JUDGMENT

A.K. Patnaik, J.

1. The petitioner is a proprietorship concern owning a small scale industrial unit for manufacture of tractor trailers and agricultural implements at the Industrial Estate at Madhupatna, Cuttack. The Industrial Unit of the petitioner is registered with the Export promotion Organization of the State of Orissa (for shot, "the E.P.M."). The Industrial Policy, 1996 of the Government of Orissa provided for purchase of store items by Government Departments and agencies under the control of the State Government from industries located inside the State. Such purchases could be made from (i) exclusive list, (ii) rate contract holders and (iii) through open tender. The provision in the Industrial Policy, 199G relating to purchase from exclusive list read as follows :

"A list of store items reserved for exclusive purchase from industries located in the State may be prepared from time to time keeping in view the production capacity of the industries and requirements of State Government Deptts. and Agencies under the control of the State Government. The latter will have to purchase their requirements for these items from local industries with ISO/ISI/EPM Certification for the items only be inviting competitive quotations from such Industries. Efforts will be made to distribute the purchase order equitably among the participating industries prepared to accept the lowest negotiated rate, keeping in view their capacity. Local Small Scale Industrial units will enjoy a price preference of 5% as also Khadi & Village Industrial units including handloom and handicrafts over local medium large industries. Any local small scale industrial unit having ISO 9000 and ISI Certification for its products will get an additional price preference of 5% and 2% respectively,"

In accordance with the aforesaid policy, a list of store items reserved for exclusive purchase from industries located in the State was prepared and notified by a circular dated 6th of July, 1998 of the Government of Orissa, Industries Department. "Agricultural implements" and "Tractor Trailer" were included in the said list of store items reserved for exclusive purchase from industries located inside the State with I.S.O./I.S.I./E.P.M certification. This policy for purchase of store items by the State Government Departments and agencies under the control of the State Government, from the exclusive list has been reiterated in the Industrial Policy of 2001 of the State Government of Orissa. Paragraph 24.2 of the Industrial Policy, 2001 of the Government of Orissa is quoted herein below :

"... the State Government and agencies will have to purchase the requirements of store items from the exclusive list only from local industry having ISO/ISI/ EPM certificate for the said items by inviting competitive quotations from such industry."

The grievance of the petitioner in this writ petition is that notwithstanding the said policy of the Government of Orissa, the Orissa Scheduled Castes and Scheduled Tribes Financial Development Corporation Limited (in short, "the O.S.F.D.C.") has not placed orders for purchase of two hundred numbers of tractor trailers for Scheduled Caste/Scheduled Tribe beneficiaries with the petitioner and other local industries having I.S.O./I.S.I./E.P.M. certificate, but has instead placed orders for purchase of such two hundred tractor trailers with the Orissa Agro Industries Corporation (opposite party No. 4), which does not manufacture trailer but only sells trailers manufactured by others, at a price higher than what has been offered by the petitioner. The petitioner has filed this writ petition with a prayer to prevent the O.S.F.D.C. from placing orders on non-manufacturing units and traders and to direct the O.S.F.D.C. to purchase the trailers and agricultural implements through the E.P.M. registered firms.

2. Mr. B. K. Mohanty, learned counsel for the petitioner, submitted that for the year 2000-2001; the O.S.F.D.C. had invited tenders for supply of two hundred numbers of tractor trailers and agricultural implements and the petitioner's tender was the lowest and yet, the petitioner's tender was rejected by the O.S.F.D.C. The petitioner moved this Court in O.J.C. No. 5613 of 2000 and this Court passed orders on 8.2.2000 directing the O.S.F.D.C. to consider the offer of the petitioner along with other eligible tenderers, but the O.S.F.D.C. placed orders for supply on other tenderers. The petitioner again approached this Court in O.J.C. No. 9022 of 2000 and by order dated 14.2.2000 this Court directed the O.S.F.D.C. to place any orders for supply on the petitioner. The petitioner again moved this Court in O.J.C. No. 3796 of 2001 and the Court directed the O.S.F.D.C. to place orders on the petitioner for supply of twenty-five numbers of trailers. When orders were again not placed, the petitioner filed O.J.C. No. 1851 of 2002 in which notices were issued by the Court. During the pendency of the said O.J.C. No. 1851 of 2002, orders were placed on the petitioner for supply of twenty-five numbers of trailers and the petitioner withdrew the said writ petition. Mr. Mohanty vehemently argued that the aforesaid facts would clearly show that the O.S.F.D.C. has been acting arbitrarily and in violation of right of the petitioner under Article 14 of the Constitution. He cited the decision of the Supreme Court in Sterling Computers Limited v. M. & N. Publications Limited and Ors., JT 1993 (1) SC 187, wherein it has been held that even in contractual matters the public authority should not have unfettered discretion and the Courts have powers of judicial review to interfere if the exercise of discretion by the competent authority has not been bonafide. Mr. Mohanty submitted that the O.S.F.D.C. had placed orders with the petitioner for supply of twenty-five numbers of tractors at a price of Rs. 59, 600/- per unit whereas the O.S.F.D.C. has decided to place orders with the Orissa Agro Industries Corporation at a price of Rs. 66.500/- per unit. This decision of the O.S.F.D.C. obviously will cost the public exchequer more and is contrary to the public interest. He cited the decisions of the Supreme Court in Asia Foundation & Construction v. Trafalgar House Construction (I) Ltd. and Ors., 1997 (I) SCC 738, as well as Raunag International Ltd. v. I.V.R. Construction Ltd. and Ors., AIR 1999 SC 393, for the proposition that the Court can interfere in a decision relating to award of contract in the public interest. Mr. Mohanty further submitted that the decision of the O.S.F.D.C. to place orders for supply of trailers on the Orissa Agro Industries Corporation in the facts and circumstances suffers from irrationality or Wednesbury unreasonableness inasmuch as no reasonable or sensible person who had applied his mind to the question would have arrived at such a decision. He relied on the decision of the Supreme Court \njata Cellular v. Union of India, 1994 (6) SCC 651, for the proposition that any award of contract by the administrative authority is subject to control by judicial review on the ground of irrationality. Finally, Mr. Mohanty argued that the industrial Policy, 1996 and Industrial Policy, 2001 of the State Government have made clear representations that products of local industries with E.P.M. certificates will be purchased by the State Government and agencies under the control of the State Government raising a legitimate expectation that the trailers and agricultural implements manufactured in the local industry of the petitioner with EPM certification will be purchased by the State Government and the agencies under the State Government, such as the O.S.F.D.C., and the O.S.F.D.C. cannot deviate from such policy defeating the claim of the petitioner based on legitimate expectation and take a decision contrary to the policy and place orders with the Orissa Agro Industries Corporation which is not an industry manufacturing products with E.P.M. certification but is only a trader selling tractor trailers and agricultural implements on commission. Mr. Mohanty cited the decision of the Supreme Court in Navjyoti Coo-Group Housing Society etc., v. Union of India and Ors., AIR 1993 SC 155, Food Corporation of India v. Kamdhenu Cattle Feed Industries, AIR 1993 SC 1601, Union of India and Ors. v. Hindustan Development Corporation and Ors., AIR 1994 SC 988 and Punjab Communications Ltd. v. Union of India and Ors., 1999 (4) SCC 727, on the law relating to legitimate expectation. He also relied on the decision of the Queen's Bench Division in R. V. Jockey Club, ex parte RAM Racecourses Ltd., 1993 (2) All ER 225, and R. V. Ministry of Agriculture Fisheries and Food, ex parte Hamble (offshore) Fisheries Ltd. 1995 (2) All ER 714, in which the law relating to the legitimate expectation has been discussed.

