Civil Appeal No 3751 of 1982
From the Judgment and Order dated 1591982 of the Punjab and Haryana High Court in LP A No 1232 of 1982
Soli J Sorabjee Ram KB Rohtagi and HN Salve for the Appellant
PP Rao Arun Madon R Venkataramani and A Marriarputtam for the Respondent No 4
LN Sinha Attorney General and RN Poddar for the Respondents
The Judgment of the Court was delivered by 545 DESAI J
As the matter brooked no delay when the arguments were concluded the Court pronounced the order which reads as under The appeal is allowed and the decision of the High Court of Punjab and Haryana at Chandigarh in LPA No 1232 of 1982 dated September 15 1982 as well as the decision of the learned Single Judge in Civil Writ Petition No 2321 of 1981 dated August 30 1982
The writ petition filed by the present appellant succeeds
The order of the Director of Industries dated May 25 1981 granting a quarry lease to Ms Pioneer Crushing Co respondent No 4 in respect of Serai Khawaja Plot No II Quarry except the area of Green Field colonies for the period ending with 31st March 1984 is quashed and set aside
The first respondent the State of Haryana and the second respondent the Director of Industries are directed under and subject to the relevant provisions of the Haryana Minor Minerals Vesting of Rights Act 1973 read with Punjab Minor and Mineral Concession Rules 1964 as applicable to the State of Haryana to grant a right to the appellant in the form of contract usually entered into in similar cases to extract stones from Serai Khawaja Plot No II on compensation howsoever described at the rate of Rs 25 lacs per year for a period of five years commencing from January I 1983 and upto and inclusive and ending with December 31 1987
The appellant herein is directed to appear before the second respondent within a weak from today to execute the contract andor necessary documents instruments and to carry out all formalities including the making of deposits andor payments if any required to be made under the relevant provisions of the Act and Rules
The fourth respondent is given time upto December 31 1982 to clear out from the area and this time is given to him as and by way of locus penitentae to wind up his affairs as far as the quarry involved in this appeal
546 In the circumstances of the case there will be no order as to costs
Reasons will follow
 Here are the reasons
It must be confessed that reasons in support of the decision are delayed but without offering an alibi for the tardiness one aspect which inhibited giving of the reasons may be mentioned
My learned colleague suddenly left the Court and the doubt nagged me for some time whether one Judge alone can give the reasons
It was an agreed order
Before pronouncing the order broad discussion took place which showed identity of views on all points involved in the matter
In this background to give reasons which appealed to us though drawn up by one of us would any day provide a better choice than not to give reasons because it would always annoy and distress the party who lost the legal battle whether there are legal or logical reasons in support of the order or it is merely an arbitrary exercise of power
However what happened in the Court in the presence of all parties and the learned counsel is res ipsa loquiter
What started before the Court as a minor whisper hardly audible ended with the experience in a whispering gallery where the whisper multiplied at the other end of the gallery in volleying thunders
There would have been no qualms of conscience if the matter was disposed of sub silentio as to reasons because of the outcome of the Court s exercise of jurisdiction under article 136
The reasons which dictated the choice and indicated the path did stand in need of justification because the end product justified interference
The very outcome would provide the raison d etre for the exercise of power
Yet to bow to the tradition to convince the protagenis of reasoned orders these are the reasons
Factually matrix first
The State of Haryana in exercise of the power conferred upon it by Haryana Mioner Minerals Vesting of Rights Act 1973  1973 Act  for short grants lease for winning minor mineral vestige in it
The grant of the lease is regulated by Punjab Minor Mineral Concession Rules 1964  Rules  for short in their application to the State of Haryana
A notification was issued on December 26 1980 specifying that minor mineral quarries at various places in Faridabad District would be auctioned on February 20 1981
At the auction held on that day appellant Ram  Shyam Company 547 gave the highest bid for Sarai Khawaja Plot No II in the amount of Rs 152000 pa
The presiding Officer conducting the auction accepted the bid but the State Government did not confirm the same
A fresh auction was notified to be held on May 4 1981
The appellant participated and gave the bid for the same plot his highest bid rising to Rs 387000 for a period of three years
The same routine followed
The Presiding Officer accepted the bid and the State Government declined to confirm the same
Then there happened something which cannot have any parallel or precedent in a constitutional democracy like ours but one could have profitably drawn parallel from the administration of old princely States
Respondent No 4 wrote a letter dated May 9 1981 Anx
R 1 in the High Court addressed to the Chief Minister Haryana State setting out therein the history of various auctions and casting serious aspersions on those who participated in the auction inter alia saying that the bidders at the auctions have formed a syndicate and want to monopolise the business by not outbidding each other so that the State gets uneconomical rentroyalty
It was further alleged that the goondas and anti social elements are assisting those monopolistsbidders and successfully pushed out a party like respondent No 4
