The State cannot afford to act arbitrarily in the field of contracts. Its action is open to judicial review and must satisfy the test of reasonableness.

Mr. R. C. Lahoti, J.

( 1 ) THE petitioner is a contractor. He has entered into with, and performed several contracts under, the respondents. On 17. 8. 95 the petitioner approached this Court raising a short grievance that the respondents had invited tenders for four works in secrecy giving a complete go-by to the normal procedure of inviting tenders. The petitioner did not have the opportunity of participating in the bidding by tenders. The respondents No. 3 and 4 refused to issue tender documents to the petitioner, though requested to do so. The tenders were going to be opened on 16th, 17th and 21st August, 1995. According to the petitioner, such action of the respondents has been arbitrary and violative of articles 14 and 19 of the Constitution.

( 2 ) ON a special mention made on behalf of the petitioner, the matter was taken up for hearing on 17. 8. 95, late in the day. This Court directed a notice to be issued to the respondents. Interim relief was allowed to the petitioner by directing that no work order shall issue pursuant to the acceptance of any tender under challenge in the petition.

( 3 ) THE respondents have filed their counter and explained in details the facts and circumstances in which the tenders were invited by them. According to the respondents they had notified four works initially by inviting open tenders. In all 19 tenders were received. A high level Tender Evaluation Committee was constituted which opened the tenders on 30. 5. 95. Seven tenders were rejected for the reasons assigned on the file. The petitioner was one of the tenderers and his tender was rejected because earnest money was not deposited alongwith the tender.

( 4 ) ON 22. 6. 95, a decision was taken cancelling all the tenders which were received earlier. Instead it was decided to invite Limited Tenders in accordance with the purchase policy of M. T. N. L. dated 24th August, 1987. The policy provides inter alia as under:-

"2. Limited Tenders In Limited Tender, only the most likely and suitable sources are addressed. To bring in adequate competition, it is necessary that at lease five sources are addressed. Where number of available sources of supplly is less than five the number of suppliers to be addressed may reduced at the discretion of the Competent Authority. Wherever available, evaluated vendor lists maintained by the Organisation will be used but in other cases the suppliers are to be addressed based on past experience. In either case, the choce of firms to be addressed should be carefully made by an officer specifically authorised for the purpose. As a rule only purchases ranging between Rs. 5,000. 00 and Rs. 3 lakhs should be made by means of Limited Tender. However, even in cases involving purchases of more than Rs. 3 lakhs, if it is felt necessary to resort to limited tender due to urgency or any other valid reasons, then it would be open to the officer authorised for the purpose to record the reasons for resorting to Limited Tender in preference to Open Tender System and obtain approval of the Competent Authority. "

( 5 ) EIGHT sources/tenderers were identified as they were most likely and suitable sources, looking to the nature of the work which was required to be executed urgently. These works related to 5 Group Housing Soceities. The decision to invite the limited tenders was as under:-

" (1) The number of cases where distribution cable laying has been pro- posed for Group Housing Societies will be identified. (2) Based on the distribution schemes issued by Planning and Survey of the area as regards the nature of the surface to be reinstated, a lay out sketch shall be prepared with details, to form part of specification, for each case. (3) Technical specification will be based on the specification for the earlier tender. However, terms and conditions shall additionally indude provision for pre-inspection by the bidder and condition to obtain a certificate from the unit officers and authorised representative of the Group Housing So

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