Sehgal Refrigerating Corporation vs National Fertilizers Ltd. and Others

D.V. Sehgal, J.—M/s. National Fertilizers Ltd., respondent No. 1(for short ''N. F. L.''), a wholly Government owned Company floated an open press tender (Annexure P-1) inviting quotations for sale of liquid oxygen (for short ''L.O.'') from its plants situated at Nangal, Bathinda and Panipat. The petitioner claims to be carrying on the business of manufacturing and supplying of various gases. It sent its quotations in response to the aforesaid tender and deposited Rs: 5,000/- as earnest money in compliance with the terms and conditions thereof. The rates offered for the purchase of L.O. from N. F. L. by different parties were the following:

(see table below)

Name Rates of liquid oxygen per NM (Normal Metric Cube)

Petitioner-Co. Panipat Nangal Bhathinda

Rs. 4.25 Rs. 4.25 Rs. 3.75

Bhagwati Oxygen Ltd. Rs. 1.60 Rs. 1.60 Rs. 1.60

Hindustan Copper Ltd., Khetri, respondent No. 2(for short H.C.L.). Rs. 2.00 Rs. 2.00 Rs. 2.00

The petitioner was thus, the highest bidder for sale of gas by N. F. L. from all its three plants at Nangal, Panipat and Bathinda. The L.O. which would have been available for sale at all these plants was up to four lacs NM subject to their normal functioning. The petitioner received acceptance letter dated 29-8-1986(Annex. P-2) from N. F. L. accepting its quotations for supply of L.O. from Panipat and Bathinda at the rates quoted by it. There was no mention therein that it could also lift L.O. from Nangal plant of N. F. L. The petitioner, therefore, addressed a letter (Annex, P-3) to N. F. L. on 30-8-1986 bringing to the notice of the latter that its offer for L.O. for Nangal unit was also the highest amongst the tenderers and made a request that it should be informed telegraphically that it could start lifting L.O. from Nangal also. A reply was received by the petitioner from N. F. L. vide letter dated 11/12-9-86(Annex. P-4) disclosing that L.O. from Nangal unit is entirely earmarked for H.C.L. and that the private parties are to be supplied L.O. only from Bathinda and Panipat units. This decision had been taken at the highest level and was conveyed to the petitioner''s representative when he last visited the office of the N. F. L.

Through the present writ petition, a prayer has been made by the petitioner for issuance of a writ of mandamus to N. F. L. to accept its tender for Nangal unit also as it was the highest and to allow it to lift L.O. from there. This claim has been, inter alia, based on the grounds that there was no mention in the tender notice A:W ex. P-1 that L.O. from Nangal plant was earmarked for H.C.L. Had it been so earmarked, the tenders would not have been invited for sale of L.O. from Nangal plant, that Nangal plant of N. F. L. alone has the capacity of two lacs NM L.O. per month. Had it been known to the petitioner that L.O. from Nangel plant is not the part of the tender. the bid of the petitioner for L.O. from the remaining two plants would have been very less because the quantity of L.O. which would be available from these plants would be half the quantity mentioned in the tender notice Annex. P-1. that N. F. L. has awarded a contract to H.C.L. for sale of L.O. for a period of two years by departing from the terms of the tender which provided for sale of L.O. for one year. As against the highest tender of the petitioner for L.O. From Nangal plant which was at the rate of Rs. 4.25 per NM3, H.C.L. has been awarded contract for sale of the same at the rate of Rs. 2.50 per NM3 and thereby N. F. L. has undergone a loss of approximately Rs. 65 lacs which is a direct loss to the public exchequer. On the above grounds it is contended by the petitioner that the action of N. F. L. denying it the contract for sale of L.O. from Nangal plant and awarding the same to H.C.L. is illegal, arbitrary. discriminatory and violative of Art. 14 of the Constitution.

