Holding

No vested right accrued to the displaced abkari workers and the 2004 modification of the rehabilitation policy was valid, rendering the claim of legitimate expectation unenforceable.

Summary

The Kerala government banned arrack in 1996, leaving 12,500 abkari workers unemployed. In 2002 it issued a Government Order reserving 25% of future daily‑wage vacancies in Kerala State Beverages Corporation for these displaced workers, but later altered the policy in 2004 to earmark those vacancies for the dependent sons of workers who had died. The workers claimed a vested right to employment and argued that the change violated their legitimate expectation and Articles 14, 19 and 21 of the Constitution. The Supreme Court held that the 2002 order did not create an indefeasible vested right and that the government could modify its policy in the public interest without breaching substantive or procedural legitimate expectation. Applying the proportionality test, the Court found the modification reasonable, not arbitrary or excessive, and therefore upheld the government’s action. Consequently, the appeals were allowed and the contempt petition was closed.

Issues considered

Whether the displaced abkari workers had a vested right of rehabilitation under the 2002 Government Order
Whether the modification of the 2002 order by the 2004 Government Order is invalid for unfairness, arbitrariness or unreasonableness
Scope and enforceability of substantive and procedural legitimate expectation in this context
Whether the change in policy violates Articles 14, 19 and 21 of the Constitution
Whether the respondents are entitled to any relief after more than two decades since the ban
Whether the proportionality test applies to the governmental decision

Legislation cited

Abkari Act, 1902

Subjects

Administrative LawLegitimate ExpectationVested RightProportionalityPolicy ModificationRehabilitationEmploymentArrack BanPublic InterestJudicial ReviewFundamental RightsArticle 14Article 19Article 21

Judgment

164 [2019]
SUPREME COURT 17 S.C.R. 164
REPORTS [2019] 17 S.C.R.

A KERALA STATE BEVERAGES (M AND M)
CORPORATION LIMITED
v.
P.P. SURESH & ORS, ETC. ETC. & ORS.
B (Civil Appeal Nos.7804-7813 of 2019)
OCTOBER 04, 2019
[L. NAGESWARA RAO AND HEMANT GUPTA, JJ.]
Administrative Law:
C Policy decision – Rehabilitation of displaced workers – On
facts, ban on sale of arrack in the State – Arrack workers deprived
of their livelihood – Government did not give re-employment –
Workers then sought rehabilitation – Issuance of Government order
to provide employment to displaced abkari workers, adjusting them
against 25% of the daily wage vacancies that would arise in the
D
Corporation – Thereafter, alteration in the criteria for rehabilitation
of arrack workers and issuance of Government order directing to
earmark the vacancies for dependent sons of arrack workers who
perished consequent to loss of employment – Arrack workers filed
writ petition seeking implementation of the first government order
E – Single Judge of the High Court directed the State Government
to implement the first government order – Division Bench upheld
the order – On appeal, held: There was no assurance given to all
the displaced abkari workers that they would be re-employed –
Assurance given by the Government was to reserve 25% of daily
wage vacancies that would arise in future for the displaced abkari
F
workers – Thus, no vested right accrued to all the abkari workers
to claim employment – Further, it came to the notice of the
Government that several displaced abkari workers perished after
1996 and their families had to be provided immediate succor, as a
result the Government modified the policy decision due to
G administrative exigencies – Said decision cannot be termed as
unreasonable or arbitrary as it was taken in light of overriding
public interest and has to be given due weight – Thus, the
expectation of the respondents for consideration against the
25 % of the future vacancies in daily wage workers in the
Corporation is not legitimate – Promise held out by the Government
H
164
KERALA STATE BEVERAGES (M AND M) CORPORATION 165
LTD. v. P.P. SURESH & ORS.

to provide employment to the displaced Abkari workers had become A
an impossible task in view of the non-availability of vacancies in
the Corporation – Impairment of the fundamental rights of the
respondents due to the change in policy cannot be said to be
excessive – Change in policy is not disproportionate – Thus, the
order passed by the High Court set aside.
B
Legitimate Expectation – Principle of substantive legitimate
expectation – Principle of procedural legitimate expectation –
Application of – Stated.
Administrative Decision – Review of – Application of test of
proportionality – Stated. C
Allowing the appeals, the Court
HELD: 1.1 The Government took a decision to provide
employment to displaced abkari workers, adjusting them against
25% of the daily wage vacancies that would arise in the
Corporation. There was no assurance given to all the displaced D
abkari workers that they would be re-employed. The assurance
given by the Government was to reserve 25% of daily wage
vacancies that would arise in future for the displaced abkari
workers. It cannot be said that a vested right accrued to all the
abkari workers to claim employment in retail outlets in the
E
Corporation. It cannot be said that a vested right was created
by the Government Order dated 20.02.2002 and that it was
indefeasible. There was no unequivocal promise that all the
displaced workers would be provided re-employment. [Para 11]
[176-B-D]
1.2 The assurance given to the abkari workers that they F
would be considered for employment in 25% of the daily wage
vacancies that would arise in the Corporation, according to the
Government, had to be altered due to administrative exigencies.
The implementation of the decision to provide employment to
displaced abkari workers was not possible in view of the fact G
that the number of vacancies of daily wage employees after the
year 2002 were very less whereas there was a large number of
displaced abkari workers to be accommodated. In view of the
difficulties faced by the Government in implementation of the
Government Order dated 20.02.2002, the Government found it
H
166 SUPREME COURT REPORTS [2019] 17 S.C.R.

