Nagendra Prasad Singh, J.

1. This writ application has been filed on behalf of the petitioner for quashing an order dated 4-3-1982 passed by the respondent Conservator of Forest directing that the respondent Bairia Forest Laborers Co-operative Society should be allowed to work in Forest Lot No. 31 situated in Bhabhua Range. A copy of that order is Annexure 2 to the writ application.

2. It appears that forest coupes are settled from time to time on basis of auctions held. On 28-1-1982 one such auction took place in respect of Lot No. 31, Coupe No. 18 in Bhabhua Range. The petitioner was the highest bidder having offered Rs. 25,000/-for the same. After the bid She deposited 15% of the bid money amounting to Rs. 3750/-. It is not in dispute that the settlement in favor of the highest bidder at such an auction was to be made only after the approval of the Conservator of Forest According to the petitioner, respondent Conservator of Forest instead of approving the proposal for settlement in favor of the petitioner in respect of the said Lot No. 31 passed the impugned order directing that respondent No. 5 which is a Forest Laborers Co-operative Society be allowed to work in the said Lot. Such an action on the part of the Conservator of Forest, according to the petitioner, amounts to an arbitrary exercise of power in matters of settlement of coupes and liable to be quashed by this Court.

3. The State has to settle such forest coupes to different persons either on basis of a public auction or on basis of some guidelines by the State Government to Co-operative Societies for exploitation of the coupes in question. Of course, while making any settlement the State is required to act in a manner which cannot be challenged on the ground of arbitrariness. The scope of the power of the State while allotting contracts, making settlements, has been examined in detail in the well known case of Ramana Dayaram Shetty V/s. The International Airport Authority of India and Ors. -- where it was pointed out that the State even in such matters required to act in a manner which cannot be held to be arbitrary. Still if such power has been exercised on basis of some reasonable principle or on basis of some guidelines issued by the State Government, which cannot be held to be arbitrary, then there is no question of interference by this Court. As such, it has to be examined as to whether in the facts and circumstances of the present case it can be held that by not accepting the highest bid of the petitioner and directing settlement in favor of respondent Co-operative Society the respondent Conservator of Forest acted in a manner which is not sanctioned by law.

4. On behalf of the respondents counter-affidavits have been filed and our attention was drawn to different decisions taken by the State Government in connection with settlement of forest coupes in favor of Forest Laborers Co operative Society. One such decision was communicated by letter dated 24-6-1968 by the State Government to the Chief Conservator of Forest Bihar, a copy whereof is Annexure A to the counter-affidavit filed on behalf of the respondent-State. In that communication it has been stated that the State Government had reviewed the Government policy regarding settlement of forest coupes with Co-operative Societies and after such review it was being ordered that settlement of forest coupes within approved ceiling of reserve price of Rs. 10,000.00 should be made with only two types of societies, namely Forest Laborers Co-operative Societies and Forest Coupe Co-operative Societies. It was further directed that the settlement should be made on the basis of reserve price in the case of Forest Laborers Co-operative Societies only. In the case of Forest Coupe Co-operative Societies the settlement may be made at a price which is 10% less than the price obtained in open auction for the similar coupes in the area. By subsequent decisions the aforesaid ceiling of Rs. 10,000.00 was increased to