DOCTRINE OF LEGITIMATE EXPECTATION
By K P C Rao.,
Practising Company Secretary
kpcrao.india@gmail.com
Introduction
The doctrine of legitimate expectation has been described in the following words: "A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice." [1]
The theory of Legitimate Expectation is a branch of Administrative Law. The doctrine of legitimate expectation is a nascent addition to the rules of natural justice. It goes beyond statutory rights by serving as another device for rendering justice. At the root of the principle of legitimate expectation is the constitutional principle of rule of law, which requires ‘regularity’, ‘predictability’ and ‘certainty’ in government's dealings with the public. The `legal certainty' is also a basic principle of European Community. European law is based upon the concept of "vertrauensschutz" (the honouring of a trust or confidence). It is for these reasons that the existence of a legitimate expectation may even in the absence of a right of private law, justify its recognition in public law. It has been accepted by the English, Irish and Indian Courts but has been outrightly rejected in Australia and Canada. The doctrine of legitimate expectation in Singapore protects both procedural and substantive rights.
The theory of Legitimate Expectation marches into operation when there is an express promise from any Public Authority / Official that there is a regular practice of a certain thing, which the claimant can reasonably expect to continue. In other words, it consists of either inculcating anticipation in the citizen, or assuring him that under certain rules and schemes he would continue to reap certain benefits of which he would not be deprived unless there is some overriding public interest.
Legitimate Expectation concerns the relationship between Public Administration and an individual. The principle means that expectations raised by administrative conduct have to be respected and fulfilled lest public interest and betterment demands otherwise. Non-fulfillment can have legal consequences. The role of the Courts in the entire transaction is to safeguard the individual’s expectations in the face of change of policy. They have to ensure that the individual’s expectations are fulfilled mutatis mutandis the Governmental Policies. Precisely speaking, the Government and its Departments, in administering the affairs of the country are expected to honour their statements of policy or intention. The policy statement cannot be disregarded unfairly. Unfairness and arbitrariness are akin to violation of principles of natural justice.
The concept of "due process of law" has played a major role in the development of administrative law. It ensures fairness in public administration. The administrative authorities who are entrusted with the task of deciding ‘lis’ between the parties or adjudicating upon the rights of the individuals are duty bound to comply with the rules of natural justice, which are multifaceted. The ‘absence of bias in the decision making process’ and ‘compliance of audi alteram partem’ are two of these facets
Judicial approach
A formal statement on the doctrine of legitimate expectation can be found in the judgment of House of Lords in Council of Civil Services Union vs. Minister of the Civil Service[2]. In this case the Government tried to forbid trade unionism among civil service. For this, Civil Service Order-in-1982 Council was issued. The Court of appeal declared that the Minister had acted unlawfully in abridging the fundamental right of a citizen to become a member of the trade union. The House of Lords approved the judgment of the Court of appeal and held that such a right could not be taken away without consulting the concerned civil servant.
In India, the Courts have gradually recognized that while administering the affairs of the State, the Government and its departments are expected to honour the policy statements and treat the citizens without any discrimination. The theory of legitimate expectation first found its mention in Navjyoti Coop. Group Housing Society vs. Union of India[3]. In that case the right of a housing society for right to priority in the matter of registration was recognized in the following words :
"...In the aforesaid facts, the Group Housing Societies were entitled to `legitimate expectation' of following consistent past practice in the matter of allotment, even though they may not have any legal right in private law to receive such treatment. The existence of `legitimate expectation' may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the `legitimate expectation' without some overriding reason of public policy to justify its doing so. In a case of `legitimate expectation' if the authority proposes to defeat a person's `legitimate expectation' it should afford him an opportunity to make representations in the matter.”
In Food Corporation of India vs. Kamdhenu Cattle Feed Industries[4], the Supreme Court has considered whether rejection of the tender of the respondent was vitiated by arbitrariness. The claim of the respondents was negated in the following words : "In the contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to article 14 of the Constitution of which non- arbitrariness is a significant facet. There is no unfettered discretion in public law : A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is `fair play in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. The rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise of by judicial review. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non- arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non- arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this context."
In Union of India and others vs. Hindustan Development Corporation and others[5] the Supreme Court has considered the doctrine of legitimate expectation and held : "For legal purposes, the expectation cannot be the same as anticipation. It is different from a wish, a desire or a hope nor can it amount to a claim or demand on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious hope even leading to a moral obligation cannot amount to a legitimate expectation. 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. Again it is distinguishable from a genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense."`
In Punjab Communications Ltd. vs. Union of India[6], the Court observed as under : "The principle of `legitimate expectation' is still at a stage of evolution. The principle is at the root of the rule of law and requires regularity, predictability and certainty in the Government's dealings with the public. The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. However, the more important aspect 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 the decision-maker has properly balanced the legitimate expectation as against the need for a change. In sum, this means that the judgment whether public interest overrides the substantive legitimate expectation of individuals will be for the decision-maker who has made the change in the policy. 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."
In Union of India v. Hindustan Development Corporation[7], the Supreme Court has elaborately considered the reverence of this theory. In the estimation of the Apex Court, the doctrine does not contain any crystallized right. It gives to the applicant a sufficient ground to seek judicial review and the principle is mostly confined to the right to a fair hearing before any decision is given.
Further, in another landmark judgment, M.P. Oil Extraction Co v. State of Madhya Pradesh[8], the Supreme Court was dealing with the license renewal claims of certain industries. It was held in this case that extending an invitation, on behalf of the State, was not arbitrary and the selected industry had a legitimate expectation of renewal of license under the renewal claims.
In Secretary, State of Karnataka vs. Uma Devi[9], the Constitution Bench referred to the claim of the employees based on the doctrine of legitimate expectation and observed as under : "The doctrine can be invoked if the decisions of the administrative authority 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 have 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."
Lastly, in National Building Constructions Corporation v. S Raghunathan[10], it was held that legitimate expectation is a source of both, procedural and substantive rights. The person seeking to invoke the doctrine must be aggrieved and must have altered his position. The doctrine of legitimate expectation assures fair play in administrative action and can always be enforced as a substantive right.
Conclusion
The protection of ‘legitimate expectation’ does not require the fulfillment of such expectation where an overriding public interest requires otherwise. That is to say, the public interest is overriding. If public interest is not involved, the doctrine of legitimate expectation has its full sway. However, it must be proved that a legitimate authority made a promise, which was acted upon and substantial investment or expenditure was made.
The emerged concept of Legitimate Expectation is gradually gaining importance. The substance of the doctrine is honouring implied commitments without hampering express policies. The doctrine invokes to enforce ‘regularity’, ‘predictability’ and ‘certainty’ in Government’s dealings .
[Published in Corporate Secretary of ICSI, December, 2010]
[1] Halsbury's laws of England
[2] Council of Civil Services Union vs. Minister of the Civil Service; [1985 AC 374 (HL]
[3] Navjyoti Coop. Group Housing Society vs. Union of India; [1992 (4) SCC 477]
[4] Food Corporation of India vs. Kamdhenu Cattle Feed Industries; [1993 (1) SCC 71]
[5] Union of India and others vs. Hindustan Development Corporation and others; [1993 (3) SCC 499]
[6] Punjab Communications Ltd. vs. Union of India; [1999 (4) SCC 727]
[7] Union of India v. Hindustan Development Corporation; AIR 1994 SC 988
[8] M.P. Oil Extraction Co v. State of Madhya Pradesh; (1997) 7 SCC 592
[9] Secretary, State of Karnataka vs. Uma Devi ; 2006 (4) SCC 1
[10] National Building Constructions Corporation v. S Raghunathan; AIR 1998 SC 2776
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