Bombay High Court
Lalit Sehgal vs State Of Goa And Ors. on 13 December, 1994
Equivalent citations: 1996(3)BOMCR105, (1995)97BOMLR474
Author: A.P. Shah
Bench: A.P. Shah
JUDGMENT A.P. Shah, J.
1. This group of writ petitions can be conveniently disposed of by a common judgment as they all seek to challenge the Notification No. 2-20-92 dated December 21, 1993 issued under section 13-A of the Goa, Daman and Diu Public Gambling Act, 1976 and also the restriction under the said section 13-A that games of electronic amusement/ slot machines can only be installed in Five Star Hotels as being violative of Articles 14 and 19(1)(g) of the Constitution.
2. The Goa, Daman and Diu Public Gambling Act, 1976 (for short, "the Act") was amended by the Goa, Daman and Diu Public Gambling (Amendment) Act, 1992 (for short, "the Amendment Act"). The Amendment Act inserted into the Act a new section 13-A, which provides:-
"13-A Authorised Game : (1) Notwithstanding anything contained in this Act, the Government may authorise any game of electronic amusement/ slot machines in Five Star Hotels subject to such conditions, including payment of such recurring and non-recurring fees, as may be prescribed.
(2) The provisions of this Act shall not apply to any game authorised under sub-section (1)."
3. Thus, the Amendment Act permitted the Government to authorise games of electronic amusement/slot machines with further power to formulate the terms and conditions on which such authorisation was to be granted.
4. In exercise of the power conferred by section 13-A of the Act, the Government vide Notification No. 2-20-92-H.D.(G) dated November 3, 1992 (for short, "the Principal Notification") laid down terms and conditions for installing and operating games of electronic amusement/ slot machines in the State of Goa.
5. Under the Principal Notification, any person desirous of obtaining a licence for installing and operating games of electronic amusement/slot machines can make an application to Under Secretary (Home), in Form 'A'. The licence fee is Rs. 2,500/- per installation of electronic amusement/ slot machine. If the Under Secretary (Home) is satisfied that the application conforms to the terms and conditions and that Rs. 2,500/- has been paid, he can grant a licence in Form 'B'. Besides the licence fee of Rs. 2,500/- per installation, a licensee is also required to pay a security deposit of Rs. 5,000/- for installation. A licensee also has to pay a fee of Rs. 6,000/- per year per machine of electronic amusement/slot machine.
6. The Principal Notification restricted the total number of machines in the State of Goa to 200. Clauses 5(iv) provided:---
"The total number of slot machine/game of electronic amusement shall not however, exceed 200 in the entire State of Goa and each licensee shall be restricted to instal not more than twenty slot machines/games of electronic amusement."
7. In or about November, 1992, the nine writ petitioners made separate applications for licence in the prescribed form. The Under Secretary (Home) granted a separate licence to each of the petitioner to install and operate 20 games of electronic amusement/slot machines, but as provided in condition No. 1 of the licence, "only in Five Star Hotel". The term of the licence is five years.
8. Before adverting to the impugned notification dated December 21, 1993, it is necessary to note that according to the petitioners they have been making arrangements for the import of the machines authorised under the licence as the same are not available in India. The petitioners claim that they have received the Importer-Exporter Code, which is a pre-requisite for import of the appropriate machines and they have also made arrangements for the finances for the import of the said machines. The petitioners have stated that there are six Five Star Hotels in the entire State of Goa and that they have been diligently and conscientiously attempting to enter into an agreement with these Five Star Hotels so as to be able to instal and operate the machines. But these Five Star Hotels, for reasons best known to them, have been refusing and/or been dilly-dallying entering into an agreement with the petitioners, which would permit the petitioners to instal and operate their machines in their premises so as to comply with the requirements of the Act and the licence, which has been issued thereunder.
9. The Government of Goa has issued the impugned notification dated December 21, 1993 mainly to amend Clause 5(iv) of the Principal Notification so as to increase the total number of games of electronic amusement/slot machines permitted in the State of Goa to be 400 instead of the original 200 machines. The impugned notification has also defined "Five Star Hotel" as follows in Clause 1 :-
"(iiia) "Five Star Hotel" for the purposes of section 13-A of the Act shall mean a hotel certified as such by an authority competent to classify hotels in the Government of India or certified to be a five stars hotel for this purpose by the Director, Department of Tourism of the Government."
10. The petitioners have challenged the increase in the total number of games of electronic amusement/slot machines in the State of Goa as arbitrary, irrational and violative of principles of natural justice. The petitioners contend that their applications were premised on the Principal Notification, which provided for a total of only 200 machines in the entire State of Goa, with a further restriction of 20 machines per licensee. Based on the fact that only 200 machines could be installed and operated, the petitioners worked out their economics and projections and only then applied for a licence. They had already committed substantial finances toward the project, including the licence fee to the Government. The licence granted by the Government to the petitioners is for a term of five years. It is not open to the Government to arbitrarily and irrationally increase the number of machines from 200 to 400 during the period of the licence, as there has been no change in the circumstances from the time the licence was issued to the petitioners till the date of the impugned Notification (December 21, 1993). When the petitioners applied for the licence and when the petitioners obtained the same, they had a legitimate expectation that terms and conditions of the Principal Notification, especially such as would affect their economic interests, would not be altered as to prejudice them. The petitioners further contend that they should at least have been granted an opportunity of being heard against the said arbitrary increase.
11. The petitioners have also challenged vires of section 13-A of the Act, as according to them, it arbitrarily and irrationally discriminates against the petitioners insofar as it restricts the games of electronic amusement/ slot machines to be installed and operated only in Five Star Hotels. The petitioners say that there is no rational, direct and proximate connection between the restriction of Five Star Hotels in section 13-A of the Act with the object for which the section was inserted, i.e. promotion of tourism industry. The petitioners have also challenged the new definition of "Five Star Hotel" in sub-clause (iiia) of Clause 1 of the impugned notification as violative of Articles 14 and 19(1)(g) of the Constitution as the Government has not given any guideline or yardstick to the Director, Department of Tourism of Government of Goa, on the basis of which he can certify the hotel to be Five Star Hotel for the purposes of section 13-A of the Act.
12. The State has filed a detailed counter-affidavit. It is stated in the counter-reply that though the Act prohibits gambling activities and use of gambling articles within the State of Goa in the interest of promoting Tourist Industry, which is today one of the main foreign exchange earner to the country, insofar as the State of Goa is concerned with the object to promote tourism, namely, to provide them entertainment activities at Five Star Hotels, which are normally catering to foreign tourists and higher income section of Indian tourists. It is said that the Legislature in its wisdom has decided to confine the permission for electronic amusement/slot machines only to Five Star Hotels for the obvious reason of restricting it to the foreign tourists and the people belonging to higher income group and such policy, which is based on rational measure, cannot be questioned in a writ jurisdiction under Article 226 of the Constitution. It is also said that the decision to increase the number of the machines from 200 to 400 is also a policy decision, which cannot be impugned in a petition under Article 226. It is also explained that the Director of Tourism is going to follow the policy for grading these hotels by the Government of India for the purpose of certifying the hotels as Five Star and, therefore, the provisions cannot be regarded as arbitrary or irrational.
13. Before examining the petitioner's claim, which is mainly based on the doctrine of legitimate expectation, we will dispose of the challenge to the validity of section 13-A of the Act, which is not seriously pressed by Mr. Dias, learned Counsel for the petitioners, as it has been rightly pointed out by the respondents in their affidavit that the restriction has been imposed with the object of confining gambling activities as far as possible to the foreign tourists and people from higher income group, which, in our opinion, cannot at all be termed as arbitrary or irrational so as to be violative of Article 14. The said restriction, in our considered view, is based on a valid foundation and it is not permissible to question the legislative wisdom in imposing such restriction, which has a nexus with the object of the said Act, which was enacted with a view to prohibit gambling. Similarly, the challenge to the definition of "Five Star Hotel" should not detain us any longer since it has been categorically stated in the affidavit filed on behalf of the State that the Director of Tourism shall be guided by the standards laid down by the Tourism Department of the Central Government. The challenge raised by the petitioners by taking recourse to Article 19(1)(g) of the Constitution is also required to be rejected as it has been held by the Apex Court in State of Bombay v. R.M.D. Chamarbaugwala, , that the words "trade" or "business" or "commerce" should not be read in their widest amplitude so as to exclude gambling for there are certain activities, which can under no circumstance be regarded as trade or business or commerce although the usual forms and instruments are employed therein. In para 42 of the judgment, the Apex Court observed:
"Gambling activities from their very nature and in essence are extra-commercium although the external forms, formalities and instruments of trade may be employed and they are not protected either by Article 19(1)(g) or Article 301 of the Constitution. These activities which have been condemned in this country from ancient times appears to have been equally discouraged and looked upon with disfavour in England, Scotland, the United States of America and in Australia. It is difficult to accept the contention that those activities which encourages a spirit of reckless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident common man and thereby lower his standard of living and drive him into a chronic state of indebtedness and eventually disrupt the peace and happiness of his humble home could possibly have been intended by our Constitution makers to be raised to the status of trade, commerce or intercourse and to be made the subject-matter of a fundamental right guaranteed by Article 19(1)(g)."
We thus find absolutely no merit in the constitutional challenges raised in the petition. We shall now consider the main contention urged before us by Mr. Dias regarding legitimate expectation.
14. In Halsbury's Law of England, Fourth Edition, Volume I(I) 151 a passage explaining the scope of "legitimate expectations" runs thus:-
"81. Legitimate expectations.---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.
The existence of a legitimate expectation may have a number of different consequences; it may give locus standi to seek leave to apply for judicial review; it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person's legitimate expectation, it must afford him an opportunity to make representations on the matter. The courts also distinguish, for example in licensing cases, between original applications, applications to renew and revocations; a party who has been granted a licence may have a legitimate expectation that it will be renewed unless there is some good reason not to do so, and may therefore be entitled to greater procedural protection than a mere applicant for a grant."
15. It is interesting to note that it was in fact for the purpose of restricting the right to be heard that 'legitimate expectation' was introduced into the law. It made its first appearance in a case where alien students of 'scientology' were refused extension of their entry permits as an act of policy by the Home Secretary, who had announced that no discretionary benefits would be granted to the sect. The Court of Appeal held that they had no legitimate expectation of extension beyond the permitted time, and so no right to a hearing, though revocation of their permits within that time would have been contrary to legitimate expectation. Schmidt v. Secretary of State for Home Affairs, (1969)2 Ch. 149.
16. The positive effect of 'legitimate expectation' was considered in Breen v. Amalgamated Engineering Union, (1971)1 All.E.R. 1148. Lord Denning observed as under:-
"If a man seeks a privilege to which he has no particular claim-such as an appointment to some post or other- then he can be turned away without a word. He need not be heard. No explanation need be given; see the cases cited in Schmidt v. Secretary of State for Home Affairs, at pages 170-171. But if he is a man whose property is at stake, or who is being deprived of his livelihood, then reasons should be given why he is being turned down, and he should be given a chance to be heard. I go further. If he is a man who has some right or interest, or some legitimate expectation, of which it would not be fair to deprive him without a hearing, or reasons given, then these should be afforded him according as the case may demand."
17. Then came the judgment of Appeal Court in the case of Re Liverpool Taxi Owners' Association, (1972) 2 All 589. Liverpool Corporation had the duty of licensing the number of taxis, which they thought fit, and for some years the number had been fixed at 300. The chairman of the sub-committee gave a public undertaking that the number would not be increased beyond 300 until a private Bill had been passed by Parliament and had come into effect. Subsequently, however, the sub-committee resolved that the number of licences should be increased before the private Bill had been passed, and the resolution was approved by the full committee and by the council in December. The association of licence holders applied to the Court for an order of prohibition and certiorari. Lord Denning said:-
"...the Corporation were not at liberty to disregard their undertaking (not to increase the number without holding an inquiry). They were bound by it so long as it was not in conflict with their statutory duty. It is said that a Corporation cannot contract itself out of its statutory duties. In Birkdale District Electric Supply Co. Ltd. v. Southport Corpn., 1926 A.C. 355 at 364 the Earl of Birkenhead said that it was-" a well established principle of law, that if a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties." But that principle does not mean that a Corporation can give an undertaking and break it as they please. So long as the performance of the undertaking is compatible with their public duty, they must honour it."
