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3.2 Judicial review of government contracts:

extent and ambit.
14 Over the years, this Court has applied the non-

arbitrariness standard under Article 14 to test the validity of government action. In Ramana Dayaram Shetty v. International Airport Authority of India , a three-Judge Bench of this Court observed that the government does not have unlimited discretion in granting State largesse and it must act in fairness. In New Horizons Limited v. Union of India, the Department of Telecommunications, invited sealed tenders for printing, binding, and supply of telephone directories. While determining the validity of the eligibility criteria prescribed for tenderers, the Court observed that the State when entering into a contract does not stand on the same footing as a private person. The Court held that the government cannot act arbitrarily while dealing with the public, whether it is while giving jobs or entering into contracts. The relevant observations are extracted below: