Holding

A change in government policy in the public interest may lawfully deny renewal of permits; doctrines of legitimate expectation and promissory estoppel cannot defeat such policy and no Article 14 violation occurs absent arbitrary discrimination.

Summary

The respondents, International Trading Co. and others, held permits under the Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act, 1981 to operate foreign deep‑sea fishing vessels in India's exclusive economic zone. Their permits were not renewed after the initial term, and the authorities gave no reasons. The respondents filed writ petitions; a Single Judge of the Delhi High Court dismissed them, but a Division Bench later held that renewal was a valuable right creating a legitimate expectation and directed the authorities to reconsider. The Union of India appealed. The Supreme Court held that a change in government policy in the public interest can lawfully deny renewal; the doctrines of legitimate expectation and promissory estoppel cannot override such policy, and there was no violation of Article 14 because no arbitrary discrimination was shown. Consequently, the appeals were allowed and costs awarded.

Issues considered

The denial of renewal of foreign deep‑sea fishing permits, based on a change in government policy, violates Article 14 of the Constitution.
Whether the renewal of the permits constitutes a vested or valuable right enforceable under the doctrine of legitimate expectation or promissory estoppel.
Whether the executive's discretion to alter policy is subject to the reasonableness test and can be challenged on grounds of arbitrariness.
The propriety of the High Court's direction to the authorities to reconsider the renewal applications.

Legislation cited

Subjects

legitimate expectationpromissory estoppelArticle 14administrative lawpublic interestpolicy changerenewal of permitsexclusive economic zonefisheriesreasonablenessarbitrariness

Judgment

UNION OF INDIA AND ANR. A
v.
INTERNATIONAL TRADING CO. AND ANR.

MAY 7, 2003

[SHIVARAJ V. PATIL AND ARIJIT PASAYAT, JJ.] B

Maritime Zones of India (Regulation of Fishery by Foreign Vessels) Act,
1981 and Rules thereunder/Constitution of India, 1950; Article 14:

Permit to operate Foreign Deep Sea Fishing Vessels in Indian Exclusive C
Economic Zone-Renewal denied on ground of change in Government policy
in public interest-Challenge to---Dismissed by the Single Judge of the High
Court-Allowed in appeal by the Division Bench holding renewal ofpermit a
valuable right/legitimate expectation and could be refused only on cogent and
valid reasons and should not be based on policy decision contrary to the D
statute-On appeal, Held: With the change in Government policy right of
renewal of permit could be denied in public interest-Doctrine of legitimate
expectation/promissory estoppel loses significance and cannot be invoked in
favour of renewal.

Foreign Deep Sea Fishing Vessels-Grant of licence to one party vis- E
a-vis denial of renewal of permit to another-Whether violative of Article
I 4-Held: Executive possesses discretion wide enough to effect changes in the
policy provided it must be made fairly and not arbitrarily-Changes 1,1 policy
must satisfY the test of reasonableness-Renewal/extension of the permit was
denied as per changes made in the Government policy-No material adduced p
to discount legitimacy of the policy-Equal treatment presupposes existence
of similar legal foothold-It does not countenance repetition of a wrong done
in anothercase-Hence, act of the Government in denial of renewal ofpermit
is not violative ofArticle 14 since no discrimination involved-Private-Interest
and Public Interest-Distinction between-Discussed-Administrative Law.
G
Words and Phrases:

'changes in policy', 'reasonableness '-Meaning of, in the context of
Article I 4 of the Constitution of India.
55 H
56 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A Doctrines:

Doctrines of 'legitimate expectation' and 'promissory estoppel '-Meaning
of

Respondent-Traders were granted permits under the provisions of
B the Maritime Zones of India (Regulation of Fishing by Foreign Vessels)
Act and Rules thereunder to operate Foreign Deep Sea Fishing Vessels in
the Exclusive Economic Sea Zones of India. Renewal of the permits was
denied without assigning any reasons. Aggrieved, respondents filed writ
petitions which were dismissed by the Single Judge of the High Court.
C However, on appeal, Division Bench of the High Court held the renewal
of permit is a valuable right involving legitimate expectation/promissory
estoppel and it could be refused on cogent and valid grounds only and
accordingly directed the concerned authority to reconsider renewal of the
permit in accordance with law. Hence the present appeals.

