Appeal No 1944 of 1993
From the Judgment and Order dated 2111993 of the Kerala High Court in OPNo 13371 of 1992
G Prakash for the Appellant
VR Reddy Addl
Solicitor General CV Subba Rao B Parthasarthy and R Sasiprabhu for the Respondents
The following Order of the Court was delivered Leave granted
Heard counsel for the parties
Having regard to the broader considerations of equality of opportunity this Court directed in Dr Pradip Jain vs Union of India 1984 3 SCC 654 that a certain percentage of seats in the post graduate medical courses should be made available to the candidates on the basis of All India Competition
The percentage was later determined at 25
In Dr Dinesh Kumar vs Motilal Nehru College 19863 SCC 327 this Court prescribed a schedule for the All India Competitive Examination which was modified in certain respects in Dr Dinesh Kumar vs Motilal Nehru College 19874 SCC 459
In subsequent decisions this Court has been impressing upon the concerned authorities the necessity of adhering to the time frame prescribed in the matter of holding All India Competitive Examination and for making admissions
According to the system in vogue a candidate who applies for admission in the All India quota is required to indicate eight medical colleges and six subjects in the order of preference to which he seeks admission
There are severity medical collegesinstitutions and forty specialities
The post graduate courses comprise degree courses as well as diploma courses
After the results of examinations are published the admissions are made on the basis of merit cum preference cum eligibility with the aid of a computer
In the first instance a list of admissions is issued
But it so happens that for one or the other reason many of the candidates in the list do not turn up to join the course
Hence a second list is issued and then a third
But while preparing the second list or the third list the overall merit cum preference cum eligibility is not again examined with the result that sometimes 340 a candidate with lesser score gets a better subject than a candidate with higher score
We may illustrate what we say
In the first list a candidate with say 250 marks is allotted a seat in MS General Surgery and a candidate with 225 marks is allotted a seat in MS Opthalomology
Now for some reason the candidate allotted a seat in MS General Surgery does not join
That seat falls vacant
When the second list is taken up the candidates available will necessarily be those who have secured less than 225 marks
Since the merit cum preference cum eligibility is not determined overall again what happens is that a candidate with 220 marks gets MS General Surgery while the candidate with 225 marks has to continue in MS Opthalomology though given a choice he would very muchlike to come into MS General Surgery
That there have been many such instances is beyond dispute and has been commented upon by the Kerala High Court in the judgment under appeal
Besides the above there is yet another circumstance
Inspite of promptings from this court the authorities in charge of holding All India competitive examination have not been able to adhere to the prescribed schedule
In such a situation it is bound to happen that issuance of second and third lists delay the process of admission still further
By the time the second and third lists are communicated half the course is over
This aspect has been agitating us while hearing this appeal
We have therefore discussed this matter thoroughly with Sri VR Reddy Additional Solicitor General for the respondents
He in turn discussed the matter with the concerned authorities and has placed before us a modified scheme for allotment of the candidates declared successful in All India post graduate entrance examination for admission to MDMSDiploma and MDS courses
We must make it clear that the modification which we are proposing herewith is only with respect to the procedure to be followed in the matter of making admission and is designed to eliminate unequal results and the delay mentioned above
In the place of present requirement of a candidate indicating his preference for eight colleges and six subjects on the basis of which admissions are finalised we wish to introduce the system of what is called counselling  which is in vogue in some of the States and is working satisfactorily
The learned Additional Solicitor General agreed whole heartedly that this would be a definite improvement and would eliminate grievances which are arising from the present system and would also help the authorities to adhere to the time frame prescribed by this Court
The new system in short is this after the examination is over the results would be published in the order of merit
The selection committee will call 150 candidates a day in the order of merit
A chart will be kept ready and displayed at all relevant places indicating the colleges and subjects wherein the seats are available
Candidates will be called in the order of merit and asked to indicate hisher choice
The slot chosen by himher then gets closed
This procedure will be gone through 341 until all the seats are filled up
There would be no second or third list
Any seats remaining vacant thereafter will be surrendered to the State Government
But this modification will apply to and come into effect only for and from the admissions for the year 1994
It will not apply to the admissions currently underway
In approving the modifications we have kept in mind the fact that most of the candidates for post graduate admissions are employed and have the means to come to Delhi for a day for counselling
We accordingly approve the modifications mentioned below as suggested by the Director General of Health Services New Delhi
The All India PG Entrance Examination will be conducted on second Sunday of January
The candidates will not be required to give any choices at the time of submission of the application forms
The results will be announced by the third week of February every year
The merit list will consists of number of candidates equal to the number of seats available for allotment
A waiting list containing not more than 10 of the merit list will also be declared from amongst the successful candidates who have secured more than 50 marks in the competitive examination
The allotment by personal appearance will start from the first of March every year and will continue upto 15th March
In the Bulletin of Information the dates for allotment by personal appearance and the venue at Delhi will be notified
The time schedule for personal appearance will also be notified alongwith the results in the newspapers
For personal appearance the candidates will be called in batches of 150 each day in the order of merit
The candidates shall have the right to choose any one of the available seats at hisher rank
The same will be allotted to himher and the allotment letters will be issued on the next day
In case a candidate is unable to appear in person on a notified date for personal appearance heshe can send hisher representative with an authority letter for allotment
The allotment made to the authorised representative shall be binding on the candidate
342 9Each candidate shall be given 15 days time to join the allotted college and course
The last date of joining shall be 31st March every year
The allotments made will be firm and final
The candidates who will not appear for allotment on the notified dates or who will reject the available seats for allotment or those who will not join the allotted course and college by the 3 1st March shall forfeit the claim for a seat under the All India Scheme
12All the seats remaining vacant after the allotment shall be deemed to have been surrendered back to the respective States
In all other respects the scheme in vogue shall continue to be effective
Now coming to the relief to be granted to the appellant we regret we are not in a position to make any positive direction
The appellant had appeared for All India competitive examination
He was not allotted any seat in any college according to the merit cum preference cum eligibility
His grievance now is that students with lesser marks than him are being admitted to college in Kerala
He says that he may be given a seat in any subject in any of the colleges in Kerala or for that matter anywhere alse
We are afraid we cannot do so at this stage
After the first second and third lists pertaining to All India seats were published the remaining vacant seats have been surrendered to the State Government already
The State Government has already filled almost all of them
We cannot withdraw one seat from the State Government at this stage the course has begun in the month of September 1992 itself and give it to the appellant
Even otherwise it is not certain that there are no other candidates who had appeared in the All India competitive examination who may have scored higher marks than the appellant
We cannot also give any direction for his being considered against the 1993 vacancies because he has not appeared for the 1993 examination
The only observation we can make is this if in case any seat is lying vacant in any of the medical courses in Kerala the second respondent Director of Medical Education Thirvananthapuram shall consider admitting the appellant against such seat relating to the year 1992
The appeal is disposed of with the above directions and observation
No costs
Appeal disposed of


Summary:
These special leave petitions were disposed of by this Court s order dated 1411993By the said order the Court gave its conclusions and certain directions observing that reasons In support thereof would be given at a later stage
Giving the reasons in support of the conclusions this Court HELD 11 The Government in a Welfare State has the wide powers in regulating and dispensing of special services like leases licences and contracts etc
The Government while entering Into contracts or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy stan 129 dards and norms
Such actions should not be arbitrary irrational or irrelevant
In the matter of awarding contracts inviting tenders is considered to be one of the fair ways
If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory
144 G H 145 A Erusian Equipment and Chemicals Ltd vs State of West Bengal   Ramana Dayaram Shety vs The International Airport Authority of India and Ors   and Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr   relied on
12 The concept of reasonableness rinds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and animates the Directive Principles and Article 14 strikes at arbitrariness In State action
149 C Maneka Gandhi vs Union of India
1978 2 SCR 621 and EP Royappa vs State of Tamil Nadu  Anr   relied on
13 The policy of the Government is to promote efficiency in the administration to provide an incentive to the uneconomic units to achieve efficiency to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice
159 F 161 C Monopolies Inquiry Commission s Report referred to
American Jurisprudence 2 vol
p 668 referred to
14 In view of the conditions in the tender notice validity whereof was not questioned the Government had the right to either accept or 130 reject the lowest offer