The letter further proceeds to make an offerthat if the contract for a period of five years is given to respondent No 4 in respect of Sarai Khawaja Plot No 2 it is willing to pay Rs 450000 per year
There is also an offer for Sarai Khawaja Plot No 1 with which we are not concerned
Promptly this offer was accepted by the Chief Minister
The appellant challenged the action of the Chief Minister in Writ Petition No 232181 in the Punjab and Haryana High Court inter alia contending that those who formed the firm styled as Ms Pioneer Crushing Co respondent No 4 had participated in the auction and Then made false allegations against the appellant whose bid was the highest and without giving him any opportunity the offer of respondent No 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of State largesse
A learned Single Judge issued a notice to the respondents calling upon them to show cause why rule nisi may not be issued
In response to the notice respondent No 4 appeared and contended that the petitioner had an alternative remedy and on this short ground the learned Single Judge rejected the writ petition
A Division Bench of the High Court in the Letters Patent Appeal filed by the appellant 548 concurred with the learned Single Judge and dismissed the appeal
Hence this appeal by special leave
At this stage it would be advantageous to refer in some details what transpired at the hearing of this appeal in this Court
Let us at once recapitulate what happened in the court because that by itself provides a tell tale piece of evidence compelling the court to interfere and set aside the impugned order
Mr LN Sinha learned Attorney General raised a sort of a preliminary objection that this Court should not assist the syndicalists to join hands to deprive the State of its legitimate revenue
Then he made a pertinent observation a interposing an objection when Mr Sorabjee learned counsel for the petitioner was making his submissions
The question posed was if the Court interferes and quashes the grant in favour of the fourth respondent the only option open to the court would be to direct a fresh auction
He posed the further question that if at the time of re auction the highest bid does not reach upto Rs 450000 pa for which the lease is granted to the fourth respondent would the Court make good the loss  Apart from the rhetoric of the question the issue raised was of primary importance
We therefore asked Mr Sorabjee whether his client is willing to make an affidavit incorporating therein that if the highest bid at a reauction if the court so directs falls short of Rs 450000 the appellant would agree and undertake to accept the contract at the value of Rs 550000 pa
Such an affidavit was immediately filed
In order to give the fourth respondent to whom contract under the impugned order was given an opportunity whether he would like to raise his offer
Mr PP Rao voiced his apprehension about his contentions
We assured him that without prejudice to his contentions it would be open to his client to raise his offer
What transpired may be tabulated in a chart Appellant s offer Respondent s offer 1
550 lacs 2 6 lacs 3 650 lacs 4 7 lacs 5
753 lacs 6 8 lacs 7
850 lacs 8 9 lacs 9 10 lacs 10
1050 lacs 549 Court intervened at this stage and said that the raise must be minimum at the rate of Rs 1 lac
12 lacs 12
14 lacs 13
15 lacs 14
16 lacs 15
17 lacs 16
18 lacs 17
19 lacs 18
20 lacs 19
21 lacs 20
22 lacs 21
25 lacs
Shock and surprise was visible on the face of each one in the court
Shock was induced by the fact that public property was squandered away for a song by persons in power who holds the position of trust
Surprise was how judicial intervention can serve larger public interest
One would require multi layered blind fold to reject the appeal of the appellant or any tenuous ground so that the respondent may enjoy and aggrandize his unjust enrichment
On this point we say no more
Before we deal with the contentions let us have a look at the relevant provisions of the Act and the Rules
Rule 281 of the Rules provides that contracts for extraction of minor mineral may be granted by the Government by auctioning or tendering for a maximum period of five years after which no extension shall be granted  Sub rule 2 provides that the amount to be paid annually by the contractor to the Government shall be determined in auction or by tender to be submitted for acceptance by the authority competent to grant the contract  Rule 29 confers power on the Presiding Officer to reject or accept any bid or tender without assigning any reason to the bidders or tenderers
However where the highest bid or tender is rejected the reason shall however be reported to the Government
Rule 30 provides for notifying of the proposed auction on the notice board of the Director Mining Officers and at least in one newspaper having wide circulation in the locality nearest to the area in question in the regional language as also in the Government Gazette
Sub cl
4 of sub r
2 of Rule 30 provided that no bid shall be regarded as accepted unless confirmed by Government  Rule 58 confers 550 power on the Government to relax any of the provisions of the Rules in the interest of mineral development or better working of the mine
Before we deal with the larger issue let me put out of the way the contention that found favour with the High Court in rejecting the writ petition
The learned Single Judge as well as the Division Bench recalling the observations of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries rejected the writ petition observing that the petitioner who invokes the extraordinary jurisdiction of the court under article 226 of the Constitution must have exhausted the normal statutory remedies available to him 
We remain unimpressed
