WP/17187/2008 of P. Mohan Rao, Vs Govt. of Andhra Pradesh, on 30 December 2008

ORDER:

More often than not detriment to what belongs to “many”,collectively, does not cause pangs to “any”, for no one ispersonally hurt directly. That is why public officials, and public-minded citizens, entrusted with the care of “public property” haveto show exemplary vigilance. What is true of “public property” isequally true of property belonging to religious or charitableinstitutions or endowments. (Chenchu Rami Reddy v. Govt. ofA.P.[[1]])

Thepetitioner, a former Chairman of the Trust Board of the3[rd] respondent temple, has filed this writ petition seeking to havethe order in G.O.Rt.No.2552 dated 01-12-2007, issued by the 1[st]respondent, permitting the 2[nd] respondent to purchase audio andvideo CDs from the 4[th] respondent for a period of two yearswithout calling for tenders, set aside as arbitrary, illegal andwithout jurisdiction The 4[th] respondent, claiming to have developed AudioCompact Discs (CDs) and Video Compact Discs (VCDs),explaining the history of Srikalahasti Temple, approached the 3[rd]respondent who, in turn, sent proposals on 16-08-2004 and 03-09-2004 requesting the 2[nd] respondent to accord permission topurchase the audio CDs and video CDs developed by the 4[th]respondent for distribution to those pilgrims who perform RahuKetu and Sarpa Dosha Nivarana Pujas. The 2[nd] respondentaccorded permission on 09-09-2004. Thereafter, vide proceedingsdated 15.10.2004, the 2[nd] respondent informed the 3[rd] respondentthat the method followed for supply of red and black clothes,required for performing Rahu Kethu Puja, should also be followedfor supply of these CDs. Aggrieved thereby, the 4[th] respondentfiled W.P.No.19418 of 2004 and, pending disposal of the writpetition, the proceedings of the 2[nd] respondent dated 15-10-2004were stayed by this Court on 19-10-2004.

The trust board members of the third respondent templesubmitted their representation dated 11.01.2007 to the 2[nd]respondent. The Executive Officer of the Temple, in his letterdated on 15-05-2008, brought to the 2[nd] respondent’s notice thedifficulty in implementing the orders of the Government, and theexpenditure which the temple had to incur in this regard. Herequested the Government to re-examine the issue.

Petitioner would allege malice against several persons. Itis, however, not necessary for this Court to examine this plea ofmalice as persons, against whom malice is alleged, have not beenarrayed as respondents eo-nominee in the writ petition. (State ofBihar vs. P.P. Sharma[[2]]). According to the petitioner, the

Conclusion

permission accorded for purchase of these CDs was in violation ofthe rules framed under the Act, that, as crores of rupees of publicmoney was involved, the authorities were bound to call for tendersand that the 1[st] respondent could not pass orders ignoring theprocedure of calling for tenders.

In the counter affidavit filed by the 1[st] respondent it isstated that, after detailed examination of the proposal of the 2[nd]respondent, and to avoid further complications, permission wasaccorded to the 3[rd] respondent to purchase these CDs relating to“Sri Kalahastheeswara Mahathyam” from the 4[th] respondent,(which was a Government of India undertaking), for distributionfree of cost to those pilgrims who performed Rahu Ketu and SarpaDosha Nivarana Pujas. The rates, at which the audio and videoCDs were to be supplied for a period of upto 2 years, are furnishedin a tabular form and it is stated that these rates were fixed as perresolution No.31/200 of the Trust Board and as per the ratesspecified by the Executive Officer of the Temple. The 1[st]respondent would admit that the 4[th] respondent had earlier beengiven an order for supply of coconuts, for the year 01.04.2004 to31.03.2005, on his being found to be the highest bidder. Accordingto the first respondent it was felt that, in the tender system, goodquality audio and video CDs could not be obtained, that a workorder was placed on the 4[th]respondent after lengthycorrespondence from the year 2004 till 2008 and that the conceptdeveloped by the 4[th] respondent was innovative for which tenderscould not be called for. According to the 1[st] respondent, afterexamining the entire issue, orders were issued in G.O.Rt.No.2552dated 01.12.2007 entrusting the work to the 4[th] respondent which

