Octrine of legitimate expectation b. N. Pandey

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31 Ban.L.J.(2002) 57-65


B. N. Pandey*

There are several principles of Administrative Law, which have been evolved by the courts for the purpose of controlling the exercise of power so that it does not lead to arbitrariness or abuse of power. These principles are intended to provide safeguard to the citizens against abuse or misuse of power by the instrumentalities or agencies of the State. One of the latest and important of these principles is the ‘doctrine of legitimate expectation’, which is an outcome of synthesis between the principle of administrative fairness (a component of the principles of natural justice) and the rule of estoppel.

It is relevant to note that the doctrine of legitimate expectation is attaining the status of a fundamental legal concept of administrative justice which is evident from its incorporation into S. 24 (b) of the Interim Constitution of the Republic of South Africa Act 200 of 1993. 1

The doctrine of ‘legitimate expectation’ imposes in essence a duty on public authority to act fairly by taking into consideration all relevant factors relating to such legitimate expectation. The doctrine is still at a stage of evolution but it has generated a significant body of case law.

The doctrine of ‘legitimate expectation’ has been judicially recognised by the Indian Supreme Court and this recognition has paved the way for the development of a broader and more flexible doctrine of fairness. Consequently, the ultimate question should always be whether something has gone wrong to the extent that the court’s intervention is required and if so, what form that intervention should take. In considering whether something has gone wrong, the court has to determine whether what has happened has resulted in real injustice. If it has, the court must intervene in the appropriate manner, in this context. The utility of the doctrine of legitimate expectation is manifold.

Development in United Kingdom

In the Common law jurisdiction the doctrine had been traced to an obiter dictum of Lord Denning M. R in Sehmidt v. Secretary of Home Affairs.2 Lord Denning observed in Sehmidt:

The speeches in Ridge v Baldwin show that an administrative body may, in a proper case, be bound to give a person who is affected by their decision an opportunity of making representations. It all depends on whether he has some right or interest or I would add, some legitimate expectation, of which it would not be fair to deprive him without hearing what he has to say ....

The legitimate expectation referred to in, Sehmidt did not give the alien students an enforceable right to stay for the time originally permitted but an enforceable right to be heard before the decision to revoke his permit was taken: a procedural protection only.

In this case the plaintiffs, alien students at Hubbard College of Scientology, had been given leave to enter the United Kingdom before July, 1968, initially for a period of a month. The periods had been extended to the end of August and September 1968, respectively. Applications were made on behalf of the plaintiffs to the Home Office on June 11 and July 15, 1968 for extensions of their stay until November and December 1968, to complete their studies. By letters of July 29 and 30 the Home Secretary, the defendant, rejected the applications, referring to the Minister of Health’s Statement. The plaintiff’s stay was, however, extended to September 30 to let them make arrangements to leave.

The Plaintiffs, on behalf of themselves and 50 other alien students of the college, claimed declarations against the defendant that his decision not to consider further similar applications for extension of stay was unlawful, void, and of no effect and the defendant was bound to consider such applications on their merit and in accordance with the principles of natural justice.

The court of appeal held that they had no legitimate expectation of extension and therefore no right to hearing, though revocation of their permits within the earlier granted period of permit would have been contrary to legitimate expectation.

The particular manifestation of the duty to act fairly is that part of the recent evolution of administrative law which may enable an aggrieved party to evoke judicial review if he can show that he had ‘a reasonable expectation’ of some occurrence or action preceding the decision complained of and that ‘reasonable expectation’ was not fulfilled in the event. The two phrases ‘reasonable expectation’ and ‘legitimate expectation’ are treated as synonymous.

It is important that in his judgement in Schmidt v. Secretary of Home Affairs, Lord Denning makes no mention of any authority, judicial or otherwise, upon which the concept of legitimate expectation could be founded; indeed he has said that he feels “sure it came out of my own head and not from any continental or other source.”3 The later cases do not suggest any other provenance. Presumably, therefore, the origin of the concept lies within Lord Denning’s justly famed creative mind and not elsewhere.