D It was contended for the appellants that denial of renewal of the
licence/permit was in conformity with the changed policy of the
Government; that neither the policy decision 'Nas contrary to the statute
nor doctrine of legitimate expectation/promissory estoppel could be
invoked for renewal of the permit; that the authorities acted fairly in not
E renewing the permit to the respondents, since the respondents did not
apply in terms of the existing EXIM policy; and that the licence was
granted to other traders in terms of the existing EXIM policy.

On behalf of the respondents, it was submitted that merely because
terms of the licence were not indicated, it did not authorize the authorities
F to refuse renewal; and that by granting licences to other traders, the
authorities acted arbitrarily, such departure from the policy amounts to
discrimination and thus impermissible in law.

Allowing the appeals, the Court

G HELD: 1.1. Though there can be a dispute with the proposition that
renewal of a permit carries with it a valuable right, it cannot be lost sight
of that for outweighing reasons of public interest renewal can be refused.
If at the time when the matter is taken up for considering whether renewal
to be granted, there is a change in policy, it cannot be said that the right
H is defeated by introduction of a policy. In such an event, the question of
U.0.1. v. INTERNATIONAL TRADING CO. 57
applying doctrine of legitimate expectation or promissory estoppel loses A
significance. (63-B, C(

1.2. Doctrines of promissory estoppel and legitimate expectation
cannot come in the way of public interest. Indisputably, public interest
has to prevail over private interest. When a conscious policy decision has
been taken and there is no statutory compulsion to act contrary, it cannot B
be said that respondents have acquired any right for renewal. The High
Court was not justified in observing that the policy decision was contrary
to statute and for that reason direction for consideratior~ of the application
for renewal was necessary. Had the High Court not recorded any finding
on the merits of respective stands, direction for consideration in C
accordance with law would have been proper and there would not have
been any difficulty in accepting the plea of the respondents. But having
practically foreclosed any consideration by the findings recorded,
consideration of the application would have been mere formality and grant
of renewal would have been the inevitable result, though it may be against
the policy decision. That renders the High Court judgment indefensible. D
(63-E, F, GI

1.3. A party cannot claim that since something wrong has been done
in another case, direction should be given for doing another wrong. It
would not be setting a wrong right, but would be perpetuating another E
wrong. In such matters there is no discrimination involved. The concept
of equal treatment on the logic of Article 14 of the Constitution of India
cannot be pressed into service in such cases. The concept of equal
treatment presupposes existence of similar legal foothold. It does not
countenance repetition of a wrong action to bring both wrongs on par.
Even if hypothetically it is accepted that wrong has been committed in F
some other cases by introducing a concept of negative equality respondents
cannot strengthen their case. They have to establish strength of their case
on some other basis and not by claiming negative equality. It is trite law
that Article 14 of the Constitution applies also to matters of Governmental
policy and if the policy or any action of the Government, even in
contractual matters, fails to satisfy the test of reasonableness, it would be G
unconstitutional. While the discretion to change the policy in exercise of
the executive power, when not trammeled by any statute or rule is wide
enough, what is imperative and implicit in terms of Article 14 is that a
change in policy must be made fairly and should not give impression that
it was so done arbitrarily or by any ulterior criteria. The wide sweep of H ·
58 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A Article 14 and the requirement of every State action qualifying for its
validity on this touchstone irrespective of the field of activity of the State
is an accepted tenet. The basic requirement of Artide 14 is fairness in
action by the State, and non-arbitrariness in essence and substance is the
heart beat of fair play. Actions are amenable, in the panorama of judicial
B review only to the extent that the State must act validly for discernible
reasons, not whimsically for any ulterior purpose. (64-B-G(

