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92. In Sterling Computers Limited v. M&N Publications Ltd. (1993) 1 SCC 445, this Court observed thus : (SCC p. 455, para 12) "In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi- judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive."

International Airport Authority of India (1979) 3 SCC 489: (1979) 3 SCR 1014 (SCR p. 1034 : SCC pp. 505-06, para 12); Kasturi Lal Lakshmi Reddy v. State of J & K (1980) 4 SCC 1: (1980) 3 SCR 1338 (SCR p. 1355 : SCC pp. 11-12, para 11); Fasih Chaudhary v. Director General, Doordarshan (1989) 1 SCC 89: 1988 Supp (3) SCR 282 (SCR p. 286 : SCC p. 92,); Sterling Computers Ltd. v. M & N Publications Ltd (1993) 1 SCC 445; Union of India v. Hindustan Development Corpn. (1993) 3 SCC 499 (at p. 513)].

In Meerut Development Authority v. Association of Management Studies, (2009) 6 SCC 171, it was observed:

"37. A large number of authorities have been cited before us in support of the submission that even in contractual matters the State or "other authorities" are bound to act within the legal limits and their actions are required to be free from arbitrariness and favouritism. The proposition that a decision even in the matter of awarding or refusing a contract must be arrived at after taking into account all relevant considerations, eschewing all irrelevant considerations cannot for a moment be doubted. The powers of the State and other authorities are essentially different from those of private persons. The action or the procedure adopted by the authorities which can be held to be "State" within the meaning of Article 12, while awarding contracts in respect of properties belonging to the State, can be judged and tested in the light of Article 14. Once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14. These principles are settled by the judgments of this Court in Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489, Kasturi Lal Lakshmi Reddy v. State of J&K (1980) 4 SCC 1, Ram and Shyam Co. v. State of Haryana (1985) 3 SCC 267, Mahabir Auto Stores v. Indian Oil Corpn. (1990) 3 SCC 752, Sterling Computers Ltd. v. M&N Publications Ltd. (1993) 1 SCC 445 and ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. (2004) 3 SCC 553.

41. The distinction between appellate power and a judicial review is well known but needs reiteration. By way of judicial review, the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. The courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the court cannot act as an appellate court by substituting its opinion in respect of selection made for entering into such contract. But at the same time the courts can certainly examine whether the "decision- making process" was reasonable, rational, not arbitrary and violative of Article 14. (See Sterling Computers Ltd. (1993) 1 SCC 445) In Tejas Constructions & Infrastructure (P) Ltd. v. Municipal Council, Sendhwa,(2012) 6 SCC 464, it was observed: