Ram Pravesh Singh v. State of Bihar
Supreme Court of India, 22 September 2006, 2 judges
The Court held that employees of a co-operative electricity society whose licence was revoked had no contractual, statutory or equitable right, including by legitimate expectation, to be absorbed by the Bihar State Electricity Board, and dismissed their appeal.
Facts
The Bihar Government, the Bihar State Electricity Board and the Rural Electrification Corporation set up a co-operative society in 1976 to distribute electricity in the Futwah and Phulwari Sharif Blocks under a licence under the Indian Electricity Act, 1910. On the Board's recommendation the State revoked the licence in 1995. A committee suggested that the Board take work from the society's employees and consider absorbing eligible ones, but the State later decided that only the society's assets and liabilities would go to the Board, not its employees. The society went into liquidation. Its employees sought a direction to the Board to absorb them, relying on legitimate expectation, fairness in action and the Board's past absorption of employees of private licensees. The Patna High Court dismissed their writ petitions and their Letters Patent Appeal.
Questions before the Court
- Was the Board under any contractual, statutory or equitable obligation to absorb the employees of the society?
- What is legitimate expectation, and did the employees have one?
- Does a direction given under Article 142 on special facts operate as a binding precedent?
What the Court held
- There was no contractual obligation, as the Board gave no assurance to absorb the employees, and no statutory obligation, as Sections 3 to 7A of the Indian Electricity Act, 1910 do not require a purchaser of an undertaking to take over its employees.
- Legitimate expectation is not a legal right but an expectation of a benefit flowing from a promise or a regular, consistent practice. It is procedural, and may entitle a person only to an opportunity to show cause or to an explanation; public interest or a change in policy may defeat it.
- Expectation based on established practice can be invoked only by someone with dealings with, or a recognised legal relationship with, the authority. The Board made no promise and had absorbed no licensee's employees for over two decades, so no legitimate expectation arose.
- Under Section 25FF of the Industrial Disputes Act, 1947, unless there is a specific provision for continuation of service, the natural consequence of a transfer of an undertaking is termination of employment with compensation, not absorption by the transferee.
- A direction given on special facts under Article 142 is not a binding precedent; only law declared under Article 141 binds. The appeal was dismissed.
Why it matters
The judgment states the doctrine of legitimate expectation: it is not a legal right, rests on a promise or regular and consistent practice, is procedural in character, ranks above fairness in action but below promissory estoppel, and can be defeated by public interest or policy change. It also states that directions under Article 142 on special facts are not binding precedents.
In the Court's words
Copied from the official judgment; each passage links to its page.
“What is legitimate expectation? Obviously, it is not a legal right. It is an expectation of a benefit, relief or remedy, that may ordinarily flow from a promise or established practice. The term 'established practice' refers to a regular, consistent predictable and certain conduct, process or activity of the decision-making authority. The expectation should be legitimate, that is, reasonable, logical and valid. Any expectation which is based on sporadic or casual or random acts, or which is unreasonable, illogical or invalid cannot be a legitimate expectation.”
“As a ground for relief, the efficacy of the doctrine is rather weak as its slot is just above 'fairness in action' but far below 'promissory estoppel'. It may only entitle an expectant : (a) to an opportunity to show cause before the expectation is dashed; or (b) to an explanation as to the cause for denial. In appropriate cases, courts may grant a direction requiring the Authority to follow the promised procedure or established practice.”
“The doctrine of legitimate expectation based on established practice (as contrasted from legitimate expectation based on a promise), can be invoked only by someone who has dealings or transactions or negotiations with an authority, on which such established practice has a bearing, or by someone who has a recognized legal relationship with the authority. A total stranger unconnected with the authority or a person who had no previous dealings with the authority and who has not entered into any transaction or negotiations with the authority, cannot invoke the doctrine of legitimate expectation, merely on the ground that the authority has a general obligation to act fairly.”
“Law declared by this Court is binding under Article 141. Any direction given on special facts, in exercise of jurisdiction under Article 142, is not a binding precedent. Therefore, the decision in Govindarajulu cannot be the basis for claiming relief similar to what was granted in that case.”
Provisions interpreted
- Sections 3 to 7A, Indian Electricity Act, 1910
- Section 25FF, Industrial Disputes Act, 1947
- Article 141, Constitution
- Article 142, Constitution
Related judgments
- Follows Union of India v. Hindustan Development Corporation (1993)“this Court explained the nature and scope of the doctrine of 'legitimate expectation' thus” (page 6)
Case and bench
- Parties
- Ram Pravesh Singh v. State of Bihar
- Case
- Appeal (civil) 4191 of 2004
- Decided
- 22 September 2006
- Bench
- B.P. Singh, R.V. Raveendran
- Opinions
- Judgment delivered by R.V. Raveendran, J. for a bench of two judges. No separate opinion appears in the file.
Questions on this case
4 questions in live Law Maker papers mention this case. Practise them with the landmark judgments questions.