A fit to modify the policy decision by a Government Order dated
07.08.2004. It came to the notice of the Government that several
displaced abkari workers perished after 1996. Their families had
to be provided immediate succur. To give priority to the families
in immediate need, the Government decided that dependent
sons of the deceased abkari workers who died after the year
B
1996 would be provided employment against the 25% daily wage
vacancies in the Corporation. The said decision cannot be
termed as unreasonable or arbitrary as it was taken in light of
overriding public interest. Relevant considerations were taken
into account by the Government to alter the Government Order
C dated 20.02.2002. [Para 12] [176-D-H]
2.1 An expectation entertained by a person may not be
found to be legitimate due to the existence of some
countervailing consideration of policy or law. Administrative
policies may change with changing circumstances, including
D changes in the political complexion of governments. The liberty
to make such changes is something that is inherent in the
constitutional form of government. [Para 17] [178-D-E]
2.2 The decision makers’ freedom to change the policy in
public interest cannot be fettered by applying the principle of
E substantive legitimate expectation. So long as the Government
does not act in an arbitrary or in an unreasonable manner, the
change in policy does not call for interference by judicial review
on the ground of a legitimate expectation of an individual or a
group of individuals being defeated. [Para 18] [178-E-F]
F 2.3 The assurance given to the respondents that they
would be considered for appointment in the future vacancies of
daily wage workers, according to the respondents, gives rise to
a claim of legitimate expectation. The explanation given by the
State Government that the change in policy due was to the
difficulty in implementation of the Government order dated
G 20.02.2002 is accepted. Due deference has to be given to the
discretion exercised by the State Government. As the decision
of the Government to the change policy was to balance the
interests of the displaced Abkari workers and a large number
of unemployed youth in the State of Kerala, the decision taken
H on 07.08.2004 cannot be said to be contrary to public interest.
KERALA STATE BEVERAGES (M AND M) CORPORATION 167
LTD. v. P.P. SURESH & ORS.

The overriding public interest which was the reason for change A
in policy has to be given due weight while considering the claim
of the respondents regarding legitimate expectation. The
expectation of the Respondents for consideration against the 25
per cent of the future vacancies in daily wage workers in the
Corporation is not legitimate. [Para 19] [178-G-H; 179-A-D]
B
2.4 There is no dispute that each of the displaced abkari
workers was not given an opportunity before the assurance was
altered. However, the Government contended that the displaced
abkari workers were consulted through their representatives
before passing the Government Order dated 07.08.2004. The
requirement of an opportunity to be given before altering the C
policy by which an assurance is given to a large number of
individuals has to be examined. [Para 20] [179-D-F]
2.5 In case of a complaint that an administrative authority
has reneged from a promise without giving an opportunity of
hearing which was the past practice, a claim of legitimate D
expectation can be raised. In other words, if the policy or
practice was to give an opportunity before the benefit is
withdrawn, the non-compliance of such a practice would result
in defeating the legitimate expectation of an individual or group
of individuals. There can be situation where the very claim made
E
can be with regard to an opportunity not being given before
withdrawing a promise which results in defeating the ‘legitimate
expectation’ [Paras 21, 22] [179-F-G; 180-D-E]
2.6 The principle of procedural legitimate expectation
would apply to cases where a promise is made and is withdrawn
without affording an opportunity to the person affected. The F
imminent requirement of fairness in administrative action is to
give an opportunity to the person who is deprived of a past
benefit. There is an exception to the said rule. If an
announcement is made by the Government of a policy conferring
benefit on a large number of people, but subsequently, due to G
overriding public interest, the benefits that were announced
earlier are withdrawn, it is not expedient to provide individual
opportunities to such innominate number of persons. In other
words, in such cases, an opportunity to each individual to explain
the circumstances of his case need not be given. [Para 23] [180-
E-G] H
168 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 3.1 While exercising primary review, the Court is entitled
to ask the State to justify the policy and whether there was an
imminent need for restricting the fundamental rights of the
claimants. In secondary review, the Court shows deference to
the decision of the executive. [Para 27] [182-C-D]
B 3.2 Proportionality involves ‘balancing test’ and ‘necessity
test’. Whereas the balancing test permits scrutiny of excessive
and onerous penalties or infringement of rights or interests and
a manifest imbalance of relevant considerations, the necessity
test requires infringement of human rights to be through the
least restrictive alternatives. An administrative decision can be
C said to be proportionate if: the objective with which a decision
is made to curtail fundamental rights is important; the measures
taken to achieve the objective have a rational connection with
the objective; and the means that impair the rights of individuals
are no more than necessary. [Paras 28, 29] [182-D-F]
D 3.3 In the instant case, the challenge to the order dated
07.08.2004 by which the respondent was deprived of an
opportunity of being considered for employment is on the ground
of violation of Article 14, 19 and 21 of the Constitution. The
High Court accepted the submissions made by the Respondents
and held that the Order dated 07.08.2004 is vitiated as it suffers
E from the vice of arbitrariness and unreasonableness. However,
in view of the challenge to the decision of the Government being
on the ground of violation of Articles 14, 19 and 21, the test of
proportionality should be applied to review the impugned
decision of the Government. [Para 30] [182-F-H]
F 3.4 The promise held out by the Government to provide
employment to the displaced Abkari workers had become an
impossible task in view of the non-availability of vacancies in the
Corporation. The decision taken by the Government in
overriding public interest was a measure to strike a balance
between the competing interest of the displaced Abkari workers
G
and unemployed youth in the State of Kerala. The impairment
of the fundamental rights of the Respondents due to the change
in policy cannot be said to be excessive. Hence, it cannot be
said that the change in policy regarding re- employment of
displaced abkari workers is disproportionate. [Para 32] [183-D-
H F]
KERALA STATE BEVERAGES (M AND M) CORPORATION 169
LTD. v. P.P. SURESH & ORS.