However, it may be recalled that prior to the introduction of the doctrine into English law, it was evolved in German administrative law4 which was subsequently borrowed and developed by the European Court.5

The judicial evolution of the doctrine of ‘legitimate expectation’ can be traced to the opinion of the Judicial Committee delivered by Lord Fraser in Attorney-General of Hong Kong vs. Ng Tuen Shiu.6 Ng. was an illegal immigrant from Macau. The government announced a policy of repatriating such persons and stated that each would be interviewed and each case treated on its merits. Ng. was interviewed and his removal ordered. His complaint was that at the interview he had not been allowed to explain the humanitarian grounds on which he might be allowed to stay, but only to answer the questions put to him; that he was given a hearing, but not the hearing in effect promised, as the promise was to give one at which ‘mercy’ could be argued. The judicial Committee agreed that, on that narrow point, the government’s promise had not been implemented; his case had not been considered on its merits, and the removal order was quashed. Ng succeeded on the basis that he had a legitimate expectation that he would be allowed to put his case, arising out of the government promise that everyone affected would be allowed to do so.

In Council of Civil Service Unions vs. Minister for the Civil Services,7 the Prime Minister issued an instruction that civil servants engaged on certain work would no longer be permitted to be members of trade unions. The House of Lords held that those civil servants had a legitimate expectation that they would be consulted before such action was taken, as it was a well-established practice for government to consult civil servants before making significant changes to their terms and conditions of service. In this case, it may be noted, legitimate expectation arose not (as in Ng) out of a promise, but out of the existence of a regular practice which could reasonably be expected to continue.

In R v. Brent London Borough Council, exp Gunning,8 the legality of a decision to close schools was challenged by a group of parents, ratepayers and parent governors, who alleged, inter alia, inadequate consultation. Hodgson J. said:

The parents had no statutory right to be consulted, but that they had a legitimate expectation that they would be consulted seems to me to be beyond question. The interest of parents in the educational arrangements in the area in which they live is self-evident....local education authorities habitually do consult on these matters. In 1980 and 1983 this local authority itself had comprehensive consultations which had led to the decision in 1983 to retain all school sites. Local education authorities are exhorted by the Secretary of State to consult and results of the consultations are something which takes into account (in deciding whether to agree to closures). On any test of legitimate expectation, it seems to me that these parents qualify.

In a subsequent case, the Court of Appeal used this as an opportunity to reconsider the entire development in Britain in the area of legitimate expectation. In Regina v. North and East Division Health Authority, Ex-parte Coughlan9, the court enforced against the health authority its promise made to a lady who was seriously injured in an accident to maintain her in a nursing home for her life. Perhaps it is very significant feature of the opinion in this case that the Court of Appeal not only recognized the doctrine of legitimate expectation into two classes, viz. (1) cases where the court may decide that the public authority was only required to bear in mind its previous policy or other representation, giving it weight it thought fit, before deciding to change course. In such cases, the court would review the decision by applying the test of rationality. (2) cases where the court may decide that a lawful promise had induced a substantive legitimate expectation. Here the court would decide whether the frustration of legitimate expectation was so unfair that to take a new and different course of action would amount to an abuse of power. Finally, the court generalized :

When the legitimacy of the exception had been established, the court would have the task of weighting the requirements of fairness against any overriding interest relied upon for the change of policy.10

It is for the court to decide in which of the two categorises is a specific fact situation.

Development in India

The legal position in India is more or less the same as in England. The precise content of this doctrine, which enables an aggrieved person to seek his remedy by judicial review, has also been the subject matter of evolution through judicial decisions. In Navjyoti Coop. Group Housing Society v. Union of India11, the Supreme Court recognised that by reason of application of the said doctrine, an aggrieved party would be entitled to seek judicial review, “if he could show that a decision of the public authority affected him of some benefit or advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment such reasons”.12 In this case the seniority as per the existing list of cooperative housing society for allotment of land was altered by 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 society for allotment of land. The Supreme Court held that the societies were entitled to a “legitimate expectation” that the past consistent practice in the matter of allotment 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 as to justify change in the criterion. No such overriding public interest was shown.