1.4. The meaning and true import and concept of arbitrariness is
more easily visualized than precisely defined. A question whether the
impugned action is arbitrary or not is to be ultimately answered on the
C facts and circumstances of a given case. A basic and obvious tes/ to apply
in such cases is to see whether there is any discernible principle emerging
from the impugned action and if so, does it really satisfy the test of
reasonableness. Where a particular mode is prescribed for doing an act
and there is no impediment in adopting the procedure, the deviation to
D act in different manner which does not disclose any discernible principle
which is reasonable itself shall be labeled as arbitrary. Every State action
must be informed by reason and it follows that an act uninformed by
reason is per se arbitrary. (64-G, H; 65-A, BJ

Union of India v. Hindustan Df!Ve/opment Corporation, AIR (1994) SC
E 98 and Punjab Communications Ltd v. Union of India and Ors., AIR (1999)
SC 1801, referred to.

Attorney General for New Southwale v. Wuin. (1990) 64 Australian
LJR 327, referred to.

F 1.5. If the State acts within the bounds of reasonableness, it would
be legitimate to take into consideration the national priorities and adopt
trade policies. The ultimate test is whether on the touchstone of
reasonableness the policy decision comes out unscathed. Reasonableness
of restriction is to be determined in an objective manner and from the
G standpoint of interests of the general public and not from the standpoint
of the interests of persons upon whom the restrictions have been imposed
or upon abstract consideration. A restriction cannot be said to be
unreasonable merely because in a given case, it operates harshly. In
determining whether there is any unfairness involved, the nature of the
right alleged to have been infringed, the underlying purpose of the
H
U.0.1. v. INTERN ATI ON AL TRADING CO. [PASA YAT. J.] 59
·restriction imposed, the extent and urgency of the evil sought to be A
remedied thereby, the disproportion of the imposition, the prevailing
condition at the relevant time, enter into judicial verdict. The
reasonableness of the legitimate expectation has to be determined with
respect to the circumstances relating to the trade or business in question.
Canalisation of a particular business in favour of even a specified B
individual is reasonable where the interests of the country are concerned
or where the business affects the economy of the country. [67-C, D, El

Parbhani Transport Co-operative Society Ltd v. The Regional Transport
Authority, Aurangabad and Ors., AIR (1960) SC 801; Shree Meenakshi Mills
Ltd v. Union of India, AIR (1974) SC 366; Hari Chand Sarda v. Mizo C
District Council and Anr., AIR (1967) SC 829 and Krishnan Kakkanth v.
Government of Kera/a and Ors., AIR (1997) SC 129, relied on.

Administrative Law by H W.R. Wade, 6th Edition, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4020-4023 D
of 2003.

From the Judgment and Order dated 31.5.2002 of the Delhi High Court
in L.P.A. Nos. 609, 611, 612 of 2001.

K.N. Raval, Solicitor General, T.V. Ratnam, K. Subba Rao and B.V. E
Balaram Das for the Appellants.

G.L. Sanghi, Rohit Tandon and Hari Shankar K. for the Respondents.

The Judgment of the Court was delivered by
F
ARIJIT PASA YAl, J. Delay condoned.

Leave granted.

Challenge in these appeals is to the direction given to the Union of G
India by Division Bench of the Delhi High Court to dispose of applications
f
for renewal filed by the respondents expeditiously, in the background of
views expressed on the factual aspects.

Shorn of rhetoric and bereft of legal controversy which constitutes bulk
of the armoury as regards attack to the legality of judgment of the High Court H
60 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.

A by which four Letters Patent Appeals were disposed of, the factual background
is as follows:

