TMI Blog1999 (5) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 technology submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EC) 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 CDOT. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 anxio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) (The Rule of Law as the Rule of Reason: Consent and Constitutionalism in (1999) 115 L.Q.R. 221 at 234 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment. (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 existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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.(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). This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts 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 unti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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