KERALA STATE BEVERAGES (M AND M) CORPORATION LIMITED versus P.P. SURESH & ORS, ETC. ETC. & ORS. on 4 October 2019

SUPREME COURT REPORTS

[2019] 17 S.C.R.

AKERALA STATE BEVERAGES (M AND M)CORPORATION LIMITED

v.

P.P. SURESH & ORS, ETC. ETC. & ORS.

(Civil Appeal Nos.7804-7813 of 2019)

B

OCTOBER 04, 2019

[L. NAGESWARA RAO AND HEMANT GUPTA, JJ.]

Administrative Law:C

CPolicy decision – Rehabilitation of displaced workers – Onfacts, ban on sale of arrack in the State – Arrack workers deprivedof their livelihood – Government did not give re-employment –Workers then sought rehabilitation – Issuance of Government orderto provide employment to displaced abkari workers, adjusting themagainst 25% of the daily wage vacancies that would arise in theDCorporation – Thereafter, alteration in the criteria for rehabilitationof arrack workers and issuance of Government order directing toearmark the vacancies for dependent sons of arrack workers whoperished consequent to loss of employment – Arrack workers filedwrit petition seeking implementation of the first government orderE– Single Judge of the High Court directed the State Governmentto implement the first government order – Division Bench upheldthe order – On appeal, held: There was no assurance given to allthe displaced abkari workers that they would be re-employed –Assurance given by the Government was to reserve 25% of dailywage vacancies that would arise in future for the displaced abkariFworkers – Thus, no vested right accrued to all the abkari workersto claim employment – Further, it came to the notice of theGovernment that several displaced abkari workers perished after1996 and their families had to be provided immediate succor, as aresult the Government modified the policy decision due toGadministrative exigencies – Said decision cannot be termed asunreasonable or arbitrary as it was taken in light of overridingpublic interest and has to be given due weight – Thus, theexpectation of the respondents for consideration against the25 % of the future vacancies in daily wage workers in theCorporation is not legitimate – Promise held out by the GovernmentH

KERALA STATE BEVERAGES (M AND M) CORPORATIONLTD. v. P.P. SURESH & ORS.

to provide employment to the displaced Abkari workers had becomean impossible task in view of the non-availability of vacancies inthe Corporation – Impairment of the fundamental rights of therespondents due to the change in policy cannot be said to beexcessive – Change in policy is not disproportionate – Thus, theorder passed by the High Court set aside.

Legitimate Expectation – Principle of substantive legitimateexpectation – Principle of procedural legitimate expectation –Application of – Stated.

Administrative Decision – Review of – Application of test ofproportionality – Stated.

Allowing the appeals, the Court

HELD: 1.1 The Government took a decision to provideemployment to displaced abkari workers, adjusting them against25% of the daily wage vacancies that would arise in theCorporation. There was no assurance given to all the displacedabkari workers that they would be re-employed. The assurancegiven by the Government was to reserve 25% of daily wagevacancies that would arise in future for the displaced abkariworkers. It cannot be said that a vested right accrued to all theabkari workers to claim employment in retail outlets in theCorporation. It cannot be said that a vested right was createdby the Government Order dated 20.02.2002 and that it wasindefeasible. There was no unequivocal promise that all thedisplaced workers would be provided re-employment. [Para 11][176-B-D]

1.2 The assurance given to the abkari workers that theywould be considered for employment in 25% of the daily wagevacancies that would arise in the Corporation, according to theGovernment, had to be altered due to administrative exigencies.The implementation of the decision to provide employment todisplaced abkari workers was not possible in view of the factthat the number of vacancies of daily wage employees after theyear 2002 were very less whereas there was a large number ofdisplaced abkari workers to be accommodated. In view of thedifficulties faced by the Government in implementation of theGovernment Order dated 20.02.2002, the Government found it A

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Afit to modify the policy decision by a Government Order dated07.08.2004. It came to the notice of the Government that severaldisplaced abkari workers perished after 1996. Their families hadto be provided immediate succur. To give priority to the familiesin immediate need, the Government decided that dependentsons of the deceased abkari workers who died after the yearB1996 would be provided employment against the 25% daily wagevacancies in the Corporation. The said decision cannot betermed as unreasonable or arbitrary as it was taken in light ofoverriding public interest. Relevant considerations were takeninto account by the Government to alter the Government OrderCdated 20.02.2002. [Para 12] [176-D-H]

2.1 An expectation entertained by a person may not befound to be legitimate due to the existence of somecountervailing consideration of policy or law. Administrativepolicies may change with changing circumstances, includingDchanges in the political complexion of governments. The libertyto make such changes is something that is inherent in theconstitutional form of government. [Para 17] [178-D-E]

2.2 The decision makers’ freedom to change the policy inpublic interest cannot be fettered by applying the principle ofEsubstantive legitimate expectation. So long as the Governmentdoes not act in an arbitrary or in an unreasonable manner, thechange in policy does not call for interference by judicial reviewon the ground of a legitimate expectation of an individual or agroup of individuals being defeated. [Para 18] [178-E-F]F2.3 The assurance given to the respondents that theywould be considered for appointment in the future vacancies ofdaily wage workers, according to the respondents, gives rise toa claim of legitimate expectation. The explanation given by theState Government that the change in policy due was to thedifficulty in implementation of the Government order datedG20.02.2002 is accepted. Due deference has to be given to thediscretion exercised by the State Government. As the decisionof the Government to the change policy was to balance theinterests of the displaced Abkari workers and a large numberof unemployed youth in the State of Kerala, the decision takenHon 07.08.2004 cannot be said to be contrary to public interest.