3.5 The contention of respondents which found favour with A
the High Court was that the Order dated 07.08.2004 was found
illegal in Writ Petition (c) No. 26878 of 2007 and that the said
judgment has become final. Aggrieved by their non-appointment
in spite of inclusion in the list of 265 dependent sons of the
deceased displaced workers, they filed a Writ Petition seeking
a direction to the Government to appoint them. The High Court B
directed the Government to appoint those persons who were
included in the list, pursuant to the Order dated 07.08.2004
within a period of six weeks. The High Court further observed
that the Order dated 20.02.2002 should not have been altered
and directed the Government to reconsider the order dated
C
07.08.2004. The Government complied with the direction of the
High Court in the Writ Petition and issued a Government Order
dated 30.04.2009 by which employment was provided to 265
dependent sons of deceased Abkari workers. Therefore, it
cannot be said that the validity of the order dated 07.08.2004
has been finally decided in Writ Petition (c) No. 26878 of 2007. D
[Para 33] [183-F-H]
3.6 The findings recorded by the High Court that a right
of appointment accrued to the Respondents and it matured into
a Right to Life as provided in Article 21 of the Constitution,
cannot be accepted. The opinion of the High Court that the Order
E
dated 07.08.2004 is in continuation of the Order dated
20.02.2002 in view of the Order dated 20.02.2002 not being
superceded, is disapproved. The Order dated 07.08.2004 was
issued in modification of the Order dated 20.02.2002. A close
scrutiny of both the Orders would indicate that the Order dated
07.08.2004 replaces the Order dated 20.02.2002 in view of a F
fresh decision taken to provide employment only to the
dependent sons of deceased Abkari workers. [Para 34] [184-B-
D]
Kerala Samsthana Chethu Thozhilali Union v. State
of Kerala & Ors. (2006) 4 SCC 327 : [2006] 3 SCR
G
420 ; Union of India v. Hindustan Development
Corporation & Ors. (1993) 3 SCC 499 : [1993] 3 SCR
128 ; Punjab Communications Ltd. v. Union of India
& Ors. (1999) 4 SCC 727 : [1999] 2 SCR 1033 ; Ram
Pravesh Singh v. State of Bihar (2006) 8 SCC 381 :
[2006] 6 Suppl. SCR 512 ; Om Kumar v. Union H
170 SUPREME COURT REPORTS [2019] 17 S.C.R.

A of India AIR 2000 SC 3689 : [2000] 4 Suppl. SCR
693 ; Coimbatore District Central Co- operative Bank
v. Coimbatore District Central Co-operative Bank
Employees Association & Anr. (2007) 4 SCC 669 :
[2007] 5 SCR 430 – referred to.
B Council of Civil Service Unions and Ors. v. Minister
for the Civil Service (1984) 3 All ER 935 ; Hughes v.
Deptt. of Health and Social Security, AC at p. 788 ;
Findlay v. Secy. Of State of Home Deptt. (1984) 3 All
ER 801 ; Attorney General of Hong Kong v. Ng Yuen
Shiu [1983] 2 All ER 346 – referred to.
C
Judicial Review of Administrative Action (1955) and
Wade & Forsyth: Administrative Law (2005) – referred
to.
Case Law Reference
D [2006] 3 SCR 420 referred to Para 4
[1993] 3 SCR 128 referred to Para 14
[1999] 2 SCR 1033 referred to Para 15
[2006] 6 Suppl. SCR 512 referred to Para 16
E
[2000] 4 Suppl. SCR 693 referred to Para 26
[2007] 5 SCR 430 referred to Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7804-
7813 of 2019.
F
From the Judgment and Order dated 21.12.2015 of the High
Court of Kerala at Ernakulam in W.A. Nos. 1416, 1440, 1441, 1442,
1479, 1482, 1488, 1503, 1505 and 2342 of 2015.
With
G Civil Appeal Nos. 7814-7832, 7833, 7834 of 2019, Contempt
Petition (C) No.638 of 2019 In Special Leave Petition (C) Nos.5550-
5559 of 2016.
Jaideep Gupta, P. V. Surendranath, Sr. Advs., V. Giri, Jogy Scaria,
Muthuehharan S., Ms. Beena Victory, V. K. Biju, Sayi George, Abhay
H Pratap Singh, G. Prakash, C. K. Sasi, Nayantara Roy, Abdulla Naseeh
KERALA STATE BEVERAGES (M AND M) CORPORATION 171
LTD. v. P.P. SURESH & ORS.