was a government of India undertaking. The 1[st] respondent wouldcontend that public auction, through the tender process, could notbe held for supply of audio and video CDs, as it required a highdegree of specialization, that the concept was conceived by the4[th] respondent, that preparation of audio and video CDs was aspecialized work by itself and could not be taken up under thetender system as good quality CDs could not be procured from thelowest private firms, that this issue was placed before the board oftrustees which, after viewing the VCDs, had resolved to accept theproposal for their preparation by the 4[th] respondent and topurchase the required number of compact discs from them atreduced rates, that the trust board had approved the master copyscript of the audio and video CDs and the then Executive Officerhad informed the same to the 4[th] respondent vide proceedingsdated 25-09-2006. According to the 1[st] respondent, the ruleswere not transgressed or violated and that the work was entrustedto a government concern only in the interest of the institution. The1[st] respondent would state that the rates quoted by the 4[th]respondent were reasonable when compared to the price for suchproducts in the market, that the product was of good quality, that,pursuant to G.O.Rt.No.2552 dated 01-12-2007, the temple hadentered into an agreement with the 4[th] respondent and had placedan indent and that the 4[th] respondent had supplied the monthlystock to the temple on 23-08-2008. It is stated that the net incometowards Rahu-Kethu Pujas in the temple exceeded Rs.13.69crores and that no loss was caused to the institution.

In his counter affidavit, the second respondent would statethat the branch manager of the 4[th] respondent, vide letter dated 22-06-2004, had proposed to provide audio CDs to theDevasthanam for Rs.29-50ps and VCDs for Rs.65/- titled “SriKalahasteeswara Mahathyam” containing information regarding theimportance of both the temple, and the Rahu-Ketu Dosha Pujas, inthree languages (Telugu, Tamil and Kannada) with the right to sellafter two years being vested in the devasthanam, that the thenRegional Joint Commissioner and Executive Officer of the Templehad submitted his report dated 16-08-2004 stating that the practiceof giving audio and video CDs was in vogue in the Sri DurgaMalleswara Swamy Devasthanam, Vijayawada, and that they hadrequested for permission to be accorded for distribution of audioand video CDs free of cost to such of those pilgrims whoperformed these pujas, that, after the writ petition was filed by the4[th] respondent in the year 2004, orders were issued on 18-01-2005to the Executive Officer to take action as per the earlier ordersdated 09-09-2004, that, after negotiations, the rates for the audioand video CDs were reduced, that the proposal was placed beforethe trust board on 19-04-2006, that the trust board, vide resolutiondated 19-04-2006, had approved the rates, script and concept andhad resolved to purchase the audio and video CDs for a period oftwo years. The 2[nd] respondent would state that the ExecutiveOfficer of the Temple had reported that till date no stock of audioand video CDs were taken delivery from the 4[th] respondent, thatG.O.Rt.No.2552 dated 01-12-2007 was communicated to the 3[rd]respondent on 28-12-2007, that the 4[th] respondent had, vide letterdated 01-02-2008, requested the Commissioner, Endowments toissue direction to the Executive Officer to implement the G.O, thatthereupon the Executive Officer was requested, vide letter dated25.2.2008, to take action as per the orders of the Government, that

the Executive Officer of the Temple, vide proceedings dated29.08.2008, had reported that, during the year 2007-08, a netincome of Rs.8.21 crores had been earned and that theexpenditure required to be incurred for the years wasapproximately Rs.1.21 crores and not Rs.5.00 crores as alleged. It is stated that the script for the audio and video CDs had beendeveloped by Sri Bharavi, a renowned Cine Writer, and directed bythe renowned Cine Director Sri K. Raghavendra Rao, that theCommissioner, and other officers of the department, had seen theaudio and video CDs exhibited by the 4[th] respondent and weresatisfied with the script, picturization and other connectedsubjects, that entrustment of the work to the 4[th] respondent, agovernment concern, was only in the interest of the institution, thatthe cost of the products supplied by the 4[th] respondent wasreasonable when compared to the market and were of good qualityand standard.

In his counter affidavit, the 3[rd] respondent would state thatthe temple had entered into an agreement with the 4[th] respondenton 6.8.2008, that an indent was placed for supply of stock and thatthe 4[th] respondent had supplied the stock on 23.8.2008. It isstated that these audio and video CDs would help in increasing thenumber of poojas through word of mouth publicity, that the templecould get additional income from the master copy rights by sellingit to various satellite channels which in turn would help it get freepublicity regarding the importance of Rahu-Kethu pooja.