The overriding public interest which was the reason for changein policy has to be given due weight while considering the claimof the respondents regarding legitimate expectation. Theexpectation of the Respondents for consideration against the 25per cent of the future vacancies in daily wage workers in theCorporation is not legitimate. [Para 19] [178-G-H; 179-A-D]

2.4 There is no dispute that each of the displaced abkariworkers was not given an opportunity before the assurance wasaltered. However, the Government contended that the displacedabkari workers were consulted through their representativesbefore passing the Government Order dated 07.08.2004. Therequirement of an opportunity to be given before altering thepolicy by which an assurance is given to a large number ofindividuals has to be examined. [Para 20] [179-D-F]

2.5 In case of a complaint that an administrative authorityhas reneged from a promise without giving an opportunity ofhearing which was the past practice, a claim of legitimateexpectation can be raised. In other words, if the policy orpractice was to give an opportunity before the benefit iswithdrawn, the non-compliance of such a practice would resultin defeating the legitimate expectation of an individual or groupof individuals. There can be situation where the very claim madecan be with regard to an opportunity not being given beforewithdrawing a promise which results in defeating the ‘legitimateexpectation’ [Paras 21, 22] [179-F-G; 180-D-E]

2.6 The principle of procedural legitimate expectationwould apply to cases where a promise is made and is withdrawnwithout affording an opportunity to the person affected. Theimminent requirement of fairness in administrative action is togive an opportunity to the person who is deprived of a pastbenefit. There is an exception to the said rule. If anannouncement is made by the Government of a policy conferringbenefit on a large number of people, but subsequently, due tooverriding public interest, the benefits that were announcedearlier are withdrawn, it is not expedient to provide individualopportunities to such innominate number of persons. In otherwords, in such cases, an opportunity to each individual to explainthe circumstances of his case need not be given. [Para 23] [180-E-G]

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A3.1 While exercising primary review, the Court is entitledto ask the State to justify the policy and whether there was animminent need for restricting the fundamental rights of theclaimants. In secondary review, the Court shows deference tothe decision of the executive. [Para 27] [182-C-D]

B3.2 Proportionality involves ‘balancing test’ and ‘necessitytest’. Whereas the balancing test permits scrutiny of excessiveand onerous penalties or infringement of rights or interests anda manifest imbalance of relevant considerations, the necessitytest requires infringement of human rights to be through theleast restrictive alternatives. An administrative decision can beCsaid to be proportionate if: the objective with which a decisionis made to curtail fundamental rights is important; the measurestaken to achieve the objective have a rational connection withthe objective; and the means that impair the rights of individualsare no more than necessary. [Paras 28, 29] [182-D-F]

D3.3 In the instant case, the challenge to the order dated07.08.2004 by which the respondent was deprived of anopportunity of being considered for employment is on the groundof violation of Article 14, 19 and 21 of the Constitution. TheHigh Court accepted the submissions made by the Respondentsand held that the Order dated 07.08.2004 is vitiated as it suffersEfrom the vice of arbitrariness and unreasonableness. However,in view of the challenge to the decision of the Government beingon the ground of violation of Articles 14, 19 and 21, the test ofproportionality should be applied to review the impugneddecision of the Government. [Para 30] [182-F-H]F3.4 The promise held out by the Government to provide

F3.4 The promise held out by the Government to provideemployment to the displaced Abkari workers had become animpossible task in view of the non-availability of vacancies in theCorporation. The decision taken by the Government inoverriding public interest was a measure to strike a balancebetween the competing interest of the displaced Abkari workersGand unemployed youth in the State of Kerala. The impairmentof the fundamental rights of the Respondents due to the changein policy cannot be said to be excessive. Hence, it cannot besaid that the change in policy regarding re- employment ofdisplaced abkari workers is disproportionate. [Para 32] [183-D-HF]

3.5 The contention of respondents which found favour withthe High Court was that the Order dated 07.08.2004 was foundillegal in Writ Petition (c) No. 26878 of 2007 and that the saidjudgment has become final. Aggrieved by their non-appointmentin spite of inclusion in the list of 265 dependent sons of thedeceased displaced workers, they filed a Writ Petition seekinga direction to the Government to appoint them. The High Courtdirected the Government to appoint those persons who wereincluded in the list, pursuant to the Order dated 07.08.2004within a period of six weeks. The High Court further observedthat the Order dated 20.02.2002 should not have been alteredand directed the Government to reconsider the order dated07.08.2004. The Government complied with the direction of theHigh Court in the Writ Petition and issued a Government Orderdated 30.04.2009 by which employment was provided to 265dependent sons of deceased Abkari workers. Therefore, itcannot be said that the validity of the order dated 07.08.2004has been finally decided in Writ Petition (c) No. 26878 of 2007.[Para 33] [183-F-H]

