ON Civil Appeal Nos
2076 2078 of 1990
From the Judgment and Orders dated 258
1989 10111989  59
1989 of the Bombay High Court in WA Nos
2198 3377 and 2197 of 1989
DN Dwivedi and Sarva Mitter for the Appellants
Arun Jetley Additional Solicitor General Raian Karan jawala HS Anand Nandini Gore Ravi Kumar M Karanjawa la VN Patil and AS Bhasme for the Respondents
The Judgment of the Court was delivered by 828 RANGANATH MISRA J
Special leave granted
Three applications were filed under Article 226 of the Constitution before the High Court of Bombay by the respec tive appellants before us challenging the rejection of their highest offers in response to invitation by public tender without assigning any reason for the same as arbitrary unconstitutional and contrary to rule of law
The respondent a Government company within the meaning of section 617 of the Companies Act has been constituted as the New Town Development Authority under sub section
3A of section 113 of the Maharashtra Regional Town Planning Act 1966
The respondent is empowered to dispose of land vested in it and the respondent has formulated with the approval of the State Government under section 159 of the said Act a code for regulat ing inter alia disposal of land
Regulation 4 provides The Corporation may dispose of plots of lands by putting to auction or considering the individual applications as the Corporation determines from time to time According to the appellants the normal practice adopted by the Corporation is to invite tenders for the disposal of specified plots which the Corporation chooses to assign according to the terms and conditions for lease of plots for mercantile use
The appellants maintained that they had given the highest offers by way of tender for certain speci fied plots by complying with the requirements of deposit and claim that though the offers were the highest yet the same have not been accepted
Each of the appellants was before the High Court challenging the action of respondent No 1 but the writ petitions were dismissed in limine by saying that there was no arbitrariness in the respondent No 1 trying to get proper price for its plots
It is not disputed that the scheme which is operating provides that respondent No 1 reserves the fight to amend revoke or modify the scheme at its discretion as well as to reject any or all offers for allotment without assigning any reason
 Obviously it is in exercise of this power that the highest tenders have not been accepted
It is the contention of Mr Dwivedi appearing in support of these appeals that the respondent is State  under Arti cle 12 of the Constitution and conferment of naked and unguided power as referred to above is arbitrary and con trary to the provisions of Article 14 of the Constitution and since there is no prescribed norm or guideline and he power is unregulated and unfettered and the highest offer after complying with the prescribed requirements is avail able to be rejected 829 without assigning any reasons citizens are likely to be affected by exercise of such uncanalised power
Shortly put Mr Dwivedi submits that the procedure is contrary to the requirement of rule of law and therefore cannot be sus tained
An affidavit in opposition has been filed on behalf of respondent No 1 wherein the circumstances under which the highest offers have not been accepted has been indicated and the position has been explained
We do not find it difficult to agree with Mr Dwivedi s submissions that respondent No 1 is State  within the meaning of article 12 and in its dealings with the citizens of India it would be required to act within the ambit of rule of law and would not be permitted to conduct its activities arbitrarily
It is too late in the day for an institution like respondent No 1 to adopt the posture that the activity in question is commercial and as respondent No 1 is engaged in trading activity it would be open to it to act as it considers appropriate for the purpose of protecting its business interest
An instrumentality of the State as has been laid down by this Court in a series of authoritative decisions beginning with RD Shetty vs International Air port Authority of India  Ors and in Ajay Hasia vs Khalid Mujib Sehravardi  and a number of decisions thereafter has to act within the ambit of rule of law and would not be allowed to conduct itself arbitrarily and in its dealings with the public would be liable to judicial review
The State is certainly entitled to look for the best deal in regard to its properties
This has been accepted by several decisions of this Court with reference to State action under the Excise Laws
There is no allegation of mala fides in the conduct of respondent No 1 in refusing to accept the highest offer
We must therefore proceed on the footing that respondent No 1 acted bona fide and in refus ing to accept the highest offers of the appellants in regard to specific plots has been actuated by the consideration of looking for better offers for the specific plots in the economic interest of respondent No 1
The question which still remains to be answered is as to whether when the highest offer in response to an invitation is rejected would not the public authority be required to provide reasons for such action Mr Dwivedi has not asked us to look for a reasoned decision but has submitted that it is in the interest of the public authority itself the State and every one in the society at large that reasons for State action are placed on record and are even communicated to the persons from whom the offers came so that the dealings remain above board the interest of the public authority is adequately protected and a citizen knows where he stands with reference to his offer
What this Court 830 said in State of UPv
Raj Narain  Ors  may be usefully recalled here In a government of responsibility like ours where all the agents of the public must be responsible for their conduct there can be but few secrets
The people of this country have a right to know every public act everything that is done in a public way by their public functionaries
They are entitled to know the particulars of every public trans action in all its bearing
The right to know which is derived from the concept of freedom of speech though not absolute is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have no repercussion on public security
To cover with veil of secrecy the common routine business is not in the interest of the public
 In recent times judicial review of administrative action has become expansive and is becoming wider day by day
The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded
State activi ty too is becoming fast pervasive
As the State has descend ed into the commercial field and giant public sector under takings have grown up the stake of the public exchequer is also large justifying larger social audit judicial control and review by opening of the public gaze these necessitate recording of reasons for executive actions including cases of rejection of highest offers
That very often involves long stakes and availability of reasons for action on the record assures credibility to the action disciplines public conduct and improves the culture of accountability
Looking for reasons in support of such action provides an opportuni ty for an objective review in appropriate cases both by the administrative superior and by the judicial process
The submission of Mr Dwivedi therefore commends itself to our acceptance namely that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be communicated to the con cerned parties unless there be any specific justification not to do so
We do not intend
to go into matters any further in as much as we do not propose to apply this test to the present appeals
These appeals fail but we make no order as to costs
PSS Appeals dismissed


Summary:
The respondent a constable convicted under sections 32534 of the Indian Penal Code along with another co ac cused constable and dismissed from service filed a suit challenging his dismissal which was dismissed by the trial court holding that it was barred by limitation
On appeal the First Appellate Court decreed his suit by holding that the respondent plaintiff was discriminated because his co accused was re instated in service pursuant to the decision in the suit filed by the co accused his dismissal was void on the ground of arbitrariness and the bar of limitation was not applicable
The defendant appellant filed a regular second appeal against the aforesaid decree before the High Court which was dismissed in limine
In the appeal to this Court it was contended on behalf of the appellant that the High Court erred in dismissing the second appeal in limine
Allowing the appeal this Court HELD 1
Serious questions of law are involved in this case and they should not have been lightly brushed aside by the High Court in the manner it has been done
Therefore the High Court erred in dismissing the second appeal in limine
824F 825D 2
Rule 162 2 of the Punjab Police Rules 1934 manda torily directs that a police officer judicially sentenced to rigorous imprisonment exceeding one month shall be dis missed and this mandate of law 823 cannot be ignored on the ground that in the case of another member of the police force a mistake was committed
824F 3
The appellant s assertion that the respondent s co accused who was reinstated in service pursuant to the Court s decision was subsequently dismissed has not been denied by the respondent
The case is therefore remitted to the High Court for fresh disposal
824G 825D