The respondents applied for and were granted perm its under the
provisions of the Maritime Zones of India (Regulation of Fishing by Foreign
Vessels) Act, 1981 (in short "the Act") and the Maritime Zones of India
B (Regulation of Fishing by Foreign Vessels) Rules, 1982 (in short "the Rules").
Permits were granted in the Exclusive Economic Zone of India in the
prescribed form. The said permit authorized the applicants-respondents to
obtain on lease and operate Foreign Deep Sea Fishing Vessels in terms of the
Act and the Rules. The permit was, however, not renewed after its period of
C initial currency. Stand of the applicants was that in each case permit was
valid for a period of 15 years from the date of issue, since they were granted
in accordance with the Government of India's policy relating to fishing of
Deep Sea Resources in Indian Exclusive Economic Zone by leased Foreign
Deep Sea Fishing Vessels; and were operative for a period of 15 years. There
is a marked distinction between a chartered vehicle and a leased vehicle
D because different periods have been prescribed for currency of the concerned
permits. Though applications for renewal were filed with requisite fees, no
express order was passed in any of the cases declining to grant permit.
However, pay orders covering renewal fee were returned to the applicants.
Grievance is made that no reason has been indicated and, there is also no
E reference to any policy decision for not effecting the renewal. The applicants
filed writ applications before the High Court. The applications were taken up
by a learned Single Judge. With reference to earlier order passed by Division
Bench in the case of Mis. Golden Ahar ltd. and Anr. v. Union of India and
the counter affidavit filed by the present appellants, the writ applicatiJns
were dismissed. In the said case the Division Bench noticed that renewal of
F permission was not a matter of right, since there was change in Government
policy. In larger public interest, the deep sea fishing policy had to be reframed.
A Review Committee was appointed which submitted its recommendations,
and in that view of the matter there was no question of directing renewal of
the permits. It was noticed by the Court that having regard to the policy
G decision adopted by the Government of India in the year 1996 pursuant to the
report of the Review Committee constituted under the Chairmanship of Mr.
P. Murari, the Government was in the process of formulating a new deep sea
fishing policy. In view of the non-success before the learned Single Judge,
the applicants filed Letters Patents Appeals before the High Court, wherein
the impugned judgment has been passed. The High Court, inter alia, came
H
U.0.1. v. INTERNATIONAL TRADING CO. [PASA YAT. J.) 61

to the conclusions that renewal of the permit is a valuable right; it could be A
refused only on cogent and valid grounds; though plea was taken that the
renewal period was mentioneo by mistake same appears to be an afterthought,
and the concerned authorities were required to consider the prayer for renewal
of the permit in accordance with law. The authorities were directed to pass
an appropriate order thereupon. Principles of natural justice were required to B
be applied. Though licence has not been granted for a period of 15 years,
there has been a legitimate expectation that renewal shall be granted. Policy
decision which is contrary to the statute cannot be upheld. The earlier decision
in Mis. Golden Ahar ltd. (supra) was not a binding precedent, as several
relevant provisions had not been brought to the notice of the Division Bench
hearing the case. c
However, it was held that in the circumstances relief was not available
by issuing a Mandamus directing the concerned officials to renew the licence.
Consideration was to be made by the statutory authorities at the first instance.
With the aforesaid conclusions, the authorities were directed to consider the D
applications and take a decision within a period of six weeks from the date
of communication.

In support of the appeals, Mr. K.N. Raval, learned Solicitor General
submitted that the High Court has lost sight of the fact that if the licence/
permit is renewed, it would be only by going against the specific stipulations E
in the policy decision. The High Court was not justified in its conclusion that
there was legitimate expectation or promissory estoppel involved, and that
the policy decision was contrary to the statute. Reference was made to the
recommendations made by the Murari Committee which specifically prohibit
renewal, extension of existing licence and put prohibition on issuance of F
permits in future for fishing to joint venture/charter/lease/test fish vessels.
The recommendations were- approved and accepted. It was pointed out that
fishing in Indian Exclusive Zone by foreign vessels is governed and regulated
by the Act and the Rules thereunder, while fishing by Indian vessels in the
said zone is governed by executive orders.
G
Responding to the aforesaid pleas, learned counsel for the respondents
submitted that the High Court's judgment is flawless and suffers from no
} infirmity to warrant interference. It has rightly turned down the plea that the
authorities were not bound by the period indicated in several documents so
far as currency of the licence/permits is concerned. Merely because licence H
62 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A was not indicated to be valid for a period of 15 years that did not clothe the
authorities with any jurisdiction to refuse renewal. It was highlighted that in
respect of 32 vessels a departure was made from the so-called policy and
they were permitted to fish in the concerned zone. This clearly establishes the
discrimination, and is impermissible in law. The 32 vessels are second hand
B deep sea fishing vessels and could not have been imported except against
vessel specific import licence granted by Director General of Foreign Trade,
which has not been granted though it is a pre-requisite for import. The so-
called imports have been made by companies, which were not in existence
at the time pennits were granted to operate. One of the companies which has
been given permission to operate is only shell Company with no financial
C resources. The factual aspects brought on record clearly establish that illegally
and without any justifiable reasons, they have ·been permitted to operate,
while the same benefit was not extended to the respondents herein. It was
further pointed out that the High Court has not in reality granted any relief
to which the applications were entitled in law. It has merely directed that the
D applications for renewal were to be disposed of expeditiously preferably
within a period of six weeks from the date of communication of its order.