3.6 The findings recorded by the High Court that a rightof appointment accrued to the Respondents and it matured intoa Right to Life as provided in Article 21 of the Constitution,cannot be accepted. The opinion of the High Court that the Orderdated 07.08.2004 is in continuation of the Order dated20.02.2002 in view of the Order dated 20.02.2002 not beingsuperceded, is disapproved. The Order dated 07.08.2004 wasissued in modification of the Order dated 20.02.2002. A closescrutiny of both the Orders would indicate that the Order dated07.08.2004 replaces the Order dated 20.02.2002 in view of afresh decision taken to provide employment only to thedependent sons of deceased Abkari workers. [Para 34] [184-B-D]

Kerala Samsthana Chethu Thozhilali Union v. Stateof Kerala & Ors. (2006) 4 SCC 327 : [2006] 3 SCR420 ; Union of India v. Hindustan DevelopmentCorporation & Ors. (1993) 3 SCC 499 : [1993] 3 SCR128 ; Punjab Communications Ltd. v. Union of India& Ors. (1999) 4 SCC 727 : [1999] 2 SCR 1033 ; RamPravesh Singh v. State of Bihar (2006) 8 SCC 381 :[2006] 6 Suppl. SCR 512 ; Om Kumar v. Union AB

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Aof India AIR 2000 SC 3689 : [2000] 4 Suppl. SCR693 ; Coimbatore District Central Co- operative Bankv. Coimbatore District Central Co-operative BankEmployees Association & Anr. (2007) 4 SCC 669 :[2007] 5 SCR 430 – referred to.

BCouncil of Civil Service Unions and Ors. v. Ministerfor the Civil Service (1984) 3 All ER 935 ; Hughes v.Deptt. of Health and Social Security, AC at p. 788 ;Findlay v. Secy. Of State of Home Deptt. (1984) 3 AllER 801 ; Attorney General of Hong Kong v. Ng YuenShiu [1983] 2 All ER 346 – referred to.CJudicial Review of Administrative Action (1955) andWade & Forsyth: Administrative Law (2005) – referredto.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7804-7813 of 2019.F

From the Judgment and Order dated 21.12.2015 of the HighCourt of Kerala at Ernakulam in W.A. Nos. 1416, 1440, 1441, 1442,1479, 1482, 1488, 1503, 1505 and 2342 of 2015.

With

GCivil Appeal Nos. 7814-7832, 7833, 7834 of 2019, ContemptPetition (C) No.638 of 2019 In Special Leave Petition (C) Nos.5550-5559 of 2016.

Jaideep Gupta, P. V. Surendranath, Sr. Advs., V. Giri, Jogy Scaria,Muthuehharan S., Ms. Beena Victory, V. K. Biju, Sayi George, AbhayHPratap Singh, G. Prakash, C. K. Sasi, Nayantara Roy, Abdulla Naseeh U.T., M. T. George, Mrs. Susy Abraham, Johns George, Saiby JoseKidangoor, Sajith P. Warrier, Ms. Nazia Hasan, Mohd. Monish, RenjithB. Marar, Sadchith P. Kurup, Anil Sharma, Lakhi Chand, Rahat Bansal,Varun Mudgal, M. Gireesh Kumar, Ankur S. Kulkarni, Ms. RichaBharadwaj, Roy Abraham, Ms. Reena Roy, Ms. Seema Jain, AkhilAbraham, Kamlesh Kumar Mittra, G. Prakash, Jishnu M.L.,Mrs. Priyanka Prakash, Mrs. Beena Prakash, Lekha Sudhakaran,Ms. Reshmitha R. Chandran, Sawan Kumar Shukla, Subhash ChandranP., Sureshan P., Ankur S. Kulkarni, Sajith. P, Lakshmeesh S. Kamath,Ms. Lakshmi N. Kaimal, Himinder Lal, S. Mahendran, G. Prakash,Ramesh Babu M. R., Venkita Subramoniam T.R., V. K. Biju, SayiGeorge, Advs. for the appearing parties.

The Judgment of the Court was delivered by

L. NAGESWARA RAO, J.

Leave granted.

1. Rehabilitation of Abkari workers is the core issue that arisesin the Appeals above. Displaced workers who lost employment due tothe ban of arrack in the State of Kerala, were successful in the WritPetition filed by them. The Appeals filed by the State of Kerala andthe Kerala State Beverages Corporation Limited (for short, ‘theCorporation’) were dismissed by a Division Bench of the Kerala HighCourt. Thus, the above Appeals.

