Food Corporation of India v. Kamdhenu Cattle Feed Industries

Facts

The Food Corporation of India invited tenders for sale of stocks. The highest tenderer (Kamdhenu) expected its bid to be accepted, but FCI, treating the bids as inadequate, negotiated with all tenderers and accepted a higher offer. Kamdhenu claimed a legitimate expectation that its highest bid would be accepted.

Issues

• What is the nature and scope of the doctrine of legitimate expectation in administrative decision-making.
• Whether a legitimate expectation gives rise to an enforceable right, or merely requires due consideration in a fair process.

Arguments

Kamdhenu argued that, being the highest bidder, it had a legitimate expectation that its tender would be accepted and that departing from it was arbitrary. FCI argued it was entitled, in larger public interest, to reject inadequate bids and negotiate for a better price, and that no enforceable right vested in any tenderer.

Held

The Supreme Court held that the doctrine of legitimate expectation operates within the rule of non-arbitrariness under Article 14. A reasonable or legitimate expectation is not by itself a distinct enforceable right, but failure to consider and give due weight to it can render a decision arbitrary. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process; whether an expectation is legitimate is a question of fact. However, larger public interest may outweigh the expectation, and a bona fide decision reached after such consideration satisfies the requirement of non-arbitrariness. On the facts, FCI's negotiation for a better price in public interest was upheld.

Ratio decidendi

Legitimate expectation is assimilated into the rule of law through Article 14: it is a relevant factor that must be given due consideration in a fair process, but it can be lawfully outweighed by larger public interest and confers no automatic enforceable right.

Significance

The leading Indian authority defining the nature and limits of legitimate expectation; its formulation that the doctrine is a facet of non-arbitrariness under Article 14, capable of being overridden by public interest, has been consistently followed.

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