The Supreme Court recognised that the doctrine, in essence, imposes a duty on public authority to act fairly taking into consideration all relevant factors before effecting a change in its policies which would affect a person who had been beneficiary of the continuing policy.

The doctrine of legitimate expectation provides that the statements of policy or intention of the Government or its Department in administering its affairs should be without abuse or discretion. The policy statement could not be disregarded unfairly or applied selectively for the reason that unfairness in the form of unreasonableness is akin to violation of natural justice. It means that said actions have to be in conformity of Article 14 of the Constitution, of which non-arbitrariness is a second facet. Public Authority cannot claim to have unfettered discretion in public law as the authority is conferred with power only to use them for public good. Generally legitimate expectation is essentially procedural in character as it gives assurance of fair play in administrative action but it may in a given case be enforced as a substantive right. But a person claiming it has to satisfy the Court that his rights had been altered by enforcing a right in private law or he has been deprived of some benefit or advantage which he was having in the past and which he could legitimately expect to be permitted to continue unless it is withdrawn on some rational ground or he has received assurance from the decision making Authority which is not fulfilled, i.e., the kind of promissory estoppel.

Change of policy should not violate the substantive legitimate expectation and if it does so it must be as the change of policy which is necessary and such a change is not irrational or perverse.

The next case in which the doctrine of “legitimate expectation” was considered is the case of Food Corpn. of India v. Kamdhenu Cattle Feed Industries.13 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 judgement, the Supreme Court referred to CCSU Case14 and to Preston, in re15 and held that though the respondent’s bid was 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 giving due weight to the legitimate expectation of the highest bidder and thus was sufficient.

In Union of India v. Hindustan Development Corporation16, the Supreme Court has pointed out that “the concept of legitimate expectation which is latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding (sic) the manner of the future exercise of administrative power in a particular case”.17 According to the Supreme Court an element of ‘speculation’ and ‘uncertainty’ is inherent in that very concept. In this case tenders were called for supply of cast-steel bogies to the Railways. The three big manufacturers quoted less than the smaller manufacturers. The Railway then adopted a dual-pricing policy giving counter-offers at a lower rate to the big manufacturers who allegedly formed a cartel and a higher offer to others so as to enable a healthy competition. This was challenged by three big manufacturers complaining that they were also entitled to a higher rate and a large number of bogies. The Supreme Court held that the change into a dual-pricing policy was not vitiated and was based on “rational and reasonable” grounds.

The Court noted that

legitimate expectation was not the same thing as a anticipation. It was also different from a mere wish to desire or hope; nor was it a claim or demand based on a right. A mere disappointment would not give rise to legal consequences.18

At another place, in the same judgement, the position was indicated 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.19

In M.P. Oil Extraction v. State of M.P.20 the Supreme Court ruled that the doctrine of legitimate expectation has its application only in the realm of public law and that in an “appropriate case, constitutes a substantive and enforceable right”. On the facts of the instant case, it was held that the industries, with whom the State government had entered into agreements for supply of sal seeds, had a legitimate expectation that in accordance with the renewal clause and in accordance with the past practice, the agreements would be renewed in the usual manner. The Court also ruled that the selected industries, with which the state had entered into agreements for supply of sal seeds at concessional rates, needed the protection of continuing such agreements and hence, the renewal clause were provided in those agreements. The Court attached considerable importance to the need for protection of such selected industries by upholding the validity of the renewal clauses in those agreements, although it was apparent in the mind of the Court that to ensure fair play and transparency in the state’s action, it was desirable that distribution of state largesse was effected by inviting open tenders or by public auction. The Court, however, felt that special agreements entered into with the selected industrial units by the state government were permissible. The decision reflects the mind of the court that it considered the doctrine of legitimate expectation as an equitable principle and that in order to give full effect to this principle, application of another principle in the realm of public law may, if need be, have to be restricted.