3. Mr. A. K. Rath, learned counsel for opposite party No. 1, on the other hand, relying on the counter-affidavit filed by the opposite party No. 1, submitted that the O.S.F.D.C. is an independent body corporate and is a financial institution providing loans to . Scheduled Caste and Scheduled Tribe beneficiaries for setting up different income generating sources of their own to enhance their socio-economic standards. The O.S.F.D.C. takes loan from the National Scheduled Castes and Scheduled Tribes Financial Development Corporation (in short, "the N.S.F.D.C."), another agency for the purpose of providing loans to the SC & ST beneficiaries in the State. During the current financial year, initially a loan for forty numbers of totley units and thereafter a loan for another forty numbers of trolley units were sanctioned by the N.S.F.D.C. Hence, a total number of eighty trolley units are to be purchased for SC and ST beneficiaries during the current year. Mr. Rath vehemently argued that since trolley units are to be purchased for the SC and ST beneficiaries and not for the use of the O.S.F.D.C., the provisions of the industrial Policy of the Government of Orissa, 2001 for purchase of stores by State Government and agencies from local agencies with E.P.M. certification do not really apply to such purchases of trolley units for the SC and ST beneficiaries. Mr. Rath further submitted that for the current year, the O.S.F.D.C. has taken a decision to purchase the tractor trailers and agricultural implements from the Orissa Agro Industries Corporation, a Government Organization, as the said Corporation can provide after-sales service in a different workshop located throughout the State of Orissa. He submitted that if the O.S.F.D.C. places orders with the petitioner which is at Cuttack then the SC and ST beneficiaries residing in the districts like Koraput and Sundargarh shall not get the facility of after-sales service from the petitioner whereas they can get such facility of after-sales service from the Orissa Agro Industries Corporation. He argued that the O.S.F.D.C. has thus taken a decision to place the orders for supply of eighty units of tractor trailers and agricultural implements with the Orissa Agro Industries Corporation in the interest of the SC and ST beneficiaries and such decision taken in the interest of the SC and ST beneficiaries should not be interfered with by the Court. He referred to the letters of intent of the N.S.F.D.C. dated 5th of November, 2001 and 19th of November, 2001 and the terms and conditions for sanction of term loan assistance to the O.S.F.D.C. for providing financial assistance towards the purchase of tractor trailer enclosed therewith to show that the purchase of trolley units are for the SC and ST beneficiaries and not for the requirements of the O.S.F.D.C. In reply to the submission of Mr. Mohanty that the price offered by the petitioner for each unit is much lower than the price of Rs. 66,500/- per unit at which orders are to be placed with the Orissa Agro Industries Corporation, Mr. Rath submitted that the difference between the two prices is only marginal and for this marginal difference, the SC and ST beneficiaries will get much more benefits in terms of after-sales service and repairs in the workshop of the Orissa Agro Industries Corporation.

4. Mr. R. C. Praharaj, Mr. S. Mishra and Mr. R. C. Sahu appearing for the intervenors - SC and ST beneficiaries submitted that they had already been supplied with tractors by the O.S.F.D.C. in October, 2000 but on account of the interim order dated 29.5.2002 they have not been supplied with trailers/trolleys and other equipments. They further submitted that as per the terms and conditions for sanction of loan enclosed with the letters of intent, the beneficiaries are to be given the option to purchase tractors and other equipments as per their choice. Considering the aforesaid submissions of the learned counsel for the intervenors, the Court, by order dated 29.1.2003, had modified the interim order passed on 29.5.2002 and directed that on the intervenors indicating their choice of trolleys/ trailers and other equipments to the O.S.F.D.C. out of the manufacturers whose products have been certified by the ISO/ISI/EPM of the State Government of Orissa, purchases will be made in terms of the scheme from the concerned suppliers and the payment of the price made to the concerned suppliers directly and the O.S.F.D.C. will ensure that the trolleys/trailers and other equipments for which payment is made, are delivered to the intervenors. By our order dated 15.1.2003, the Orissa Agro Industries Corporation was impleaded as opposite party No. 4 and notice by special messenger was served on the said opposite party No. 4, but despite such notice the opposite party No. 4 has not entered appearance and opposed the prayers in the writ petition.

5. In Union of India v. Hindustan Development Corporation Ltd. (supra), the Supreme Court observed that of late the doctrine of legitimate expectation is being pressed into service in many cases, particularly in contractual sphere and thereafter examined the decisions of English Courts on the doctrine and held :

"On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that 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 straightway from the administrative authorities as no crystallized right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words where a person's legitimate expectation is not fulfilled by taking a particular decision then decision-maker should justify the denial of such expectation by showing some overriding public interest. Therefore even if substantive protection of such expectation is contemplated that does not grant an absolute right to a particular person. It simply ensures the circumstances in which that expectation may be denied or restricted. 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 protection is limited to that extent and a judicial review can be within those limits. But as discussed above 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. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the Court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted, in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relief is again a matter which depends on several factors."

