http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 21

PETITIONER:

PUNJAB COMMUNICATIONS LTD.

Vs.

RESPONDENT:

UNION OF INDIA & OTHERS

DATE OF JUDGMENT: 04/05/1999

BENCH:

S.B.MAJMUDAR, & M. JAGANNADHA RAO.,

JUDGMENT:

M.JAGANNADHA RAO,J.

Leave granted.

These two appeals have been filed by the Punjab

Communications Ltd (hereinafter called the `PCL'), a

public-sector undertaking of the State of Punjab against the

judgment dated 27.2.1998 of the High Court of Punjab &

Haryana in CWP No.124 of 1998 and against the order in the

review application dated 19.3.1998 in RA 138 of 1998. The

Transfer Petition (C) No.680 of 1998 is filed by Sri

D.P.Srivastava for transfer of a public interest writ

petition No.4112 M/B of 1997 from the Allahabad High Court

to this Court as some points are common to the appeals and

the writ petition.

Though the main judgment in the writ petition has been

rendered by the High Court on 27.2.1998, the events which

have taken place during the pendency of these appeals have

changed the complexion of the case and, according to the

respondent-Union of India, the writ petition has practically

become infructuous and no relief can be granted. We shall

narrate the facts which have given rise to the writ petition

and shall also refer to the subsequent events.

In September 1993, the Asian Development Bank

(hereinafter called the `ADB') agreed to grant a

soft loan of US $ 113 m to the Union of India (1st

respondent) for funding a project meant to provide

digital wireless telecom facility to 36,000

identified villages in Eastern U.P. The Department

of Tele-communications (hereinafter called `DOT')

floated a tender on 9.10.1996 inviting offers open

to Indian and foreign companies. There were 14

offers including one from the appellant. The

Technical Evaluation Committee (hereinafter called

the `TEC') examined the offers and wherever there

were deviations in the offers that were made, the

TEC sought clarifications on 3.6.1997 from the

bidders to be given by 10.6.1997. The appellant

replied and resubmitted the "proveness"

certificates which were included in the original

bid pagers at pages 226 to 228. This was a

certificate dated 28.2.1997 issued by the Chinese

Post and Telecommunication Department where the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 21

technology submitted by the appellant was stated to

have been implemented. After scrutiny, the TEC

short-listed the appellant (PCL) and BEL on

7.7.1997. It is the appellant's case that on

account of some pressure brought on respondents 5

(Member (P) Telecom Commission) DOT and Respondent

6 (Advisor (T) Telecom Commission) DOT, the matter

was referred by the 5th respondent to a High Level

Committee, with a view to obtain an opinion

disqualifying the appellant so that the Department

could go in for an outmoded `analog' system (rather

than the current `digital' system) to be provided

by some multinational company which was wanting to

dump its outmoded `analog' system in the India. It

is the appellant's case that this was done with a

view to enable the issue of a fresh notification

calling for fresh tenders pertaining to `analog'

system. It appears that on 23.9.1997, the

abovesaid High Level Committee submitted its report

stating that there were two `deviations' in the

tenders submitted by the appellant as noticed by

the Technical Evaluation Committee in respect of

the required specifications. The Committee

required the department to negotiate orally with

the appellant. It is the appellant's contention

that at an extremely short notice of 2 days, a mock

negotiation was held on 29.10.1997, and some oral

questions were asked. It is said that the

appellant had answered all these questions put by

the respondents by means of the appellant's

documents already on record but these were not

accepted. According to the appellant no agreed

minutes were recorded. On 19.11.1997, a note

signed by the 6th respondent, the convenor of the

High Level Committee, was prepared stating that the

further Technical Evaluation of the project was

likely to go beyond 27.11.1997 due to complexities

of bids offered by manufacturers and also in view

of the want of authentication of the "proveness"

of the system proposed by the appellant. It then

stated that a decision had been taken not to go

ahead with the ADB loan. The note stated as

follows:

"Department should not go in for ADB loan

as it would result in heavy commitment

charges and Department must go ahead for

implementation of rural telecom project

through its own resources"

According to the appellant, these minutes dated

19.11.1997 were back-dated inasmuch as, even as

late as 20.11.1997, the Chairman TC's office diary

recorded a note that the Chairman (TC) wanted para

2 to be modified to say that the Department did not

have any technically responsive bid and that none

of the offered systems were proven and therefore

Department might not go ahead with the loan and the

draft might be modified in consulation with

ADV(T)/DDG(LPT) & resubmitted. According to the

appellant, the convenor of the High Level Committee

created these imaginary deficiencies in the

appellant's bid and prepared backdated minutes and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 21

showed that all the High Level Committee members

had signed the minutes on 17.11.1997 itself. These

backdated minutes, it is alleged, were prepared as

a ground for rejection of the tender, in spite of

the fact that 5 years were spent on drafting the

specifications and in the evaluation of bids.

According to the appellant, the Sr.DDG-TX who is

said to have signed these "concocted backdated"

minutes had, in reality, not even seen these

minutes, let alone signing them. The appellant

stated that the said officer disowned signing such

minutes dated 17.11.1997. The appellant made a

representation on 23.11.1997 to the 2nd respondent

and on 16.12.1997, the impugned order was passed,

cancelling the tenders.

The appellant then filed writ petition on

6.1.1998 in the High Court of Punjab & Haryana.

The High Court dismissed the writ petition on

27.2.1998. A review application was filed but that

was also dismissed on 19.3.1998. Thereafter, the

appellant moved this Court in June, 1998.

This Court issued notice on 8.6.1998 in the

application for leave returnable by 22.6.1998 and

stated that till then the Union of India should not

return the bid papers to the appellant.

We shall now refer to the subsequent events

that have taken place after the filing of the SLP

in this Court.

On 2.9.1998, when the matter came before the

Court, a copy of the communication of the Ministry

of Finance dated 1.9.1998 received by the DOT was

placed before the Court. That letter showed that

pursuant to a letter of the DOT dated 29.4.1998,

the ADB had come to know about the inability of the

DOT to avail of the ADB loan. This Court requested

the Additional Solicitor General of India to take

appropriate instructions from the concerned

department and directed that an intimation be sent

to the ADB to keep the letter of cancellation of

loan in abeyance, awaiting further orders from this

Court.

On 22.9.1998, the Additional Solicitor

General of India informed this Court that the Union

of India had communicated to the ADB about the

pendency of the case. Thereafter, this Court

permitted the parties to the case, if they thought

it fit, to inform the ADB about the order which

this Court passed on that day i.e. 22.9.1998.