U.T., M. T. George, Mrs. Susy Abraham, Johns George, Saiby Jose A
Kidangoor, Sajith P. Warrier, Ms. Nazia Hasan, Mohd. Monish, Renjith
B. Marar, Sadchith P. Kurup, Anil Sharma, Lakhi Chand, Rahat Bansal,
Varun Mudgal, M. Gireesh Kumar, Ankur S. Kulkarni, Ms. Richa
Bharadwaj, Roy Abraham, Ms. Reena Roy, Ms. Seema Jain, Akhil
Abraham, Kamlesh Kumar Mittra, G. Prakash, Jishnu M.L.,
B
Mrs. Priyanka Prakash, Mrs. Beena Prakash, Lekha Sudhakaran,
Ms. Reshmitha R. Chandran, Sawan Kumar Shukla, Subhash Chandran
P., Sureshan P., Ankur S. Kulkarni, Sajith. P, Lakshmeesh S. Kamath,
Ms. Lakshmi N. Kaimal, Himinder Lal, S. Mahendran, G. Prakash,
Ramesh Babu M. R., Venkita Subramoniam T.R., V. K. Biju, Sayi
George, Advs. for the appearing parties. C
The Judgment of the Court was delivered by
L. NAGESWARA RAO, J.
Leave granted.
D
1. Rehabilitation of Abkari workers is the core issue that arises
in the Appeals above. Displaced workers who lost employment due to
the ban of arrack in the State of Kerala, were successful in the Writ
Petition filed by them. The Appeals filed by the State of Kerala and
the Kerala State Beverages Corporation Limited (for short, ‘the
Corporation’) were dismissed by a Division Bench of the Kerala High E
Court. Thus, the above Appeals.
2. Retail outlets for sale of arrack were started by the Corporation
in the year 1995, in view of the decision taken by the Government of
Kerala to abolish arrack shops which were hitherto run by private
parties. Thereafter, on 01.04.1996, arrack was banned in the State of F
Kerala. Consequentially, 12,500 arrack workers were deprived of their
livelihood. Since it was not possible to provide re-employment to the
displaced arrack workers, the State Government paid compensation of
Rs. 30,000/- each to the arrack workers in lieu of rehabilitation. In
addition, an ex gratia of Rs.2000/- was also disbursed by the
Government, apart from the provident fund pension and DCRG. G
Dissatisfied with the decision of the Government in not providing re-
employment, the arrack workers launched an agitation demanding
rehabilitation. Pursuant to an agreement between the arrack workers
and the Government, G.O.(Rt) No.81/2002/TD dated 20.02.2002 was
issued. The Government ordered that 25% of all daily wage employment H
172 SUPREME COURT REPORTS [2019] 17 S.C.R.

A vacancies which would arise in the Corporation in future shall stand
reserved to be filled up by displaced workers who were members of
the Abkari Workers Welfare Fund Board and whose services were
terminated due to the ban of arrack.
3. The criteria for rehabilitation of arrack workers was altered
B by G.O.(Rt) No. 567/2004/TD dated 07.08.2004. Vide this Order, 25%
of all daily wage employment vacancies likely to arise in the Corporation,
were directed to be earmarked for the dependent sons of arrack
workers who had perished consequent to the loss of employment, due
to the ban on arrack in the State. In case the claimants exceeded the
number of available vacancies, employment would be provided after a
C
selection. The eligibility for seeking re-employment was that the
dependent sons of deceased arrack workers should not have completed
38 years of age.
4. In the meanwhile, Rules 4(2) and 9(10)(b) were introduced in
the Kerala Abkari Shops Disposal Rules, 2002 (for short “the Rules”).
D
The said Rules provided for absorption of arrack workers who lost
employment due to the abolition of the Abkari shops. The said Rules
were declared ultra vires the Abkari Act enacted in the year, 1902
(for short “the Act”), by a judgment of this Court in Civil Appeal
No.1732 of 2006 dated 24.03.2006. [See: Kerala Samsthana Chethu
E Thozhilali Union v. State of Kerala & Ors.1]
5. A list of 265 persons, who were the dependent sons of
deceased arrack workers, was prepared pursuant to the Government
Order dated 07.08.2004. They approached the High Court by filing a
Writ Petition in which a direction was sought to the Appellant/ State to
F provide employment to them. The High Court directed implementation
of the Government Order dated 07.08.2004, by appointing the dependent
sons of the deceased arrack workers within a period of six weeks from
the date of the judgment. Further, the High Court by its judgment dated
03.03.2009 directed the Government to reconsider the Order dated
07.08.2004 by which the benefit of rehabilitation was not given to all
G
the arrack workers who remained unemployed pursuant to the ban of
arrack. G.O. (Rt.) No.399/09/TD was issued by the Government on
30.04.2009 implementing the direction issued in Writ Petition (C)
No.26878 of 2007 by appointing all 265 persons whose names were
1
H (2006) 4 SCC 327
KERALA STATE BEVERAGES (M AND M) CORPORATION 173
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

