The State is entitled to reject tenders for valid reasons, including the escalation of prices and public interest. The State cannot be compelled to enter into a contract and has the discretion to consider the market value of the property before accepting an offer.

Jagannadha Rao, CJ.

This writ petition has been referred to a Division Bench at the stage of admission on the ground that having regard to the stakes and questions involved it would be advantageous to have the matter heard in the first instance by a Division Bench. Petitioner, Choice Trading Corporation Put. Ltd., submitted its tender to the respondent, Greater Cochin Development Authority, Cochin (hereinafter called G.C.D.A.) pursuant to notification published by the respondent in the newspapers on 19-10-1990 for sale of 61 cents of land on Marine Drive at Cochin for construction of residential flats. The last date for receipt of tenders was 22-11-1990 at 3 prm. and the tenders were to be opened on the same day at 4 p.m. (The petitioner was the only tenderer. This particular property is notified as item 4 in the said notification. It is stated in the terms and conditions (Ext. P3) that the tenderer should submit a minimum base price of Rs.50,000/- per cent and comply with the other conditions of Earnest Money Deposit etc. Clause 6 of the terms and conditions states that the Secretary of the G.C.D.A. reserves the right to reject any or all of the tenders without assigning any reason thereto, and the said decision shall be finali and binding. Clause 7 states that subject to the abovesaid Clause 6, the site shall be allotted to the tenderer who quotes the highest amount above the minimum fixed for the site. Clause 8 states that the allottee shall construct the specified building in the site according to the architectural designs approved by the G.C.D.A. After various other terms and conditions, Clause 12 states that after the payment of the amount in full the sale deed shall be prepared in duplicate in accordance with the draft sale deed issued by the G.C.D.A. Clause 14 states that the allottee will be given possession of the plot allotted only after registration of the sale deed. Clause 15 states that the site shall be used only for the purpose for which it is allotted. It however contains a condition that any modification in the approved design, if required by the allottee shall be done only with the written approval of the Authority and the grant or refusal to grant such modification shall be at the sole discretion of the authority. The petitioner made an offer as per Ext. P4 and submitted a rate of Rs. 70,500/- per cent in respect of the area with F.S.I.1.56 and a rate of Rs. 75,500/- per cent in respect of another type of F.S.I, with a clause saying that "this offer is subject to our forwarding letter dated 22-11-1990" (Ext. P5). In the said letter petitioner stated that the said tender is subject to the following terms and conditions:

1. This letter of ours forms part of this tender.

2. Our tender is based on the assumption that we would be allowed to create spaces for an air-conditioned auditorium and our Corporate office in the proposed building besides residential flats. Also, we have in our plans a basement mainly for the purpose of car parking."

Thereafter, the above-said letter Ext. P5 contained a further clause, Clause 5, which reads as follows:

"Our this tender is negotiable, we would request you to allow us an option for us to discuss with you and make amendments to facilitate an effective conclusion of the sale transaction between ourselves."

Thereafter, as per letter dated 5-12-1990, Ext. P6, respondent invited the petitioner for certain negotiations on 12-12-1990. There was such a meeting on that day. After the said meeting petitioner wrote Ext. P7 letter dated 19-12-1990 stating that in the said meeting, Chairman of the G.C.D.A. had informed that there was no scope for accepting the petitioner's request to have an enhanced FSI for the project. They further stated that it was possible that the shape of the building and lay out arrangements could be got changed to suit the proposed construction provided such changes are acceptable to G.C.D.A. It was also stated that in the above discussions they were made