In its counter affidavit, the 4[th] respondent would submit thatthe writ petition was not bona-fide and was only filed with a view toharass them, that the petitioner had no locus-standi to question thegovernment order, that they were a central government organization, that they intended to introduce an innovative concepton Sri Kalahasteeswara Swamy Varu by picturizing a short film,that video CDs and audio CDs in the name of “SriKalahastheeswara Mahathyam” were prepared in three languages,with the help of renowned script and lyric writers, cine artists andtechnicians of the Telugu film industry, on par with cine standards,that the short film was directed by the legendary devotionalDirector Sri K.Raghavendra Rao, that this innovative concept wasproposed and developed by the 4[th] respondent which would enablethe temple administration to boost propagation of the templehistory, the story of Bhaktha Kannappa and formation of ‘SriKalahastheewara” from ‘Sree’ ‘Kala’’ and ‘Hasthi’, the history of‘Rahu’ and ‘Kethu’, the importance of ‘Rahu Kethu Sarpa DoshaNivarana Pooja’, to create awareness regarding the Rahu Kethupooja and for wide publicity of the temple. They state that thecost of screening and production, of both audio and video CDs,and short film, had to be borne by the 4[th] respondent, that thequotation for each item, included the cost of production of themaster copy as well as the cost of making copies, that thereputation and creative work of technicians and the other artistsinvolved in concept based works may have some impact on thepricing of the copies, despite which the 4[th] respondent had offeredreasonable rates with the intention of rendering devotional service,that these CDs were meant exclusively for temple use, that, oneach and every occasion, the temple administration had kept aclose watch on the making of the short film and had suggestedcorrections, that the 4[th] respondent had adhered to theinstructions given for improving the quality of the short film, that,in this process, the 4[th] respondent had spent more money for

arranging several shooting locations, that, after completion ofpicturization, the 2[nd] and the 3[rd] respondents, and other officers ofthe Department, had seen the short film exhibited by the 4[th]respondent and were satisfied with the picturization and audiosongs, that the 4[th] respondent had spent huge amounts for makingthe short film and audio songs, that they had spent Rs.1.00 Crorewithout calculating interest for the past 4 years, that therespondent had also entered into an agreement with the 3[rd]respondent on 6.8.2008, had supplied the stock to the temple asearly as on 13.8.2008 and 23.8.2008 and that the respondent couldnot recover a single paise till date in view of the interim orders ofthis Court.

Sri K.V.Bhanuprasad, Learned Counsel for the Petitioner,would submit that Rule 44 of the Rules made under the 1966 Actrequired tenders to be called for, that the 4[th] respondent wasneither an expert nor did making of a short film call for suchexpertise as to justify dispensing with the tender process, thatrespondents 1 to 3 could not confer largesse on the 4[th]respondent without adhering to the tender process, that, since the2[nd] respondent had admitted in its counter affidavit that a sum ofRs.1.2 Crores would be the expenditure to be incurred forprocurement of these audio and video CDs, a transparent and fairprocedure of inviting bids through the tender process ought tohave been adopted, that, admittedly, the 4[th] respondent had noexpertise in this regard since it had itself admitted that it hadengaged the services of directors and musicians from the telugufilm industry and that picking the 4[th] respondent, for conferment oflargesse, was in flagrant violation of Article 14 of Constitution ofIndia. Learned counsel would contend that the 3[rd] respondent could have stipulated stringent conditions, both technical andfinancial, while inviting tenders to ensure that the audio and videoCDs supplied to them were of the required standard and qualityand at the most competitive price. Learned Counsel would statethat there was no rationale in dispensing with the tender process inprocurement of these audio and video CDs, that there was noprescribed policy for giving preference to central governmentundertakings ignoring the claims of others and that it was not as ifthe 4[th] respondent, a central government undertaking, was makingthese films and preparing these CDs on its own as the bye-laws ofthe 4[th] respondent showed that it was not involved in this businessand that they had engaged the services of private technicians, andothers conversant in this trade, for making the film and inpreparing the audio and video CDs.

Learned Government Pleader for Endowments wouldcontend that it was not as if the 4[th] respondent was hand-pickedfor conferment of largesse, that the documents placed before thisCourt would disclose that detailed negotiations had taken placeover a long span of 4 years, that the 4[th] respondent was asked toreduce the price at which the audio and video CDs were to besupplied and that the decision of the state government, to entrustthe work to the 4[th] respondent – a Central Governmentundertaking, was neither unreasonable nor arbitrary.