included in the list of dependent sons of deceased arrack workers. No A
relief was given to those workers who were jobless pursuant to the
ban on arrack. G.O.(Rt) No. 562/09/TD dated 22.06.2009 was issued,
citing practical difficulties in implementation of Government Order dated
20.02.2002, such as want of vacancies, fixing suitable criteria to
accommodate them, etc.
B
6. The legality and validity of the Government Orders dated
07.08.2004 and 22.06.2009 was challenged by the displaced arrack
workers. They sought implementation of the Order passed by the
Government on 20.02.2002 by which the benefit of rehabilitation was
given to all the arrack workers who remained unemployed pursuant to
the ban. By a judgment dated 29.05.2015, the learned Single Judge of C
the High Court of Kerala allowed the Writ Petitions and directed the
State Government to implement G.O.(Rt) No.81/2002/TD dated
20.02.2002 within a period of two months from the date of the judgment.
The learned Single Judge was of the view that the displaced workmen
had a legitimate expectation of continued employment, which they could D
claim. The justification of the Government that the change of policy
was on account of overriding public interest, was not accepted by the
learned Single Judge.
7. In the Appeals preferred by the Appellants, the Division Bench
of the High Court observed that the Government Order dated E
20.02.2002 created legitimate expectation in the workers that they would
be entitled for an appointment, as of right. Any change in policy should
have been preceded by a suitable opportunity of hearing being given to
the arrack workers. In view of the said findings, the Division Bench
held that the implementation of the Government Order dated 07.08.2004
is arbitrary and violative of Article 14 of the Constitution of India (for F
short “the Constitution”). As the matter pertained to the loss of
employment resulting in deprivation of livelihood of the arrack workers,
the High Court was of the opinion that the Government Order dated
07.08.2004 was also violative of Article 21 of the Constitution. The
Government Order dated 07.08.2004 was only in modification of the G
earlier Order dated 20.02.2002 and not in supersession, according to
the High Court. Apart from providing employment to the dependent sons
of the deceased arrack workers, the obligation cast on the Government
to provide employment to displaced Abkari workers, by Order dated
20.02.2002, continued to exist. The Division Bench of the High Court
referred to the Directive Principles, especially Articles 38 to 43 of the H
174 SUPREME COURT REPORTS [2019] 17 S.C.R.

A Constitution to hold that the policy decision taken by the Government
to provide rehabilitation was for the purpose of achieving social
objectives. Concluding that the Government Order dated 07.08.2004
suffers from the vice of arbitrariness and unreasonableness, the Division
Bench upheld the judgment of the learned Single Judge by which the
displaced arrack workers were directed to be provided employment in
B
the Corporation.
8. Before this Court, it was contended on behalf of the State
that the Government Order dated 07.08.2004 modifying the earlier
Government Order dated 20.02.2002 was due to overriding public
interest. The Government found it very difficult to implement the decision
C to provide employment to the displaced Abkari workers in the
Corporation. The number of vacancies available for daily wage
workers in the year 2002 was only 51. After a detailed discussion with
the stakeholders, a decision was taken to modify the Government Order
dated 20.02.2002 and to provide employment only to the dependent sons
D of displaced Abkari workers who died after the ban on arrack.
According to the State, there was no vested right in the displaced Abkari
workers to claim public employment. As the decision to modify/ alter
the Government Order dated 20.02.2002 was in overriding public
interest, the Respondents could not claim that they had legitimate
expectation. It was submitted on behalf of the State that the decision
E to modify the Government Order dated 20.02.2002 was pursuant to a
policy decision of the State which should not normally be interfered with.
Learned senior counsel for the State submitted that loss of employment
of the displaced workers was more than 20 years ago and the
Respondents could not claim employment now. He further stated that
the Respondents who lost their livelihood due to ban on arrack were
F suitably compensated in the year 1996 itself and it was not possible to
assume that they were unemployed even after a lapse of 23 years since
losing their jobs. Fixing suitable criteria to accommodate 12,500 persons
against 51 vacancies was a challenge for the Government. A meeting
was held on 22.10.2003 by the Chief Minister to work out the modalities
G of implementation of the Government Order dated 20.02.2002. It was
decided in the said meeting that only the dependent sons of the
deceased displaced workers who had not completed 38 years of age
would be eligible for appointment in the Corporation. A list of such
persons was prepared. In all, 265 persons figured in the list and were
given appointment. These appointments were made pursuant to the
H Government Order dated 07.08.2004. The Corporation contended that
KERALA STATE BEVERAGES (M AND M) CORPORATION 175
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

the appointment to all posts in the Corporation is done through the Kerala A
State Public Service Commission. Learned senior counsel for the
Corporation also submitted that providing employment to the displaced
Abkari workers was detrimental to other eligible candidates who would
lose an opportunity of appointment.
9. The learned counsel appearing on behalf of the Respondents B
justified the judgment of the High Court by arguing that the decision to
modify the Government Order dated 20.02.2002 was arbitrary and
unreasonable. They submitted that the assurance given by the
Government in the year 2002 that the displaced Abkari workers would
be considered against 25% of the daily wage vacancies in the
Corporation, created a vested right. They argued that the Respondents C
had a legitimate expectation in assuming that the State would act in
fairness. It was contended on behalf of some of the Respondents that
providing employment only to the dependent sons of deceased abkari
workers was an invitation to the displaced workers to commit suicide.
Reliance was placed by learned counsel for the Respondents on the D
judgment of the High Court in Writ Petition (Civil) No.26878 of 2007
to submit that the issue pertaining to the correctness of the Government
Order dated 07.08.2004 had attained finality. It was argued on behalf
of the Respondents that long and several number of years had been
spent by them in litigation and the majority of displaced abkari workers
were still unemployed. If they could not be re-employed, they submitted E
that they should be monetarily compensated, at least.
10. The points that arise for our consideration in these Appeals
are:
(a) Whether the displaced abkari workers had a vested right F
of rehabilitation pursuant to the Government Order dated
20.02.2002;
(b) Whether modification/ alteration of the Government
Order dated 20.02.2002 is vitiated due to unfairness,
arbitrariness and unreasonableness. G
(c) The scope of the legitimate expectation of the
Respondents; and
(d) Whether the Respondents are entitled to any relief after
the passage of 23 years since they lost their jobs due
to ban on arrack. H
176 SUPREME COURT REPORTS [2019] 17 S.C.R.