2. Retail outlets for sale of arrack were started by the Corporationin the year 1995, in view of the decision taken by the Government ofKerala to abolish arrack shops which were hitherto run by privateparties. Thereafter, on 01.04.1996, arrack was banned in the State ofKerala. Consequentially, 12,500 arrack workers were deprived of theirlivelihood. Since it was not possible to provide re-employment to thedisplaced arrack workers, the State Government paid compensation ofRs. 30,000/- each to the arrack workers in lieu of rehabilitation. Inaddition, an ex gratia of Rs.2000/- was also disbursed by theGovernment, apart from the provident fund pension and DCRG.Dissatisfied with the decision of the Government in not providing re-employment, the arrack workers launched an agitation demandingrehabilitation. Pursuant to an agreement between the arrack workersand the Government, G.O.(Rt) No.81/2002/TD dated 20.02.2002 wasissued. The Government ordered that 25% of all daily wage employment A

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Avacancies which would arise in the Corporation in future shall standreserved to be filled up by displaced workers who were members ofthe Abkari Workers Welfare Fund Board and whose services wereterminated due to the ban of arrack.

3. The criteria for rehabilitation of arrack workers was alteredBby G.O.(Rt) No. 567/2004/TD dated 07.08.2004. Vide this Order, 25%of all daily wage employment vacancies likely to arise in the Corporation,were directed to be earmarked for the dependent sons of arrackworkers who had perished consequent to the loss of employment, dueto the ban on arrack in the State. In case the claimants exceeded thenumber of available vacancies, employment would be provided after aCselection. The eligibility for seeking re-employment was that thedependent sons of deceased arrack workers should not have completed38 years of age.

4. In the meanwhile, Rules 4(2) and 9(10)(b) were introduced inthe Kerala Abkari Shops Disposal Rules, 2002 (for short “the Rules”).DThe said Rules provided for absorption of arrack workers who lostemployment due to the abolition of the Abkari shops. The said Ruleswere declared ultra vires the Abkari Act enacted in the year, 1902(for short “the Act”), by a judgment of this Court in Civil AppealNo.1732 of 2006 dated 24.03.2006. [See: Kerala Samsthana ChethuEThozhilali Union v. State of Kerala & Ors.[1]]

5. A list of 265 persons, who were the dependent sons ofdeceased arrack workers, was prepared pursuant to the GovernmentOrder dated 07.08.2004. They approached the High Court by filing aWrit Petition in which a direction was sought to the Appellant/ State toFprovide employment to them. The High Court directed implementationof the Government Order dated 07.08.2004, by appointing the dependentsons of the deceased arrack workers within a period of six weeks fromthe date of the judgment. Further, the High Court by its judgment dated03.03.2009 directed the Government to reconsider the Order dated07.08.2004 by which the benefit of rehabilitation was not given to allGthe arrack workers who remained unemployed pursuant to the ban ofarrack. G.O. (Rt.) No.399/09/TD was issued by the Government on30.04.2009 implementing the direction issued in Writ Petition (C)No.26878 of 2007 by appointing all 265 persons whose names were H1 (2006) 4 SCC 327

included in the list of dependent sons of deceased arrack workers. Norelief was given to those workers who were jobless pursuant to theban on arrack. G.O.(Rt) No. 562/09/TD dated 22.06.2009 was issued,citing practical difficulties in implementation of Government Order dated20.02.2002, such as want of vacancies, fixing suitable criteria toaccommodate them, etc.

6. The legality and validity of the Government Orders dated07.08.2004 and 22.06.2009 was challenged by the displaced arrackworkers. They sought implementation of the Order passed by theGovernment on 20.02.2002 by which the benefit of rehabilitation wasgiven to all the arrack workers who remained unemployed pursuant tothe ban. By a judgment dated 29.05.2015, the learned Single Judge ofthe High Court of Kerala allowed the Writ Petitions and directed theState Government to implement G.O.(Rt) No.81/2002/TD dated20.02.2002 within a period of two months from the date of the judgment.The learned Single Judge was of the view that the displaced workmenhad a legitimate expectation of continued employment, which they couldclaim. The justification of the Government that the change of policywas on account of overriding public interest, was not accepted by thelearned Single Judge.

7. In the Appeals preferred by the Appellants, the Division Benchof the High Court observed that the Government Order dated20.02.2002 created legitimate expectation in the workers that they wouldbe entitled for an appointment, as of right. Any change in policy shouldhave been preceded by a suitable opportunity of hearing being given tothe arrack workers. In view of the said findings, the Division Benchheld that the implementation of the Government Order dated 07.08.2004is arbitrary and violative of Article 14 of the Constitution of India (forshort “the Constitution”). As the matter pertained to the loss ofemployment resulting in deprivation of livelihood of the arrack workers,the High Court was of the opinion that the Government Order dated07.08.2004 was also violative of Article 21 of the Constitution. TheGovernment Order dated 07.08.2004 was only in modification of theearlier Order dated 20.02.2002 and not in supersession, according tothe High Court. Apart from providing employment to the dependent sonsof the deceased arrack workers, the obligation cast on the Governmentto provide employment to displaced Abkari workers, by Order dated20.02.2002, continued to exist. The Division Bench of the High Courtreferred to the Directive Principles, especially Articles 38 to 43 of the A

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AConstitution to hold that the policy decision taken by the Governmentto provide rehabilitation was for the purpose of achieving socialobjectives. Concluding that the Government Order dated 07.08.2004suffers from the vice of arbitrariness and unreasonableness, the DivisionBench upheld the judgment of the learned Single Judge by which thedisplaced arrack workers were directed to be provided employment inBthe Corporation.