Sri V.T.M.Prasad, Learned Standing Counsel appearing onbehalf of the 3[rd] respondent, would submit that the petitioner wasnot a competing tenderer, that it was not as if the petitioner hadoffered to supply these audio and video CDs at rates lower thanthe rate offered by the 4[th] respondent, that there was no offer onthe petitioner’s part to provide these CDs at lower rates, that the petitioner had not placed any material before this Court to showthat the rates quoted by the 4[th] respondent were low and that thepetitioner was, therefore, disentitled to the relief sought for. Hewould contend that specialized areas, such as making of films andpreparation of audio and video CDs, were not amenable to thetender process. Learned counsel would place reliance on Tata Cellular v. Union of India[[3]].

According to Sri N.Subba Reddy, learned Senior Counselappearing on behalf of the 4[th] respondent, the questions whicharise for consideration is whether the government had the power toissue the impugned order, and whether the order wasunreasonable or irrational. He would contend that the governmenthad the right, in the interest of the temple, and in larger publicinterest, to pass necessary orders allotting this work to anothergovernment organization, that the test to ascertain whether, or not,the action of the government was fair and reasonable, was thewednesbury test of reasonableness and, since the governmenthad considered the matter from different angles, examined thereports of the executive officer and that of the trust board, thisCourt should refrain from interfering in the matter. He wouldcontend that, since the work was given to another governmentundertaking, it could not be said that the action of the respondentswas arbitrary. Learned Senior Counsel would place reliance on Kasturi Lal Lakshmi Reddy v. State of J & K[[4]]and Center forPublic Interest Litigation v. Union of India[[5]]in this regard. Hewould further contend that, even if the action of the respondents, inentrusting the work to the 4[th] respondent without adhering to thetender process, is found to suffer from some infirmity, this Courtwould not interfere merely because it was lawful to do so, more so, as an agreement had been entered into, and the CDs had beenreceived by the 3[rd] respondent temple. Learned Senior Counselwould state that W.P.No.19418 of 2004, filed earlier by the 4[th]respondent, was closed on 31.1.2008 in view of the orders passedby the Government in G.O.Rt.No.2552 dated 1.12.2007.

On the question of locus-standi, it must be noted that thepetitioner is a former chairman of the Trust Board of the 3[rd]respondent temple. He has invoked this Court’s jurisdictionquestioning the action of respondents 1 to 3 in awarding the work,relating to supply of audio and video CDs to the 3[rd] respondenttemple, to the 4[th] respondent through private negotiations withoutadhering to the tender process. While the petitioner may not be acompeting tenderer, it is well to remember that Law is a socialauditor and this audit function can be put into action only whensomeone, with public interest in mind, ignites the jurisdiction of theCourt. If public property is dissipated, it would require a strongargument to convince the court that representative segments ofthe public would have no right to complain of the infraction ofpublic duties and obligations. (Fertilizer Corpn. Kamgar Union v.

Union of India[[6]]).In an appropriate case, although the petitionermight have moved the court in his private interest, and forredressal of personal grievances, the Court in furtherance of thepublic interest may consider it necessary to enquire into the stateof affairs of the subject matter of litigation in the interest of justice.(Shivajirao Nilangekar Patil v. Dr Mahesh Madhav Gosavi[[7]];Guruvayoor Devaswom Managing Committee v. C.K. Rajan[[8]];Indian Banks' Assn. v. Devkala Consultancy Service[[9]])