Ordinarily it is true that the court has imposed a restraint in its own wisdom on its exercise of jurisdiction under article 226 where the party invoking the jurisdiction has an effective adequate alternative remedy
More often it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law
At any rate it does not oust the jurisdiction of the Court
In fact in the very decision relied upon by the High Court in The State of Uttar Pradesh vs Mohammad Nooh it is observed that there is no rule with regard to certiorari as there is with mandamus that it will lie only where there is no other equally effective remedy
It should be made specifically clear that where the order complained against is alleged to be illegal or invalid as being contrary to law a petition at the in stance of person adversely affected by it would lie to the High Court under article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government
An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the nice distinction between jurisdiction and merits
Look at the fact situation in this case
Power was exercised formally by the authority set up under the Rules to grant contract but effectively and for all practical purposes by the Chief Minister of the State
To whom do you appeal in a State administration against the decision of the Chief Minister  The clutch of appeal from Ceasar to Ceasar wife can only be bettered by appeal from one s own order to oneself
Therefore this is a case in which the High Court was not at all justified in throwing out the petition on the untenable ground 551 that the appellant had an effective alternative remedy
The High Court did not pose to itself the question who would grant relief when the impugned order is passed at the instance of the Chief Minister of the State
To whom did the High Court want the appeal to be filed over the decision of the Chief Minister
There was no answer aud that by itself without anything more would be sufficient to set aside the judgment of the High Court
Turning to the merits of the case the arguments covered a much larger canvass than was anticipated when the hearing opened
It was submitted that India being a Sovereign Socialist Secular Democratic Republic the property of the Union or of the Slate is socialist property which would imply that it is community property and every citizen of this country has vital interest in its effective use and legitimate disposal
It was never disputed nor could it have been disputed that minerals vest in the state
The minor minerals vast in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vast in the Union Minor minerals  have been defined in The Mines and Minerals Regulation and Development
Act 1957 to mean building stores gravel ordinary clay ordinary sand other than sand used for prescribed purposes and any other mineral which the Central Government may by notification in the Official Gazette declare to be a minor mineral  Minor minerals vest in the state in which the land is situated
The first respondent State of Haryana notified that an auction would be held for mineral quarries of Faridabad District
The appellant gave his bid at the auction so notified
It is an admitted position that his was the highest bid
Anyone conversant with auction would not be naive enough to believe that one can go on raising his own bid
His was the highest bid in the amount of Rs 387000 pa
Though the Presiding Officer accepted the bid of the appellant being the highest bid at the auction yet the State Government in the exercise of the power conferred by cl
4 of sub r
2 of Rule 30 declined to confirm the same presumably under the belief that the highest bid did not represent the adequate lease rent which the State Government was entitled to get
The right of the State Government not to confirm the bid as also its action of not confirming the highest bid of the appellant is not questioned
Therefore various decisions laying down that the Government is not bound to accept the highest bid to which our attention was drawn 552 by Mr PP Rao learned counsel for the fourth respondent are of no relevance in this case
This Court in Trilochan Mishra etc
vs State of Orissa  Ors
State of Uttar Pradesh  Ors
vs Vijay Bahadur Singh  Ors
and State of Orissa  Ors
vs Harinarayan Jaiswal  Ors
held that the Government is under no obligation to accept the highest bid and that no rights accrue to the bidder merely because his bid happened to be the highest
The Court also observed that the Government had the right for good and sufficient reason not to accept the highest bid but even to prefer a tenderer other than the highest bidder
In Vijay Bahadur Singh s case the Court further observed that the power conferred on the Government by the act to refuse to accept the higher bid cannot be confined to inadequacy of bid only
There may be variety of other good and sufficient reasons to reject the same
The appellant has no grievance that even though his was the highest bid the same was not accepted nor Mr Sorabjee on his behalf contends that the highest bid of the appellant was rejected on grounds which are either irrelevant or extraneous
This aspect therefore need not detain us any more
Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property
Owner of private property may deal with it in any manner he likes without causing injury to any one else
But the socialist or if that word is jarring to some the community or further the public property has to be dealt with for public purpose and in public interest
The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song
On the other hand disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz the welfare State may be able to expand its beneficient activities by the availability of larger funds
This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose one such being to achieve 553 the goals set out in Part IV of the Constitution
