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Tenders for publication of the directories for Delhi and Bombay were invited. Tender of the United India Periodicals Pvt. Ltd. (hereinafter referred to as 'the UlP, the 2nd respondent to the Writ Petition and appellant in one of the appeals) was accepted and an agreement dated 14th March, 1987 was executed. United Database (India) Pvt. Ltd. (hereinafter referred to as 'the UDI', the 3rd respondent to the Writ Petition and appellant in one of the appeals) is a subsidiary of UIP. Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately and was to payan amount of Rs. 20.16 crores as royalty to the MTNL and to supply the MTNL directories free of cost with reference to the number of subscribers. UIP also furnished a performance guarantee for a sum of Rs. one crore. UIP was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue. The annual issue of the directory was to be published in November/December every year. UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold and extra entries in the white pages. The rates of such advertisements were to be fixed by the UIP for each issue of the directory and such rates had to be printed for general information. It was also stipulated that if UIP committed any default or breach of the terms and conditions of the agreement or failed in the due performance thereof within the time fixed (which was the essence of the contract), the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages an amount calculated at the rate of Rs. one lakh for every day or part thereof for the delay beyond the stipulated date in respect of the item which was not completed or finished and delivered completely to the MTNL on the stipulated date as mentioned in the contract. In view of clause 22 of the agreement, the MTNL without prejudice to other rights could by notice in writing determine the contract.

On 26th September, 1991 a supplemental agreement was entered between UIP, UDI, MTNL and Sterling Computers Ltd. (hereinafter referred to as "Sterline" appellant in one of the appeals). Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with UIP. It may be mentioned that by this date the period of the original agreement dated 14th March, 1987 between the MTNL and the UIP had expired, still the supplemental agreement states that "subject to UIP/UDI and Sterling successfully completing the unexecuted job relating to printing of Bombay and Delhi telephone directories within the stipulated time frame and other stipulations in the agreement MTNL shall extend the original contract for three more issues each for Delhi and Bombay, i.e., seven main issues of Bombay and six main issues of Delhi of the said directories to be brought out hereafter". The agreement further stipulated that all terms and conditions contained in the original agreement and the memorandum of understanding would be the integral part of the supplemental agreement and all obligations of UIP/UDI and rights and privileges and powers provided for MTNL thereunder and under the law shall be applicable and available to and binding on the parties to the supplemental agreement as if the same were the part of the supplemental agreement. It was also said that if there was any inconsistency or contradictions vis-a-vis the original agreement, the memorandum of understanding read with supplemental agreement shall prevail and would have overriding effect. By the supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the MTNL over and above the royalty stipulated in the original agreement by the UIP. As mentioned above the original royalty which was payable under the agreement dated 14th March, 1987 was Rs. 20.16 crores for the period 1987 to 1991 but under the supplemental agreement Sterling was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 crores. It was left to the UIP/UDI to receive all revenue earnings on account (cast and future) from the advertisements and MTNL was to be only informed about the prices as fixed.

The High Court came to the conclusion that supplemental agreement dated 26th September, 1991 cannot be held to be the extension of the original agreement dated 14th March, 1987. According to the High Court the supplemental agreement was tainted with malice-the object being to provide unjust enrichment to UIP/UDI/Sterling.

The most interesting part of the controversy is that the MTNL having fully supported the supplemental agreement before the High Court has filed an affidavit before this Court saying that "MTNL has decided to accept the High Court judgment in so far as that the procedure for the grant of contract dated 26.9.1991 to the petitioner M/s Sterling Computers Ltd. Was not in keeping with the requirement of Article 14 of the Constitution and is not filing any petition for Special Leave against the said judgment. However, as far as aspersions are concerned, MTNL does not accept the same and the same are matters of investigation and enquiry by an independent Central Agency at present." It has been further stated that subsequent events have shown that the Sterling has collected Rs. 19.59 crores approximately for advertisements in yellow pages without delivering the goods. They have also uncashed the letter of credit issued by the 'MTNL' prematurely. This collection is apart from the collection of Rs. 14 crores against the yellow pages advertisements made by UDI and UIP during the years 1987-1991. It has been further stated that the Board of 'MTNL' had in fact even decided to terminate the contract for lapse in the performance of the obligations under the 26th September, 1991 agreement but as the High Court has quashed the said supplemental agreement no further step was considered necessary. Ultimately it has been said in the said affidavit that MTNL' has started the process for inviting fresh public tenders and for that purpose advertisement has already been issued.

Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract. The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the MTNL and due to the condonation of delay on the part of the UIP/UDI. There was no justification on the part of the MTNL to become benevolent by entering into the supplemental agreement with no apparent benefit to the MTNL, without inviting fresh tenders from intending persons to perform the same job for the next five years. Public authorities are essentially different from those of private persons. Even while taking decision in respect of commercial transactions a public authority must be guided by relevant considerations and not by irrelevant ones. If such decision is influenced by extraneous considerations which it ought not to have taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias. The contract awarded for the publication of the directories had not only a commercial object but had a public element at the same time i.e. to supply the directories to lakhs of subscribers of telephones in Delhi and Bombay, every year within the stipulated time free of cost. In such a situation MTNL could not exercise an unfettered discretion after the repeated breaches committed by UIP/UDI, by entering into a supplemental agreement with the sterling for a fresh period of more than five years on terms which were only beneficial to UIP/UDI/Sterling with corresponding no benefit to MTNL, which they have realised only after the High Court went into the matter in detail in its judgment under appeal. The supplemental agreement is really a fresh agreement with fresh terms and conditions which has been entered by MTNL without inviting any tender for the same. The supplemental agreement has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991 although they had collected several crores of rupees for the advertisements for the directories to be published in the aforesaid years. We fail to understand as to how a fresh contract for a period upto 1997/1998 was awarded to UIP/UDI/Sterling in the garb of an agreement for extension of the period of the original agreement taking into account irrelevant factors as already enumerated above. If the supplemental agreement has been executed without following the procedures which are essential in view of the repeated pronouncements of this Court and taking into consideration irrelevant factors, then can it be said that "decision making process" before the supplemental agreement was entered into was consistent with the requirement of Article 14 of the Constitution? In such a situation there is no scope for argument that any interference by Court shall amount to an intervention like a court of appeal. Once the process through which the supplemental agreement was executed is held to be against the mandate of Article 14 of the' Constitution, the supplemental agreement shall be deemed to be avoid. The appellants also took an objection to the maintainability of the writ application, on the ground of delay and laches. It was pointed out that supplemental agreement was entered into on 26th September, 1991 whereas the Writ Petition was filed before the High Court on 19th May, 1992, although during this period the petitioners had full knowledge about the supplemental agreement. According to the petitioners, the supplemental agreement was kept as a guarded secret by the MTNL as well as UIP/UDI/Sterling and it is only in April 1992 the petitioners could know some details of the supplemental agreement. In this connection our attention was drawn to an advertisement published on 27th September, 1991 saying that official Bombay directory was being released in December, 1991 and Delhi telephone directory in January, 1992. That advertisement was given on behalf of the UDI only. In the body of the advertisement it was mentioned that UDI and Sterling have made all necessary arrangements to ensure that every subscriber receives up-to- date directory in Delhi and Bombay in time. It was urged on behalf of the writ-petitioners that under the supplemental agreement it was the Sterling who had been given the right to publish the directories and as such in normal course the advertisement should have been given in the paper on behalf of the Sterling but only with an ulterior motive the advertisement was published on behalf of the UDI. Our attention was also drawn to several communications addressed by the Department of Telecommunications, Madras, to the dif- ferent authorities of the MTNL making enquiries as to whether the Sterling had been entrusted with the printing of directories for Delhi and Bombay, as tenders for printing and supply of main telephone directories with yellow pages on turnkey basis were under consideration at Madras. The aforesaid queries were made in the month of December, 1991. The office of the Chief General Manager, MTNL, on 2nd January replied to the Divisional Engineer, Madras Telephones, saying "perhaps, MTNL, Corporate Office have entrusted some job of printing of telephone directories to M/s Sterling Computers Ltd. In this connection, you are therefore requested to contact Chairman-cum-Managing Director, MTNL". A letter dated 30.12.1991 was addressed by Sterling to the Divisional Engineer, Madras Telphones, in reply to the query whether they had been entrusted with the printing and supply of telephone directories, saying "Much as we would like to provide you a copy of the order of Mahanagar Telephone Nigam Ltd. we are unable to do so due to certain circumstances beyond our control." Reference was made to yet another communication dated 30.12.1991 addressed by MTNL to Deputy General Manager, Madras Telephones, saying that so far the Sterling Computers were concerned "they have been allowed a sub-contract by M/s UDI for printing the directories for Delhi and Bombay", without giving the details of any such contract. It was pointed out on behalf of the the writ-petitioners that an affidavit, was filed on behalf of the Sterling, before the Madras High Court in connection with another Writ Petition on 19.4.1992, in which the details of the supplement agreement were disclosed. The Writ Petition in the Delhi High Court was filed on 19.5.1992. Under the circumstances mentioned above it is difficult to reject the Writ Petition on the ground of delay and laches.