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1. Leave granted.

2. In the past the telephone directory used to be printed by the Department at its own cost for the purpose of supplying the same to the telephone subscribers. It was an item of expenditure. Today, the telephone directory has become a source of revenue for the State. This has become possible by making it a medium for advertising by industrial and commercial concerns. A section in distinct 'Yellow Pages' devoted exclusively to advertisements is contained in the directory. The person who undertakes the printing of the directory procures the advertisements from private parties and collects the charges for the same. In return, he supplies a prescribed number of directories free of cost to the department and also pays to the department a certain amount by way of royalty. The contract for printing and publishing the telephone directory is normally awarded by inviting tenders and selecting the best offer from among the tenders which are so received. This practice has been in vogue for some time. In Sterling Computers Limited v. M&N Publications Limited and Anr. , this Court has dealt with the award of such a contract for printing and publishing of the telephone directories for Delhi and Bombay. The instant case relates to the telephone directory for Hyderabad.

(iv) in addition to its projected strength, NHL has access to the benefit of the complete resources and strength of its parent/owning companies, each of which is a recognized market leader.

7. An overview of each of the parent companies, namely, TPI, LMI, WML and IIPL also given in the tender offer,

8. Regarding the expertise of TPI was stated that it has been established as a joint venture with Thomson International Canada in 1964 and is located at Faridabad, Haryana and has units at Okhla, Noida Export Zone and also has sales/co-ordination offices in Metropolitan towns in India, and in London and New York. It was stated that with over 125 Managers and 1255 skilled technicians/workers the press is equipped to handle the most exacting printing jobs and working with state of an technology, TPI produces both quality and volume and a detailed list of machines installed for printing, folding, cutting and binding and other equipment was enclosed and it was stated that the said equipment and skill would be available/utilized for all directory production work. It was stated that among the many diverse jobs that have been executed by TPI are printing of editions of India Today (Two languages and a total of 1.2 million copies per month), Computers Today, Business Today, Readers Digest, Span Magazine, Scientific Journals, Books (both hard and soft bound) for export and Telephone Directories for UDI, Sterling Computers, Sesa Seat, etc.

A modern extremely powerful, Computer system is being purchased to install the integrated directory system developed over the past 25 years by IIPL. The IDS will ensure efficiency and accuracy of operations. Training of all personnel is being and will continue to be conducted by experienced Managers from IIPL.

13. Alongwith the tender the appellants submitted the directories of Delhi and Bombay 1992 which were printed and bound by Living Media Press in Madras.

14. In the counter affidavit filed on behalf of respondents Nos. 1 to 3 in the High Court it was stated that as per the averments in the writ petition TPI and LMI had printed and bound the telephone directories for respective parties who had been awarded the contract for Delhi and Bombay and that the appellants did not produce any evidence to show that they have in their name undertaken compiling, printing, binding and supply of Telephone Directories of large telephone systems with a capacity of more than 50,000 lines and further that telephone directory of Delhi 1992 issue was published by Sterling Computers Limited on behalf of United Data Base (India) Pvt. Ltd., and it was printed and bound at Navneet Publications (India) Ltd., Gandhinagar, and the telephone directory of Bombay 1992 issue does not indicate any publisher's or printer's name. It was also stated that NHL was converted in to a joint venture company in 1992 and have no experience whatsoever in their own name for compiling, printing, binding and supply of telephone directories of Telephone Systems of more than 50,000 lines capacity. It was further stated that the appellants had submitted the Directories of Delhi and Bombay only to show the capability of printing facilities of TPI and LMI and it does not substantiate their experience of a full job of compiling, printing and supply of telephone directories as stipulated in the tender notice/document. In the counter affidavit it was also stated that the royalty and other aspects of the tender were not considered since the appellants did not meet the primary requirement of experience as above.

19. At the outset, we may indicate that in the matter of entering into a contract, the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. The decision of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licenses 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 the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognized that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere See : Ramanna Dayaram Shetty v. The International Airport Authority of India ; Kasturi Lal Lakshmi Reddy v. State of J&K ; Fasih Chaudhary v. Director General, Dooradarshan [1988] Suppl. 3 SCR 282 at p. 286; Sterling Computers Ltd. v. M&N Publications Ltd. and Anr. (supra); Union of India v. Hindustan Development Corporation 1983 (3) SCC 499, at p. 513.