Thereafter, several affidavits came to be

filed by the Union of India as directed by the

Court. The affidavit dated 4.1.1999 stated that

the DOT had conveyed, through the Department of

Economic Affairs, to the ADB on 17.9.1998 for

keeping the letter of cancellation of ADB loan in

abeyance. It was also stated that the ADB, in its

letter dated 29.10.1998, had informed the

Department of Economic Affairs that it had decided

that it was not "practical" to keep the loan offer

open and that, in fact, formal steps had been taken

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 21

to cancel the loan-offer on 6.11.1998. The DOT

also stated that the ADB had approved the

withdrawal of the loan on 6.11.1998.

This Court was informed on 5.1.1999 that, in

the meantime, the Government of India was thinking

of calling for fresh tenders for installation of

telephones under a new scheme for rural areas

spread over different States and this Court

directed a further affidavit to be filed in this

behalf.

A fresh affidavit dated 15.1.1999 was filed

on behalf of the Union of India to the effect that

the ADB loan had a validity period of one year

which had automatically lapsed on 27.11.1997, that

there was a time constraint in regard to the ADB

loan and that remainders were received from the

Department of Economic Affairs to avail the loan

latest by 27.11.1997, that the DOT had informed the

Finance Department that it was not availing the

loan and that it had decided

"to fund the Rural Telecom Project

through its own resources"

It was stated that this decision was taken to avoid

heavy commitment charges of ADB loan if the

evaluation/decision on the previous tender went

beyond 27.11.1997. Thereafter, the previous

tenders were cancelled on 16.12.1997, stating that:

"no bidder qualified the

technical/commercial evaluation"

It was also stated that the Department of Economic

Affairs had, by their letter dated 26.11.1998,

already confirmed that the ADB had approved

withdrawal of the loan on 6.11.1998 as already

informed to this Court.

In regard to the new scheme for rural

telephones, it was stated in the affidavit of the

respondent that under the scheme of Village Public

Telephones (VPT), during 1997-98 42,855 VPTs were

provided, that for 1998-99, the target was 45,000

VPTs and out of that 10,150 were already provided

by December, 1998 through other schemes in

progress. It was stated that the Department had

already covered 6,100 villages out of 36,000

village in Eastern Uttar Pradesh which were to be

covered under the previous tender and that another

5,500 VPTs would be provided by March, 1999. It

was further clarified as follows:

"All the villages in UP(E) would be

provided Telecom facilities during the

9th Plan period along with the rest of

the Country. Presently, out of 75,000

villages of UP(E), 32,000 villages have

already been provided Telecom

facilities."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 21

It was stated that during 1997-98, the Department

had opened 990 new rural exchanges and had provided

7.16 lakhs new telephone connections in rural areas

and had incurred an expenditure of Rs.1060 crores

for rural telephones. So far as 1998-99 was

concerned, the Department had allocated 1,485

crores for rural networks to be opened in 1,385

new rural exchanges and `to provide 8.4 lakhs

telephone connections. The Department had already

installed 295 rural exchanges and provided 2 lakhs

telephones between April, 1998 and December, 1998.

For 1999-2000, it was planned to allocate Rs.2000

crores for rural network and to provide 12.5 lakhs

telephone connections. It was also stated that,

presently, there were 18,500 indigenously developed

C-DOT exchanges which were working in rural area

having total capacity of 40 lakh lines, landlines,

digital MARR etc.

So far as remote/inaccessible areas were

concerned, it was stated in the affidavit of the

respondent that a choice of technology was made by

including wireless in local loop (WLL) based on

area of application as stated in the affidavit

dated 5.11.1998. The Department had already

floated a tender for 20,000 lines for Digital

Wireless Local loop Systems for rural areas - for

the entire country, including UP. A copy of the

Bid document was filed. It was alleged that the

appellant, among other manufacturers, had also

actively participated in the finalisation of the

Technical Specifications of the new tenders. These

specifications were slightly different from the

earlier ADB tender and were based on latest

`Generic Requirement' (GR) prepared by the Telecom

Engineering Centre (TEC) of the Department, after

extensive consultation with the manufacturers. The

bid document for this tender was on sale w.e.f.

8.1.1999 and 7 companies had already purchased the

same and the tenders were scheduled to be opened

on 4.2.1999. It was stated for the respondents

across the Bar that the appellant had also

responded to the new advertisement. Again C-DOT

TDMA PMP Technology, field-trial orders were placed

on M/s ITI for 25 Systems having capacity for

providing 4,000 Village Panchayat Telephones

(VPTs). These telephones were expected to be

installed by February, 1999 in 17 Telecom Circles

spread throughout the Country and these systems

were more cost-effective than WLL system and were

based on indigenous technology developed by M/s C-

DOT. Against satellite based technology, notice

inviting tenders had been issued on 30.12.1998 for

1,000 terminals and the tender was scheduled to be

opened on 9.4.1999.

Two tabular statements were filed by the

Union of India during the process of hearing of the

cases. One showed, District-wise, the number of

villages identified for the earlier ADB tender and

the villages provided with VPT out of the said

villages. It was shown that out of 32,350 villages

in UP Telecom Circle in UP Districts, 8524 villages

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 21

out of the villages identified for ADB tender,

(i.e. in Eastern UP) were already provided with

telephones. A separate tabular statement was filed

showing the progress of telephone installation in

the rural sector right from 1992. As on

31.12.1998, the position is stated to be as

follows:

"Assam & Nagaland - 72.3%; AP -78.5%; AS

- 48.2%; Bihar -24.2%; Gujarat - 76.8%;

Haryana - 99.4%; Himachal Pradesh -40.4%;

J&K-41.75%; Karnataka-81%; Kerala - 100%;

Madhya Pradesh - 55.1%; Maharashtra -

69.5%; NE - 26.7%; Orissa - 41.7%; Punjab

- 94.1%; Rajasthan - 56.3%; Tamil Nadu -

98.4%; UP(Eastern) - 43.9%; UP(Western) -

34.4%; Delhi - 100%; Calcutta - 90%. In

all, 6,07,491 villages, the average is

51.8%".

It will be noticed that the percentage of

telephones in Bihar, Himachal Pradesh, J&K, North

East and Orissa is less than the percentage in

Eastern UP.

