Judgment-

KHANNA

( 1 ) THIS judgment would dispose of civil appeals Nos. 844 and 845 of 1973 which have been filed by special leave against the judgment of learned Judicial Commissioner Goa, Daman and Diu whereby he cancelled the leases of the distilleries granted in favour of the appellant and directed the Government to deal with the tender of respondent No. 1 according to law in the light of the observations made by the Judicial Commissioner. As the question involved in the two appeals is identical, we may set out the facts giving rise to civil appeal No. 844. Learned counsel for the parties are agreed that the decision in that civil appeal would also govern the other appeal.

( 2 ) THERE is a distillery installation owned by the State at Daman. The Government has been leasing out the said distillery for specified period to members of the public for manufacture of country liquor. At the expiry of each lease, the Government used to invite fresh tenders from the public for the next lease and granted lease of the distillery to the person whose tender was accepted. For a number of years before 1973 the appellants tender in respect of the above distillery was accepted by the Government as the amount offered by him was the highest. The last lease in favour of the appellant expired on 31/01/1973. Before that by notice dated 25/09/1972 the Finance Secretary for the Union Territory of Goa, Daman and Diu invited tenders on behalf of the President of India from the public for the lease of the said distillery for a period of three years commencing from 1/02/1973 for the manufacture of country liquor. The terms and conditions of tender as framed by the Government were appended to the said notice. Clause 7 of those terms and conditions was as under:

"the highest tender shall ordinarily be accepted but the Government reserves the right to select any tender or reject all tenders without assigning any reason therefor. "

PURSUANT to the notice the appellant and respondent No. 1 submitted closed tenders to the Government in the prescribed form. The tenders were opened on 20/12/1972 in the office of the Commissioner of Excise in the presence of the tenderers. It was found that the tender of respondent No. 1 for an amount Rs. 3, 51, 345 was the highest, while that of the appellant for Rs. 3,25. 000 was second. There was a third tenderer also, but his tender was the lowest and we are no longer concerned with him. As respondent No. 1 whose tender was for the highest amount, did not receive any communication regarding the acceptance of his tender, he wrote a letter on 16/01/1973 to the Finance Secretary calling upon him to accept the tender of respondent No. 1 within 24 hours and to take necessary steps for the execution of the lease. On 18/01/1973 the Advocate of respondent No. 1 sent notice to the Finance Secretary to accept the tender of respondent No. 1. Respondent No. 1 then learnt that the distillery in question had been given on lease to the appellant for Rs. 3,52. 345, i. e. , Rs. 1,000 more than the amount mentioned in the tender of respondent No. 1.

( 3 ) RESPONDENT No. 1 thereupon filed petition under Article 226 and 227 praying for the issuance of a writ to quash and set aside the grant of lease of the distillery in question in favour of the appellant and for directing the Government to grant the lease of the distillery in favour of respondent No. 1. According to respondent No. 1, it was incumbent upon the Government to give reasons for the rejection of his tender. It was further stated that in case the Government relied upon clause 7 of the terms and conditions in support of its action, the said clause was void for violation of Article 14 of the Constitution inasmuch as it enabled the Government to reject the highest tender without assigning any reason therefore.

( 4 ) THE petition was resisted by the appellant as well as by the State Government. It was stated in the reply filed on behalf of the State Government that the invitation of tende