By way of reply to the submissions made by learned counsel for the
respondents, learned Solicitor General submitted that directions were not
merely to consider. Had it been so, and the matter would have been left open
E to be decided in accordance with law, there could have been no difficulty.
But in view of the specific findings recorded by the Division Bench on
several aspects more particularly policy being opposed to statute, and/or that
the documents established entitlements for renewal, the exercise by the
concerned authorities in dealing with the applications for renewal would
F amount to an empty formality. Fu11her, 32 vessels to which reference has
been made stood on entirely different footing. The vessels in question were
imported under the prevailing policy of the Government and were registered
by the Mercantile Maritime Department under the Merchant Shipping Act,
I 958. The said vessels were not in any way connected with the cases at hand
which relate to lease and charter permits. The aforesaid 32 vessels were
G imported as per EXIM policy of the Government. The said EXIM policy in
the year 2000-200 I allowed import of deep sea fishing vessels by surrendering
special import licence which had been done in the case of the concerned
vessels and, therefore the licences on those cases have no relevance so far as
the present appeals are concerned. Even if it is conceded for the sake of
H arguments that there was anything improper in the permission granted it may
U.0.1. v. INTERN ATI ON AL TRADING CO. [PASAYA T. J.] 63
be ground for taking action against the concerned vessels, but it cannot be a A
ground to renew licence of the applicants.
i
Though there can be quarrel with the proposition that renewal of a
permit carries with it a valuable right, it cannot be lost sight of that for
outweighing reasons of public interest renewal can be refused. It is not in B
dispute that licences have not been granted for a period of 15 years. If at the
time when the matter is taken up for considering whether renewal to be
granted, there is a change in policy; it cannot be said that. the right is defeated
by introduction of a policy. In such an event, the question of applying doctrine
of legitimate expectation or promissory estoppel looses significance. It has
not been disputed that in fact the policy decision exists. But the stand of the C
respondents is that it cannot outweigh the legitimate expectation or the inbuilt
rights. Additionally it is submitted that the issue has to be considered in the
background of 32 vessels referred to above.

Rival contentions need to be cogitated. D
Legitimacy of the policy decision has not been questioned by the
respondents. What is highlighted is that notwithstanding the policy their rights
are unaffected.

Doctrines of promissory estoppel and legitimate expectation cannot E
come in the way of public interest. Indisputably, public interest has to prevail
over private interest. The case at hand shows that a conscious policy decision
has been taken and there is no statutory compulsion to act contrary. In that
context, it cannot be said that respondents have acquired any right for renewal.
The High Court was not justified in observing that the policy decision was F
contrary to statute and for that reason direction for consideration of the
application for renewal was necessary. Had the High Court not recorded any
finding on the merits of respective stands, direction for consideration in
accordance with law would have been proper and there would not have been
any difficulty in accepting the plea of the learned counsel for the respondents.
But having practically foreclosed any consideration by the findings recorded, G
consideration of the application would have been mere formality and grant
of renewal would have been the inevitable result, though it may be against
)
the policy decision. That renders the High Court Judgment indefensible.

What remains now to be considered, is the effect of permission granted H
64 SUPREME COURT REPORTS !2003] SUPP. I S.C.R.