A A. Vested Right of Employment
11. There is no dispute that a number of abkari workers lost their
livelihood due to the ban on arrack in the State, in the year 1996.
Dissatisfied with the monetary compensation provided to them, they
demanded employment in the Corporation. The agitation turned violent
B and to find an immediate solution to the law and order problem, the
Government took a decision to provide employment to displaced abkari
workers, adjusting them against 25% of the daily wage vacancies that
would arise in the Corporation. There was no assurance given to all
the displaced abkari workers that they would be re-employed. The
assurance given by the Government was to reserve 25% of daily wage
C vacancies that would arise in future for the displaced abkari workers.
It cannot be said that a vested right accrued to all the abkari workers
to claim employment in retail outlets in the Corporation. We do not agree
with the submission of the Respondents that a vested right was created
by the Government Order dated 20.02.2002 and that it was indefeasible.
D There was no unequivocal promise that all the displaced workers would
be provided re-employment.
12. The assurance given to the abkari workers that they would
be considered for employment in 25% of the daily wage vacancies that
would arise in the Corporation, according to the Government, had to
E be altered due to administrative exigencies. The implementation of the
decision to provide employment to displaced abkari workers was not
possible in view of the fact that the number of vacancies of daily wage
employees after the year 2002 were very less whereas there was a
large number of displaced abkari workers to be accommodated. In view
of the difficulties faced by the Government in implementation of the
F Government Order dated 20.02.2002, the Government found it fit to
modify the policy decision by a Government Order dated 07.08.2004.
It came to the notice of the Government that several displaced abkari
workers perished after 1996. Their families had to be provided
immediate succur. To give priority to the families in immediate need,
the Government decided that dependent sons of the deceased abkari
G
workers who died after the year 1996 would be provided employment
against the 25% daily wage vacancies in the Corporation. The said
decision cannot be termed as unreasonable or arbitrary as it was taken
in light of overriding public interest. Relevant considerations were taken
into account by the Government to alter the Government Order dated
H 20.02.2002.
KERALA STATE BEVERAGES (M AND M) CORPORATION 177
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

B. Legitimate Expectation A
13. The main argument on behalf of the Respondents was that
the Government was bound by its promise and could not have resiled
from it. They had an indefeasible legitimate expectation of continued
employment, stemming from the Government Order dated 20.02.2002
which could not have been withdrawn. It was further submitted on B
behalf of the Respondents that they were not given an opportunity before
the benefit that was promised, was taken away. To appreciate this
contention of the Respondents, it is necessary to understand the concept
of legitimate expectation.
14. The principle of legitimate expectation has been recognized C
by this Court in Union of India v. Hindustan Development
Corporation & Ors.2 If the promise made by an authority is clear,
unequivocal and unambiguous, a person can claim that the authority in
all fairness should not act contrary to the promise.
15. M. Jagannadha Rao, J. elaborately elucidated on legitimate
D
expectation in Punjab Communications Ltd. v. Union of India &
Ors.3 He referred to the judgment in Council of Civil Service Unions
and Ors. v. Minister for the Civil Service4 in which Lord Diplock
had observed that for a legitimate expectation to arise, the decisions of
the administrative authority must affect the person by depriving him of
some benefit or advantage which, E
(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 has been
communicated to him some rational grounds for
withdrawing it on which he has been given an F
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. G
Rao, J. observed in this case, that the procedural part of
legitimate expectation relates to a representation that a hearing or other
2
(1993) 3 SCC 499
3
(1999) 4 SCC 727
4
1985 AC 374 : (1984) 3 All ER 935 H
178 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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.
B 16. It has been held by R. V. Raveendran, J. in Ram Pravesh
Singh v. State of Bihar5 that legitimate expectation is not a legal right.
Not being a right, it is not enforceable as such. It may entitle an
expectant:
(a) to an opportunity to show cause before the expectation
C is dashed; or
(b) to an explanation as to the cause of denial. In
appropriate cases, the Courts may grant a direction
requiring the authority to follow the promised procedure
or established practice.
D Substantive Legitimate Expectation
17. An expectation entertained by a person may not be found to
be legitimate due to the existence of some countervailing consideration
of policy or law.6 Administrative policies may change with changing
circumstances, including changes in the political complexion of
E governments. The liberty to make such changes is something that is
inherent in our constitutional form of government. 7
18. The decision makers’ freedom to change the policy in public
interest cannot be fettered by applying the principle of substantive
legitimate expectation.8 So long as the Government does not act in an
F arbitrary or in an unreasonable manner, the change in policy does not
call for interference by judicial review on the ground of a legitimate
expectation of an individual or a group of individuals being defeated.
19. The assurance given to the Respondents that they would be
considered for appointment in the future vacancies of daily wage
G workers, according to the Respondents, gives rise to a claim of legitimate
expectation. The Respondents contend that there is no valid reason for
5
(2006) 8 SCC 381
6
Administrative Law, Eleventh Edition, H.W.R. Wade & C.F. Forsyth
7
Hughes v. Deptt. of Health and Social Security, AC at p. 788
8
H Findlay v. Secy. Of State of Home Deptt. (1984) 3 All ER 801
KERALA STATE BEVERAGES (M AND M) CORPORATION 179
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

