention of political party appears to be the factors which weighed the decision making process of the respondent MIDC. Such decision, in our opinion, is influenced by political and extraneous considerations, only for the purpose of denying the petitioner company of its legitimate claim in respect of the tendered work. 14. Creation of mess by unsuccessful bidders and intervention of political party appears to be the factors which weighed the decision making process of the respondent MIDC. Such decision, in our opinion, is influenced by political and extraneous considerations, only for the purpose of denying the petitioner company of its legitimate claim in respect of the tendered work. 14. What should be the parameters for exercising discretion by the Government in contractual matters is aptly described by the Honourable Apex Court, in the matter of “Ramanna Dayaram Shetty” (supra), and in para.11 and 12 thereof, it is held thus:- “11. ... The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted, as pointed out by Prof. Reich in an especially stimulating article on "The New Property" in 73 Yale Law Journal 733, "that Government action be based on standards that are not arbitrary or unauthorised." "The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religions faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual. 12. We agree with the observations of Mathew, J., in V. Punnan Thomas v. State of Kerala(1) that: "The Government is not and should not be as free as an individual in selecting the recipients for its largess. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal". The same point was made by this court in Erusian Equipment and Chemicals Ltd. v. State of West Bengal(2) where the question was whether blacklisting of a person without giving him an opportunity to be heard was bad ? A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal". The same point was made by this court in Erusian Equipment and Chemicals Ltd. v. State of West Bengal(2) where the question was whether blacklisting of a person without giving him an opportunity to be heard was bad ? Ray, C. J., speaking on behalf of himself and his colleagues on the Bench pointed out that black-listing on a person not only affects his reputation which is in Poundian terms an interest both of personality and substance, but also denies him equality in the matter of entering into contract with the Government and it cannot, therefore, be supported without fair hearing. It was argued for the Government that no person has a right to enter into contractual relationship with the Government and the Government, like any other private individual, has the absolute right to enter into contract with any one it pleases. But the Court, speaking through the learned Chief Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a Government when it enters into contract or when it is administering largess and it cannot, without adequate reason, exclude any person from dealing with it or take away largess arbitrarily. 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. 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 norms 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 nondiscriminatory standard or norm and if the Government departs from 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”. 15. In its rejoinder affidavit, which went uncontroverted, the petitioner has averred that undue pressure was brought on the respondent Corporation by a political party, for taking decision of retendering the work, for favouring contractors who were earlier found to be unqualified. To demonstrate this, the petitioner has pointed out that mandatory conditions are either omitted or relaxed in the subsequent tender notice just to show undue favour to other contractors. Duly sworn testimony of the petitioner points out that the condition at Sr. No.6, in first tender notice requiring turn over in last 3 years at Rs.1266 Lakhs, as certified by the Chartered Accountant in Form F; is omitted in the subsequent tender notice. The Petitioner company further affirmed that condition No.5 of the earlier tender notice was relaxed. The earlier tender notice required experience certificate of having successfully completed single work of 33/11kv, 10MVA transformer substation or 33/11kv HT Line, during one of the last 3 years costing not less Rs.475 Lakhs. The Petitioner company further affirmed that condition No.5 of the earlier tender notice was relaxed. The earlier tender notice required experience certificate of having successfully completed single work of 33/11kv, 10MVA transformer substation or 33/11kv HT Line, during one of the last 3 years costing not less Rs.475 Lakhs. However, in subsequent tender notice, cost of such work undertaken by the contractor, is reduced to Rs.190 Lakhs only and the period is also expanded to 5 years. 16. This uncontroverted version of the petitioner do show that if really earlier tender process has been cancelled for maintaining procedural fairness and transparency, then, there was no cause or reason for the respondent Corporation to make such significant modification to the qualifying conditions in the subsequent tender notice. The only inference which can be drawn from such variation, relaxation and omission of tender conditions in subsequent tender notice is that the respondents wanted to favour the contractors who were earlier found to be disqualified in technical bids, by excluding the petitioner. 17. True it is, the petitioner has no right to enter into contract but the principles of equality embodied in Article 14 of the Constitution mandates that the respondent Corporation can not arbitrarily cancel the tender process for choosing any person it likes, for entering into relationship with it and for excluding the petitioner by adopting irrelevant considerations. Therefore, arbitrary and irrational decision of the respondent Corporation in retendering the work needs to be set aside as the same is unable to meet the test of reasonableness and non discrimination. 18. We, therefore, quash and set aside the impugned tender notice No.31/201314, published by the respondent No.1, to the extent of work named as, “Shendra Five Star Industrial Area – Providing, erecting and commissioning of 33/11kv sub station, 2 x 10 MVA Transformer and 6 outgoing feeder substation in SEZ. 19. Rule is made absolute in terms of prayer clause (B). There shall be no orders as to costs.