18. On examination of these important decisions, it is seen that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation by and large has been invoked in the context of right of fair hearing. Professor Wade in his book on Administrative Law, 6th Edition, at page 520, observed:---
"The classic situation in which the principles of natural justice apply is where some legal right, liberty or interest is affected, for instance where a building is demolished or an office-holder is dismissed or a trader's licence is revoked. But good administration demands their observance in other situations also, where the citizen may legitimately expect to be treated fairly. As Lord Bridge has explained:
The courts have developed a relatively novel doctrine in public law that a duty of consultation may arise from a legitimate expectation of consultation aroused either by a promise or by an established practice of consultation."
19. Attorney-General of Hong Kong v. Ng Yuen Shiu, (1983)2 A.C. 629, was a case of 'promise' where the Government of Hong Kong announced that certain illegal immigrants, who were liable to deportation, would be interviewed individually and treated on their merits in each case. The Privy Council quashed a deportation order where the immigrant had only been allowed to answer questions without being able to put his own case, holding that 'when a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise, so long as implementation does not interfere with its statutory duty'. R. v. Home Secretary ex p. Asif Mahmood Khan, (1984) 1 W.L.R. 1337, was another example of 'promise' where the Court of Appeal quashed the refusal of the Home Office to admit an immigrant when this was contrary to the legitimate expectation created by one of its published circulars. In R. v. Secretary of State For Transport ex p. Sheriff & Sons Ltd., (1986) The Times, 18 December, it was held that where a Government department encouraged a company to suppose that it would receive a grant, it could not lawfully refuse the grant without first granting a hearing. For the same reason, it was held in R. v. Brent L.B.C. ex p. Gunning, (1985)84 L.G.R. 168, that a local education authority acted unlawfully in proceeding with a school reorganisation without adequately consulting parents, since this was habitually done in such cases under the emphatic advice of the Secretary of State. Professor Wade said:-
"These are revealing decisions. They show that the courts now expect Government departments to honour their published statements or else to treat the citizen with the fullest personal consideration. Unfairness in the form of unreasonableness here comes close to unfairness in the form of violation of natural justice, and the doctrine of legitimate expectation can operate in both contexts. It is obvious, furthermore, that this principle of substantive, as opposed to procedural, fairness may undermine some of the established rules about estoppel and misleading advice, which tend to operate unfairly. Lord Scarman has stated emphatically that unfairness in the purported exercise of a power can amount to an abuse or excess of power, and this seems likely to develop into an important general doctrine."
20. In R. v. Ministry of Agriculture, Fisheries and Food, ex parte Jaderow Ltd., (1991)1 All.E.R. 41, a question arose whether legitimate expectation can affect legislative power. It was held:--
"Question II: legitimate expectation: It should be pointed out in this regard that, under the powers reserved to the member states by Article 5(2) of Regulation 170 of 1983, fishing activities could be made subject to the grant of licences which, by their nature, are subject to temporal limits and to various conditions. Furthermore, the introduction of the quota system was only one event amongst others in the evolution of the fishing industry, which is characterised by instability and continuous changes in the situation due to a series of events such as the extensions, in 1976, of fishing areas to 200 miles from certain coasts of the Community, the necessity to adopt measures for the conservation of fishery resources, which was dealt with at the international level by the introduction of total allowable catches, the arguments about the distribution amongst the member States of the total allowable catches available to the Community, which were finally distributed on the basis of a reference period which ran from 1973 to 1978 but which is reconsidered every year.
In those circumstances, operators in the fishing industry were not justified in taking the view that the Community rules precluded the making of any changes to the conditions laid down by national legislation or practice for the grant of licences to fish against national quotas or the adoption of new conditions compatible with Community law."
Thus, it will be clear even legitimate expectation cannot preclude legislation.