These are the subsequent events that have

taken place during the pendency of these matters in

this Court. It will be noticed that these events

have substantially changed the very basis of the

original writ petition filed in the High Court of

Punjab & Haryana. The ADB loan on which the tender

was based now stands withdrawn; the tenders for

installing 38,000 telephones in Eastern UP stand

withdrawn and invitations for new Tenders spread

over several rural areas in various States have now

been made. In fact, the new tenders have also been

submitted. It is stated for the respondents that

the appellant is also participating in these new

tenders. We have, therefore, to decide this appeal

in the light of the above subsequent developments.

Learned Senior counsel Sri D.D.Thakur and Sri

R.F.Nariman for the appellant and Senior counsel

Sri Rajeev Dhawan for the petitioner in the

Transfer Petition have submitted that in spite of

these developments, the question whether the

various officers conspired and played fraud in

seeing to it that the ADB loan lapsed or stood

withdrawn, has still to be gone into. They contend

that when the writ petition was filed on 6.1.1998,

the position was that with a view to allow multi-

national companies to dump outmoded analog

technology into India, the officers were wanting to

float fresh tenders in which such analog technology

could be made the basis of the tenders, either

wholly or partly, that the said attempt was

successfully thwarted by the appellant filing the

writ petition in the High Court of Punjab and

Haryana and that with a view to spite the

appellant, the officers had all conspired and

played fraud in having the ADB loan withdrawn and

the ADB tender cancelled. This, according to the

appellant, amounted to a fraud on the appellant and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 21

also on the people of Eastern UP and has to be

investigated. The excuse put forward by the

officers of DOT that ADB loan would be expensive

was absurd inasmuch as there was a 5 year

moratorium on interest and the interest rate was

something like 4% and there were other very

favourable terms. It was argued that there was no

point in having such a beneficial loan withdrawn

and spending funds of the Government of India. The

learned Senior counsel for appellant and for

petitioner in the Transfer Petition contended that

the scheme meant for a very backward area like

Eastern UP could not be allowed to be frustrated in

this manner.

Alternatively, it was contended by the

learned senior counsel for the appellant that the

appellant had a legitimate expectation of a

substantive nature, that, even if the Government

wanted to put its own funds, the original tender

notification would be processed for the benefit of

Eastern UP. The respondents cannot change the

policy to benefit the rural areas in the whole

country and abandon the original tender

notification for Eastern UP.

Dr.Rajeev Dhawan for the petitioner in the

Transfer Petition contended that fraud in private-

law field was different from fraud in the public-

law field. This Court should, therefore, decide

whether these officials got the High Level

Committee appointed only with a view to harm the

appellant and whether the Committee was stage-

managed by a few officers who had other motives.

Learned counsel Sri Dhawan also contended that this

was a case of legitimate expectation for the

appellant in the civil appeal as also to the 36,000

villages in Eastern UP. The learned Senior counsel

for the State of Punjab Sri P.C.Jain also supported

the case of the appellant on the ground that the

appellant was its public sector undertaking.

On the other hand, it was contended

vehemently for the Union of India by Sri

C.S.Vaidyanathan, the learned Additional Solicitor

General of India, that there was absolutely no

truth in the contention of the appellant that there

was a conspiracy or fraud to shelve the ADB loan,

or to bring in outmoded technology into India

through certain favoured multinationals. According

to him, there were two main defects in the tender

submitted by the appellant, one was a technical one

and the other was the absence of proof of

`proveness'. Even though, final opportunity was

given, the appellant having agreed to produce fresh

certificate from China, (apart from the certificate

initially filed) to prove `proveness' of the system

in that country - the appellant failed to do so.

The High Level Committee's proceedings, in fact,

showed that it wanted to accept the appellant's

tender and it gave an opportunity to the appellant

to make good the defects but the attitude of the

appellant was not helpful and it was the inaction

of the appellant that was the cause for the delay

that led to a situation where the time limit set by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 21

the ADB came very close and was expiring. As there

was no chance of the appellant curing the defects

within the few days that were left, the ADB loan

had to be withdrawn. Photocopies of the entire

departmental proceedings were placed before the

Court to show that everything was done bonafide and

the allegations of the appellant were wild and

unsubstantiated. It was argued that there was no

forgery or ante-dating of any minutes. Two files in

the respective departments were moving

simultaneously and there was absolutely no truth in

the allegations of ante-dating the minutes. Now

that the ADB loan stood withdrawn and the ADB

tender had also fallen through, the writ petition

had become totally infructuous. The Government of

India decided to go on with its own funds and now a

new policy decision was taken to benefit rural

areas in the whole country and not merely the

36,000 villages in Eastern UP. This was because

there were other rural areas in other States which

were more backward then Eastern UP. In those

places, the percentage of telephones was far less

than in Eastern UP. In fact, fresh tenders have

been called for to benefit the backward rural areas

in the whole country and the new tenders are no

longer confined exclusively to Eastern UP. A

Tabular statement relating to the national figures

regarding telephones is placed before the Court to

show that there are even more backward rural areas

in some States where the percentage of telephone

was less than in Eastern UP. The Government has,

now plans to cover all backward rural areas in the

country in the next few years and monies have also

been allocated. All these details have been given

in the additional affidavits and statements filed

in the Court. There is no question of dumping

outdated technology into India. The new tenders and

the future schemes are based on the latest

`digital' technology and not on the outmoded

`analogy' technology. The new government policies

are wider and cannot be challenged in this writ

petition which had become infructuous. There is no

proof of fraud either in private law or public law

established. There can be no legitimate

expectation in regard to the ADB loan contract and

in any event the new policy is based on overriding

considerations of public interest and cannot be

questioned. The appeals are liable to be

dismissed. It is also argued that there is no need

to transfer the writ petition filed by Mr. OP

Srivastava from the Allahabad High Court to this

Court. That has also, it is stated, become

infructuous.

On these submissions, the following questions

arise for consideration:

(1) Whether, after the ADB loan for the contract

for providing telephones for Eastern UP was

withdrawn, it is necessary to give any finding on

the question of alleged fraud or to grant any

directions regarding the bids offered for the ADB

contract?

(2) Whether, if initially the Government decided

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 21

to fund the proposed contract for Eastern UP from

its own resources, it was permissible for the

Government to change its policy into one for

providing telephones for rural areas in the entire

country and whether the `legitimate expectation' of

the appellant in regard to the earlier notification

required, this Court to direct that the

notification for Eastern UP should be continued?