The petition has been opposed both by N. F. L. and H.C.L. and they have filed their respective written statements. It has been averred on behalf of N F hat like it, H.C.L. is also a public sector undertaking. Both N. F. L. and H.C.L. are wholly owned by the Government of India. The H.C.L. is engaged in the manufacture of copper and the end product manufactured by it is used all over the country. The arrangement between N. F. L. and H.C:L. for supply of L.O. is serving the cause of public at large. There is no question of any loss or gain in the transaction which in fact is aimed at keeping the price of copper low: The supplies of L.O. from Nangal unit were earmarked for H.C.L. The petitioner has no absolute right to obtain the said supply. It is at liberty to accept the offer given. by N.F.L. vide Annex. P-2. If the same does not suit it, it may not accept it. Even in the previous years. L.O. was being supplied to H.C.L. as also to the petitioner. The rates at which the supply was made to H. C. L. were lower than that at which the supplies were made to the petitioner. Thus, the arrangement made this year is not a new one. The petitioner was. aware of the same. The aim of the petitioner by filling this petition is to have a monopoly over L.O. The H.C.L. is bulk consumer of L.O. which is a by-product of the fertilizer plant of N.F.L. The matter was considered by N.F.L. at its highest level and it was decided that the question of rate at which the supply was to be made to H.C.L.. would be settled by negotiations. The H.C.L., no doubt, sent its offer in response to the tender and quoted the rate at which it was already receiving supplies from N. F. L. After negotiations; however, the price for supply of L.O. to H.C.L. was fixed at Rs. 2.50 per NM3. The supply of L.O. made to H.C.L. is used by the latter for flash furnaces and copper smelters. Copper is a raw material supplied'' to strategic Defence Industries and to other important sectors like Tele-communications and electrical industries. It is, thus, a critical raw material, the production and distribution of which is controlled by the Government of India.

H.C.L. is the sole manufacturer of copper in the country. It was decided in public interest that there should be no intermediaries deriving profit out of sale of L.O. by N. F. L. and purchase of the same by H.C.L. The direct supply of L.O. to H.C.L. at lower but reasonable rate is to avoid exploitation of two Government of India enterprises by private parties. A decision to supply L.O. to H.C.L. on negotiated rates from Nangal unit of N. F. L. was taken before floating tender Annex. P-1 and an agreement in this regard was reached at between N. F. L. and H.C.L. before issuance of the acceptance letter Annex. P-2 w the petitioner. It is, thus, contended by N. F. L. that its impugned action is not arbitrary. rather it is reasonable and rational and aimed at securing the public interest.

The H.C.L. has adopted the averments made in its written statement by N. F. L. and has added that it is wholly owned by the Government of India and has copper mines and plants amongst other places at Khetri Nagar (Rajasthan). It needs L.O. for several plants including smelters to keep the furnace hot at very high degree. N. F. L. was throwing oxygen. a by-product of its units, in the air as a wastage. It was H.C.L. which started purchasing L.O. from N. F. L. and first contract between them came into being on 4-6-1981. Initially, N. F. L. was selling L O. to H.C.L. at the rate of Re. 1.20 per NM3 ex-works. The contract has been renewed year after year. In 1983 a fresh contract was entered into for three years. The agreed price of L.O. was Re. 1.30 per NM3 with a clause for price escalation at the rate of 10 per cent every year. On 5th May 1986, the N.F L. raised the price of L.O. to Rs. 2/- per NM3. It has been further stated that H.C.L. did submit its tender for L.O. to N. F. L. in response to tender notice Annex. P-1 at the rate of Rs. 2/- per NM3 which was the existing rate of supply.

N. F. L. had assured H.C.L., when a meeting took place between their Directors on July 11, 1986, that H.C.L. would be supplied L.O. without any interruption though the price shall be negotiated after receipt of tenders in response to Annex. P-1. It has been further asserted that the arrangement between N.F.L. and H.C.L. for supply of L.O. is in the public interest.