A to the 32 vessels. As highlighted by learned counsel for the appellants, even
if it is accepted that there was any improper permission, that may render such
permissions vulnerable so far as 32 vessels are concerned. But it cannot come
to the aid of respondents. It is not necessary to deal with that aspect because
two wrongs do not make one right. A party cannot claim that since something
B wrong has been done in another case; direction should be given for doing
another wrong. It would not be setting a wrong right, but would be perpetuating
another wrong. In such matters there is no discrimination involved. The
concept of equal treatment on the logic of Article 14 of the Constitution of
India, 1950 (in short "the Constitution") cannot be pressed into service in
such cases. What the concept of equal treatment presupposes is existence of
c similar legal foothold. It does not countenance repetition of a wrong action
to bring both wrongs on par. Even if hypothetically it is accepted that wrong
has been committed on some other cases by introducing a concept of negative
equality respondents cannot strengthen their case. They have to establish
strength of their case on some other basis and not by claiming negative
D equality.

It is trite law that Article 14 ·of the Constitution applies also to matters
of governmental policy and if the policy or any action of the Government,
even in contractualmatters, fails to satisfy the test ofreasonableness, it would
be unconstitutional.
E
While the discretion to change the policy in exercise of the executive
power, when not trammelled by any statute or rule is wide enough, what is
imperative and implicit in terms of Article 14 is that a change in policy must
be made fairly and should not give impression that it was so done arbitrarily
F or by any ulterior criteria. The wide sweep of Article 14 and the requirement
I
of every State action qualifying for its validity on this touchstone irrespective
of the field of activity of the State is an accepted tenet. The basic requirement
of Article 14 is fairness in action by the State, and non-arbitrariness in essence
and substance is the heart beat of fair play. Actions are amenable, in the
G panorama of judicial review only to the extent that the State must act validly
for a discernible reason, not whimsically for any ulterior purpose. The meaning
and true import and concept of arbitrariness is more easily visualized than
precisely defined. A question whether the impugned action is arbitrary or not
is to be ultimately answered on the facts and circumstances of a given case.
A basic and obvious test to apply in such cases is to see whether there is any
H discernible principle emerging from the impugned action and if so, does it
U.0.1. v. INTERNATIONAL TRADING CO. [PASA VAT, J.] 65
really satisfy the test of reasonableness. A
} Where a particular mode is prescribed for doing an act and there is no
impediment in adopting the procedure, the deviation to act in different manner
which does not disclose any discernible principle which is reasonable itself
shall be labelled as arbitrary. Every State action must be informed by reason
and it follows that an act uninformed by reason is per se arbitrary. B

The Court as observed in G.B. Mahajan v. Ja/gaon Municipal Council,
AIR (199 I) SC I I 53 are kept out of lush field of administrative policy except
where policy is inconsistent with the express or implied provision of a statute
which creates the power to which the policy relates or where a decision made C
in purported exercise of power is such that a repository of the power acting
reasonably and in good faith could not have made it. But there has to be a
word of caution. Something overwhelming must appear, before the Court
will intervene. That is and ought to be a difficult onus for an applicant to
discharge. The courts are not very good at formulating or evaluating policy.
Sometimes when the Courts have intervened on policy grounds the Court's D
view of the range of policies open under the statute or of what is unreasonable
policy has not got public acceptance. On the contrary, curial views of polity .
have been subjected to stringent criticism.

As Professor Wade points out (in Administrative Law by H. W.R. Wade, E
6th Edition) there is ample room within the legal boundaries for radical
differences of opinion in which neither side is unreasonable. The
reasonableness in administrative law must, therefore, distinguish between
proper course and improper abuse of power. Nor is the test Court's own
standard of reasonableness as it might conceive it in a given situation. The
point to note is that the thing is not unreasonable in the legal sense merely F
because the Court thinks it to be unwise.

In Union of India v. Hindustan Development Corporation, AIR (1994)
SC 988, it was observed that decision taken by the authority must be found
to be arbitrary, unreasonable and not taken in public interest where the doctrine
of legitimate expectation can be applied. If it is a question of policy, even by G
ways of change of old policy, the Courts cannot intervene with the decision.
' In a given case whether there are such facts and circumstances giving rise to
legitimate expectation, would primarily be a question of fact.

H
66 SUPREME COURT REPORTS (2003) SUPP. I S.C.R.