the Government to resile from the promise made to them. We are in A
agreement with the explanation given by the State Government that the
change in policy due was to the difficulty in implementation of the
Government order dated 20.02.2002. Due deference has to be given
to the discretion exercised by the State Government. As the decision
of the Government to the change policy was to balance the interests
B
of the displaced Abkari workers and a large number of unemployed
youth in the State of Kerala, the decision taken on 07.08.2004 cannot
be said to be contrary to public interest. We are convinced that the
overriding public interest which was the reason for change in policy
has to be given due weight while considering the claim of the
Respondents regarding legitimate expectation. We hold that the C
expectation of the Respondents for consideration against the 25 per cent
of the future vacancies in daily wage workers in the Corporation is not
legitimate.
Procedural Legitimate Expectation
20. The other contention of the Respondents which found favour D
with the High Court was that they were entitled for an opportunity before
the assurance of rehabilitation given to them was withdrawn. There is
no dispute that each of the displaced abkari workers was not given an
opportunity before the assurance was altered. However, the
Government contended that the displaced abkari workers were E
consulted through their representatives before passing the Government
Order dated 07.08.2004. The requirement of an opportunity to be given
before altering the policy by which an assurance is given to a large
number of individuals has to be examined.
21. In case of a complaint that an administrative authority has F
reneged from a promise without giving an opportunity of hearing which
was the past practice, a claim of legitimate expectation can be raised.
In other words, if the policy or practice was to give an opportunity before
the benefit is withdrawn, the non-compliance of such a practice would
result in defeating the legitimate expectation of an individual or group
of individuals. In Attorney General of Hong Kong v. Ng Yuen Shiu9, G
the Privy Council was concerned with a dispute relating to an assertion
of legitimate expectation of hearing, by an illegal immigrant. The
Respondent in that case entered Hong Kong illegally and remained for

9
[1983] 2 All ER 346 H
180 SUPREME COURT REPORTS [2019] 17 S.C.R.

A a long period of time without being detected. He became part owner
of a factory which employed several workers. A change in immigration
policy was announced whereby illegal immigrants would be interviewed
in due course, but no guarantee was given that they would not be
removed from Hong Kong. The Respondent approached the
immigration authorities for interview and after being interviewed he was
B
detained until a removal order was made by the Director of Immigration.
His appeal was dismissed by the Immigration Tribunal. The Court of
Appeal of Hong Kong granted the Respondent an order of prohibition
till an opportunity was given to him to explain the circumstances of his
case before the Director. The Appeal filed by the Attorney General of
C Hong Kong was dismissed by the Privy Council. The only question
raised by the Respondent in the Appeal was whether he was entitled
to have a fair inquiry under common law, before a removal order was
made against him. Without expressing any opinion on violation of
principles of natural justice, the right of hearing of the Respondent in
the peculiar facts of the case was adjudicated upon. It was held that
D
the Respondent had a ‘legitimate expectation’ of being accorded a
hearing before an order of removal was passed.
22. We have referred to the above judgment to demonstrate that
there can be situation where the very claim made can be with regard
to an opportunity not being given before withdrawing a promise which
E
results in defeating the ‘legitimate expectation’.
23. The principle of procedural legitimate expectation would apply
to cases where a promise is made and is withdrawn without affording
an opportunity to the person affected. The imminent requirement of
F fairness in administrative action is to give an opportunity to the person
who is deprived of a past benefit. In our opinion, there is an exception
to the said rule. If an announcement is made by the Government of a
policy conferring benefit on a large number of people, but subsequently,
due to overriding public interest, the benefits that were announced
earlier are withdrawn, it is not expedient to provide individual
G opportunities to such innominate number of persons. In other words,
in such cases, an opportunity to each individual to explain the
circumstances of his case need not be given. In Union of India v.
Hindustan Development Corporation and Ors. (supra) it was held
that in cases involving an interest based on legitimate expectation, the
H Court will not interfere on grounds of procedural fairness and natural
KERALA STATE BEVERAGES (M AND M) CORPORATION 181
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

justice, if the deciding authority has been allotted a full range of choice A
and the decision is taken fairly and objectively.
C. Judicial Review and Proportionality
24. The challenge to the order dated 07.08.2004 by which the
Respondents were deprived of an opportunity of being considered for
employment is on the ground of violation of Articles 14, 19 and 21 of B
the Constitution of India. Lord Diplock in Council of Civil Service
Unions and Ors. v. Minister for the Civil Services 10, held that the
interference with an administrative action could be on the grounds of
‘illegality’, ‘irrationality’ and ‘procedural impropriety’. He was of the
opinion that ‘proportionality’ could be an additional ground of review in
C
the future. Interference with an administrative decision by applying
the Wednesbury’s principles is restricted only to decisions which are
outrageous in its defiance of logic or of accepted moral standards that
no sensible person who applied his mind to the question to be decided
could have arrived at it.
25. Traditionally, the principle of proportionality has been applied D
for protection of rights guaranteed under the European Convention for
the Protection of Human Rights and Fundamental Freedoms, 1950.
26. In Om Kumar v. Union of India 11 , this Court held as
follows:
“By ‘proportionality’, we mean the question whether, while E
regulating exercise of fundamental rights, the appropriate
or least restrictive choice of measures has been made by the
legislature or the administrator so as to achieve the object
of the legislation or the purpose of the administrative order,
as the case may be. Under the principle, the Court will see F
that the legislature and the administrative authority ‘maintain
a proper balance between the adverse effects which the
legislation or the administrative order may have on the rights,
liberties or interests of persons keeping in mind the purpose
which they were intended to serve’. The legislature and the
administrative authority are, however, given an area of G
discretion or a range of choices but as to whether the choice
made infringes the rights excessively or not, is for the Court.
That is what is meant by proportionality.”
10
Infra n. 22
11
AIR 2000 SC 3689 H
182 SUPREME COURT REPORTS [2019] 17 S.C.R.