A reading of the aforesaid conclusions of the Supreme Court would show that a case of legitimate expectation would arise when a body by representation or by past practice arouses expectation in the applicant that the said expectation will be fulfilled, and when such legitimate expectation is not fulfilled, the applicant can move the Court for judicial review contending that he should have been given a fair hearing before the decision was taken by the administrative authority negativing the legitimate expectation of the applicant. The aforesaid conclusions of the Supreme Court further show that the applicant cannot claim relief on the basis of doctrine of legitimate expectation straightway from the administrative authorities and the administrative authorities can show that overriding public interest required a departure from the earlier consistent past practice or policy and the Court will interfere only when the decision of the administrative authority is arbitrary, unreasonable and not in the public interest. The Supreme Court has also held that even if the Court is satisfied that a case for legitimate expectation is made out for interference, relief to be granted will depend upon several factors. In the aforesaid decision in the case of Union of India v. Hindustan Development Corporation Ltd. (supra), the Supreme Court cautioned that the doctrine of legitimate expectation cannot by itself form a basis for invalidating the exercise of a power by the Court and the Court will interfere only when a case for interference is made out on the basis of other well settled principles of administrative law such as arbitrariness, unreasonableness, gross abuse of power, etc. In the language of the Supreme Court :

"... Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form 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 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 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 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. As cautioned in Attorney General for New South Wales' case the courts should 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 a directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important."

6. The doctrine of legitimate expectation was again examined by the Supreme Court in Punjab Communication Ltd. v. Union of India and Ors. (supra) and in the said decision, the Supreme Court made it clear that it is not as if the decision-maker cannot change the policy on the basis of which a benefit is claimed and deny the benefit to the applicant but where it seeks to change the policy, the decision-maker must sustain the change in the policy by resort to Wednesbury principle of rationality. But, here also the limited role of the Court is to find out whether the change in the policy which defeats the legitimate expectation is irrational or perverse or one which no reasonable person could have made and once the Court finds that the decision of the administrative authority for change in the policy satisfies the tests of rationality or Wednesbury reasonableness, the Court will not interfere with the said decision on the ground that a better decision could be taken by the administrative authority as the choice of the decision is to be made not by the Court but by the administrative authority. In the words of the Supreme Court :

"... The result is that a change in policy can defeat a substantive legitimate expectation if it can be justified on Wednesbury reasonableness. We have noticed that in Hindustan Development Corporation Case also it was laid down that 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 the policy is for the decision-maker and not for the Court. The legitimate substantive expectation merely permits the Court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made."

7. Bearing in mind the aforesaid principles of law as laid down by the Apex Court, we may now examine the facts in the present case. The legitimate expectation of the petitioner in the present case is based on the Industrial Policies of the Government of Orissa, 1996 and 2001 wherein representations have been made that State Government Departments and agencies will purchase of store items included in the exclusive list from local industries having ISO/ISI/EPM certificate for the items by inviting competitive quotations from such industries. It is not disputed that O.S.F.D.C. is a State Government agency even though it may be an independent body corporate. Hence, it is expected to follow the aforesaid policy decision of the State Government for purchasing store items included in the exclusive list from local industries having ISO/ISI/EPM certificates for the concerned items by inviting competitive quotations from such industries. Since agricultural implements and tractor trailers are included in the exclusive list for store items, there is foundation for the petitioner to have a legitimate expectation that the agricultural implements and the tractor trailers with EPM certification manufactured by the petitioner as a local industry will be purchased by the O.S.F.D.C. This legitimate expectation of the petitioner can, however, be defeated by a decision of the O.S.F.D.C. to place orders for purchase of agricultural implements and tractor trailers with the Orissa Agro Industries Corporation provided such decision was dictated by overriding public interest and such decision of the O.S.F.D.C. is not arbitrary, unreasonable or unfair. !n the counter-affidavit filed by opposite party No. 1, it is stated that the eighty numbers of trolley units were to be purchased for ST and SC beneficiaries throughout the State in whose favour loan had been sanctioned and that the O.S.F.D.C. was not really purchasing the trolley units for its own use, and while deciding to purchase different items for supply to the beneficiaries under the loan scheme, factors such as timely delivery, after-sales service and guaranteed quality as per the specifications are to be considered in the larger interest of the ST and SC beneficiaries and considering all these factors, it was decided to place the orders with the Government organization the Orissa Agro Industries Corporation.

8. The aforesaid decision of the O.S.F.D.C. to place orders with the Orissa Agro industries Corporation for purchase of all the eighty trolley units is not consistent with the terms and conditions of sanction of term loan assistance to O.S.F.D.C. for financing the scheme for purchase of trolley units enclosed along with the letters of intent dated 5th of November, 2001 and 19th of November, 2001 of the N.S.F.D.C. Clauses 3, 4 and 6 of Part-B which contain the special condition of the said terms and conditions for sanction of term loan assistance to the O.S.F.D.C., are extracted herein below :

"3. In case of any other exemption like sales tax, excise duty refund bulk purchase discount etc. the same would be paid io NSFDC on Pro-rata basis immediately on its receipt. Cost over run if any shall be made by OSFDC and loanees to the satisfaction of NSFDC.

4. Beneficiaries should be given option to purchase tractor and other equipments, as per their choice. SCDC should mention details of tractor & equipment to be purchased (specification/rates) for each beneficiary, at the time of seeking disbursement of funds. NSF.DC would release funds on proportionate basis for expenditure to be incurred (subject to amount not exceeding the sanctioned loan amount.)

5. *** *** ***

6. Tractors will be purchased directly from the manufacturers at approved company rate or at DGS & D rates contract whichever is feasible. The OSFDC may negotiate for bulk purchase order discount."

Clause -4 quoted above expressly stipulates that beneficiaries should be given option to purchase tractor and other equipments as per their choice. It is thus not for the O.S.F.D.C. but for the beneficiaries to decide as to what tractor and what equipment he will purchase. Once he indicates his choice of tractor, the O.S.F.D.C. will have to place orders with the company which manufactures the said tractor at the approved company rate or at the DGS & D rate contract, whichever was feasible. If the O.S.F'.D.C. finds that as per such choice indicated by the beneficiaries a bulk purchase can be made from a particular company, the O.S.F.D.C. may also negotiate for bulk purchase order discount. Similarly, it is for the beneficiaries to indicate their choice of other equipments, such as tractor trailer and agricultural equipments. But, the O.S.F.D.C. Would have to ensure that such equipments are of standard quality. Hence, tractor trailers and agricultural implements will have to bear ISO/ISI/EPM certification. Further, at the time of such purchase the O.S.F.D.C. will have to ensure that after-sales service will be available for the products purchased and the purchases are made at as economic price as possible. Moreover, exemption like sales-tax, excise duty refund, bulk purchase discount, etc., will have to be paid to the N.S.F.D.C. on pro-rata basis immediately on its receipt as indicated in Clause-3 quoted above. These special conditions have obviously been imposed by the N.S.F.D.C. in the interest of the Scheduled Castes and Scheduled Tribes beneficiaries and in the public interest and there was absolutely no scope for the O.S.F.D.C. to take a decision to place orders for all the eighty numbers of trailers for which the O.S.F.D.C. had received sanction from the N.S.F.D.C. with the Orissa Agro industries Corporation. It is a decision which no reasonable person would have taken considering the aforesaid special conditions for sanction of term loan scheme imposed by the N.S.F.D.C., and thus does not satisfy the test of Wednesbury reasonableness. The said decision of the O.S.F.D.C. for placing orders with the Orissa Agro Industries Corporation is also arbitrary and unfair to the petitioner inasmuch as the SC/ST beneficiaries may have indicated their choice for purchasing tractor trailers and agricultural implements with EPM certification from the petitioner and in such an event, the O.S.F.D.C. would have had to place orders with the petitioner for purchase of such tractor trailers and agricultural implements, if other factors such as price and after-sales service were favourable for such purchase.

9. For the aforesaid reasons, we quash the impugned decision of the O.S.F.D.C. for placing orders for supply of eighty numbers of tractor trailers/trolleys and other agricultural implements with the Orissa Agro Industries Corporation and direct opposite party No. 1 to take fresh decisions for purchase of tractor trailers and agricultural implements in accordance with the terms and conditions of sanction of term loan assistance to the O.S.F.D.C. for financing the scheme of tractor with trolley laid down by the N.S.F.D.C., as discussed above, as early as possible so that the Scheduled Castes and Scheduled Tribes beneficiaries do not suffer, and vacate the interim order dated 29.5.2002.

The writ application is, accordingly, allowed to the extent indicated above. There shall, however, be no order as to costs.

Ch. P.K. Misra, J.

10. I agree.