21. Now we proceed to consider some recent decisions of the English Courts, which are of considerable importance in understanding the concept of legitimate expectation and, particularly the last case in A. G. for New South Wales v. Quin, (1990)64 Aust L.J.R. 327, which has defined the scope and ambit of the doctrine of legitimate expectation.
22. Council of Civil Service Unions v. Minister for the Civil Service, (1985) A.C. 374, was a case of 'established practice' where civil servants employed in secret work in the Government Communications Headquarters were prohibited from belonging to Trade Unions. Since there was a well established practice of consultation in such matters, but no consultation had been offered, the House of Lords held that the procedure would have been unfair and unlawful had there not been overriding considerations of national security. The impugned action was upheld as reasonable, made on due consideration of all relevant factors including the legitimate expectation of the applicant, wherein the considerations of national security were found to outweigh that which otherwise would have been the reasonable expectation of the applicant. In this very case, the observations made by Lord Diplock went on to indicate that the doctrine of legitimate expectation was confined to the applicant's right to be consulted or heard. Lord Diplock observed :-
'by depriving him of some benefit or advantage which either (i) he has 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 has been communicated to him some rational ground for withdrawing it on which he has given an opportunity to comment or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should be withdrawn.' '...the prima facie rule of "procedural propriety" in public law, applicable to a case of legitimate expectations that a benefit ought not to be withdrawn until the reason for its proposed withdrawal has been communicated to the person who has therefore enjoyed that benefit and that person has been given an opportunity to comment on the reason...' Similarly, Lord Roskill said:-
'The particular manifestation of the duty to act fairly which is presently involved is that part of the recent evolution of our 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 in the event fulfilled... The principle may now (be) said to be firmly entrenched in this branch of the law. As the cases show, the principle is closely connected with "a right to be heard". Such an expectation may take many forms. One may be an expectation of prior consultation. Another may be an expectation of being allowed time to make representations, especially where the aggrieved party is seeking to persuade an authority to depart from a lawfully established policy adopted in connection with the exercise of a particular power because of some suggested exceptional reasons justifying such a departure.'
23. In R. v. Secretary of State, (1987)2 All.E.R. 518, Taylor, J., however, concluded that the doctrine of legitimate expectation need not be restricted where the expectation was to be consulted or heard, but the doctrine imposes, in essence, a duty to act fairly. Taylor, J., observed:-
"On those authorities I conclude that the doctrine of legitimate expectation in essence imposes a duty to act fairly. Whilst most of the cases are concerned, as Lord Roskill said with a right to be heard, I do not think the doctrine is so confined. Indeed, in a case where ex hypothesis there is no right to be heard, it may be thought the more important to fair dealing that a promise or undertaking given by a Minister as to how he will proceed should be kept. Of course such promise or undertaking must not conflict with his statutory duty or his duty, as here, in the exercise of a prerogative power. In accept the submission of counsel for the Secretary of State that the respondent cannot fetter his discretion. By declaring a policy he does not preclude any possible need to change it. But then if the practice has been to publish the current policy, it would be incumbent on him in dealing fairly to publish the new policy, unless again that would conflict with his duties."
24. Turning then to the latest judgment in A. G. for New South Wales v. Quin, a question arose whether the concept of legitimate expectation is an impact only on the procedure or whether it also can have a substantive impact and if so to what extent. In that case, the Local Courts Act abolished Courts of Petty Sessions and replaced them by Local Courts. Section 12 of the Act empowered the Governor to appoint any qualified person to be a Magistrate in charge of a Court of Petty Sessions under the old system, applied for, but was refused, an appointment under the new system. It was argued on behalf of Mr. Quin that he had a legitimate expectation that he would be treated in the same way as his former colleagues considering his application on its own merits. It was observed as under:-
"If the courts were to define the content of legitimate expectations as something less than a legal right and were to protect what would be thus defined by striking down administrative acts or decisions which failed to fulfil the expectations, the courts would be truncating the powers which are naturally apt to affect those expectations. To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right ) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law."