Point 1

The disputes between the parties, before the

ADB loan was withdrawn, were (i) whether there was

a conspiracy or fraud or other manouvre on the part

of the DOT-officials to shelve the ADB loan to

spite the appellant and bring in outmoded `analog'

technology through favoured multinationals and (ii)

whether the appellant (a) complied with the

technical specifications and (b) produced adequate

proof of the `proveness' of the system offered by

the appellant i.e. as to its successful

implementation in China.

A review of the facts and the subsequent

events would show that the issues which were live

when the writ petition of the appellant was pending

in the High Court have now lost all their

relevance. The entire tender was based on the ADB

loan. If the ADB loan itself has now stood

withdrawn, there is now no possibility of the ADB

loan project for Eastern UP being started or

completed. It will well nigh be impossible to

issue any directions to the Union of India to seek

a renewal of the lapsed loan nor to issue any

directions to continue the project for Eastern UP

on the basis of ADB loan.

Even so, learned Senior counsel for the

appellant and the petitioner in the Transfer

petition have argued the case on merits as if the

ADB loan were still alive. We have been taken

through several volumes of correspondence between

the various departments, and the minutes of various

officers and of the High Level Committee to prove

arbitrariness in the non-acceptance of the

appellant's bid on two counts. We have heard

these submissions very patiently but the point is

whether this Court is to give findings on issues

which have become non-issues now after the

withdrawal of the ADB loan. We have given our

anxious consideration to the various contentions

raised on behalf of the appellant and the

petitioner in the Transfer Petition and we are of

the view that a detailed decision on the said

questions is not called for. A question of fraud

was also raised. But once the ADB loan is

withdrawn the question has also become a non-issue.

The position is that in respect of the ADB loan

project, no fresh tenders based on `analog' system

have been invited nor has any multinational company

been awarded any contract based on outmoded analog

system. The said question of fraud is no longer

relevant. On all these issues we should not be

understood as having expressed any opinion.

Further, there cannot be a cause of action on the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 21

basis of an "attempt at fraud" which did not

materialise. It is true as stated in De Smith

Administrative Law (para 13.010)(5th Ed.) that it

is fundamental to the legitimacy of public

decision-making that official decisions should not

be infected with motives such as fraud (or

dishonesty) malice or personal self interest. Duty

to act in good faith is inherent in the process.

Learned senior counsel for the petitioner in the

Transfer Petition, Sri Rajeev Dhavan referred to

Shrisht Dhawan vs. Shaw Brothers [1992 (1)SCC 534]

where the distinction between fraud in public law

and private law has been adverted to. But all

these legal principles are not relevant if, the so

called or alleged attempt at fraud did not

fructify. We accordingly do not think it

worthwhile to go into the question of `fraud'

either. We may once again clarify that we should

not be understood as having decided anything on the

merits of these questions. Point 1 is decided

accordingly.

Point 2 It was argued that even if the ADB

loan was withdrawn, when the State decided to go

ahead with its own funds, it should have gone ahead

with the same notification calling for tenders for

Eastern UP sans ADB loan. The change in the

policy to benefits other backward areas in the

courts was unwarranted. Reliance was placed on the

principles of promissory estoppel and legitimate

expectation. It was contended that the project

for Eastern UP should still go ahead and it was

not open to the Union of India to deprive the

appellant company of its reasonable and legitimate

expectation regarding the acceptance of the bid

offered for the Eastern UP project; It was not

open to the State to deprive the expectation of

villagers in 36000 villages in Eastern UP and to

change over to a new policy of providing telephones

to rural areas in all the States. Such is the

contention of the appellant. We do not propose to

deal with question of promissory estoppel because

the parties were still at the stage of the tenders,

at the relevant time. We shall, therefore, confine

ourselves to the point relating to legitimate

expectation of the appellant and the effect of the

change of policy.

The principle of `legitimate expectation' is

still at a stage of evolution as pointed out in De

Smith Administrative Law (5th Ed.) (para 8.038).

The principle is at the root of the rule of law and

requires regularity, predictability and certainity

in governments' dealings with the public.

Adverting to the basis of legitimate expectation

its procedural and substantive aspects, Lord Steyn

in Piersova vs. Secretary of State [1997 (3) All

E.R. 577 (at 606) (HL)] goes back to Dicey's

description of the rule of law in his "Introduction

to the study of the Law of the Constitution" (1oth

Ed., 1959 p.203) (*) as containing principles of

enduring value in the work of a great Jurist.

Dicey said that the constitutional rights have

roots in the common law. He said: .lm15

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 21

"The `rule of law', lastly, may be used as a

formula for expressing the fact that with us,

the law of constitution, the rules which in

foreign countries naturally form part of a

constitutional code, are not the source but

the consequence of the rights of individuals,

as defined and enforced by the Courts; that,

in short, the principles of private law have

with us been by the action of the Courts and

Parliament so extended as to determine the

position of the Crown and its servants, thus

the constitution is the result of the ordinary

law of the land".

..........L.....T.......T.......T.......T.......T.......T..J

This, says Lord Steyn, is the pivot of Dicey's

discussion of rights to personal freedom and to

freedom of association and of public meeting and

that it is

________________________________________________________

* See also `The Rule of Law as the Rule of Reason:

Consent and Constitutionalism in (1999) 115 L.Q.R.

221 at 234 that `Fairness is both procedural and

substantive': Due Process and Fair Procedure by

D.J. Galligam (1996); and at p.242 quoting Dicey

(1959) at p.203-204 clear that Dicey regards the

rule of law as having both procedural and

substantive effects. "The rule of law enforces

minimum standards of fairness, both substantive

and procedural". On the facts in Pierson, the

majority held that the Secretary of State could

not have maintained a higher tariff of sentence

than recommended by the judiciary when admittedly

no aggravating circumstances existed. The State

could not also increase the tariff with

retrospective effect.

The basic principles in this branch relating to

`legitimate expectation' were enunciated by Lord

Diplock in Council of Civil Service Unions vs.

