PUNJAB COMMUNICATIONS LTD. versus UNION OF INDIA AND ORS.

Citation: [1999] 2 S.C.R. 1033 · Decided: 04-05-1999 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

PUNJAB COMMUNICATIONS LTD. 
A 
v. 
UNION OF INDIA AND ORS. 
MAY 4, 1999 
(S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.] 
B 
Administrative Law: 
Doctrine of legitimate expectation-Change in public policy-
Applicability of-Policy decision taken by the Government to provide digital C 
wireless telecom facility in Eastern U.P. on the basis of ADB loan-Tender 
invited and appellant along with another company shortlisted-Allegation 
of appellant that certain officers of the Government played fraud to see that 
the ADB loans either lapse or stand withdrawn to favour a multinational 
company who wanted to dump outmoded technology in India-Subsequently, 
Government took another policy decision to provide digital telecom facility D 
not only to Eastern UP. but other rural areas of various States-Held, 
changed policy decision was neither irrational or perverse on the basis of 
the underlining Principles and hence Govt. was not bound by its earlier 
policy decision-Such policy can be changed by the Decision-makers in 
overriding public interest-However, change in policy defeating the E 
substantive legitimate expectation 111us1 satisfy the test of reasonableness and 
the Court can interfere if the change of policy is irrational or perverse-
W ednes bury principle-Government contracts-Fraud-Legitimate 
expectation. 
Administrative action-Allegation of fraud-Official decision should F 
not be infected with motives such as fraud or dishonesty, malice or personal 
self-interest-There can be any cause of action on the basis of an attempt at 
fraud, which did not materialise. 
Practice and Procedures-SLP-lnfructuous issues-Subsequent G 
issues-Regard for-Issues live before the High Court become non-issue due 
to subsequent events during the pendency of the appeal-Must be taken into 
consideration-Constitution of India, Article 136. 
The Asian Development Bank (ADB) agreed to grant a soft loan to 
respondent No. 1 for funding a project meant to provide digital wireless H 
1033 
·1034 
SUPREME COURT REPORTS ' 
[1999] 2 S.C.R. 
A telecom facility to 36,000 identified villages in Eastern U.P. Accordingly, 
Department of Telecommunication (DOT) floated a tender inviting offers 
from foreign and Indian companies. On evaluation of the offer, appellant and 
BEL was shortlisted by the Tender Evaluation Committee. It was the case of 
the appellant that on account of some pressure b~ought on Respondent 5 
(Member, Telecom Commission) and Respondent No. 6 (Advisor, Telecom 
B Commission), the matter was referred to a High Level committee; with a view 
to obtain an opinion to disqualify the appellan! so that the DOT could go in 
for outmoded ."analog" system ratJter than the current "digital" system to 
be provided to a multinational company whiCh was wanting to dump its 
outmoded "analog" system to India. This .idea was to issue fresh notification. 
C inviting tender for this "analog" system. The appellant made representation 
to respondent No. 2 but an order cancelling the tender was passed. The 
appellant therefore, challenged the order cancelling the tender in a writ 
petition before the High Court and the same was dismissed. Review petition 
was also dismissed by the High Court. Hence this appeal. During the pendency 
of this appeal, the ADB loan, on which the tender was based, stood withdrawn. 
D Therefore, the previous tenders were cancelled. DOT informed the finance 
. 
I 
Ministry that it would not avail the loan and had decided to fund the Rural 
Telecom Project through its own resources. This Court was informed that 
the Government was thinking of calling for fresh tenders for installation of 
telephones under a new scheme for rural areas spread over different States •. 
E Accordingly a new tender was floated in which appellant was also participating. 
It was submitted by the appellant that in spite of the developments 
subsequent to the filing of this appeal, various officers conspired and played 
fraud in order that the ADB loans either lapsed or stood withdrawn, that the 
appellant had a legitimate expectation of a substantive nature, that, even if 
F the Government wanted to put its own funds, the original tender notification 
would require to be processed for the benefit of Eastern U.P.; and that the 
G 
· respondents cannot change the policy to benefit the rural areas in the whole 
country and abandon the tender notification for Eastern U.P. 
Dismissing the appeal, this Court 
HELD : 1. The issues, which were live when the writ peti

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