"To lie within the limits of judicial power, the notion of 'legitimate expectation' must be restricted to the illumination of what is the legal limitation on the exercise of administrative power in a particular case. Of course, if a legitimate expectation were to amount to a legal right, the Court would define the respective limits of the right and any power which might be exercised to infringe it so as to accommodate in part both the right and the power or so as to accord to one priority over the other. (That is a commonplace of curial declarations.) But a power which might be so exercised as to affect a legitimate expectation falling short of a legal right cannot be truncated to accommodate the expectation.
So long as the notion of legitimate expectation is seen merely as indicating 'the factors and kinds of factors which are relevant to any consideration of what are the things which must be done or afforded' to accord procedural fairness to an applicant for the exercise of an administrative power (see per Mahoney, J.A. in Macrae, at 285), the notion can, with one important proviso, be useful. If, but only if, the power is so created that the according of natural justice conditions its exercise, the notion of legitimate expectation may useful focus attention on the content of natural justice in a particular case; that is, on what must be done to give procedural fairness to a person whose interests might be affected by an exercise of the power. But if the according of natural justice does not condition the exercise of the power, the notion of legitimate expectation can have no role to play. If it were otherwise, the notion would become a stalking horse for excesses of judicial review."
In this very case, Brennan, J., after referring to Schmidt case observed thus:-
"Again, when a Court is deciding what must be done in order to accord procedural fairness in a particular case, it has regard to precisely the same circumstances as those to which the Court might refer in considering whether the applicant entertains a legitimate expectation, but the inquiry whether the applicant entertains a legitimate expectation is superfluous. Again, if an express promise be given or a regular practice be adopted by a public authority, and the promise or practice is the source of a legitimate expectation, the repository is bound to have regard to the promise or practice in exercising the power, and it is unnecessary to inquire whether those factors give rise to a legitimate expectation. But the Court must stop short of compelling fulfilment of the promise or practice unless the statute so requires or the statute permits the repository of the power to bind itself as to the manner of the future exercise of the power. It follows that the notion of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not unlock the gate which shuts the Court out of review on the merits. The notion of legitimate expectation was introduced at a time when the courts were developing the common law to suit modern conditions and were sweeping away the unnecessary archaisms of the prerogative writs, but it should not be used to subvert the principled justification for curial intervention in the exercise of administrative power."
25. On examination of these decisions and particularly the latest decision in A. G. for New South Wales v. Quin, it is seen that 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 representation may arise either from a representation or promise made by the authority. Although there is some similarity between the doctrines of legitimate expectation and of estoppel, the two are distinct and detrimental reliance upon the representation is not a necessary ingredient of legitimate expectation. The existence of a legitimate expectation may have a number of different consequences: it may give locus standi to seek leave to apply for judicial review; sometimes the expectation will itself be of consultation or the opportunity to be heard. We shall shortly refer to certain Supreme Court judgements holding that legitimate expectation is to be confined mostly to right of a fair hearing before a decision, which results in negativing a promise or withdrawing an undertaking is taken. Normally, a legitimate expectation would arise when an authority by representation or past practice aroused expectation, which it would be within its power to fulfil. The protection is limited to that extent and a judicial review can be within those limits. Again the decision taken by the authorities must be found to be arbitrary, unreasonable and not taken in public interest because the protection of legitimate expectation does not require the fulfilment of the expectation where an overriding public interest requires otherwise. As observed by Brennan, J., the notion of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not unlock the gate which shuts the Court out of review on the merits. Then there is one more important limitation on the application of doctrine of legitimate expectation and that is the doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved.
26. The Apex Court has considered the doctrine of legitimate expectation in some recent decisions. In the case of Navjyoti Co-op. Group Housing Society v. Union of India, , Justice G. N. Ray speaking for the Bench observed:---
"...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 this connection reference may be made to the discussions on ' legitimate expectation' at page 151 of Volume 1(1) of Halsbury's Law of England-Fourth Edition (re-issue). We may also refer to a decision of the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service. It has been held in the said decision that an aggrieved person was entitled to 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 on such reasons.
It may be indicated here that 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'. Within the conspectus of fair dealing in case of 'legitimate expectation', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent past policy, come in. We, have not been shown any compelling reasons taken into consideration by the Central Government to make a departure from the existing policy of allotment with reference to seniority in Registration by introducing a new guideline."