Minister of the Civil Service 1985 AC 374 (408-

409). It was observed in that case that for a

legitimate expectation to arise, the decisions of

the administrative authority must affect the

person by depriving him of some benefit or

advantage which either (i) he had in the past been

permitted by the decision-maker to enjoy and which

he can legitimately expect to be permitted to

continue to do until there has been communicated

to him some rational grounds for withdrawing it on

which he has been given an opportunity to comment;

or (ii) he has received assurance from the

decision-maker that they will not be withdrawn

without giving him first an opportunity of

advancing reasons for contending that they should

not be withdrawn. The procedural part of it

relates to a representation that a hearing or

other appropriate procedure will be afforded

before the decision is made. The substantive part

of the principle is that if a representation is

made that a benefit of a substantive nature will

be granted or if the person is already in receipt

of the benefit that it will be continued and not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 21

be substantially varied, then the same could be

enforced. In the above case, Lord Fraser accepted

that the civil servants had a legitimate

expectation that they would be consulted before

their trade union membership was withdrawn because

prior consultation in the past was the standard

practice whenever conditions of service were

significantly altered. Lord Diplock went a little

further, when he said that they had a legitimate

expectation that they would continue to enjoy the

benefits of the trade union membership. The

interest in regard to which a legitimate

expectation could be had must be one which was

protectable. An expectation could be based on an

express promise or representation or by

established past action or settled conduct. The

representation must be clear and unambigious. It

could be a representation to the individual or

generally to a class of persons.

The principle of substantive legitimate

expectation, that is, expectation of a favourable

decision of one kind or another, has been accepted

as part of the English Law in several cases. (De

Smith, Administrative Law, 5th Ed) (para 13.030);

(See also Wade, Administrative Laws, 7th Ed.) (pp

418-419). According to Wade, the doctrine of

substantive legitimate expectation has been

"rejected" by the High Court of Australia in

Attorney General for N.S.W vs. Quinn (1990) 93

ALR 1 (But see Teon's case referred to later) and

that the principle was also rejected in Canada in

Reference Re Canada Assistance Plan (1991) 83 DLR

(4th) 297 = 1991 (2)SCR 525 but favoured in

Ireland : Cannon vs. Minister for the Marine

1991 (1) I.R. 82 The European Court goes further

and permits the Court to apply proportionality and

go into the balancing of legitimate expectation

and the Public interest.

Even so, it has been held under English law that

the decision maker's freedom to change the policy

in public interest, cannot be fettered by the

application of the principle of substantive

legitimate expectation. Observations in earlier

cases project a more inflexible rule than is in

vogue presently. In Re Findlay (1985 AC 318) the

House of Lords rejected the plea that the altered

policy relating to parole for certain categories

of prisoners required prior consultation with the

prisoner. Lord Scarman observed:

"But what was their legitimate expectation. Given

the substance and purpose of the legislative

provisions governing parole, the most that a

convicted prisoner can legitimately expect is that

his case be examined individually in the light of

whatever policy the Secretary of State sees fit to

adopt provided always that the adopted policy is a

lawful exercise of the discretion conferred upon

him by the statute. Any other view would entail

the conclusion that the unfettered discretion

conferred by statute upon the minister can in some

cases be restricted so as to hamper, or even to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 21

prevent changes of policy."

To a like effect are the observations of Lord

Diplock in Hughes vs. Department of Health and

Social Security 1985 AC 778 (788):

"Administrative policies may change with changing

circumstances, including changes in the political

complexion of governments. The liberty to make

such changes is something that is inherent in our

constitutional form of government."

(See in this connection Mr.Dotan's article "why

Administrators should be bound by their policies"

(Vol.17) 1997 Oxford Journal of Legal Studies,

p.23). But today the rigidity of the above

decisions appears to have been somewhat relaxed to

the extent of application of Wednesbury rule

whenever there is a change in policy and we shall

be referring to these aspects presently.

Before we do so, we shall refer to some of the

important decisions of this Court to find out the

extent to which the principle of substantive

legitimate expectation is accepted in our country.

In Navjyoti Co- op. Group Housing Society vs.

Union of India [1992 (4) SCC 477, the principle of

procedural fairness was applied. In that case the

seniority as per the existing list of co-operative

housing societies for allotment of land was

altered by a subsequent decision. The previous

policy was that the seniority amongst housing

societies in regard to allotment of land was to be

based on the date of registration of the society

with the Registrar. But on 20.1.1990, the policy

was changed by reckoning seniority as based upon

the date of approval of the final list by the

Registrar. This altered the existing seniority of

the societies for allotment of land. This Court

held that the Societies were entitled to a

`legitimate expectation' that the past consistent

practice in the matter of allotment, will be

followed even if there was no right in private law

for such allotment. The authority was not

entitled to defeat the legitimate expectation of

the societies as per the previous seniority list

without some overriding reason of public policy to

justify change in the criterion. No such

overriding public interest was shown. According

to the principle of `legitimate expectation', if

the authority proposed to defeat a person's

legitimate expectation, it should afford him an

opportunity to make a representation in the

matter. Reference was made to Halsbury's Laws of

England (p.51, Vol.1(1) (4th Ed. re-issue) and to

the case in Council of Civil Service Unions 1985

AC 374, already referred to. It was held that the

doctrine imposed, in essence, a duty to act fairly

by taking into consideration all relevant factors,

relating to such legitimate expectation. Within

the contours of fair dealing, the reasonable

opportunity to make representation against change

of policy, came in. The next case in which the

principle of `legitimate expectation' was

considered is the case in Food Corporation of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 21

India vs. M/s Kamdhenu Cattle Feed Industries

[1993 (1) SCC 71]. There the Food Corporation of

India invited tenders for sale of stocks of

damaged food grains and the respondent's bid was

the highest. All tenderers were invited for

negotiation but the respondent did not raise his

bid during negotiation while others did. The

respondent filed a writ petition claiming that it

had a legitimate expectation of acceptance of its

bid, which was the highest. The High Court

allowed the writ petition. Reversing the

judgment, this Court referred to Council of Civil

Service Union Case 1985 AC 374 and to Preston In

re 1985 AC 835. It was held that though the

respondent's bid was the highest, still it had no

right to have it accepted. No doubt, its tender

could not be arbitrarily rejected but if the

corporation reasonably felt that the amount

offered by the respondent was inadequate as per

the factors operating in the commercial field, the

non- acceptance of bid could not be faulted. The

procedure of negotiation itself involved the

giving due weight to the legitimate expectation of

the highest bidder and this was sufficient.