8. Before this Court, it was contended on behalf of the Statethat the Government Order dated 07.08.2004 modifying the earlierGovernment Order dated 20.02.2002 was due to overriding publicinterest. The Government found it very difficult to implement the decisionCto provide employment to the displaced Abkari workers in theCorporation. The number of vacancies available for daily wageworkers in the year 2002 was only 51. After a detailed discussion withthe stakeholders, a decision was taken to modify the Government Orderdated 20.02.2002 and to provide employment only to the dependent sonsDof displaced Abkari workers who died after the ban on arrack.According to the State, there was no vested right in the displaced Abkariworkers to claim public employment. As the decision to modify/ alterthe Government Order dated 20.02.2002 was in overriding publicinterest, the Respondents could not claim that they had legitimateexpectation. It was submitted on behalf of the State that the decisionEto modify the Government Order dated 20.02.2002 was pursuant to apolicy decision of the State which should not normally be interfered with.Learned senior counsel for the State submitted that loss of employmentof the displaced workers was more than 20 years ago and theRespondents could not claim employment now. He further stated thatthe Respondents who lost their livelihood due to ban on arrack wereFsuitably compensated in the year 1996 itself and it was not possible toassume that they were unemployed even after a lapse of 23 years sincelosing their jobs. Fixing suitable criteria to accommodate 12,500 personsagainst 51 vacancies was a challenge for the Government. A meetingwas held on 22.10.2003 by the Chief Minister to work out the modalitiesGof implementation of the Government Order dated 20.02.2002. It wasdecided in the said meeting that only the dependent sons of thedeceased displaced workers who had not completed 38 years of agewould be eligible for appointment in the Corporation. A list of suchpersons was prepared. In all, 265 persons figured in the list and weregiven appointment. These appointments were made pursuant to theHGovernment Order dated 07.08.2004. The Corporation contended that the appointment to all posts in the Corporation is done through the KeralaState Public Service Commission. Learned senior counsel for theCorporation also submitted that providing employment to the displacedAbkari workers was detrimental to other eligible candidates who wouldlose an opportunity of appointment.

9. The learned counsel appearing on behalf of the Respondentsjustified the judgment of the High Court by arguing that the decision tomodify the Government Order dated 20.02.2002 was arbitrary andunreasonable. They submitted that the assurance given by theGovernment in the year 2002 that the displaced Abkari workers wouldbe considered against 25% of the daily wage vacancies in theCorporation, created a vested right. They argued that the Respondentshad a legitimate expectation in assuming that the State would act infairness. It was contended on behalf of some of the Respondents thatproviding employment only to the dependent sons of deceased abkariworkers was an invitation to the displaced workers to commit suicide.Reliance was placed by learned counsel for the Respondents on thejudgment of the High Court in Writ Petition (Civil) No.26878 of 2007to submit that the issue pertaining to the correctness of the GovernmentOrder dated 07.08.2004 had attained finality. It was argued on behalfof the Respondents that long and several number of years had beenspent by them in litigation and the majority of displaced abkari workerswere still unemployed. If they could not be re-employed, they submittedthat they should be monetarily compensated, at least.

10. The points that arise for our consideration in these Appeals are:

(a) Whether the displaced abkari workers had a vested rightof rehabilitation pursuant to the Government Order dated20.02.2002; (b) Whether modification/ alteration of the GovernmentOrder dated 20.02.2002 is vitiated due to unfairness,arbitrariness and unreasonableness.

(c) The scope of the legitimate expectation of theRespondents; and (d) Whether the Respondents are entitled to any relief afterthe passage of 23 years since they lost their jobs dueto ban on arrack.

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AA. Vested Right of Employment

11. There is no dispute that a number of abkari workers lost theirlivelihood due to the ban on arrack in the State, in the year 1996.Dissatisfied with the monetary compensation provided to them, theydemanded employment in the Corporation. The agitation turned violentBand to find an immediate solution to the law and order problem, theGovernment took a decision to provide employment to displaced abkariworkers, adjusting them against 25% of the daily wage vacancies thatwould arise in the Corporation. There was no assurance given to allthe displaced abkari workers that they would be re-employed. Theassurance given by the Government was to reserve 25% of daily wageCvacancies that would arise in future for the displaced abkari workers.It cannot be said that a vested right accrued to all the abkari workersto claim employment in retail outlets in the Corporation. We do not agreewith the submission of the Respondents that a vested right was createdby the Government Order dated 20.02.2002 and that it was indefeasible.

DThere was no unequivocal promise that all the displaced workers wouldbe provided re-employment.

