In Sachidanand Pandey v. West Bengal [(1987) 2 SCC 324]. At paragraph 40 of the said judgment the Supreme Court held as follows:-
“Public auction is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives the appearance of bias, jobbery or nepotism.”
Calling of tenders is not the only procedure which answers the requirement of non-arbitrariness on the part of the State. When the State is intending to purchase or sell property or goods or seeking to have certain work like construction of a building or a project, etc. to be done by private parties inviting competitive bids from persons interested is generally a rational and transparent process, but even in such cases courts have recognised exceptions to the rule. However, in a case like the one on hand where the State is proposing to carry on some business by participating in a venture jointly with others, the decision cannot in any way be called distribution of largess. It is not the case of either of the petitioners that they are also interested in carrying on the same business that is to be carried on by the 6th respondent, nor some other persons would be interested in such business and if only the State of Kerala advertised its intention to participate in such business venture there would have been more competition enabling the State of Kerala to take a decision which would be economically more beneficial to the State. We are of the opinion that by the very nature of the impugned decision it is incompatible with the process of inviting tenders.