This Court considered the question

elaborately in in Union of India vs. Hindustan

Development Corporation [1993 (3) SCC 499]. There

tenders were called for supply of cast-steel bogies

to the railways. The three big manufacturers

quoted less than the smaller manufacturers. The

Railways then adopted a dual pricing policy giving

counter offers at a lower rate to the bigger

manufacturers who allegedly formed a cartel and a

higher offer to others so as to enable a healthy

competition. This was challenged by the three big

manufacturers complaining that they were also

entitled to a higher rate and a large number of

bogies. This Court held that the change into a

dual pricing policy was not vitiated and was based

on `rational and reasonable' grounds. In that

context, this Court referred to Halsbury's Laws of

England (4th Ed.)(Vol.1(I) 151). This Court

referred to Schmidt vs. Secretary of State for Home

Affairs [1969 (2) Ch 149] which required an

opportunity to be given to an alien if the leave

given to him to stay in UK was being revoked before

expiry of the time and to Attorney General of Hong

Kong vs. Ng Yuen Shiu [1983 (2) AC 629] which

required the Government of Hong Kong to honour its

undertaking to treat each deportation case on its

merits; this Court also referred to Council of

Civil Service Unions vs. Minister for the Civil

Service 1985 AC 835 which related to alteration of

conditions relating to membership of trade unions

and the need to consult the unions in case of

change of policy as was the practice in the past,

and to Food Corporation of India case 1993 (1) SCC

71 and Nayjyoti Co-op. Group Housing Society's case

1992 (4) SCC 477. This Court then observed that

legitimate expectation was not the same thing as

anticipation. It was also different from a mere

wish or desire or hope. Nor was it a claim or

demand based on a right. A mere disappointment

would not give rise to legal consequences. This

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 21

Court held(p.540) as follows:

"The legitimacy of an expectation can be

inferred only if it is founded on the

sanction of law or custom or an

established procedure followed in regular

and natural sequence. Such expectation

should be justifiably legitimate and

protectable."

After quoting Wade, Administrative Law (6th

Ed.)(p.424, 522), this Court referred to the

judgment of the Australian High Court in Attorney

General for New South Wales vs. Quin [(1990) 64

Aust. LJR 327] in which the principle itself,

according to Wade, did not find acceptance. In

that case a Stipendiary Magistrate incharge of a

Court of Petty Sessions under the old court system

was refused appointment to the system of local

courts which replaced the previous system of Petty

Sessions Courts. In 1987 the Attorney General who

was hitherto recommending former magistrates on

the ground of `fitness' for appointment to the new

local courts, deviated from that policy and

decided to go by assessment of merit of the

competing applicants. The Court of Appeal had

directed that the case of Mr. Quin must be

considered separately and not in competition with

other applicants, but it was reversed by the

majority of the High Court of Australia(Mason, CJ,

Brennan & Dawson,JJ) (Deane and Toohey, JJ

dissenting). Mason, CJ held that the Court could

not fetter the executive discretion to adopt a

different policy which was better calculated to

serve the administration of justice and make it

more effective. The grant of substantive relief

in such a case would effectively prevent the

executive from giving effect to the new policy

which it wished to pursue in relation to the

appointment of magistrates. Brennan,J. observed

very clearly that the notion of legitimate

expectation (falling short of a legal right) was

too nebulous to form a basis for invalidating the

exercise of power. He said that such a principle

would "set the courts adrift on a featureless sea

of pragmatism." Dawson,J. held that the

contention ofthe respondent exceeded the bounds of

procedural fairness and intruded upon the freedom

of the executive.(*) This Court in Hindustan

Development Corporation's case 1993 (3) SCC 499

then proceeded to refer to R vs. Secretary of

State for the Home Department ex parte Ruddock

(1987) 2 All E.R. 518 and Findlay vs. Secretary

of State for the Home Department (1984 3 All E.R.

801 and to Breen vs. Amalgamated Engineering

Union, (1971) 1 All E.R. 1148. This Court

accepted (see p.546) that the principle of

legitimate expectation gave the applicant

sufficient locus standi to seek judicial review

and that the doctrine was confined mostly to a

right to fair hearing before a decision which

resulted in negativing a promise or withdrawing an

undertaking, was taken. It did not involve any

crystallised right. The protection of such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 21

legitimate expectation did not require the

fulfilment of the expectation where an overriding

public interest required otherwise. However, the

burden lay on the decision maker to show such an

overriding public .ls1

________________________________________________________

* In a later decision from Australic in Minister

for Immigration and Ethnic Affairs vs. Teoh

[(1995) 69 ALJR 423] the High Court held that the

U.N.Covenant on the rights of the Child, which was

not incorporated into Australian Law, may

nevertheless give rise to a legitimate expectation

that the decision maker would comply with it,

atleast to the extent of giving an affected person

a hearing. This decision has been treated as

controversial and critised (See Taggart) (1996)

112 L.Q.R. 50. The decision no doubt held that

such an expectation did not, however, compel

action consistent with the Treaty provisions.

McHugh,J. dissented. [See Unincorporated

Treaties in Australian Law] (1996 PL 190 and Lord

Lester's article in 1996 PL 187). interest. A

case of substantive legitimate expectation would

arise when a body by representation or by past

practice aroused expectation which it would be

within its powers to fulfil. The Court could

interfere only if the decision taken by the

authority was arbitrary, unreasonable or not taken

in public interest. If it is established that a

legitimate expectation has been improperly denied

on the application of the above principles, the

question of giving opportunity can arise if

failure of justice is shown. The Court must

follow (p.548) an objective method by which the

decision making authority is given the full range

of choice which the legislature is presumed to

have intended. (In this connection we shall

advert to a similar view of Laws, J. and also to

the contrary view of Sedley, J). If the decision

is reached fairly and objectively, it cannot be

interfered with on the ground of procedural

fairness. An example was given that if a renewal

was given to an existing licence holder, a new

applicant cannot claim an opportunity based on

natural justice. On facts, it was held that

legitimate expectation was denied on the basis of

reasonable considerations. The next case in which

the question was considered is Madras City Wine

Merchants' Association vs. State of Tamil Nadu

[1994 (5) SCC 509]. In that case the rules

relating to renewal of liquor licences were

statutorily altered by repealing existing rules.

It was held that the repeal being the result of a

change in the policy by legislation the principle

of non-arbitrariness was not invocable. In that

context, this Court referred to a large number of

authorities on the question. This Court in M.P.