That the Government, and the 3[rd] respondent – temple,should not pick and choose persons, with whom they intend toenter into contracts, is not in dispute. The Government, is not,and should not be, as free as an individual in selecting therecipients of its largesse. It cannot lay down arbitrary andcapricious standards for the choice of persons with whom alone itwill deal. (Ramana Dayaram Shetty v. International Airport Authority of India[[10]]). It cannot, without adequate reason,exclude any person from dealing with it or take away largessearbitrarily. The activities of the Government have a public elementand, therefore, there should be fairness and equality and absenceof arbitrariness and discrimination in such transactions. The Stateneed not enter into a contract with anyone, but if it does so, it mustdo so fairly without discrimination and without unfair procedure.(Erusian Equipment and Chemicals Ltd. v . State of West Bengal[[11]]). Where the Government is dealing with the public,whether by way of entering into contracts or issuing licences orgranting other forms of largesse, it cannot act at its sweet will and,like a private individual, deal with any person it pleases, but itsaction must be in conformity with standard or norms which is notarbitrary, irrational or irrelevant. The power or discretion of theGovernment in the matter of grant of largesse, including award ofcontracts, licences, etc. must be confined and structured byrational, relevant and non-discriminatory standards or norms and,if the Government departs from such standard or norm in anyparticular case, the action of the Government would be liable to bestruck down, unless it can be shown that the departure was notarbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. (RamanaDayaram Shetty[10]).

The Government cannot act in a manner which wouldbenefit a party at the cost of the State; such an action would beboth unreasonable and contrary to public interest. TheGovernment, therefore, cannot give a contract for a considerationless than the highest that can be obtained for it, unless of coursethere are other considerations which render it reasonable and inpublic interest to do so. It is on a total evaluation of variousconsiderations which have weighed with the Government in takinga particular action, that the court would have to decide whether theaction of the Government is reasonable and in public interest.(Kasturi Lal Lakshmi Reddy[4]). Where the object is augmentationof revenue and nothing else, the State is under an obligation tosecure the best market price. (Ram & Shyam Co. v. State ofHaryana[[12]]). In such matters there should not be any suspicionof a lack of principle. (V. Purushotham Rao v. Union ofIndia[[13]]).

The rule that property should be purchased/sold throughpublic auction or by inviting tenders not only secures the bestprice but also ensures fairness in the activities of the State andpublic authorities. Their actions should be legitimate and aboveboard. Their transactions should be without aversion or affection.Nothing should be suggestive of discrimination. Nothing should bedone by them which gives an impression of bias, favouritism ornepotism. Ordinarily, these factors would be absent if the matter isbrought to public auction. There may be situations necessitating adeparture from the rule, but then such instances must be justifiedby compulsion and not by compromise. It must be justified by

compelling reasons and not just by convenience. (Haji T.M.Hassan Rawther v. Kerala Financial Corpn.[[14]]).

Public auction with open participation, and a reserve price,guarantees public interest being fully subserved. (State of U.P. v.Shiv Charan Sharma[[15]]). The object of holding the auction isgenerally to raise the highest revenue. (Ramana DayaramShetty[10]). The methodology which can be adopted for receivingmaximum consideration in a normal and fair competition would beby public auction which is fair and transparent. Public auction notonly ensures a fair price and maximum return it also militatesagainst any allegation of favouritism on the part of the Governmentauthorities. Courts have accepted public auction as a transparentmeans. (Shiv Charan Sharma[15], Ram & Shyam Co[12], SterlingComputers Ltd. v. M & N Publications Ltd.[[16]],MaheshChandra v. Regional Manager, U.P. Financial Corpn[[17]],Pachaiyappa’s Trust v. Official Trustee of Madras[[18]],Chairman and MD SIPCOT v. Contromix (P) Ltd.[[19]],New IndiaPublic School v. HUDA[[20]],State of Kerala v. M. BhaskaranPillai[[21]],Haryana Financial Corpn. v. Jagdamba Oil Mills[[22]]a n d Aggarwal & Modi Enterprises (P) Ltd. v. New DelhiMunicipal Council[[23]]). It is well recognised that one of thefairest means, which a State can adopt, without showing anyfavour in purchase/sale of property, is by auction. (Chint RamRam Chand v. State of Punjab[[24]]). Invitation for participation inpublic auction ensures transparency and it would be free from biasor discrimination and beyond reproach. (Aggarwal & Modi Enterprises (P) Ltd.[23]).

It is admitted, in the counter affidavit filed by the 2[nd]respondent, that the 3[rd] respondent – temple would incur anexpenditure of Rs.1.2 Crores on procurement of audio and videoCDs from the 4[th] respondent. It is also not in dispute that thesubject work was awarded to the 4[th] respondent through privatenegotiations and without adhering to the established mode ofawarding contracts through the tender process. As departure fromthe norm would be justified only in cases where it is in the publicinterest to do so, or to achieve some defined constitutionallyrecognized public purpose, the question which necessitatesexamination is whether the impugned order seeks to achieve anysuch public purpose. No prescribed policy, giving preference inaward of contracts to State/Central Government publicenterprises, has been placed before this Court. In the absence ofwhich Central Government undertakings, such as the 4[th]respondent, would stand on par with others eligible to compete forbeing awarded such contracts. The justification put forth foradopting the private negotiations route is that preparation of audioand video CDs, and making of short films, is a specialized fieldwhich requires expertise of a high order and that it is not amenableto the tender process.

