Supreme Court Upholds Policy Change in Abkari Worker Rehabilitation Case: Kerala State Beverages Corporation vs. P.P. Suresh (2019)

Introduction

Date of the Judgment: 04 October 2019

Citation: 2019 INSC 1234

Judges: L. Nageswara Rao, J. and Hemant Gupta, J.

Can a government alter its policy regarding rehabilitation of displaced workers due to administrative difficulties? The Supreme Court of India recently addressed this question in a case concerning Abkari (liquor) workers in Kerala, who lost their jobs following a ban on arrack. The core issue was whether these workers had a vested right to employment and if the government could modify its earlier policy of providing them jobs. This judgment, delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice Hemant Gupta, examined the scope of legitimate expectation and the government’s power to change policy in public interest.

Case Background

In 1995, the Kerala State Beverages Corporation Limited (the Corporation) began operating retail outlets for arrack, replacing private shops. However, on April 1, 1996, the state of Kerala banned arrack, resulting in the unemployment of approximately 12,500 arrack workers. Initially, the State Government provided each worker with a compensation of ₹30,000, along with an ex gratia payment of ₹2,000, provident fund, pension, and DCRG.

Dissatisfied with mere compensation, the displaced workers agitated for re-employment. Consequently, an agreement was reached, and on February 20, 2002, the government issued G.O.(Rt) No.81/2002/TD, reserving 25% of all future daily wage vacancies in the Corporation for displaced Abkari workers who were members of the Abkari Workers Welfare Fund Board.

However, this policy was altered on August 7, 2004, by G.O.(Rt) No. 567/2004/TD. The new order earmarked the 25% of daily wage vacancies for the dependent sons of arrack workers who had died due to loss of employment, with an age limit of 38 years.

Meanwhile, the Kerala Abkari Shops Disposal Rules, 2002, introduced Rules 4(2) and 9(10)(b) for absorbing displaced arrack workers. However, these rules were later declared *ultra vires* the Abkari Act, 1902, by the Supreme Court in the case of Kerala Samsthana Chethu Thozhilali Union v. State of Kerala & Ors. [(2006) 4 SCC 327].

A list of 265 dependent sons of deceased arrack workers was prepared, and they approached the High Court seeking employment. The High Court directed the implementation of the 2004 order, but also instructed the government to reconsider the order so that all displaced workers could benefit. The government then issued G.O. (Rt.) No.399/09/TD on April 30, 2009, appointing the 265 individuals. However, no relief was granted to other jobless workers. Citing practical difficulties, the government issued G.O.(Rt) No. 562/09/TD on June 22, 2009, which made it difficult to implement the 2002 order.

The displaced arrack workers challenged the legality of the government orders of 2004 and 2009, seeking the implementation of the 2002 order. A single judge of the High Court ruled in their favor on May 29, 2015, directing the government to implement the 2002 order within two months, stating that the workers had a legitimate expectation of continued employment. The Division Bench of the High Court upheld this decision, stating that the 2004 order was arbitrary and violated Articles 14 and 21 of the Constitution.

Timeline

Legal Framework

The case primarily revolves around the interpretation of the principle of legitimate expectation and its application to government policy decisions. The Supreme Court also considered the following:

• Article 14 of the Constitution of India: This article guarantees equality before the law and prohibits discrimination. The High Court held that the Government Order dated 07.08.2004 was violative of Article 14 as it was arbitrary and unreasonable.
• Article 21 of the Constitution of India: This article protects the right to life and personal liberty. The High Court held that the Government Order dated 07.08.2004 was also violative of Article 21 as it deprived the arrack workers of their livelihood.
• Articles 38 to 43 of the Constitution of India: These articles are Directive Principles of State Policy, which guide the government in formulating policies for social welfare. The High Court referred to these articles to emphasize that the policy decision to provide rehabilitation was for achieving social objectives.
• The principle of Legitimate Expectation: The Supreme Court discussed the principle of legitimate expectation as developed in cases such as Union of India v. Hindustan Development Corporation & Ors. [(1993) 3 SCC 499], Punjab Communications Ltd. v. Union of India & Ors. [(1999) 4 SCC 727], and Ram Pravesh Singh v. State of Bihar [(2006) 8 SCC 381]. This principle states that if a government makes a clear promise, it should not act contrary to it, unless there are valid reasons.
• The principle of Proportionality: The Supreme Court discussed the principle of proportionality as developed in cases such as Om Kumar v. Union of India [AIR 2000 SC 3689]. This principle states that any action taken by the government should be proportionate to the objective it seeks to achieve and should not excessively infringe on the rights of individuals.