Oil Extraction vs. State of M.P. [1997 (7) SCC

592] considered the question again. In that case,

it was held that the State's policy to extend

renewal of an agreement to selected industries

which came to be located in Madhya Pradesh on

invitation of State, - as against other local

industries - was not arbitrary and the said

selected industries had a legitimate expectation

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 21

of renewal under renewal claims which should be

given effect to according to past practice unless

there was any special reason not to adhere to the

practice. It was clearly held that the principle

of substantive legitimate expectation was accepted

by this Court earlier. Reference was made to Food

Corporation's case 1993 (1) SCC 71; Navjyoti

Co-op. Group Housing Society's case 1992 (4) SCC

477 and to Hindustan Development Corporation's

case 1993 (3) SCC 499. Lastly we come to the

three judge judgment in National Buildings

Construction Corporation vs. S.Raghunathan &

Others [1998 (7) SCC 66]. This was a service

matter. The respondents were appointed in CPWD

and they went on deputation to the NBCC in Iraq

and they opted to draw, while on deputation, their

grade pay in CPWD plus deputation allowance.

Besides that, the NBCC granted them Foreign

Allowance at 125% of the basic pay. Meanwhile

their Basic Pay in CPWD was revised w.e.f.

1.1.1986 on the recommendation of the 4th Pay

Commission. They contended that the abovesaid

increase of 125% should be given by NBCC on their

revised scales. This was not accepted by NBCC by

orders dated 15.10.1990. The contention of the

respondents based on legitimate expectation was

rejected in view of the peculiar conditions under

which NBCC was working in Iraq. It was observed

that the doctrine of `legitimate expectation' had

both substantive and procedural aspects. This

Court laid down a clear principle that claims on

legitimate expectation required reliance on

representation and resultant detriment in the same

way as claims based on promissory estoppel(*).

The .ls1

---------------------------------------------------

-----* This also appears to be the view of Simon

Brown, LJ in a tax case in Regina vs.

Commissioners of Inland Revenue ex parte Unilever

Plc (1996) 68 Tax Cases 205 at 231 referring to

Regina vs. Inland Revenue Commissioners ex parte

MFK Underwriting Agents Ltd. & Others 1990 (1)

WLR 1545; Regina vs. Jockey Club ex parte RAM

Racecourses Ltd. 1993 (2) All ER 225 and Regina

vs. Independent Television Commission ex parte

TSW Broadcasting Ltd. 1994 (2) LRC 414. Wade,

Administrative Law, (7th Ed. P.419) also appears

to think that detrimental reliance on previous

policy is necessary.

See, however, DeSmith (5th Ed.) Administrative Law

(para 8.060) where he says that in important

cases, a legitimate expectation has been founded

in the absence of detrimental reliance and that

there are good reasons for doing so. R vs.

Secretary of State for Home Department exp. Asif

Mahmood Khan 1984 (1) WLR 1337; Attorney General

of Hong Kong vs. Ng Yuen Shiu 1983 (2) AC 629; R

vs. Secretary of State for the Home Department ex

parte Ruddock 1987 (1) WLR 1982. .ls2 principle

was developed in the context of `reasonableness'

and in the context of `natural justice'. This

Court referred to R vs. IRC exp Preston 1985 AC

835, Food Corporation's case 1993 (1) SCC 71,

Hindustan Development Corporation's case 1993 (3)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 21

SCC 499, the Australian Case in Quin (1990) 64

Aust. LJR 327 and M.P.Oil Extraction's case 1997

(7) SCC 592, the Council of Civil Service Union's

case 1985 AC 374 and Navjyoti's case 1992 (4) SCC

477. The above survey of cases shows that the

doctrine of legitimate expectation in the

substantive sense has been accepted as part of our

law and that the decision maker can normally be

compelled to give effect to his representation in

regard to the expectation based on previous

practice or past conduct unless some overriding

public interest comes in the way. The judgment in

Raghunathan's case requires that reliance must

have been placed on the said representation and

the representee must have thereby suffered

detriment. The more important aspect, in our

opinion, is whether the decision maker can sustain

the change in policy by resort to Wednesbury

principles of rationality or whether the Court can

go into the question whether decision maker has

properly balanced the legitimate expectation as

against the need for a change? In the latter case

the Court would obviously be able to go into the

proportionality of the change in the policy. This

aspect has come up for consideration recently in

the English Courts. The debate was started by

Laws,J. in R vs. Secretary of State for

Transport, ex parte Richmond upon Thames London BC

1994 (1) WLR 74 where the learned Judge laid down

that the Wednesbury reasonableness test alone

applied for finding out if the change from one

policy to another was justified. That was a case

in which, in relation to airports a new system of

night flying restrictions were imposed. The new

policy related to the fixation of the maximum

number of take-off and landing movements variable

according to the type of aircraft involved and the

noise the aircraft generated during the night

time. The Wednesbury test was held applicable.

Laws,J. stated:

"The Court is not the Judge of the merits of the

decision maker's policy .... the public authority

in question is the Judge of the issue whether

`overriding public interest' justifies such a

change in policy ... But that is no more than

saying that a change in policy, like any

discretionary decision by a public authority, must

not transgress Wednesbury principles."

But this view of Laws,J. was dissented by Sedley,

J. in R vs. Ministry of Agriculture Fisheries &

Food, ex parte Hamble Coffshore Fisheries Ltd.

1995 (2) All E.R. 714. The learned Judge

observed that if the outcome is challenged by way

of judicial review, he `did not consider that the

courts' criterion was restricted to consider the

rationality of the policy maker's conclusions. He

held that while policy was for the policy maker

alone, the fairness of his or her decision

remained the courts' concern. He said that to say

so did not amount to placing the Judge in the seat

of the minister.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 21

The judgment of Sedley, J. has since been

overruled in R vs. Secretary of State for the

Home Department and another, ex parte Hargreaves

and others 1997 (1) WLR 906(A). In that case, the

facts were that the eligibility for `home leave'

of prisoners was initially one third of the term

of sentence as per in earlier decision of the

government of 1994 (accepting Lord Woolf's Report,

1990) and Hargreaves would attain that eligibility

by 12-4-95 to put in his application. But the

Home Secretary felt that the scheme was being

abused and therefore he modified the eligibility

to one half of the period of sentence by notice

dated 20.4.95. This postponed Hargreaves'

eligibility to 12.4.96. Though the applicant had

"become eligible" by 20.4.95, the Courts rejected

his plea of legitimate expectation because

eligibility merely enabled consideration of the

application for home leave. The case was similar

to Findlay 1985 AC 318 which related to change in

parole policy and which was held valid. It was

held that the change in home leave policy did not

violate the earlier policy. In the Court of

Appeal, Hirst, LJ said described the principle

laid down by Sedley,J. as based on `heresy' and

stated:

"On matters of substance (as contrasted to

procedure) Wednesbury provides the correct test.

