Legal Notes by Arvind Datar: Legitimate Expectation and Article 14

In my last article, I had discussed the origins, the procedural and substantial aspects of legitimate expectations. I had then indicated that the relationship between legitimate expectation and Article 14 would be discussed in the next article.

In both the United Kingdom and in India, there is an overlap between legitimate expectation and promissory estoppel. In National Buildings Construction Corporation v. S. Raghunathan (1998) 7 SCC 66, it was pointed out that claims based on legitimate expectation necessarily require a reliance on certain representations which result in some detriment to the claimant as are required to establish claims based on promissory estoppel. However, the distinction between legitimate expectations and promissory estoppel is interesting but outside the scope of the present article as it is confined to only to the interplay between legitimate expectations and Article 14.

In Food Corporation of India v. Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71, Verma J. (as he then was) pointed out that non-arbitrariness in State action is a significant facet of Article 14. Failure to consider the legitimate expectations of persons likely to be affected by any decision taken by a public authority may be exposed to challenge on the grounds of arbitrariness. The rule of law does not eliminate the discretion in the exercise of power but provides for its control through judicial review.

At the same time, a mere claim of legitimate expectation cannot by itself give rise to distinct enforceable rights, but the failure to give due weightage to it under the facts of a case may render it arbitrary. Thus, the requirement of due consideration of legitimate expectation forms part of the principle of non-arbitrariness which is a necessary concomitant of the rule of law.

In State of West Bengal v. Niranjan Singha, (2001) 2 SCC 326, a person was appointed as an agent for collection of toll and taxes. The appointment was for a one year term which “may” be extended on an application by the agent, provided there was no default on his part. The State called for fresh applications instead of granting an extension as applied for. The agent pleaded legitimate expectation and non-consideration of his application as being arbitrary and violative of Article 14. The Food Corporation case cited above was distinguished, as it was always open to the Government to call for fresh bids. There was no right to an extension beyond the period of one year as the clause used the term: ‘may be extended’. The Supreme Court went on to hold that legitimate expectation is only an aspect of Article 14 in dealing with citizens in a non-arbitrary manner. By itself, legitimate expectation did not give rise to an unenforceable right. It is submitted that this statement is incorrect. If the factual situation gives to a legitimate expectation, it will necessarily give rise to an enforceable right. When the extension beyond one year was at the discretion of the Government, there was no legitimate expectation. Thus, the public authority could always call for fresh bids.

The link between legitimate expectation, non-arbitrariness and Article 14 was once again emphasized in NOIDA Entrepreneurs Association v. NOIDA, (2011) 6 SCC 508. It was held that an authority that had a legal obligation to exercise powers reasonably and in good faith would contradict the principles of legitimate expectation if decisions were taken in an arbitrary manner. The expression ‘good faith’ must mean having legitimate reasons.

In several cases, concessions or benefits are given by State Governments for a period of five or ten years and business entities set up factories or industrial units. However, these benefits have often been withdrawn prematurely, leading to several cases where the doctrine of promissory estoppel has been invoked to prevent such withdrawal, unless there was an overriding public interest to withdraw such benefit.

The interplay of legitimate expectation and Article 14 was once again emphasized in State of Jharkhand v. Brahmputra Metallics (2023) 10 SCC 634. In this case, the industrial policy announced a 50% exemption in electricity duty for captive consumption for a five year period, but a notification was issued under the Bihar Electricity Duty Act, 1948 after a delay of three years. The Court characterized the delay as “arbitrary and a case of bureaucratic lethargy”. It referred to legitimate expectation and observed that this arbitrariness violated Article 14.

In Sivanandan C.T  v. High Court of Kerala (2024) 3 SCC 799 the doctrine of legitimate expectation, arbitrariness and Article 14 was once again discussed. It is submitted that it was unnecessary to undertake such an exercise on the facts of this case. This judgment emphasized that substantive legitimate expectation is a facet of Article 14 and there is again an extensive discussion on legitimate expectation. In this case, the entrance exam for selection of district judges consisted of a written examination and a viva. The cut-off marks were prescribed only for the written examination, but not for the viva. This was also under the rules framed by the High Court. After the exams were held, the High Court decided to fix cut-off marks for the viva as well which was contrary to rules. This was immediately challenged in 2017 under Article 32.

While upholding the challenge as being violative of the relevant article, the court did not grant relief on the ground that six years had passed after the selection, and it would be unfair to set aside the selection as the State of Kerala would be deprived of the judicial experience of the selected candidate. It is submitted that this conclusion is incorrect. If the judges had been selected by not following the rule, the selection should have been set aside and the order of merit re-determined without the cut-off marks. The petitioners had a legitimate expectation that the High Court would not do the selection contrary to the rules. The candidates who wrote the exam and were selected were fully aware that their selection would be subject to the outcome of the writ petition. They had no legitimate expectation that they would continue even if the selection was made contrary to law. This is indeed a strange case where despite the selection having been held to be violative of the relevant rule as well as principles of legitimate expectation, the relief was denied for no fault of the petitioners.

Legitimate expectation and promissory estoppel are doctrines essentially in the realm of administrative law but have now been included as a facet of Article 14 and thus become part of the constitutional law. The link that joins the legitimate expectation and Article 14 is the existence of arbitrariness. Therefore, once legitimate expectation is frustrated because of arbitrariness, Article 14 can be invoked for granting necessary relief.

Arvind P Datar is a Senior Advocate practicing before the Supreme Court of India.

The author wishes to thank S. Niranjan Reddy, Senior Advocate, for a discussion on the Sivanandan case.