The Supreme 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. In National Buildings Construction Corporation v S. Raghunathan21, the respondents were appointed in CPWD. They went on deputation to NBCC in Iraq and opted to draw, while on deputation, their grade pay in CPWD plus deputation allowance. Besides that, 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 Fourth Pay Commissioin. They contended that the aforesaid increase of 125% should be given by NBCC on their revised scales. This was not accepted by NBCC. The contention of the respondents based on legitimate expectation was rejected in view of the peculiar conditions and financial stringency (due to embargo put by UNO) under which NBCC was working in Iraq. On the facts of the case, the Court, found that since there was no promise or agreement or contract of service executed by NBCC for payment of foreign allowance to its employees, who were posted on overseas projects, they could not have any legitimate expectation of receiving such allowance. The Court further ruled that the question, whether the expectations and the claims made thereupon were legitimate or not, was essentially a question of fact and therefore, the rules of pleading would strictly apply. A party which seeks a relief from the Court claiming expectation, ought to place such facts before the court as would enable it to satisfy itself that such claim is legitimate. It was observed by the Supreme Court that the doctrine of “legitimate expectation” had both substantive and procedural aspects.

The Supreme Court restated that a policy decision making representation that benefits of substantive nature will be granted, creates legitimate expectation which is substantive in nature and is normally binding on the decision maker. But such policy can be changed in overriding public interest, since choice of policy is for the decision-maker. However, the Court emphasised that change in policy defeating substantive legitimate expectation must satisfy the test of Wednesbury reasonableness. The Courts can interfere on being satisfied that change in policy is irrational or perverse. In Punjab Communication v. Union of India,22 the government had changed its earlier policy to provide digital wireless telecom facility which was for Eastern Uttar Pradesh villages to a policy to provide wider coverage of villages through analog system. Punjab Communications Limited had filed lowest tender under the first scheme and hence approached the court on the ground of violation of its legitimate expectation. The Court found that change in policy is neither irrational nor perverse, hence, no violation of legitimate expectation.

Conclusion :

The plea of legitimate expectation still remains a very weak plea in Indian Administrative Law. A claim for a benefit on the basis of legitimate expectation is more often negatived by the courts. It is rarely that such a plea is accepted by courts in India. It is humbly submitted, therefore, that in situation of confusion of ideas regarding the concept of legitimate expectation what needs to be realized is that the concept envisages not merely "expectation" but "legitimate expectation" which means that there is already something super-added to just "expectation" - some kind of assurance or representation by the administration or the fact that the expectation has been recognized over a period of time. What needs to be realized is that the concept is more of an equitable nature rather than legalistic in nature.

*. LL.M, Ph.D, Professor, Law School, Banaras Hindu University, BHU

1. Section 24(b): “Every person shall have the right to procedurally fair administrative action where any of his or her rights or legitimate expectations is affected or threatened”.

2. [1969] 2 Ch 149; (1969) 1.AllE.R. 904.

3. In a letter to Prof. C.F. Forsyth, quoted in Cambridge Law Journal, 47 (2), July 1988, at 241.

4. The German Concept of ‘Vertrauenschutz’ sought to protect the confidence that subjects had placed in government.

5. See J. Usher, “The Influence of National Concepts on Decisions of the European Court” (1976) 1 European Law Review 359 at 364 and Re Civil Service Salaries: E.C. Commission v. E.C. Council, (1973) E.C.R. 575; (1973) C.M.L.R. 639.

6. (1983) 2 A.C. 629, (1983) 3 All. E.R. 346.

7. (1985) A.C. 374, (1984) 3 All. E.R. 935.

8. (1986) 84 LGR 168.

9. [2001] QB 213

10 Id. at 215

11. (1992) 4 SCC 477.

12. Id. at 494.

13. (1993) 1. S.C.C. 71.

14. Supra note 5.

15. 1985 AC 835; (1985) 2 All E R 327.

16. (1993) 3 SCC 499

17. Id. at 549.

18. Id. at 540.

19. Id.

20. (1997) 7 SCC 592.

21. (1998) 7 SCC 66.

22. (1999) 4 SCC 727

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