It follows that ... his (Sedley,J.'s) ratio in so

far as he propounds a balancing exercise to be

undertaken by the Court should, in my opinion, be

overruled."

The result is that change in policy can defeat a

substantive legitimate expectation if it can be

justified on Wednesbury reasonableness. We have

noticed that in Hindustan Development Corporation

case [1993 (3) SCC 449] also it was laid down that

the decision maker has the choice in the balancing

of the pros and cons relevant to the change in

policy. It is, therefore, clear that the choice

of the policy is for the decision-maker and not

for the Court, The legitimate substantive

expectation merely permits the Court to find out

if the change in policy which is the cause for

defeating the legitimate expectation is irrational

or perverse or one which no reasonable person

could have made.

The Court of Appeal considered the question again

in a tax case in R vs. Commissioner of Inland

Revenue, ex parte Unilever Plc (1990) (Vol.68) Tax

Cases 205 = 1996 STC 681. A particular loss

relief was being granted at a second stage on more

than 30 occasions during 20 years though the

relief was not claimed within the stipulated

period of two years. In respect of 1988, the

relief claimed beyond time was for the first time

refused. It was contended that there was a

substantive legitimate expectation that the

revenue would continue to follow the previous

practice in regard to claims for loss relief. It

was held that the Court was still confined to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 21

Wednesbury principles but that on facts it a case

of `exceptional' circumstances and it would be

unfairness amounting to abuse of power to refuse

to follow past practice. Lord Woolf MR agreed

that no doubt the Revenue was the best Judge of

what was fair. But on facts, the learned Judge

treated the case as exceptional. Simon Brown, LJ

also agreed with this view. He in addition

emphasised the detrimental test as did this Court

in Raghunathan's case (p.231). Noting that

substantive legitimate expectation was rooted in

the theory of `legal certainty', he observed as

follows (p. 233):

"Of course legal certainty is a highly desirable

objective in public administration as

elsewhere.......the central Wednesbury principle

is that an administrative decision is unlawful if

"...so outrageous in its defiance of logic of or

accepted moral standards that no sensible person

who had applied his mind to the question to be

decided could have arrived at it". The

flexibility necessarily inherent in that guiding

principle should not be sacrificed on the altar of

legal certainty."

L.........I.....T.......T.......T.......T.......T.......T..J

On facts, the case was treated as one containing

exceptional circumstances which, even going by the

Wednesbury principle, required relief to be granted. Thus

both in ex p.Hargreaves (in which the challenge failed) and

ex p. Unilever (in which the challenge succeeded), the

protection for substaitive legitimate expectation was based

on Wednesbury unreasonableness. In sum, this means that the

judgment whether public interest overrides the substaitive

legitimate expectation of individuals will be for the

decision-maker who has made the change in the policy and the

Courts will intervene in that decision only if they are

satisfied that the decision is irrational or perverse [See

1997 Public Law, 375 "Wednesbury Protection of Substantive

legitimate expectation by Christopher Forsyth]. The

observations of this Court in Hindustan Development

Corporation's case 1993 (3) SCC 499; in M.P. Oil

Extraction's case 1997 (7) SCC 592 and in S.Raghunathan's

case 1998 (7) SCC 66) are more or less to a similar effect,

though no specific reference was made to the Wednesbury

rule.

After Hargreaves, Wednesbury principle is now

consistently followed in England. We shall refer to two

recent cases. Lapse of time resulted in a changed policy in

R vs. Cardiff County Council, Exp. Scars Group Properties

Ltd. [1998 Public Law 518]. The position there was that a

company was granted planning permission in 1993 and the

relevant highway authority had indicated that it had no

objection to entering into a highway improvement agreement

under Section 278 of the Highways Act, 1990. The proposed

highway scheme was approved in 1995. But in 1996, there was

a reorganisation of local Government in Wales, and the

successor authority withheld its authority for the approved

scheme until an updated traffic impact analysis had been

submitted and was considered. It was held by Carnworth,J

that where a formal decision had been made in relation to a

subject matter affecting private rights, that decision would

be considered binding unless and until there had been some

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 21

change which undermined the foundation of the original

decision; the question whether there could be such a change

was for the authority, subject to Wednesbury

unreasonableness test. In that case, the highway authority

had not rejected the agreement outright but had requested a

new traffic analysis, which was prima facie reasonable

because of lapse of time. In yet another case in McPhee vs.

North Lanarkshine Council [1998 SLT 1317] (See 1999 Public

Law 152- 153), the petitioner was a traveller who consented

to vacate a site after receiving a letter from the Director

of Housing telling her that she would be offered a pitch at

the site after the refurbishment work had been carried out.

The Council subsequently refused to grant her a pitch. She

sought a `declarator' that she was `entitled to be offered

accommodation by way of a petition on the site and that on

the same terms and conditions as any other family seeking

accommodation from the respondents". It was held by Lady

Congreve,J. that an authority providing an assurance as to

a substantive right may depart from it but will fall to be

scrutinised by reference to Wednesbury reasonableness.

Since it could not be said that no reasonable authority

could do anything other than grant her application, the

remedy of declarator was inappropriate.

In view of the above legal position, can it be

said on the facts of this case that the substantive

legitimate expectations of the appellant have been

contravened?

It will be noticed that at one stage when the ADB

loan lapsed, the Government took a decision to go ahead with

the project on its own funds. But later it thought that the

scheme regarding telephones in rural areas must cover not

only the villages in Eastern UP but also in other backward

rural areas in other States. The statistics given in the

counter-affidavits of the Union of India to which we have

already referred, show that there are other States in the

country where the percentage of telephones is far less than

what it is in eastern UP. The said facts are the reason for

the change in the policy of the government and for giving up

the notification calling for bids for Eastern UP. Such a

change in policy cannot, in our opinion, be said to be

irrational or perverse according to Wednesbury principles.

In the circumstances, on the basis of the clear principles

laid down in exp. Hargreaves and exp. Unilever, the

Wednesbury principle of irrationality or perversity is not

attracted and the revised policy cannot be said to be in

such gross violation of any substantive legitimate

expectation of the appellant which warrants interference in

judicial review proceedings. Point 2 is held against the

appellant.

The appeal and Transfer Petition are dismissed but

in the circumstances, without costs.