12. The assurance given to the abkari workers that they wouldbe considered for employment in 25% of the daily wage vacancies thatwould arise in the Corporation, according to the Government, had toEbe altered due to administrative exigencies. The implementation of thedecision to provide employment to displaced abkari workers was notpossible in view of the fact that the number of vacancies of daily wageemployees after the year 2002 were very less whereas there was alarge number of displaced abkari workers to be accommodated. In viewof the difficulties faced by the Government in implementation of theFGovernment Order dated 20.02.2002, the Government found it fit tomodify the policy decision by a Government Order dated 07.08.2004.It came to the notice of the Government that several displaced abkariworkers perished after 1996. Their families had to be providedimmediate succur. To give priority to the families in immediate need,the Government decided that dependent sons of the deceased abkariGworkers who died after the year 1996 would be provided employmentagainst the 25% daily wage vacancies in the Corporation. The saiddecision cannot be termed as unreasonable or arbitrary as it was takenin light of overriding public interest. Relevant considerations were takeninto account by the Government to alter the Government Order datedH20.02.2002.

B. Legitimate Expectation

13. The main argument on behalf of the Respondents was thatthe Government was bound by its promise and could not have resiledfrom it. They had an indefeasible legitimate expectation of continuedemployment, stemming from the Government Order dated 20.02.2002which could not have been withdrawn. It was further submitted onbehalf of the Respondents that they were not given an opportunity beforethe benefit that was promised, was taken away. To appreciate thiscontention of the Respondents, it is necessary to understand the conceptof legitimate expectation.

14. The principle of legitimate expectation has been recognizedby this Court in Union of India v. Hindustan DevelopmentCorporation & Ors.[2] If the promise made by an authority is clear,unequivocal and unambiguous, a person can claim that the authority inall fairness should not act contrary to the promise.

15. M. Jagannadha Rao, J. elaborately elucidated on legitimateexpectation in Punjab Communications Ltd. v. Union of India &Ors.[3] He referred to the judgment in Council of Civil Service Unionsand Ors. v. Minister for the Civil Service[4]in which Lord Diplockhad observed that for a legitimate expectation to arise, the decisions ofthe administrative authority must affect the person by depriving him ofsome benefit or advantage which,

(i) he had in the past been permitted by the decision-makerto enjoy and which he can legitimately expect to bepermitted to continue to do until there has beencommunicated to him some rational grounds forwithdrawing it on which he has been given anopportunity to comment; or

(ii) he has received assurance from the decision-maker thatthey will not be withdrawn without giving him first anopportunity of advancing reasons for contending thatthey should not be withdrawn.

Rao, J. observed in this case, that the procedural part oflegitimate expectation relates to a representation that a hearing or other 2 (1993) 3 SCC 4993 (1999) 4 SCC 7274 1985 AC 374 : (1984) 3 All ER 935

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178SUPREME COURT REPORTS

Aappropriate procedure will be afforded before the decision is made. Thesubstantive part of the principle is that if a representation is made thata benefit of a substantive nature will be granted or if the person isalready in receipt of the benefit, that it will be continued and not besubstantially varied, then the same could be enforced.

B16. It has been held by R. V. Raveendran, J. in Ram PraveshSingh v. State of Bihar[5] that legitimate expectation is not a legal right.Not being a right, it is not enforceable as such. It may entitle anexpectant:

(a) to an opportunity to show cause before the expectationCis dashed; or (b) to an explanation as to the cause of denial. Inappropriate cases, the Courts may grant a directionrequiring the authority to follow the promised procedureor established practice.

DSubstantive Legitimate Expectation

17. An expectation entertained by a person may not be found tobe legitimate due to the existence of some countervailing considerationof policy or law.[6] Administrative policies may change with changingcircumstances, including changes in the political complexion ofEgovernments. The liberty to make such changes is something that isinherent in our constitutional form of government.[7]

18. The decision makers’ freedom to change the policy in publicinterest cannot be fettered by applying the principle of substantivelegitimate expectation.[8] So long as the Government does not act in anFarbitrary or in an unreasonable manner, the change in policy does notcall for interference by judicial review on the ground of a legitimateexpectation of an individual or a group of individuals being defeated.

19. The assurance given to the Respondents that they would beconsidered for appointment in the future vacancies of daily wageGworkers, according to the Respondents, gives rise to a claim of legitimateexpectation. The Respondents contend that there is no valid reason for H

5 (2006) 8 SCC 381

6 Administrative Law, Eleventh Edition, H.W.R. Wade & C.F. Forsyth 7 Hughes v. Deptt. of Health and Social Security, AC at p. 788

8 Findlay v. Secy. Of State of Home Deptt. (1984) 3 All ER 801

the Government to resile from the promise made to them. We are inagreement with the explanation given by the State Government that thechange in policy due was to the difficulty in implementation of theGovernment order dated 20.02.2002. Due deference has to be givento the discretion exercised by the State Government. As the decisionof the Government to the change policy was to balance the interestsof the displaced Abkari workers and a large number of unemployedyouth in the State of Kerala, the decision taken on 07.08.2004 cannotbe said to be contrary to public interest. We are convinced that theoverriding public interest which was the reason for change in policyhas to be given due weight while considering the claim of theRespondents regarding legitimate expectation. We hold that theexpectation of the Respondents for consideration against the 25 per centof the future vacancies in daily wage workers in the Corporation is notlegitimate.

