1998 Supreme(SC) 888

1998(6) Supreme 570
Supreme Court of India
(From Delhi High Court)
S.C. Agrawal, S. Saghir Ahmad and M. Srinivasan, JJ.
National Buildings Construction Corporation -Appellant
versus
S. Raghunathan & Ors. etc. -Respondents
Civil Appeal No. 4483 of 1998
(Arising out of SLP (C) No. 10372 of 1997)
With
Civil Appeal No. 4484 of 1998
(Arising out of SLP (C) No. 20753 of 1997)
Decided on 28-8-1998
Counsel for the Parties :
For the Appearing Parties : Altaf Ahmed, Additional Solicitor General, Raju Ramachandran, M. Chandrasekaran, Sr. Advocates, Ravindra Kumar, Manoj Kumar, V.J. Francis and Dr. Vincent Panikulangara, C.V. Subba Rao, and P.I. Jose, Advocates.

Important Points
(i) In the absence of pleading and foundation laid in the pleadings Court cannot allow party to argue and allow relief on the basis of legitimate expectation.
(ii) Where Foreign allowance is not one of the conditions of agreement of deputation on Foreign service Foreign allowance cannot be claimed as of right.

Headnote:(i) Doctrine of legitimate expectation-Genesis-Scope and ambit - Condition precedent to invoke. (Paras 18 and 19)

       (ii) Service Law-Foreign allowance-Foreign service on deputation basis - Respondents drawn from Government department depu­ted for over­seas project-Respon­dents given option to draw salary in scale of pay admissible to employees of CPWD together with deputation allowance-Foreign allowance not covered by terms of contract-Fourth Pay Commission revised pay scale - Respondents claimed Foreign Allowance @ 125 on revised basic pay-Appellant had been paying foreign allow­ance on basis of revised pay-High Court granting relief on basis of plea of legitimate expectation-Whether correct? - No - Foreign allowance was not one of the allowances promised to be paid-Foreign allowance could not be treated as a salary component or akin to deputation allowance as it was in nature of a residuary perk regulated by provi­sion of F.R. 51(2)-Quantum of such allowance is left to absolute discretion of President-Appellant had taken policy decision that Foreign allowance would be payable on original basic salary-Policy decision shall have effect of displacing doctrine of legitimate expec­tation-Further there was no plead­ing of legitimate expectation in writ petition-Whole exercise of High Court allowing petitioner to argue and allow petition on ground of legitimate expectation was speculative-High Court’s order set aside.

       Held : The doctrine of “Legitimate Expectation” has its genesis in the field of administrative law. The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without any iota of abuse of discretion. The policy statements cannot be disregarded unfairly or applied selective­ly. Unfairness in the form of unreasonableness is akin to violation of natural justice. It was in this context that the doctrine of Legiti­mate Expectation” was evolved which has today become a source of sub­stantive as well as procedural rights. But claims based on “Legitimate Expectation” have been held to require reliance on representations and resulting detriment to the claimant in the same way as claims based on promissory estoppel. The doctrine of “Legiti­mate Expectation” has been developed, both in the context of reasonableness and in the context of natural justice. (Paras 18 & 19)

       Applying the principles discussed above in the instant case, it will be seen that Foreign Allowance was not one of the allowances which was promised to be paid to the respondents at the time of their induction in the service of NBCC nor had NBCC, at any time, given any assurance to any of the respondents that this allowance would be payable to them at the revised rate. The agreement or the contract of service, executed between the respondents and the NBCC, does not stipulate payment of Foreign Allowance to them. Even the High Court has observed that Foreign Allowance was not one of the allowances mentioned in the terms of deputation. The ap­proach of the High Court was wholly erroneous and the reasoning is equally fallacious. (Paras 27 & 29)

       Incidentally, in this case, the question of “Legitimate Expecta­tion” was not raised in the petition and no foundation was laid in the pleadings for such a plea being advanced before the Court. Strangely, the High Court allowed this plea at the stage of argument and allowed the petitions only on the ground of “Legitimate Expectation” without least realising that there was hardly any legitimacy in the claim of the respondents. In the absence of pleading and the affidavit of the respondents in support thereof, the whole exercise done by the High Court cannot but be termed to be speculative. (Para 31)

       Held further : That apart, the High Court suffered from a misconception that whenever there was a revision of the pay scales, Foreign Allowance as also the other allowances were correspondingly raised on the basis of the revised basic salary. Respondents had served on deputation with the NBCC in their foreign projects at Iraq from 1982-83 to 1986-87 and during this period the pay structure was revised only once to imple­ment the recommendations of the Fourth Pay Commission. Was there any other revision in the pay structure of the respondents or any of them during their tenure with the NBCC; if so, when? To whom was the bene­fit of such revision available? Who are those other Officers and employees serving on deputation in a foreign country who were benefit­ted by any revision in the pay structure during the period 1982-83 to 1986-87? These are the few questions which legitimately arise, and unless there is material on record to answer these questions, the observations of the High Court that whenever there was a revision in the pay scales, Foreign Allowance was correspondingly increased and, therefore, the respondents had come to entertain “Legitimate Expecta­tion”, are wholly speculative, besides being erroneous. (Para 32)

       Foreign Allowance could also not be treated as a salary component or akin to Deputation (Duty) Allowance as it was in the nature of a residuary perk regulated by the provisions of F.R. 51(2). Sub-rule (2) of Rule 51, quoted above, gives a discretion to the Government to pay to the Government servant, on deputation in a for­eign country, such compensatory allowance as may be thought fit by the President. The payment of compensatory allowance as also the quantum of such allowance is left to the absolute discretion of the President. It was for this reason perhaps that the High Power Committee did not make any recommendation in respect of Foreign Allowance and left it to the discretion of NBCC to decide whether it would be payable or not at all, and if payable, at what rate. The Ministry of External Affairs had already fixed Foreign Allowance under F.R. 51(2) for its officers and other staff working in its Missions abroad. The NBCC, therefore, issued the order dated 15th October, 1990 specifying the benefits which would be available to its employees and deputationists with effect from 1.1.1986. It was in this order that it was indicated that Foreign Allowance would continue to be payable at the rate of 125 of the basic pay (pre-revised) as on or upto 31.12.1985. There was thus no increase in the Foreign Allowance payable to the respondents; nor was the amount reduced in any way. (Paras 33 & 35)

       NBCC had taken a policy decision on account of strange situations and conditions prevailing in Iraq where respondents were deputed on foreign projects assigned to NBCC, that Foreign Allowance would be payable only on the original basic salary of the respondents and not on the salary as revised on account of the recommendations of the Fourth Pay Commission. In such a situation, the policy decision shall have the effect of displacing the doctrine of “Legitimate Expectation”, particularly as the decision was based on objective assessment of the prevailing circumstances including the financial stringency in which Iraq came to be placed. There is, therefore, no element of arbitrariness in that decision. (Para 36)

       Consequently held : The judg­ment and order dated 13.9.96 and 25.7.97 passed by the Delhi High Court are set aside and the Writ Petitions relating to Foreign . (Para 38)