Arguments

The arguments presented before the Supreme Court can be summarized as follows:

Arguments of the State of Kerala and the Corporation:

• The State argued that the modification of the 2002 order through the 2004 order was due to overriding public interest.
• It was difficult to implement the 2002 order due to the limited number of vacancies (only 51) compared to the large number of displaced workers (12,500).
• The decision to modify the order was taken after detailed discussions with stakeholders, including the Chief Minister.
• The State contended that there was no vested right for the displaced workers to claim public employment and that the decision to modify the order was a policy decision that should not be interfered with.
• The State also argued that the displaced workers had been compensated in 1996 and could not claim employment after 23 years.
• The Corporation argued that appointments are made through the Kerala State Public Service Commission and providing employment to displaced workers would be detrimental to other eligible candidates.

Arguments of the Displaced Abkari Workers:

• The workers argued that the 2002 order created a vested right for them to be considered for employment.
• They had a legitimate expectation that the State would act fairly and not resile from its promise.
• They contended that providing employment only to the dependent sons of deceased workers was arbitrary and unreasonable.
• The workers argued that the issue pertaining to the correctness of the 2004 order had attained finality in Writ Petition (Civil) No.26878 of 2007.
• They submitted that they had spent many years in litigation and were still unemployed, and if they could not be re-employed, they should be monetarily compensated.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the displaced Abkari workers had a vested right of rehabilitation pursuant to the Government Order dated 20.02.2002.
2. Whether modification/alteration of the Government Order dated 20.02.2002 is vitiated due to unfairness, arbitrariness, and unreasonableness.
3. The scope of the legitimate expectation of the Respondents.
4. Whether the Respondents are entitled to any relief after the passage of 23 years since they lost their jobs due to the ban on arrack.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court allowed the appeals, setting aside the High Court’s decision. The Court held that the displaced Abkari workers did not have a vested right to employment and that the government’s decision to modify its policy was justified due to administrative exigencies and overriding public interest.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ Kerala Samsthana Chethu Thozhilali Union v. State of Kerala & Ors. [(2006) 4 SCC 327]* was cited to show that the rules for absorption of arrack workers were declared *ultra vires*.

✓ Union of India v. Hindustan Development Corporation & Ors. [(1993) 3 SCC 499]* was used to recognize the principle of legitimate expectation.

✓ Punjab Communications Ltd. v. Union of India & Ors. [(1999) 4 SCC 727]* was used to elaborate on the concept of legitimate expectation.

✓ Council of Civil Service Unions and Ors. v. Minister for the Civil Service [1985 AC 374 : (1984) 3 All ER 935]* was cited to explain the conditions for a legitimate expectation to arise.

✓ Ram Pravesh Singh v. State of Bihar [(2006) 8 SCC 381]* was used to clarify that legitimate expectation is not a legal right.

✓ Attorney General of Hong Kong v. Ng Yuen Shiu [1983] 2 All ER 346* was cited to demonstrate a situation where a claim can be made regarding an opportunity not being given before withdrawing a promise.

✓ Om Kumar v. Union of India [AIR 2000 SC 3689]* was used to explain the principle of proportionality.

✓ Coimbatore District Central Co-operative Bank v. Coimbatore District Central Co-operative Bank Employees Association & Anr. [(2007) 4 SCC 669]* was cited to explain the balancing test and necessity test under the principle of proportionality.

✓ Articles 14, 19 and 21 of the Constitution of India were considered in the context of the fundamental rights of the workers and the government’s actions.