Procedural Legitimate Expectation

20. The other contention of the Respondents which found favourwith the High Court was that they were entitled for an opportunity beforethe assurance of rehabilitation given to them was withdrawn. There isno dispute that each of the displaced abkari workers was not given anopportunity before the assurance was altered. However, theGovernment contended that the displaced abkari workers wereconsulted through their representatives before passing the GovernmentOrder dated 07.08.2004. The requirement of an opportunity to be givenbefore altering the policy by which an assurance is given to a largenumber of individuals has to be examined.

21. In case of a complaint that an administrative authority hasreneged from a promise without giving an opportunity of hearing whichwas the past practice, a claim of legitimate expectation can be raised.In other words, if the policy or practice was to give an opportunity beforethe benefit is withdrawn, the non-compliance of such a practice wouldresult in defeating the legitimate expectation of an individual or groupof individuals. In Attorney General of Hong Kong v. Ng Yuen Shiu[9],the Privy Council was concerned with a dispute relating to an assertionof legitimate expectation of hearing, by an illegal immigrant. TheRespondent in that case entered Hong Kong illegally and remained for A

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Aa long period of time without being detected. He became part ownerof a factory which employed several workers. A change in immigrationpolicy was announced whereby illegal immigrants would be interviewedin due course, but no guarantee was given that they would not beremoved from Hong Kong. The Respondent approached theimmigration authorities for interview and after being interviewed he wasBdetained until a removal order was made by the Director of Immigration.His appeal was dismissed by the Immigration Tribunal. The Court ofAppeal of Hong Kong granted the Respondent an order of prohibitiontill an opportunity was given to him to explain the circumstances of hiscase before the Director. The Appeal filed by the Attorney General ofCHong Kong was dismissed by the Privy Council. The only questionraised by the Respondent in the Appeal was whether he was entitledto have a fair inquiry under common law, before a removal order wasmade against him. Without expressing any opinion on violation ofprinciples of natural justice, the right of hearing of the Respondent in the peculiar facts of the case was adjudicated upon. It was held thatDthe Respondent had a ‘legitimate expectation’ of being accorded ahearing before an order of removal was passed.

22. We have referred to the above judgment to demonstrate thatthere can be situation where the very claim made can be with regardto an opportunity not being given before withdrawing a promise whichEresults in defeating the ‘legitimate expectation’.

23. The principle of procedural legitimate expectation would applyto cases where a promise is made and is withdrawn without affordingan opportunity to the person affected. The imminent requirement ofFfairness in administrative action is to give an opportunity to the personwho is deprived of a past benefit. In our opinion, there is an exceptionto the said rule. If an announcement is made by the Government of apolicy conferring benefit on a large number of people, but subsequently,due to overriding public interest, the benefits that were announcedearlier are withdrawn, it is not expedient to provide individualGopportunities to such innominate number of persons. In other words,in such cases, an opportunity to each individual to explain thecircumstances of his case need not be given. In Union of India v.Hindustan Development Corporation and Ors. (supra) it was heldthat in cases involving an interest based on legitimate expectation, theHCourt will not interfere on grounds of procedural fairness and natural justice, if the deciding authority has been allotted a full range of choiceand the decision is taken fairly and objectively.

C. Judicial Review and Proportionality

24. The challenge to the order dated 07.08.2004 by which theRespondents were deprived of an opportunity of being considered foremployment is on the ground of violation of Articles 14, 19 and 21 ofthe Constitution of India. Lord Diplock in Council of Civil ServiceUnions and Ors. v. Minister for the Civil Services[10], held that theinterference with an administrative action could be on the grounds of‘illegality’, ‘irrationality’ and ‘procedural impropriety’. He was of theopinion that ‘proportionality’ could be an additional ground of review inthe future. Interference with an administrative decision by applyingthe Wednesbury’s principles is restricted only to decisions which areoutrageous in its defiance of logic or of accepted moral standards thatno sensible person who applied his mind to the question to be decidedcould have arrived at it.

25. Traditionally, the principle of proportionality has been appliedfor protection of rights guaranteed under the European Convention forthe Protection of Human Rights and Fundamental Freedoms, 1950.

26. In Om Kumar v. Union of India[11], this Court held asfollows:

“By ‘proportionality’, we mean the question whether, whileregulating exercise of fundamental rights, the appropriateor least restrictive choice of measures has been made by thelegislature or the administrator so as to achieve the objectof the legislation or the purpose of the administrative order,as the case may be. Under the principle, the Court will seethat the legislature and the administrative authority ‘maintaina proper balance between the adverse effects which thelegislation or the administrative order may have on the rights,liberties or interests of persons keeping in mind the purposewhich they were intended to serve’. The legislature and theadministrative authority are, however, given an area ofdiscretion or a range of choices but as to whether the choicemade infringes the rights excessively or not, is for the Court.That is what is meant by proportionality.”