From a perusal of the proceedings of the Tender Committee as well as the opinion expressed by the Financial Commissioner and the other members of Railway Board it is clear that Rs 76000 per bogie could be the reasonable price and the post tender offer at a lower price was made with the hope that the three big manufacturers would get the entire or larger quantity allotted which if accepted would result in monopoly extinguishing the smaller manufacturers
46 D G State of Uttar Pradesh and others vs Vijay Bahadur Singh and others 19822 SCC365 State of Orissa and Ors
vs Harinarayan Jaiswal and Ors
  GB Mahajan and others V Jalgaon Municipal Council and others   State of Madhya Pradesh  ors
vs Nandial Jaiswal  Ors   Shri Sitaram Sugar Co Ltd V Union of India   RK Garg vs Union of India   and Peerless General Finance and Investment Co Limited and another etc
vs Reserve Bank of India etc  relied on
21 The cartel is an association of producers who by agreement among themselves attempt to control production sale and prices of the product to obtain a monopoly in any particular industry or commodity
It amounts to an unfair trade practice which is not in the public interest
The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers167B C Collins English Dictionary Webster comprehensive Dictionary International Edition chamber s English Dictionary Black s Law Dictionary A Dictionary of Modern Legal Usage by Bryan A Garner American Jurisprudence 2d Vol
54 page 677 referred to
22 However the determination whether an agreement unrea sonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same
167 C D 131 National Electrical contractors Associations Inc et at National constructors Associations et
al Federal Reporter 2d Series 678 page 492 Matsushita Electric Industrial Co Ltd et
at vs Zenith Radio Corporation et al 89 LEd
2d 538 referred to
23 Monopoly is the power to control prices or exclude competition from any part of the trade or commerce among the producers
The price fixation is one of the essential factors
171 E American Jurisprudence 2d Vol
54 referred to
24 A mere offer of a lower price by itself though may appear to be predatory does not manifest the requiste intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy the formation of a cartel among the producers who offered such lower price cannot readily be inferred
172 B C Matsushita Electric Industrial Co Ltd et
vs Zenith Radio Corporation et
  referred to
Webster Comprehensive Dictionary International Edition A dictionary of Modern Legal Usage by Bryan A Garner Collins English Dictionary Black s Law Dictionary The oxford English Dictionary Vol
VIII referred to
25 The opinion of the Tender Committee that the identical price quoted by the three big manufacturers was a cartel price was only a suspicion which got strengthened by post tender attitude of the said manufacturers who quoted a much lesser price and cannot positively be concluded on the basis of these two circumstances alone
There is not enough material to conclude that in fact there was formation of a cartel
173 B C 26 A mere quotation of identical price and an offer of further reduction by themselves could not entitle the said manufacturers automatically to corner the entire market by way of monopoly since the final allotment of quantities vested in the authorities who in their 132 discretion can distribute the same to all the manufacturers including these three big manufacturers on certain basis
Besides
the authorities reserved a right to reject a lower price
172 F 173 A B 27 However the opinion regarding formation of a cartel entertained by the concerned authorities including the Minister was not malicious nor was actuated by any extraneous considerations
They entertained a reasonable suspicion based on the record and other surrounding circumstances and only acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel
173 C 31 The legitimacy of an expectation can be Inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence
It Is distinguishable from a genuine expectation
Such expectation should be justifiably legitimate and protectable
Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil
The claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can be quashed provided the same is found to be unfair unreasonable arbitracy and violative of principle of natural justice
182 C 192 A Food Corporation of India vs Ms Kamdhenu Cattle Feed Industries JT  relied on
Halsbury s Law of England
fourth Edition vol
1 1 151 Administrative Laws of England Sixth Edition by HWR Wade page 424 522 referred to
Schmidt vs Secretary of State for Home Affairs 1969 2 Ch
149AG of Hong Kong vs Ng Yeun Shiu 1983 2AC629In Council of Civil Service Unions and others vs Minister for the Civil Service 1984 Vol3 All ER 935 Amarjit Singh Ahluwalia vs The State of Punjab  Ors   Att
for New South Wales vs Ouin 1990 Vol
64 Australian Law 133 Journal Reports 327 R vs Secretary of State for the Home Department ex parte Ruddock  Ors
19872 All E R 518 Breen vs Amalcamated Engineering Union  Ors
1971 2 Law Reports Queen Bench Division 173 referred to
32 Legitimate expectation gives the applicant sufficient locus standi for judicial review and the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken
The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystalised right as such is involved
191 F Navyoti Coo Group Housing Society etc
