“Public Policy” has been defined by Winfield as “a principle of judicial legislation or interpretation founded on the current needs of the community”. (See Percy H. Winfield, “Public Policy in English Common Law.” 42 Harvard Law Rev. 76). Now this would show that the interests of the whole public must be taken into account; but it leads in practice to the paradox that in many cases what seems to be in contemplation is the interest of one section only of the public, and a small section at that. The explanation of the paradox is that the courts must certainly weigh the interests of the whole community as well as the interests of a considerable section of it, such as tenants for instance, as a class as in this case. If the decision is in their favour, it means no more than that there is nothing in their conduct which is prejudicial to the nation as a whole. Nor is the benefit of the whole community always a more tacit consideration. The courts may have to strike a balance in express terms between community interests and sectional interests. So, here we are concerned with the general freedom of contract which every one possesses as against the principle that this freedom shall not be used to subject a class, to the harassment of suits without valid or reasonable grounds. Though there is considerable support in judicable dicta for the view that courts cannot create new heads of public policy, see Gherulal Parakh Vs. Mahadeodas Maiya and Others, , there is also no lack of judicial authority for the view that the categories of heads of public policy are not closed and that there remains a broad field within which courts can apply a variable notion of policy as a principle of judicial legislation or interpretation founded on the current needs of the community. See Dennis Lloyd, “Public Policy”, (1953), pp 112-113.
Public Policy does not remain static in any given community. It may vary from generation to generation and even in the same generation. Public policy would be almost useless if it were to remain in fixed moulds for all time.
If it is variable, if it depends on the welfare of the community at any given time, how are the courts to ascertain it? The judges are more to be trusted as interpreters of the law than as expounders of public policy. However, there is no alternative under our system but to vest this power with judges. The difficulty of discovering what public policy is at any given moment certainly does not absolve the Judges from the duty of doing so. In conducting an enquiry, as already stated, judges are not hide bound by precedent. The judges must look beyond the narrow field of past precedents, though this still leaves open the question, in which direction he must cast his gaze. The judges are to base their decision on the opinions of men of the world, as distinguished from op8inions based on legal learning. In other words, the judges will have to look beyond the jurisprudence and that in so doing, they must consult not their own personal standards or predilections but those of the dominant opinion at a given moment, or what has been termed customary morality. The judges must consider the social consequences of the rule propounded especially in the light of the factual evidence available as to its probable results….
70. The matter was again considered by the Apex Court in various decisions including Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, The relevant part of para 93 of this decision being germane to the issue is quoted below.
From the very nature of things, the expressions “public policy”, opposed to public policy”, or “contrary to public policy” are incapable of precise definition. Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy.
x x x x x x x x x
It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution. [COMMITTEE OF MANAGEMENT, SHRI MOHAN SINGH INTER COLLEGE Vs. STATE OF U.P. – (2007) 289 ITR 224 -ALLAHABAD HIGH COURT ]