But where disposal is for augmentation of revenue and nothing else the State is under an obligation to secure the best market price available in a market economy An owner of private property need not auction it nor is he bound to dispose it of at a current market price
Factors such as personal attachment or affinity kinship empathy religious sentiment or limiting the choice to whom he may be willing to sell may permit him to sell the property at a song and without demur
A welfare State as the owner of the public property has no such freedom while disposing of the public property
A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty
All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue the welfare activities will get a fillip and shot in the arm
Financial constraint may weaken the tempo of activities
Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages The setting up of a welfare State
In this connection we may profitably refer to Ramana Dayaram Shetty vs The International Airport Authority of India and Ors in which Bhagwati J speaking for the Court observed It must therefore
be taken to be the law that where the Government is dealing with the public whether by E way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse the Government cannot act arbitrarily at its sweet will and like a private individual deal with any person it pleases but its action must be in conformity with standard or norms which is not arbitrary irrational or irrelevant
The power or discretion of the Government in the matter of grant of largesse including award to jobs contracts quotas licences etc must be confined and structured by rational relevant and non discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases the action of the Government would be liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational unreasonable or discriminatory
554 At another place it was observed that the Government must act in public interest it cannot act arbitrarily or without reason and if it does so its action would be liable to be invalidated
It was further observed that the object of holding the auction is generally to raise the highest revenue
The Government is entitled to reject the highest bid if it thought that the price offered was inadequate
But after rejecting the offer it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily
Following this line of thought in Kasturi Lal Lakshmi Reddy vs State of Jammu  Kashmir and Anr
while upholding the order of the Government of Jammu  Kashmir dated April 27 1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order observed as under Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest it would be liable to be struck down as invalid
It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State such an action would be both unreasonable and contrary to public interest
The Government therefore cannot for example give a contract or sell or lease out its property For a consideration less than The highest that can be obtained for it unless of course there are other considerations which render it reasonable and in public interest to do so  emphasis supplied At one stage it was observed that the Government is not free like an ordinary individual in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion
The law is now well settled that the Government need notdeal with anyone but if it does so it must do so fairly and without discretion and without unfair procedure
Let it be made distinctly clear that respondent No 4 was not selected for any special purpose or to satisfy ally Directive Principles of State Policy
He 555 surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court
Only a blind can refuse to perceive it
Approaching the matter from this angle can there be any doubt that the appellant whose highest bid was rejected by the Government should have no opportunity to improve upon his bid more so when his bid was rejected on the ground that it did not represent adequate market consideration for the concession to extract minor mineral
A unilateral offer secretly made not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted Without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid
The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action
When he gave the highest bid he could not have been expected to raise his own bid in the absence of a competitor
Any expectation to the contrary betrays a woeful lack of knowledge of auction process
And then some one surreptitiously by a secret offer scored a march over him
No opportunity was given to him either to raise the bid or to controvert and correct the erroneous statement
What happened in this case must open the eyes both of the Government as well as the people at large
How an uncontrolled exercise of executive power to deal with socialist property in which entire community s interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal
Conceding that on weighty and valid considerations the highest bid can to rejected by the State one such which can be foreseen is that the highest bid does not represent the adequate market price of the concession yet before giving up the auction process and accepting a private bid secretly offered the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder
In the absence of such satisfaction acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their the truth which was not undertaken would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is 556 impermissible
Even though repeatedly this Court has said that the State is not bound to accept the highest bid this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder
In the absence of it the approach must be as clearly laid down by the Constitution Bench of this Court in KN Guruswamy vs The State of Mysore  Ors
In that case the appellant and the fourth respondent were rival liquor contractors for the sale of the liquor contract for the year 1953 54 in the State of Mysore