✓ Articles 38 to 43 of the Constitution of India were considered to understand the Directive Principles of State Policy and their relevance to the case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Administrative Exigencies: The Court recognized the practical difficulties faced by the government in implementing the 2002 order due to the limited number of vacancies and the large number of displaced workers.
• Overriding Public Interest: The Court accepted that the change in policy was to balance the interests of the displaced workers and the unemployed youth in the State of Kerala.
• No Vested Right: The Court held that the 2002 order did not create a vested right for all displaced workers to be employed, but was an assurance to consider them for future vacancies.
• Legitimate Expectation: The Court clarified that the legitimate expectation of the workers was not absolute and could be overridden by public interest and administrative difficulties.
• Proportionality: The Court applied the principle of proportionality to determine that the change in policy was not excessive and did not disproportionately infringe on the rights of the workers.

The sentiment analysis of the reasons given by the Supreme Court is as follows:

Fact:Law Ratio

The ratio of fact to law that influenced the court’s decision is as follows:

Logical Reasoning:

The Court’s reasoning was based on a careful analysis of the facts, the legal principles involved, and the specific circumstances of the case. The Court emphasized the government’s need to balance competing interests and the importance of public interest in policy decisions.

The Court considered the argument that the workers had a legitimate expectation of continued employment based on the 2002 order. However, the Court held that this expectation was not absolute and could be overridden by public interest and administrative difficulties. The Court also noted that the government had consulted with the workers’ representatives before modifying the policy.

The Court also considered the argument that the 2004 order was arbitrary and violated Articles 14 and 21 of the Constitution. However, the Court held that the 2004 order was a policy decision taken in overriding public interest and was not arbitrary. The Court applied the principle of proportionality to determine that the change in policy was not excessive and did not disproportionately infringe on the rights of the workers.

The Court rejected the High Court’s finding that the 2004 order was a continuation of the 2002 order. The Court clarified that the 2004 order was issued in modification of the 2002 order, and it replaced the earlier order.

The Court quoted the following from the judgment:

“There was no unequivocal promise that all the displaced workers would be provided re-employment.”

“The said decision cannot be termed as unreasonable or arbitrary as it was taken in light of overriding public interest.”

“The principle of procedural legitimate expectation would apply to cases where a promise is made and is withdrawn without affording an opportunity to the person affected.”

There were no dissenting opinions in this case. The judgment was delivered by a two-judge bench.

Key Takeaways

• A government’s assurance to consider displaced workers for future employment does not create a vested right to employment.
• The principle of legitimate expectation is not absolute and can be overridden by public interest and administrative difficulties.
• When a policy affects a large number of people, individual hearings are not necessary before modifying the policy.
• The principle of proportionality is applied to determine if a policy change is excessive and disproportionately infringes on the rights of individuals.
• The government has the power to modify its policies in the public interest, provided the decision is not arbitrary or unreasonable.

Practical Implications:

• This judgment clarifies the scope of legitimate expectation in the context of government policy changes. It emphasizes that the government has the power to modify its policies in the public interest, even if it affects the expectations of certain individuals.
• It provides a framework for balancing the interests of displaced workers and the larger public interest, particularly in cases where the government faces administrative difficulties in implementing its policies.
• The judgment highlights the importance of considering the principle of proportionality when reviewing government policy decisions, ensuring that the changes are not excessive or disproportionately infringe on the rights of individuals.
• This case serves as a reminder that assurances made by the government are not always legally binding and that the government has the flexibility to adapt its policies to changing circumstances.
• The judgment underscores the need for governments to provide adequate compensation or alternative rehabilitation measures to displaced workers, even if they do not have a vested right to employment.

Future Impact:

• This judgment is likely to be cited in future cases involving government policy changes and the rights of displaced workers.
• It may influence the way governments formulate and implement policies, encouraging them to consider the practical difficulties and public interest implications of their decisions.
• The judgment could lead to a more nuanced understanding of the principle of legitimate expectation, emphasizing the need for a balance between individual rights and public interest.
• It may also prompt governments to be more transparent and consultative in their policy-making processes, ensuring that the affected parties are given a fair opportunity to express their views.
• The case could encourage governments to explore alternative rehabilitation measures for displaced workers, such as skill development programs and financial assistance, rather than relying solely on employment guarantees.