I have heard the learned counsel for the parties at some length. Mr. Kuldip Singh, Senior Advocate appearing for the petitioner has contended that the facts clearly bring out that the action of N. F. L. denying supply of L.O. from out of Nangal unit to the petitioner at the highest tendered rate is violative of Art. 14 of the Constitution. N. F. L.. has arbitrarily chosen to supply L.O. to H.C.L. at a much lower rate without any reasonable ground. N. F. L. a public sector undertaking has deliberately and knowingly suffered a loss of about Rs. 65 lacs by its arbitrary action. It has departed from the terms and conditions of the tender notice Annex P-1 by denying the supply From Nangal unit to the petitioner and allowing the same to H.C.L.

Mr. H. L. Sibal, Senior Advocate appearing on behalf of N. F. L. and Mr. Ashok Bhan. Senior Advocate appearing on behalf of H.C.L. have. on the other hand. submitted that the facts on record clearly bring out that N. F. L. and H.C.L. two public sector undertakings have coordinated in larger public interest. The petitioner after purchasing L.O. from N. F. L. was to supply the same to different consumers and H.C.L. is the biggest consumer of the same. The petitioner was, thus. aiming at securing the contract actuated by profit motive. By negotiating direct supply of L.O. From N. F. L. to H.C.L., though at lower rate intermediaries like the petitioner have been eliminated. No loss has been caused to the public exchequer as the supply of L.O. is made by one Government owned Company to the other. The price factor in such a transaction is not at all material or relevent. They have also stated that since the arrangement for supply of L.O. by N.F.L. to H.C.L. has been continuing for the past number of seats, the petitioner has not been taken by surprise nor has it beeti discriminated against. Mr. Sibal, however, offered that ''if the petitioner considered that the purchase of L.O. by it from other two units of N. F. L. at its quoted rates, would result in loss to it. it was at liberty not to accept the offer made through Annex. P-2.

The principles which ought to govern the contracts entered into by the Government or its corporations or companies have been elaborately set out in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, . After a threadbare discussion, it has been held:

"It must, therefore, follow as a necessary corollary from the principle of equality enshrined in Art. 14 that though the State is entitled to refuse to enter in to relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and nondiscrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground."

Mr. Kuldip Singh has placed reliance on Ram and Shyam Company Vs. State of Haryana and Others, . This was a case of auction of mineral lease which according to law was to be given to the highest bidder. The petitioner therein gave the highest bid at the public auction held by the State Government. The authorities, however, received a subsequent communication from M/s. Pioneer Crushing Co. which offered to pay lease money higher than that quoted by the petitioner in its highest bid and also complained of some irregularities at the public auction. Without any further reference to the petitioner this offer was accepted and lease was granted. This action was held to be arbitrary and discriminatory by the highest Court. It was held that unilateral offer secretly made by M/s. Pioneer Crushing Co. not correlated to any reserved price was accepted without opportunity to the petitioner either to raise the bid or to point out the falsity of allegations made by the former as also the inadequacy of the petitioner''s bid. The petitioner had, thus, suffered an unfair treatment by the State in the discharge of its administrative functions which thus. violates the fundamental principles of fair play. The ratio of this case in my view cannot be applied to the ease in hand.

The learned counsel then relied on Harminder Singh Arora Vs. Union of India (UOI) and Others, . In this case the tenders were invited for supply of fresh buffalo and cow milk. The appellant who was eligible and had been supplying milk and was also on the approved list: submitted his tender. The General Manager, Govt. Milk Scheme also submitted tender but the same was for supply of pasteurized milk and not fresh milk. The milk supplied by the Govt. Milk Scheme also required re pasteurization which entailed an additional cost. Though the appellant''s tender was the lowest yet the tender of Govt. Milk Scheme was accepted by the Govt. department concerned. The Supreme Court held that the tenders of different parties were to he adjudged on their own. intrinsic merits in accordance with the terms and conditions of the tender notice. The following contentions of the appellant were found to have considerable force:

(i) The tender of Government Milk Scheme did not satisfy the requirement of Para 2 of the tender notice. The tenders had been invited for the supply of pure fresh buffalo milk or fresh cow''s milk. But it had submitted tenders for supplying pasteurized milk. Therefore, it was not in conformity with tender notice and the same should not have been accepted.