The contract was auctioned by the Deputy Commissioner under the authority conferred upon him by the Mysore Excise Act 1901
The appellant s bid was the highest and the contract was knocked down in his favour subject to formal confirmation by the Deputy Commissioner
The fourth respondent was present at the auction but did not bid
Instead of that he went direct to the Excise Commissioner and made a higher offer
The Excise Commissioner cancelled the sale of favour of the appellant and directed the Deputy Commissioner to take action under the relevant rule
The latter accepted the tender of the respondent
The appellant moved the High Court for a writ of mandamus which was dismissed
In appeal by the certificate it was urged on behalf of the State that the Deputy Commissioner acted within the ambit of his powers under the relevant rule which gave him an absolute discretion either to re auction or to act otherwise and no fetters are placed upon the otherwise  method
The court negatived this contention observing that arbitrary improvisation of an ad hoc procedure to meet the exigencies of a particular case is ruled out
Therefore the grant of the contract to the fourth respondent was wrong
Repelling the contention that a writ petition at the instance of the appellant would not be maintainable the Constitution Bench observed as under The next question is whether the appellant can complain of this by way of a writ
In our opinion he could have done so in an ordinary case
The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else
Here we have Thimmappa who was present at the auction and who did not bid not that it would make any difference if he had 557 for the fact remains that he made no attempt to outbid the appellant
If he had done so it is evident that the appellant would have raised his own bid
The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the backs of those interested and anxious to compete is unjustified
Apart from all else that in itself would in this case have resulted in a loss to the State because as we have said the mere fact that the appellant has pursued this with such vigour shows that he would have bid higher
But deeper considerations are also at stake namely the elimination of favouritism and nepotism and corruption not that we suggest that occurred here but to permit what has occurred in this case would leave the door wide open to the very evils which the Legislature in its wisdom has endeavored to avoid
All that is part and parcel of the policy of the Legislature
None of it can be ignored
We would there fore in the ordinary course have given the appellant the writ he seeks
But owing to the time which this matter has taken to reach us a consequence for which the appellant is in no way to blame for he has done all he could to have an early hearing there is barely a fort night of the contract left to go
We were told that the excise year for this contract 1953 54 expires early in June
A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law Fact of no two cases are alike but if one attempts to compare the situation the conclusion is inescapable
Appellant s bid was the highest bid
It was in the amount of Rs 387000 pa Respondent No 4 approached the Chief Minister with a slightly higher bid of Rs 450000 per year
This was granted without any reference to the appellant to raise his bid
Such a thing if allowed to pass once is bound to be repeated because this method is open to the abuse of favouritism and nepotism and the loss of revenue in this case to the State is enormous
What happened in tho court staggered everyone
Learned Attorney General Shri LN Sinha who questioned the competence of the court to deal with the matter when he witnessed the rising crescendo of the auction in the 558 court and the bid reached Rs 12 lacs per year he quietly left the court frankly stating that he does not wish any contention to be raised on behalf of the State of Haryana
Apprehension voiced by the Constitution Bench has literally come true in this case
This view of the Constitution Bench was reaffirmed in Nand Kishore Saraf vs State of Rajasthan  Anr the only distinguishing feature of the case being that the highest bid of the appellant was rejected and the contract was given to Dharti Dan Shramik Theka Sahkari Samiti Ltd a cooperative Society of the workmen
Though the court did not so specifically state it upheld the rejection of the highest bid of the appellant on the ground that the benefit of the concession was given to a cooperative society formed by the weaker section of the society and thereby it serves the public purpose as set out in article 41 of the Directive Principles of the State Policy
In Fertilizer Corporation Kamgar Union Regd Sindri and Ors
vs Union of India  Ors Krishna Iyer J speaking for himself and Bhagwati J Observe as under A pragmatic approach to social justice compel us to interpret constitutional provisions including those like Articles 32 and 226 with a view to see that effective policing of the corridors of power is carried out by the court until other ombudsman arrangements a problem with which Parliament has been wrestling for too long emerges
I have dwelt at a little length on this policy aspect and the court process because the learned Attorney General challenged the petitioner s locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bona fide and correct
We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien System of separation of powers
The court cannot 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 I l task
The function is limited to testing whether the 559 administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration
 In a concurring opinion Chandrachud CJ
Observed that sales of public property when the intention is to get the best price ought to take place publicly