The questions which necessitate examination are whether itis indeed so, and whether the 4[th] respondent can claim any suchexpertise? The 4[th] respondent is a multi-unit national cooperativesociety and a national cooperative consumer federation. Theobjects for which it was established are to assist, aid and counselits member institutions on consumer principles, to facilitate theirworking including providing supply support to consumer

cooperatives and other distributing agencies, for distribution ofconsumer goods at reasonable and affordable rates and renderingtechnical guidance and assistance to them for improving theirmanagerial and operational efficiency, generally to act as aspokesman of the consumers’ cooperative movement and toassistant organizations and promote consumer cooperativeinstitutions. Among the objects also include establishing tradeconnections with manufacturers, their authorized distributors andsuppliers and to undertake purchase, sale and supply ofagricultural commodities, manufacture and value added items,drugs, medicines, coal and its by products, chemicals, fertilizersetc.

The 4[th] respondent is neither involved, nor does it possessany expertise, in the preparation of audio and video CDs or in themaking of short films. As admitted by them, in their counteraffidavit, they had utilized the services of directors, musicians andother technicians from the Telugu film industry in making the shortfilm. They have obviously entrusted the manufacture of audio andvideo CDs to some other agency. It is not even the case of therespondents that no one else possess this expertise in makingshort films and in production and manufacture of audio and videoCDs. The mythology and folklore of the 3[rd] respondent temple, andits religious ceremonies, are legion. Such information is readilyavailable in the form of books and has, in any event, beenfurnished by the 3[rd] respondent to the 4[th] respondent periodicallyduring the course of making of the short film. Except for anunsubstantiated averment in the counter affidavit, no material hasbeen placed on record to justify the contention that making of theshort film, or manufacture and distribution of audio and video CDs,is not amenable to the tender process. Stringent conditions could

have been prescribed, as part of the tender process, both withregards technical and financial requirements, to ensure that highquality audio and video CDs are supplied at the best possibleprice. While the respondents claim that the price quoted by the 4[th]respondent is reasonable, this fact could only have beenestablished if the tender process had been adopted wherein the 4[th]respondent could also have participated. It needs no emphasisthat property of religious or charitable institutions or endowmentsmust be zealously protected. It must be protected, for, a largesegment of the community has a beneficial interest in it (that is theraison d’etre of the Act itself). The authorities, exercising powersunder the Act, must be most alert and vigilant in such matters.Those who are willing to enter into private negotiations can alsobid at a public auction. Why would they feel shy or be deterredfrom bidding at a public auction? Why then private negotiationswhich will not be visible to the public eye and may even give riseto public suspicion unless there are special reasons to justifydoing so? (Chenchu Rami Reddy[1]). This Court, in proceedingsunder Article 226 of the Constitution of India, would not take uponitself the task of making a comparative assessment of the pricequoted by the 4[th] respondent with the market rates or to ascertainwhether the rates at which the 4[th] respondent supplied the CDsare low when compared with prices in the market. Larger publicinterest would require adherence to the norm that sale/purchase ofgoods by religious institutions should be through the tenderprocess and not by private negotiations. The petitioner cannot,therefore, be non-suited merely because he is not a competingtenderer or that he had not quoted a rate less than that of the 4[th]respondent. In Tata Cellular[3],on which reliance was placed on behalf of the 4[th] respondent, the tender route was taken, unlike inthe case on hand. Similarly, in Centre for Public InterestLitigation[5],the Government of India had invited bids for 12medium sized oil fields in response to which eight consortia hadsubmitted their bids. Both in Tata Cellular[3], and in Center forPublic Interest Litigation[5], the scope of judicial review in mattersinvolving exercise of the contractual powers of the Governmentfell for consideration and it was held that there could be noinfringement of Article 14 if the Government tried to get the bestperson or the best quotation. In the case on hand, exercise ofcontractual powers in entering into a contract through privatenegotiations is in issue. The process of private negotiations with aparticular individual would not amount to the Government trying toget the best person or the best quotation as this can be bestachieved through the tender process.