10 Infra n. 22

11 AIR 2000 SC 3689

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AIn this case, M. Jagannadha Rao, J. examined the developmentof principles of proportionality for review of administrative decision inEngland and in India. After referring to several judgments, it was heldthat the proportionality test is applied by the Court as a primary reviewingauthority in cases where there is a violation of Articles 19 and 21. Theproportionality test can also be applied by the Court in reviewing aBdecision where the challenge to administrative action is on the groundthat it was discriminatory and therefore violative of Article 14. It wasclarified that the principles of Wednesbury have to be followed whenan administrative action is challenged as being arbitrary and thereforeviolative of Article 14 of the Constitution of India. In such a case, theCCourt would be doing a secondary review.

27. While exercising primary review, the Court is entitled to askthe State to justify the policy and whether there was an imminent needfor restricting the fundamental rights of the claimants. In secondaryreview, the Court shows deference to the decision of the executive.

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28. Proportionality involves ‘balancing test’ and ‘necessity test’.[12]Whereas the balancing test permits scrutiny of excessive and onerouspenalties or infringement of rights or interests and a manifest imbalanceof relevant considerations, the necessity test requires infringement ofhuman rights to be through the least restrictive alternatives.[13]

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29. An administrative decision can be said to be proportionate if:

(a) The objective with which a decision is made to curtailfundamental rights is important; (b) The measures taken to achieve the objective have aFrational connection with the objective; and

(c) The means that impair the rights of individuals are nomore than necessary.

30. In the instant case, the Respondents challenged the orderdated 07.08.2004, as being violative of Articles 14, 19 and 21. The HighGCourt accepted the submissions made by the Respondents and held thatthe Order dated 07.08.2004 is vitiated as it suffers from the vice of 12 Coimbatore District Central Co-operative Bank v. Coimbatore District Central Co-operative Bank Employees Association & Anr. (2007) 4 SCC 669

13 Judicial Review of Administrative Action (1955) and Wade & Forsyth:HAdministrative Law (2005) (2007) 4 SCC 669

arbitrariness and unreasonableness. However, in view of the challengeto the decision of the Government being on the ground of violation ofArticles 14, 19 and 21, the test of proportionality should be applied toreview the impugned decision of the Government.

31. The contention of the Respondents was firstly, that theirfundamental rights have been violated by modification/alteration of theearlier assurance by the Government. Secondly, that the Respondentslost an opportunity of being employed which resulted in deprivation oftheir life and livelihood in violation of Article 21 of the Constitution. Itwas further submitted that the decision is arbitrary and hence violativeof Article 14 of the Constitution. The contention of the Governmentwas that modification of the assurance given for employment to thedisplaced Abkari workers was unavoidable. It was contended on behalfof the State that there is a rational connection between the measurestaken to modify and the objective with which the policy was altered.The Government justified the decision by submitting that the meansadopted for impairment of the rights of the Respondents were notexcessive.

32. The promise held out by the Government to provideemployment to the displaced Abkari workers had become an impossibletask in view of the non-availability of vacancies in the Corporation.The decision taken by the Government in overriding public interest wasa measure to strike a balance between the competing interest of thedisplaced Abkari workers and unemployed youth in the State of Kerala.The impairment of the fundamental rights of the Respondents due tothe change in policy cannot be said to be excessive. Hence, it cannotbe said that the change in policy regarding re-employment of displacedabkari workers is disproportionate.

33. Another contention of Respondents which found favour withthe High Court was that the Order dated 07.08.2004 was found illegalin Writ Petition (C) No.26878 of 2007 and that the said judgment hasbecome final. Aggrieved by their non-appointment in spite of inclusionin the list of 265 dependent sons of the deceased displaced workers,they filed a Writ Petition seeking a direction to the Government toappoint them. The High Court directed the Government to appoint thosepersons who were included in the list, pursuant to the Order dated07.08.2004 within a period of six weeks. The High Court furtherobserved that the Order dated 20.02.2002 should not have been altered A

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Aand directed the Government to reconsider the order dated 07.08.2004.The Government complied with the direction of the High Court in theWrit Petition above and issued a Government Order dated 30.04.2009by which employment was provided to 265 dependent sons of deceasedAbkari workers. Therefore, it cannot be said that the validity of theorder dated 07.08.2004 has been finally decided in Writ Petition (C)BNo.26878 of 2007.

34. We are not in agreement with the findings recorded by theHigh Court that a right of appointment accrued to the Respondents andit matured into a Right to Life as provided in Article 21 of theConstitution. We disapprove the opinion of the High Court that theCOrder dated 07.08.2004 is in continuation of the Order dated 20.02.2002in view of the Order dated 20.02.2002 not being superceded. The Orderdated 07.08.2004 was issued in modification of the Order dated20.02.2002. A close scrutiny of both the Orders would indicate that theOrder dated 07.08.2004 replaces the Order dated 20.02.2002 in viewDof a fresh decision taken to provide employment only to the dependent sons of deceased Abkari workers.

35. For the aforementioned reasons, the Appeals are allowed.Contempt petition is closed.

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Nidhi Jain

Appeals allowed.

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