1998 (8) TMI 597 - SC - Indian Laws

Summary

Issues Involved:
1. Payment of Foreign Allowance at 125% of revised basic pay.
2. Application of the doctrine of "Legitimate Expectation".

Summary:

Issue 1: Payment of Foreign Allowance at 125% of Revised Basic Pay
The respondents, who were on deputation with NBCC in Iraq, claimed Foreign Allowance at 125% of their revised basic pay following the Fourth Pay Commission's recommendations. The Delhi High Court had directed NBCC to pay this allowance based on the revised pay. However, NBCC contended that Foreign Allowance was not part of the contractual terms and was to be paid on the pre-revised basic pay. The Supreme Court observed that Foreign Allowance was not included in the original terms of deputation and was considered a discretionary compensatory allowance u/s F.R. 51(2). The High Court's decision to link Foreign Allowance to revised pay was found speculative and erroneous.

Issue 2: Application of the Doctrine of "Legitimate Expectation"
The High Court allowed the respondents' claim based on the doctrine of "Legitimate Expectation," stating that the respondents expected Foreign Allowance to increase with the revised basic pay. However, the Supreme Court highlighted that this doctrine requires reliance on representations and resulting detriment, which was not established in this case. The respondents' claim of "Legitimate Expectation" was not pleaded in the writ petition, and no foundation was laid for such a plea. The Supreme Court emphasized that the doctrine cannot override a policy decision taken by NBCC based on objective assessment and financial constraints in Iraq.

Conclusion:
The Supreme Court allowed the appeals, setting aside the Delhi High Court's judgments dated 13.9.96 and 25.7.97. The writ petitions relating to Foreign Allowance were dismissed, with no order as to costs.