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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 the cases of Ramana Dayaram Shetty vs. International Airport Authority of India8, Kasturi Lal Lakshmi Reddy vs. State of J & K9, Ram and Shyam Co. vs. State of Haryana10, Mahabir Auto Stores vs. Indian Oil Corporation11, Sterling Computers Ltd. vs. M & N Publications12 and A.B. International Exports vs. State Corporation of India. Executive does not have an absolute discretion, certain principles have to be followed, the public interest being the paramount consideration.

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. 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 `decision making process' was reasonable, rational, not arbitrary and violative of Article 14. [See: Sterling Computers Ltd. (supra)].