(ii) If the tender of Govt. Milk Scheme regarding supply of pasteurized milk was to be accepted and the original terms of the tender notice were to be changed; the appellant should have been given an opportunity to submit his tender in conformity with the changed terms but this was not done which had caused serious prejudice to the appellant. It was not disputed that the appellant had the capacity of supplying pasteurized milk and had already been having contracts for supply of milk with the concerned Govt. department for quite a considerable time.

(iii) If the tender form submitted by any party is not in conformity with the conditions of the tender notice, the same should have been accepted but the authorities concerned arbitrarily and in a fanciful manner accepted the tender of Govt. Milk Supply Scheme.

It is to be seen that none of the above factors is present in the case in hand. No doubt, in Harminder Singh''s case (supra) the Supreme Court did not accept the contention raised on behalf of the Govt. Milk Scheme that as per the policy of the Govt. of India laid down in letter dated August 13, 1985, the Govt. department should receive the supply from it but it was so rejected on the ground that the policy dated August 13, 1985 had been adopted subsequent to the tenders and it was of no avail. It was also held that if the authority or the State chose to invite tenders then it must abide by the results of the tenders and cannot arbitrarily and capriciously accept the bid which is to the detriment of the State. But this observation, to my mind, is in the context of factors present in Harminder Singh''s case (supra).

Reliance was also placed by the learned counsel on a Division Bench judgment of this Court in Mohinder Singh v. State of Punjab, C:W.P. No. 4555 of 1986 decided on 1-10-1986. In this case the tenders were invited for construction of a High Level Bridge. It was specifically mentioned in the tender notice that only specialized bridge contractors were eligible for allotment of the contract m question. It was also mentioned that the tender forms were to be issued only to those contractors who were bridge builders of proven experience and competence and that too, on their production of the proof of the same to the entire satisfaction of the Engineer-in-charge. Mohinder Singh had already constructed as many as fifteen High Level Bridges either in partnership or individually and had thus, proven experience in the said construction work. He was also the lowest tenderer. In spite of this, the work was allotted to another contractor who had never constructed High Level Bridges by entering into negotiation with him at the back of Mohinder Singh. Another factor which weighed with the Division Bench was that there was a condition in the tender notice that the tender not accompanied by earnest money specified therein would not be entertained. While Mohinder Singh deposited the reasonable amount of earnest money the contractor to whom the work was allotted did not comply with this requirement and instead asked the department concerned to treat the amount due to him on the other works being executed by him as his earnest money. The Division Bench was of the view that he has failed to comply with the condition of deposit of earnest money. This case is, thus, distinguishable and its ratio cannot be applied to the case in hand.

One of the earliest cases decided by the final Court having bearing on the instant case is C. K. Achutan v. State of Kerala AIR I979 SC 490 . The ratio of this case has been discussed in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, and the following observations of Hidayatullah. J. (as he then was) have been noticed:

"There is no discrimination because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, a, fulfil contracts which they wish to be performed. When. one person is chosen rather than another, the aggrieved party cannot claim the protection of Art, 14.

because the choice of the person to fulfil a particular contract must be left to the Government.

In Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, the above observations were dealt with thus:

"The respondents relied very strongly on this observation in support of their contention that it is open to State to enter into contract with any one it likes and choosing one person in preference to another for entering into a contract dots not involve violation of Art. 14. Though the language in which this observation in couched is rather wide, we do not think that in making this observation the Court intended to laid down such a proposition, permitting the State to act arbitrarily in the matter of entering into contract with third parties. We have no doubt that the Court could not have intended to lay down such a proposition because Hidayatullah, J. who delivered the judgment of the Court in this case was also a party to the judgment in Rasbihari Panda v. State of Orissa AIR 1969 SC 4081 which was also a decision of the Constitution Bench, wherein it was held in so many terms that the State cannot arbitrarily selecting persons with whom to enter into contracts. Obviously what Court meant to say was that merely because one person is chosen in preference to another, it does not follow that there is a violation of Art. 14, because the Government must necessarily be entitled to make a choice. But that does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned or unprincipled.

Another case which was considered by the Supreme Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, is Trilochan Mishra, etc. Vs. State of Orissa and Others, from which the following observations of Mitter. J. have been reproduced. thus:

"With regard to the grievance that in some cases the bids of persons making the highest tenders were not accepted the facts are that persons who had made lower bids were asked to raise their bids to the highest offered before the same were accepted. Thus there was no loss to Government and merely because the Government preferred one tender to another no complaint can be entertained. Government certainly has a right to enter into a contract with a person well known to it and specially one who has faithfully performed his contracts in the past in preference to an undesirable or unsuitable or untried person. Moreover, Government is not bound to accept the highest tender but may accept a lower one in case it thinks that the person offering the lower tender is on an overall consideration to be preferred to the higher tenderer."

The above observations in Trilochan Mishra''s case were dealt with in Ramana Dayaram Shetty''s case (supra), thus:

"We fail to see how this observation can help the contention of the respondents. It does not say that the Government can enter into contract with any one it likes arbitrarily and without reason. On the contrary, it postulates that the Government may reject a higher tender and accept a lower one only when there is valid reason to do so, as for example. Where it is satisfied that the person offering the lower tender is on an overall consideration preferable to the higher tenderer. There must be some relevant reason for preferring one tenderer to another, and if there is, the Government can certainly enter into contract with the former even though his tender may be lower but it cannot do so arbitrarily or for extraneous reasons."

Another decision of the Supreme Court in State of Orissa and Others Vs. Harinarayan Jaiswal and Others, was also noticed in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, wherein it was pointed out that a condition that the Government shall be at liberty to accept or reject any bid without assigning any reason therefore is not violative of Art. 14 and that in matters relating to contracts with the Government, the latter is not bound to accept the tender of the person who offers the highest amount.

In the above context in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, it was observed, thus:

"Nowhere does it say that such a condition permits the Government to act arbitrarily in accepting a tender or t under the guise or pretext of such a condition, the Government may enter into a contract with any person it likes, arbitrarily and without reason. In fact the Court pointed out at the end of the judgment that the act of the Government was not ''shown to be vitiated by such arbitrariness as should call for interference by the Court'', recognising clearly that if the rejection of the tender of the 1st respondent were arbitrary, the Court would have been justified in striking it down as invalid."

It is, thus, clear in the light of the above judgment that if a Government organisation has given the contract to one person and not to other then the mere fact that it has not been given to the highest tenderer by itself does not constitute a ground for discrimination. These are, no doubt, factors which weigh if on facts it is found that the action of the authority concerned suffers from the taint of unreasonableness. In the present case, therefore, in the context of the facts we are to find out whether the action of N.F.L. contracting to sell L.O. to H.C.L. is bona fide or not and whether or not it can be justified on the touchstone of public interest.

During. the course of arguments, Mr. Sibal produced before me the file which contains the correspondence between N.F.L. and H.C.L. as also the notes recorded by different functionaries of N.F.L. in the process of reaching at the impugned decision, Its Director (Finance) recorded a note an 117-1986 that the Executive Director of Hindustan Copper Ltd., had met him on that day. The former informed the latter that it is not the interruption of N.F.L. to dispose of liquid oxygen through a single middleman as seems to be the, apprehension of H.C.L. However, N.F.L. would like to test the market on the basis of an advertisement. As regards dealing with H.C.L., they will continue to be on a preferential basis: However, H.C.L. should pay commercial price for the oxygen. The Executive Director of H.C.L. mentioned that H.C.L. is bulk buyer who can make a commitment on long term basis and that the requirement of purchase from N.F.L.. would stand even after their own factory goes in to production. He also mentioned that the price " for H.C.L. cannot be the same as for a small buyer who may be buying a few tankers every month. The Director (Finance) mentioned to him that after N.F.L. had tested the market it would be willing to negotiate with the H.C.L.