vs Union of India  Others   Findlay vs Secretary of State for the Home Department 1984 3 All E R801 and Council of Civil Service Unions case Lord diplock 33 Legitimate expectation being less then right operate in the field of public and not private law and to some extent ought to be protected thought not guaranteed
193 C 34 Legitimate expectations may come in various forms and owe their existence to different kind of circumstances
By and large they arise in cases of promotions which are in normal course expected though not guaranteed by way of a statutory right in cases of contracts distribution of largess by the Government and in somewhat similar situations
193 D 35 Protection of legitimate expectation would not be available where an overriding public interest requires otherwise
The protection is limited to that extent and a judicial review can be within those limits
191 H 192 A B
36 A person who bases his claim on the doctrine of legitimate expectation in the first instance must satisfy that there is a foundation and thus has locus standi to make such a claim
The decision taken 134 by the authority must be found to be arbitrary unreasonable and not taken in public interest
It that be so then what should be the relief is again a matter which depends on several factors
192 C D E 37 The courts jurisdiction to interfere is very Much limited and much less in granting any relief in a claim based purely on the ground of legitimate expectation 
A decision denying a legitimate expectation based on a policy or change of an old policy or in the public interest either by way of GO rule or is made by way of a legislation does not qualify for interference unless in a given case the decision or action taken amounts to an abuse of power
193 E F Att
Gen for New South Wales vs Quin 1990 Vol
64 Australian Law Journal Reports 327 referred to
Public Law and Politics edited by Carol Harlow referred to
38 Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power
The concept of legitimate expectation can have no role to plan and the Court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended
Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected
193 G A 194 A 39 If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrarydiscriminatory unfair or based 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 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
194 E F 135 310 The concept of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits particularly when the element of speculation and uncertainty is inherent in that very concept
The courts would restrain themselves and restrict such claims duly to the legal limitations
It is a well meant caution
Otherwise a resourceful litigant having vested interests in contracts licences etc
can successfully indulge In getting welfare activities mandated by directive principles thwarted to further is own interests
The caution particularly in the changing scenario becomes all the more important
194 G H 195 A B Att
Gen for New South Wales vs Quin 1990 Vol
64 Austraian Law Journal Reports 327 referred to 311 In the instant case the Rules for entering into contracts lay down certain norms and contain guidelines
They provide for constitution of Tender Committee and the procedure to be followed in the matter of inviting tenders
They also provide for negotiations but lay down that selection of contracts by negotiations is an exception rather than a rule and can be resorted to only under certain circumstances
As per the notice inviting tender the price quoted is subject to price variation clause and the Railways reserved a right to accept the lowest price or accept the whole or any part or the tender or portion of the quantity offered
The tenderer cannot expect that his entire tender should be accepted in respect of the quantity
In the past also there were man  instances where the Railways as per the procedure followed arrived at decisions in respect of both price and quantity for good and justifiable reasons
178 A B C 312 There is no legally fixed procedure regarding fixation of price and particularly regarding allotment giving scope to a legitimate expectation
The Tender Committee is not a statutory authority and its proposals are recommendatory in nature and have to be considered in the distribution procedure culminating in the decision of the approving authority who as a matter of fact also can take decisions in respect of price and allotment of quantities taking into consideration various other aspects from the point of view of public interest
178 D E 136 4
The modifications In the decision of the Railways by way of judicial review are not on the ground of legitimate expectation and violation of principles of natural justice but on the other ground namely the decision of the authorities was based on wrong assumption of formation of Cartel
195 F G 5The status of a manufacturer being a BIFR company or a small manufacturer was not taken Into account so far as the fixation of the price is concerned and these considerations were deemed relevant only for the purpose of allocation of quantities
The stand taken by the Railways is that smaller manufacturers should survive from the point of view of arresting monopolistic tendencies and from the point of view of public interest
The Tender Committee proceedings would indicate that on the basis of certain formulae namely the past performance capacity etc the allotment was being made
Therefore these cannot be said to be irrelevant considerations and as a matter of fact they had been duly given effect to and weightage was given accordingly in respect of allotment of quantities to various manufacturers within the four corners of the limited tender
196 C E