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Issues:
1. Interpretation of clause in agreement for extension of agency period. 2. Discretion of authorities in granting extension of agency. 3. Legitimate expectation and arbitrary exercise of power. 4. Consideration of public interest in extension of agency period. 5. Validity of High Court's decision in granting renewal of agreement. Analysis: 1. The respondent sought extension of agency for toll collection as per agreement terms. The appellant invited fresh bids instead of extending respondent's agency. High Court directed consideration of respondent's representation for extension based on clause 5 of the agreement. The Division Bench upheld the High Court's decision, considering the clause as an extension, not renewal. However, the Supreme Court found the distinction irrelevant, stating extension or renewal is granted post existing agreement, with the possibility of different terms. Economic considerations for higher bids are relevant, and public interest can outweigh legitimate expectations. The doctrine of legitimate expectation does not create enforceable rights but aids in testing governmental actions for arbitrariness. The respondent's claim for extension may not hinder the government's economic interests, allowing for fresh bids. The Court disagreed with the High Court's decision, setting aside the orders and dismissing the writ petition. 2. The authorities contended that extension of the agency is at their discretion, not a right of the respondent. The respondent argued that non-consideration of clause 5 would be arbitrary. The Division Bench upheld the respondent's claim based on fulfillment of extension conditions. However, the Supreme Court emphasized that economic benefits and public interest can justify inviting fresh bids over extending the agency. The respondent can participate in the tender process, ensuring fair consideration. The Court allowed the appeal, emphasizing the authority's discretion in granting extensions. 3. The respondent claimed a legitimate expectation for extension based on clause 5 of the agreement. The High Court upheld this claim, considering it non-arbitrary. The Supreme Court clarified that legitimate expectation does not create enforceable rights but aids in preventing arbitrary actions. Economic considerations and public interest can outweigh legitimate expectations, justifying the authority's decision to invite fresh bids. The Court dismissed the writ petition, emphasizing the importance of economic considerations in such cases. 4. The High Court's decision to grant renewal of the agreement was based on the interpretation of clause 5 as an extension, not a renewal. The Supreme Court found this distinction irrelevant, stating that extension or renewal post-existing agreement may involve different terms. Economic considerations, such as inviting fresh bids for higher amounts, are relevant, and public interest can outweigh legitimate expectations. The Court set aside the High Court's decision, emphasizing the authority's discretion in such matters. 5. The Supreme Court set aside the Division Bench's decision upholding the High Court's order for renewal of the agreement. The Court dismissed the writ petition, emphasizing the authority's discretion in deciding whether to extend the agency or invite fresh bids. Until new arrangements are made, the existing agency terms for the respondent will continue. The appeal was allowed in favor of the appellant, highlighting the importance of economic considerations and public interest in such cases.
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