A As was observed in Punjab Communications ltd. v. Union of India and
Ors., AIR (1999) SC 1801, the change in policy can defeat a substantive
legitimate expectation if it can be justified on "Wednesbury reasonableness".
The decision maker has the choice in the balancing of the pros and cons
relevant to the change in policy. It is, therefore, clear that the choice of
B policy is for the decision maker and not the Court. The legitimate substantive
expectation merely permits the Court to find out if the change of policy
which is the cause for defeating the legitimate expectation is irrational or
perverse or one which no reasonable person could have made. A claim based
on merely legitimate extension without anything more cannot ipso facto give
a right. Its uniqueness lies in the fact that it covers the entire span of time:
C present, past and future. How significant is the statement that today is
tomorrows' yesterday. The present is as we experience it, the past is a present
memory and future is a present expectation. For legal purposes, expectation
is not same anticipation. Legitimacy of an expectation can be inferred only
if it is founded on the sanction of law.

D As observed in Attorney General for New Southwale v. Quin, [1990] 64
Australian LJR 327 'to strike 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 negotiation of a legitimate expectation (falling
E short of a legal right) is too nebulous to from 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 known grounds attracting Article 14 but a claim based on mere legitimate
F 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 recognized
general principles of administrative law applicable to such facts and the
G 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
treasure of natural justice and it ought not to unlocks the gates which shuts
H
U.0.1. v. INTERNATIONAL TRADING CO. [PASAYAT, .f.] 67

the court out of review on the merits', particularly, when the element of A
speculation and uncertainty is inherent in that very concept. As cautioned in
Attorney General for New Southwale 's case the Courts should restrain
themselves and respect such claims duly to the legal limitations. It is a well-
meant caution. Otherwise, a resourceful litigant having vested interest in
contract, licences, etc., can successfully indulge in getting welfare activities B
mandated by directing principles thwarted to further his own interest. The
caution, particularly in the changing scenario becomes all the more important.

If the State acts within the bounds of reasonableness, it would be
' 1 legitimate to take into consideration the national priorities and adopt trade
policies. As noted above, the ultimate test is whether on the touchstone of C
reasonableness the policy decision comes out unscathed.

Reasonableness of restriction is to be determined in an objective manner
and from the standpoint of interests of the general public and not from the
standpoint of the interests of persons upon whom the restrictions have been
imposed or upon abstract consideration. A restriction cannot be said to be D
unreasonable merely because in a given case, it operates harshly. In
determining whether there is any unfairness involved; the nature of the right
alleged to have been infringed, the underlying purpose of the restriction
imposed, the extent and urgency of the evil sought to be remedied thereby,
the disproportion of the imposition, the prevailing condition at the relevant E
time, enter into judicial verdict. The reasonableness of the legitimate
expectation has to be determined with respect to the circumstances relating
to the trade or business in question. Canalization of a particular business in
favour of even a specified individual is reasonable where the interests of the
country are concerned or where the business affects the economy of the
country. (See Parbhani Transport Co-operative Society ltd. v. The Regional F
Transport Authority, Aurangabad and Ors., AIR (1960) SC 801, Shree
Meenakshi Mills Ltd v. Union of India, AIR (1974) SC 366, Hari Chand
Sarda v. Mizo District Council and Anr., AIR (1967) SC 829 and Krishnan
Kakkanth v. Government of Kera/a and Ors., AIR (1997) SC 129.)

As noted above, the appellants have relied upon the change in
G
Government policy prescribing that there shall be no grant of renewal/extension
for charter/lease ·permits. Learned Solicitor General has stated that if
respondents apply in terms of prevailing EXIM policy, as was done by the
aforenoted 32 vessels, due consideration in accordance with law shall be
made. H
68 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A Keeping in view the analysis made of legal positions, and in the absence
of any material to discount legitimacy of policy, the respondents have not
made out a case for interference.

In the aforesaid background the residual plea of the respondents
B regarding legitimafe expectation is also sans merit.

The appeals deserve to be allowed; which we direct Costs made easy.

S.K.S. Appeals allowed.