Awarding public contracts without competitive tendering violates Article 14 of the Constitution, as it results in discrimination and undermines public interest.

1. It is all about a contract allotted to the appellant by the Indian Oil Corporation (IOC) to carry and handle High Speed Diesel (HSD) to the second Gas Turbine unit (PDC Unit - II) set up by the State Power Development Corporation at Pampore (Kashmir). The contract was ordered to be quashed by the writ Court in OWPs Nos. 602/94 and 649/94 filed by respondents 1 to 47 herein, by a common judgment dated 14-11-1994 with a further direction to the IOC to allot the contract by floating public tenders.

2. The present appeal is taken against this judgment and the principal question that falls for determination is : whether the action of allotting contract is bona fide, fair, reasonable and in tune with the public interest or whether it smacks of some bias, favouritism or arbitrariness affecting such interests in the process?

3. The matter is engulfed in a jungle of facts, though some of the facts relevant for our purpose are undisputed. Both the appellants and respondents 1 to 47 (writ - petitioners) are carriage contractors registered with the IOC. They were all carrying on smoothly and executing their carriage contracts allotted to them by the IOC for transportation of oil to various stations in the region after floating public tenders. The handling of the supplies, however, was being done by the employees of the IOC. This position seems to have continued in respect of Gas Turbine Unit No. 1 (PDC - 1) till November, 1990, when due to outbreak of the militancy in Kashmir valley; IOC employees expressed their inability to carry on the handling operations at the site of the Unit. The IOC says that it informed the contractors about the situation and enquired from them if they could undertake handling operations but none of them, except the appellant, came forward and consequently its composite offer of undertaking the transportation as well as handling operations in respect of PDC Unit - I was accepted culminating in awarding of carriage contract to it for two years with effect from 24-4-1991. The contract was extendable for one year from 24-4-1993 on the same terms and conditions and the appellant was to be paid Rs. 5,000 per month on account of handling charges and 78 paise per Kilo litre / per Kilometer (KL / KM). It is also borne by the record that this contract expired on 23-4-1994 and was later extended by six months up to 23-10-1994. Meanwhile the contract was processed for rendering and was ultimately allotted to the lowest bidder at the rate of 48 paise per KL / Per KM, There is no dispute about this contract on which dust has settled down after it was awarded pursuant to the floating of public tenders.

4. It transpires that while controversy was raging about the allotment of contract to the appellant in respect of PDC Unit - I, without resort to tenders and with the writ - petitioners agitating the matter before the authorities of the IOC, the second Gas Turbine Unit (PDCII) was completed in November, 1993. Upon this some of the carriage contractors amongst the writ - petitioners, formed a separate group styled as "Kashmir Valley Carriers" and offered to undertake carriage work at the rate of 64 paise per KL / per KM. It is not known as to how their offer was dealt with but the IOC, acting on the offer of the appellant dated 22-6-1993 and 21-12-1993 proceeded to allot this contract also to the appellant at the rate of 64 paise for three years vide communication dated 10-12-1994.

5. This was challenged by respondents 1 to 47 herein in OWPS Nos. 602 / 94 and 649 / 94 filed on 23-8-1994 and 7-9-1994 respectively. The case of the writ - petitioners was that the IOC had discriminated