When the above note was put to the Managing Director of N.F.L., he recorded the following remarks:

"The press advertisement will enable us to test the market. Thereafter we will take a decision on the sale terms etc. of product with, no doubt, H.C.L., a sister public sector undertaking, having always a preferential consideration on our part."

After the tender notice Annex. P-1 was advertised in the newspaper of July 20, 1986, the file was again put up before the Director (Finance) of N.F.L., who recorded the following note on 25-7-1986 to which the Managing Director agreed:

"Most probably H.C.L. will also quote against our tender. Even if they do not, we cannot reject their request to negotiate with them. During the course of negotiations, as usual, proper commitment can be sought from H.C.L. including price and quantity.

E.D. (Executive Director) H.C.L. told me that H.C.L. will like to enter into a long term agreement with N.F.L. Possibly liquid oxygen from any other source, including a captive production facility, may be available at higher cost.

M.D. (Managing Director) may also please see."

The Executive Director of H.C.L. and its other functionaries discussed the matter again on 11-8-1986 with the authorities of N.F.L. The Managing Director of N.F.L. recorded, inter alia, the following note:

"H.C.L. representatives, however, mentioned that all these parties who have quoted their rates, are trying to corner liquid oxygen so that they can take benefit from M/s. HCL. These parties do not have any requirement of their own."

The parties who had submitted their tenders in response to the tender notice, were called by the General Manager (M) of N.F.L. and after discussion with them as also with the representatives of H.C.L., a note was recorded by him on 20-8-1986 to which the Director (Finance) and Managing Director of N.F.L. agreed. This note, inter alia, states as under:

"The representatives of Sehgal Refrigerating/Sehgal Gases, Superior Air Product Gas Supply Company/Goyal Gases and National Air Product were called on l8th and l9th instant. It transpired during the discussions that Hindustan-Copper Ltd. is one of the biggest customers and all the tenderers have been supplying in the past also to H.C.L. They would possibly like to give H.C.L. also by charging higher price for liquid oxygen. During. the discussions, however. some of the parties mentioned that they do not intend to supply to H.C.L.

The representatives of H.C.L. had detailed discussions with D(F) i.e. (Director Finance). After prolonged discussions it was agreed that the private parties should not be allowed to take undue advantage by cornering the entire liquid oxygen from N.F.L. Secondly, it was also appreciated that since the price of liquid oxygen for H.C.L. also had been increased from Rs. 1.60 to Rs. 2/- per NM3 w.e.f. Ist June, 1986, substantial increase with immediate effect would jeopardise cost of production of H.C.L. The H.C.L. being a public sector undertaking should be given preference in price and supplies even though by selling to private sector. N.F.L. could perhaps earn slightly more profit.

Ultimately it was agreed that H.C.L. may be charged the price of Rs. 2, 50 per NM3 ex-Nangal. A record note of discussions, with HCL,. of the meeting is submitted for D(F)/M.D''s kind approval before it is sent to H.C.L. for their signatures.

In so far H.C.L. are concerned, they are to be given liquid oxygen only from Nangal Unit. The parties who should be given liquid oxygen from Bathinda and Panipat Units, which has been earmarked for private sector companies, may also kindly be decided. The quotations given by the private sector parties are indicated at Annexure A."

It is, thus, clear that paramount consideration which impelled N.F.L. to continue supply of L.O. to H.C.L. by entering with it a new agreement at the rate of Rs. 2.50 per NM'', which, no doubt, was much lower than the highest tender is that intermediaries in private sector should not be allowed to corner profit by purchasing L.O. from one public sector undertaking and selling it to another undertaking wholly owned by Government. The production of vital raw material. that is. copper. by H.C.L. which would he aided by supply of L.O. for its furnaces by N.F.L: was also a factor which weighed with the authorities of N. F. L.