27. The next case is State of H. P. v. Kailash Chand Mahajan, 1992 Supp. (2) S.C.C. 351. There the contention was that by the tenure of appointment there was a right to continue and the legitimate expectation in that regard had come to be interfered with by the amendment was not accepted as the Supreme Court held that the legitimate expectation cannot preclude a legislation.
28. In F.C.I. v. Kamdhenu Cattle Feed Industries, , it was argued before the Supreme Court that even though the Food Corporation of India had right to reject any tender, including the highest tender, and thereafter negotiate with all the tenderers to procure the highest price for the commodity, yet this right has to be exercised reasonably and not arbitrarily, otherwise the credibility of the procedure of sale by inviting tenders would be lost. It was further argued that the decision not to accept any tender and to negotiate thereafter for obtaining a higher price than that quoted in the highest bid, cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary. The Supreme Court held:-
"In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 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 'fairplay 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. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
The mere reasonable or legitimate expectation of 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 extent."
29. Then we proceed to refer to an important decision of the Supreme Court in Union of India v. Hindustan Development Corpn., , where the Apex Court considered the question as to whether the dual pricing policy adopted by the railways was reasonable. There the learned Counsel for the unsuccessful tenderer contended that the railways were bound to follow the rules and standards pertaining to the tender system and on the basis of these provisions and the course of conduct followed by the railways in the matter of fixation of price and allotment of quota in the past, let the manufacturers believe that the same course of conduct would be followed and the manufacturers legitimately expected that they would be treated equally and in a non-arbitrary manner and such legitimate expectation is a right guaranteed under Article 14 of the Constitution. The Apex Court, after examining minutely the decisions of the English Courts and also decisions rendered by the same Court, observed:-
"33. On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfilment of the expectation wherean overriding public interest requires otherwise. In other words, where a person's legitimate expectation is not fulfilled by taking a particular decision then decision-maker should justify the denial of such expectation by showing some overriding public interest. Therefore even if substantive protection of such expectation is contemplated that does not grant an absolute right to a particular person. It simply ensures the circumstances in which that expectation may be denied or restricted. A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. In a given case where there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the Court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relief is again a matter which depends on several factors."
"35. Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the Governmental activities. They shift and change so fast that the start of our list would be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in some what similar situations. For instance discretionary grant of licences, permits or the like, carry with it a reasonable expectation, though not a legal right to renewal or non-revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the Court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power. Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the Court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the Court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the Court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence prefers an existing licence holder to a new applicant, the decision cannot be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. In other words, such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attorney General for New South Wales case: "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law." If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-know grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider but the Court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the 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 the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the Court out of review on the merits", particularly when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for New South Wales case the courts should restrain themselves and restrict such claims duty to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts, licences etc. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important."
30. In a latest decision of the Supreme Court in Madras City Wine Merchants' Assn. v. State of T.N., , Mohan, J., speaking for the Bench held that the legitimate expectation may arise:---
(a) If there is an express promise given by a public authority; or
(b) because of the existence of a regular practice which the claimant can reasonably expect to continue;
(c) Such an expectation must be reasonable.
However, if there is a change in policy or in public interest the position is altered by a rule or legislation, no question of legitimate expectation would arise.
31. We shall now proceed to examine the contentions of Mr. Dias in the light of these principles. As indicated earlier, prior to introduction of the Amendment Act, the electronic amusement/slot machines were prohibited by virtue of the provisions of the Act. The amended section 13-A for the first time empowered the Government to authorise any game of electronic amusement/ slot machines; provided they are fixed in Five Star Hotels and subject to such conditions as may be prescribed. In exercise of the powers under section 13-A, the Government has issued the Principal Notification laying down the terms and conditions for obtaining a licence including the period of licence and the licence fee to be payable by the licensee. It was provided in Clause (iv) of the said Notification that the total number of electronic amusement/ slot machines shall not exceed 200 in the entire State of Goa and it was further provided that no single licensee shall hold a licence for more than 20 machines. It is not the grievance of the petitioners that the licence period is being curtailed or any term or condition of the licence is being sought to be changed to their detriment. But the contention of Mr. Dias is that the total number of machines as fixed in Clause (iv) of the Principal Notification is not liable to be changed till the expiry of the petitioners' licence. According to Mr. Dias, the petitioners' applications were based on the fact that only 200 machines could be installed and operated and they worked out their economics and projections on that assumption. Therefore, says Mr. Dias, it is not open to the Government to arbitrarily and irrationally increase the number of machines from 200 to 400 during the period of the licence contrary to a legitimate expectation that terms and conditions of the Principal Notification, especially such as would affect the petitioners' economic interests, would not be altered as to prejudice them.