In State of Uttar Pradesh vs Shiv Charan Sharma  Ors
 this court observed that public auction with open participation and a reserved price guarantees public interest being fully subserved
Even though later on learned Attorney General did not invite us to examine any specific contention on behalf of the State of Harayana it may in passing be stated that with regard to transactions with the State the principle enunciated in Sec
555 a of the Transfer of Property Act would apply with greater vigour
Proceeding along it was submitted that if that is accepted and if it appears to the court that the State of Haryana did not appear to have full appreciation of the value of the property and the other party ie respondent No 4 by reason of its profession was aware of the same and the resulting transaction is materially unfair then such a case falls outside the principle enunciated by the decision of this court on which reliance was placed on behalf of the respondent No 4
We consider it unnecessary in the facts of this case to examine this aspect
The position that emerge is this
Undoubtedly rule 28 permits contracts for winning mineral to be granted by the Government by auction or tender
It is true that auction was held
It is equally true that according to the State Government the highest bid did not represent the market price of the concession
It is open to the State to dispose of the contract by tender
Even here the expression tender  does not mean private secret deal between the Chief Minister and the offerer
Tender in the context in which the expression is used in rule 28 meant tenders to be invited from intending contractors  If it was intended by the use of the expression tender  in rule 28 that contract can be disposed of by private negotiations with select individual its validity will be open to serious question
The 560 languages ordinarily used in such rules is by public auction or private negotiations
The meaning of the expression private negotiations  must take its colour and prescribe its content by the words which precede them
And at any rate disposal of the state property in public interest must be by such method as would grant an opportunity to the public at large to participate in it the State reserving to itself the right to dispose it of as best subserve the public weal
Viewed from this angle the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason
The writer has indulged into allegations the truth of which was not verified or asserted
The highest bidder whose bid was rejected on the ground that the bid did not represent the market price was not given an opportunity to raise his own bid when privately a higher offer was received
If the allegations made in the letter influenced the decision of the Chief Minister fair plan in action demands that the appellant should have been given an opportunity to counter and correct the same
Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory
When it is said that even in administrative action the authority must act fairly it ordinarily means in accordance with the principles of natural justice variously described as fair play in action That having not been done the grant in favour of the fourth respondent must be quashed
Apart from various considerations herein examiner if any other view is taken in the facts and circumstances of this case it may provide a classic example of ostrich burying its face in sand and declining to see the reality


Summary:
The State Government respondent No 1 issued a notification for auctioning a minor mineral quarry situated in the State
The appellant offered the highest bid in the amount of Rs 387 lakhs per annum as rentroyalty
The Presiding Officer accepted the bid of the appellant
The State Government however under the belief that the highest bid did not represent the adequate lease rent exercised powers under clause 4 of sub rule 2 of Rule 130 or the Punjab Minor Mineral Concession Rules 1964 and declined to confirm the same
Respondent No 4 wrote a letter to the Chief Minister casting serious aspersions on those who participated in the auction and made an offer that if the contract for a period of 5 years is given he was willing to pay Rs 45 lakhs per year
The Chief Minister accepted this offer
Being aggrieved the appellant challenged the order of the Chief Minister in a writ petition before the High Court contending that respondent No 4 had participated in the auction and made false allegations against the appellant and without giving him any opportunity the offer of respondent No 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of the State largesse
The High Court following the decision of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries   dismissed the writ petition on the ground that the appellant had an alternative remedy and that he must have exhausted the normal statutory remedies before invoking the extraordinary jurisdiction under Article 226
542 Being aggrieved the appellant filed an appeal to this Court and during is hearing filed an affidavit that if the Court orders re auction and if the highest bid falls short of Rs 45 lakhs then he would undertake to accept the contract at the value of Rs 55 lakhs per annum
The Court held are auction and both the appellant and respondent No 4 participated there in and the appellant offered the highest bid at the value of Rs 25 lakhs
Allowing the Appeal  HELD 1
i The Court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Article 226 where the party invoking the jurisdiction has an effective adequate alternative remedy
It has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law
It does not oust the jurisdiction of the Court It is made specifically clear where the order complained against is alleged to be illegal or invalid as being contrary to law a petition at the instance of a person adversely affected would lie to the High Court under Article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government