The impugned Government order whereby the work wasawarded to the 4[th] respondent through private negotiations must,necessarily, be held to be illegal. It is in larger public interest toensure adherence to the tender process. It is imperative in ademocracy governed by the rule of law that governmental actionmust be kept within the limits of the law and, if there is anytransgression, the court must be ready to condemn it. The court,as the reviewing authority under the Constitution, should beincreasingly vigilant to ensure observance with the rule of law and,in this task, the court must not flinch or falter. (Kasturi LalLakshmi Reddy[4]).

The contention of Sri N.Subba Reddy, Learned SeniorCounsel appearing for the 4[th] respondent, that this Court shouldnot interfere merely because it is lawful to do so, does not,

therefore, merit acceptance. It is no doubt true that the executivepower of the State, under Article 162 of the Constitution of India,extends to matters with respect to which the Legislature of theState has the power to make laws. It must, however, be borne inmind that the extent of executive power under Article 162 issubject to the provisions of the Constitution which include Part IIIthereof. As award of works, or entering into contracts, by religiousinstitutions, through private negotiations, and not by the tenderprocess, except in exceptional cases, is arbitrary, irrational andunreasonable, it would fall foul of Article 14 of the Constitution ofIndia and would be required to be set aside. Contracts beingentered into through private negotiations is unreasonable enoughto satisfy the Wednesbury test. Mere incantations that theGovernment had examined the matter from different angles wouldnot suffice, in the absence of details thereof being furnished. Asno prescribed policy, giving preference to other State/CentralGovernment undertakings, exists, the mere fact that the work wasawarded to a central government undertaking would not justifyupholding the impugned G.O. The plea that the 4[th] respondent hadincurred large amount of money in making the film, in preparationof the audio and video CDs and that this Court should, therefore,exercise its discretion not to interfere must also be rejected. Thefurtive method adopted by the 4[th] respondent, in procuring acontract through private negotiations behind the back of thoseinterested and anxious to compete, is not justified. Deeperconsiderations are also at stake, for permitting such contracts tobe entered into would encourage favouritism, nepotism andcorruption (K.N.Guruswamy v. State of Mysore[[25]]).

It is necessary to note that this Court, by order in W.P.M.P.No.22308 of 2008 dated 6.9.2008, passed the following interim order:

“Prima facie, it is evident that even for purchase of a small items likebroomsticks and coconuts, tenders are called for as required under therelevant provisions, whereas, the contract in relation to purchase of videoand audio cassettes worth lakhs of rupees was awarded by nomination.There shall be interim stay, as prayed for”

The agreement entered into with the 4[th] respondent was justa month prior to the interim order of this Court and the stock wassupplied on 13.8.2008 and 23.8.2008 for a period of one month. Itis evident that, pursuant to the interim orders, neither were theCDs distributed nor was payment made to the 4[th] respondent. It isnot as if the agreement has worked itself out during the pendencyof these writ proceedings as the respondents were injuncted fromproceeding further in view of the interim order of this Court.

Viewed from any angle, the impugned order must be, and isaccordingly, quashed. The writ petition is allowed. However, inthe circumstances, without costs.

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30-12-2008

asp

LR copy to be marked.

[1](1986) 3 SCC 391

[2]AIR 1991 SC 1260

[3]AIR 1996 SC 11

[4]AIR 1980 SC 1992

[5]AIR 2000 SC 80

[6](1981) 1 SCC 568(1981) 1 SCC 568

[7]1987(1) SCC 2271987(1) SCC 227

[8](2003) 7 SCC 546(2003) 7 SCC 546

[9](2004) 11 SCC 1(2004) 11 SCC 1

[10](1979) 3 SCC 489[11](1975) 1 SCC 70[12](1985) 3 SCC 267)[13](2001) 10 SCC 305[14](1988) 1 SCC 166[15]AIR 1981 SC 1722[16](1993)1 SCC 445[17](1993)2 SCC 279[18](1994) 1 SCC 595[19](1995)4 SCC 595[20](1996)5 SCC 510[21](1975)3 SCC 432[22](2002)3 SCC 496[23](2007) 8 SCC 75)[24](1996) 9 SCC 338)[25]AIR 1954 SC 592