It is to be noted that the people of India resolved to constitute India into a Sovereign Socialist Secular Democratic Republic and this is. so embodied in the Preamble of our Constitution. Articles 38 and 39 (b) and (c) which are enshrined in Part IV of the Constitution as Directive Principles of State policy, lay down that the State shall strike to promote welfare of the people.by securing and protecting as effectively as it may a social order in which justice, social, economic. and political, shall inform.all the institutions of the national life. It shall strive to minimize the inequalities in income, and endeavor to eliminate inequalities in status; facilities and opportunities. It shall, to particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; that operation of the economic system does not result in the concentration.of wealth. and means of production to the common detriment.

It cannot be gainsaid that the public sector. undertakings are the instruments to achieve these objects. The management of N.F.L: in its wisdom decided to supply L.O. direct to H.C.L. by eliminating intermediaries of private sector which would have cornered. profit from H.C.L. which is a bulk consumer of L.O. Since both, N.F.L. and H.C.L. are wholly owned by the Government of India, no question of any loss to the public exchequer arises even if the supply of L.O. is made by N,F.L. to H:C:L. at a rate lower than that which the former would have secured for the same in the open market.

I have, thus, no doubt in my mind that the impugned action of N. F. L. does not suffer from any taint of unreasonableness. It in face is in conformity with fundamental rules of management of public business. It does not suffer from any infirmity when tested on the touch stone of public interest. Though in somewhat different context the following observations of the Supreme Court in Nand Kishore Saraf Vs. State of Rajasthan and Another, are worth noting:

"There.is the letter dated February 14,1962 from the Director of Mines & Geology, to, all Mining. Engineers on the subject of encouragement of co-operative mines and states that co-operative societies ought to be encouraged for mining work also as per directive of the Government of India. Respondent No. 2 addressed a letter to the Director of Mines & Geology and referred to Government policy for the encouragement of co-operative societies in connection with royalty collection contracts. The order of Government dated April 1, 1964, after referring to. the appellant''s offering the highest bid stated that the Government was satisfied ''that the Society, respondent No.2, was a suitable party for the grant of the said contract. The view taken by the Government in preferring respondent No. 2 to the appellant for the grant of the contract cannot be said to be arbitrary or without any justification. The co-operative society is of the laborers who work in the mines and. it is obvious that any benefit arising out of the contract would go to the labourers and thus improve their economic position".

The decisions, like the present one taken by the authorities of N. F. L., when they are neither unreasonable nor actuated by any mala fide motive should not be subjected to any further scrutiny by the Court. It is apt to note the following observations of V. R. Krishna Iyer; J. (as he then was) speaking for himself and on behalf of P. N. Bhagwati, J. (as he then was) while concurring with the majority judgment in Fertilizer Corporation Kamgar Union (Regd.) Sindri v. Union of India "The Court can not usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the Directorate of a Government company has acted fairly, even if it has faltered in its wisdom, the Court cannot, as a super auditor, take the Board of Directors to task. This. function is limited to testing whether the administrative action has been fair and tree from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration."

... ... ... ...

The Court is least equipped for such oversights. Nor, indeed, is it a function of the judges in our constitutional scheme. We do not think that the internal management, business activity or institutional operation of public bodies can be subjected to inspection by the Court. To do so, is incompetent and improper and, therefore, out of bounds.

Nevertheless, the broad parameters of fairness in administration, bona fides in action, and the fundamental rules of reasonable management of public business, if breached, will become justiciable."

In the conspectus of the above discussion, I am of the firm view that the action of N. F. L. agreeing to sell liquid oxygen to H.C.L. at the rate of Rs: 2.50, per NM3 from its Nangal unit and not offering the same to the petitioner, who was the highest tenderer, is based on sound reasons keeping the public interest in mind. The action is, therefore, neither discriminatory nor arbitrary nor it violates the rule of equality enshrined in Art. 14 of the Constitution.

Consequently, finding no merits in this writ petition, I dismiss the same leaving the parties to bear their Own costs.

Petition dismissed.