A In this case, M. Jagannadha Rao, J. examined the development
of principles of proportionality for review of administrative decision in
England and in India. After referring to several judgments, it was held
that the proportionality test is applied by the Court as a primary reviewing
authority in cases where there is a violation of Articles 19 and 21. The
proportionality test can also be applied by the Court in reviewing a
B
decision where the challenge to administrative action is on the ground
that it was discriminatory and therefore violative of Article 14. It was
clarified that the principles of Wednesbury have to be followed when
an administrative action is challenged as being arbitrary and therefore
violative of Article 14 of the Constitution of India. In such a case, the
C Court would be doing a secondary review.
27. While exercising primary review, the Court is entitled to ask
the State to justify the policy and whether there was an imminent need
for restricting the fundamental rights of the claimants. In secondary
review, the Court shows deference to the decision of the executive.
D 28. Proportionality involves ‘balancing test’ and ‘necessity test’.12
Whereas the balancing test permits scrutiny of excessive and onerous
penalties or infringement of rights or interests and a manifest imbalance
of relevant considerations, the necessity test requires infringement of
human rights to be through the least restrictive alternatives.13
E 29. An administrative decision can be said to be proportionate if:
(a) The objective with which a decision is made to curtail
fundamental rights is important;
(b) The measures taken to achieve the objective have a
F rational connection with the objective; and
(c) The means that impair the rights of individuals are no
more than necessary.
30. In the instant case, the Respondents challenged the order
dated 07.08.2004, as being violative of Articles 14, 19 and 21. The High
G Court accepted the submissions made by the Respondents and held that
the Order dated 07.08.2004 is vitiated as it suffers from the vice of
12
Coimbatore District Central Co-operative Bank v. Coimbatore District Central Co-
operative Bank Employees Association & Anr. (2007) 4 SCC 669
13
Judicial Review of Administrative Action (1955) and Wade & Forsyth:
H Administrative Law (2005) (2007) 4 SCC 669
KERALA STATE BEVERAGES (M AND M) CORPORATION 183
LTD. v. P.P. SURESH & ORS. [L. NAGESWARA RAO J.]

arbitrariness and unreasonableness. However, in view of the challenge A
to the decision of the Government being on the ground of violation of
Articles 14, 19 and 21, the test of proportionality should be applied to
review the impugned decision of the Government.
31. The contention of the Respondents was firstly, that their
fundamental rights have been violated by modification/alteration of the B
earlier assurance by the Government. Secondly, that the Respondents
lost an opportunity of being employed which resulted in deprivation of
their life and livelihood in violation of Article 21 of the Constitution. It
was further submitted that the decision is arbitrary and hence violative
of Article 14 of the Constitution. The contention of the Government
was that modification of the assurance given for employment to the C
displaced Abkari workers was unavoidable. It was contended on behalf
of the State that there is a rational connection between the measures
taken to modify and the objective with which the policy was altered.
The Government justified the decision by submitting that the means
adopted for impairment of the rights of the Respondents were not D
excessive.
32. The promise held out by the Government to provide
employment to the displaced Abkari workers had become an impossible
task in view of the non-availability of vacancies in the Corporation.
The decision taken by the Government in overriding public interest was E
a measure to strike a balance between the competing interest of the
displaced Abkari workers and unemployed youth in the State of Kerala.
The impairment of the fundamental rights of the Respondents due to
the change in policy cannot be said to be excessive. Hence, it cannot
be said that the change in policy regarding re-employment of displaced
abkari workers is disproportionate. F

33. Another contention of Respondents which found favour with
the High Court was that the Order dated 07.08.2004 was found illegal
in Writ Petition (C) No.26878 of 2007 and that the said judgment has
become final. Aggrieved by their non-appointment in spite of inclusion
in the list of 265 dependent sons of the deceased displaced workers, G
they filed a Writ Petition seeking a direction to the Government to
appoint them. The High Court directed the Government to appoint those
persons who were included in the list, pursuant to the Order dated
07.08.2004 within a period of six weeks. The High Court further
observed that the Order dated 20.02.2002 should not have been altered H
184 SUPREME COURT REPORTS [2019] 17 S.C.R.

A and directed the Government to reconsider the order dated 07.08.2004.
The Government complied with the direction of the High Court in the
Writ Petition above and issued a Government Order dated 30.04.2009
by which employment was provided to 265 dependent sons of deceased
Abkari workers. Therefore, it cannot be said that the validity of the
order dated 07.08.2004 has been finally decided in Writ Petition (C)
B
No.26878 of 2007.
34. We are not in agreement with the findings recorded by the
High Court that a right of appointment accrued to the Respondents and
it matured into a Right to Life as provided in Article 21 of the
Constitution. We disapprove the opinion of the High Court that the
C Order dated 07.08.2004 is in continuation of the Order dated 20.02.2002
in view of the Order dated 20.02.2002 not being superceded. The Order
dated 07.08.2004 was issued in modification of the Order dated
20.02.2002. A close scrutiny of both the Orders would indicate that the
Order dated 07.08.2004 replaces the Order dated 20.02.2002 in view
D of a fresh decision taken to provide employment only to the dependent
sons of deceased Abkari workers.
35. For the aforementioned reasons, the Appeals are allowed.
Contempt petition is closed.

E
Nidhi Jain Appeals allowed.

F

G

H