32. We are afraid that the contentions of Mr. Dias are completely misconceived. In the first place, Mr. Dias was unable to show any 'promise' or 'representation' on the part of the Government that the number of machines shall not be increased, as Clause (iv) contains only a policy decision of the Government to restrict the number of machines in the State of Goa at 200 and it cannot be taken to be sort of promise or representation that the number shall remain static. The concept of legitimate expectation has to be founded on a promise or a past practice, which is necessary for invoking the said doctrine. (See: Madras City Wine Merchants' Assn. v. State of T.N. supra). It is well settled that for legal purposes, the expectation cannot be the same as anticipation and it is different from a wish, a desire or a mere hope. The petitioners, as experienced businessmen, might have hoped that the policy of the Government will not change so as to affect their business interests, but this by itself is not sufficient to infer a legitimate expectation so as to fructify into a right. Mr. Dias, however, contends that even in the absence of a specific promise or representation, there may be a case of legitimate expectation arising from particular set of facts. He relies upon a judgment of Queen's Bench Divisions in R. v. Secretary of State of Transport ex p. Greater London Council, (1985)3 All.E.R. 300, to show that a legitimate expectation may arise other than by way of a representation or past practice. The case cited by Mr. Dias is clearly distinguishable. In that case, the Secretary of State had directed Greater London Council to make grant to London Regional Transport stipulating maximum grant permitted under the status. Council was not given opportunity to make representations that less than maximum grant should be directed. In the context of these facts, it was held that since the Act provided for a maximum payment, it was to be assumed that less than the maximum could be directed, and natural justice therefore entitled the payer at least to be able to make representations to the effect that he should pay less than the maximum. Accordingly, it was held that in failing to consult the Council on the direction the Secretary of State had acted in breach of natural justice. The said decision is thus based on the right of hearing rather than doctrine of legitimate expectation.
33. Mr. Dias next contends that doctrine of legitimate expectation in essence imposes a duty to act fairly. Mr. Dias says that the Government has not shown any justification for the increase in number of machines. According to Mr. Dias, the object of increasing the number of machines appears to confer the undue favour on the Five Star Hotels, who are rather adamant in negotiations with the petitioners. Mr. Dias also contends that decision to increase the number of machines should not have been taken by the Government without giving an opportunity of hearing to the petitioners, who are virtually affected by such decision. It is not possible to agree with Mr. Dias. It is true that the doctrine of legitimate expectation has an important place in the developing law of judicial review, but it is squarely well settled that where expectation arises out of an administrative authority's existing policy, it can only be that the policy for the time being in existence will be fairly applied, and cannot be invoked to prevent a change of policy fairly carried out. (See: (Findlay v. Secretary of State for the Home Department)22, (1984)3 All.E.R. 801. Any other view would entail the conclusion that the unfettered discretion conferred by the statute on the Government can be restricted so as to hamper or even prevent changes of policy.
34. There is one more reason for rejecting the contentions of Mr. Dias. It has been pointed out by K.J. Reddy, J., in Hindustan Development Corporation's case that if according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the Court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the Court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. The power exercised by the Government of Goa in issuing the Principal Notification as well as the impugned Notification is in essence a rule making power which cannot be conditioned by principles of audi alteram partem and thus there is no scope for application of doctrine of legitimate expectation.
35. In the result, this group of nine writ petitions fails and the same is dismissed with no order as to costs. Rule is discharged in all the petitions.
36. On the oral application of Mr. Dias, interim relief granted pending admission to continue till January 23, 1995.