An appeal in all cases cannot be said to provide in all situations an alternative effective remedy
550 C F In the instant case power was exercised by the authority set up under the rules to grant contract
The High Court did not pose to itself the question who would grant the relief when the impugned order is passed at the instance of a Chief Minister of the State
This is therefore a case in which the High Court was justified in throwing out the petition on the untenable ground that the appellant had an effective alternative remedy
550 G H Assistant Collector of Central Excise v Jainson Hosiery Industries  and The State of Uttar Pradesh v Mohammad Nooh   referred to
2 i There is a clear distinction between the use and disposal of private property and socialist property
Owner of private property may deal with it in any manner he likes without causing injury to any one else
But the socialist or if that word is jarring to some the community or further the public property has to be dealt with for public purpose and in public interest
Tho marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song
On the other hand dispose at of public property partakes the character of a trust in that in its disposal their should be nothing hanky panky and that it must be done at the best price so that large revenue coming into the offers of the State administration would serve public purpose viz the welfare state may be able to expand its beneficient activities by the availability of larger funds
This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or oven for a token price to achieve some defined constitutionally recognised Public purpose one such being to achieve the goals set out in Part IV of the 543 Constitution
But where disposal is for augmentation of revenue and nothing else the State is under an obligation to secure the best market price available in a market economy
552 G H 553 A ii The Government is not free like an ordinary individual in selecting recipient for its largesse and it cannot chose to deal with any person it please a in its absolute and unfettered discretion
The law is now well settled that the Government need not deal with anyone but if it does so it must do so fairly and without discretion and without unfair procedure
Even though the State is not bound to accept the highest bid this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder
In the absence of it the approach must be as clearly laid down by the Constitution Bench of this Court in K N Guruswamy vs The State of Mysore and Ors
19551 SCR 305
Before giving up the auction process and accepting a private bid secretly offered the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder
In the absence of such satisfaction acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their truth which was not undertaken would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is impermissible
1554 G H 556 A B 555 G H Trilochan Mishra etc vs State of Orissa and Ors
 State of Uttar Pradesh and Ors vs Vijay Bahadur Singh and Ors
and State of Orissa and Ors
vs Harinarayan Jaiswal and Ors
 held inapplicable
Raman Dayaram Shetty v The International Airport Authority of India and Ors  and Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr  relied upon
Rule 28 of Punjab Minor and Mineral Concession Rules 1964 permits contract for winning mineral to be granted by the Government by auction or tender
It is open to the State to dispose of the contract by tender
Even here the expression tender  does not mean a private secret deal between the Chief Minister and the offerer
Tender in the context in which the expression is used in rule 28 means tenders to be invited from intending contractors  If it was intended by the use of the expression tender  in Rule 28 that contract can be disposed of by private negotiations with select individual its validity will be open to serious question
The language ordinarily used in such rules is by public auction or private negotiations
The meaning of the expression private negotiations  must take its colour and prescribe its content by the words which precede them
And at any rate disposal of the State property in public interest must be by such method as would grant an opportunity to the public at large to participate in it the State reserving to itself the right to dispose it of as best subserve the public weal
559 F H 560 A B 544 Nand Kishore Saraf vs State of Rajasthan and Anr  and Fertilizer Corporation Kamgar Union Regd
Sindri and Ors
vs Union of India and Ors
 relied upon
State of Uttar Pradesh vs Shiv Charan Sharma and Ors etc
1981 Supp
SCC 85 referred to
In the instant case it is clear that respondent No 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy
He surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court
A unilateral offer secretly made not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid
The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action
When he gave the highest bid he could not have been expected to raise his own bid in the absence of a competitor
Any expectation to the contrary betrays a woeful lack of knowledge of auction process
And then some one surreptitiously by a secret offer scored a march over him
No opportunity was given to him either to raise the bid
Application of the minimum principles of natural justice in such a situation must be read in the Statute and held to be obligatory
When it is said that even in administrative action the authority must act fairly it ordinarily means in accordance with the principles of natural justice variously described as fair play in action
That having not been done the grant in favour of the fourth respondent must be quashed
554 H 555 A E 560 D E