Governement contract under Article 299 of constitution and Contractual liability of government
📜 Government Contracts under Article 299 of the Constitution of India
🔹 What is Article 299?
Article 299 of the Indian Constitution governs the manner and form in which contracts are made by the Union or State Governments. It ensures accountability and legality in government dealings by prescribing specific formalities.
🔹 Text of Article 299(1):
"All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorize."
🔹 Key Requirements Under Article 299(1):
To be a valid government contract, the following three conditions must be fulfilled:
The contract must be expressed to be made in the name of the President (Union) or Governor (State).
It must be executed on behalf of the President/Governor.
It must be executed by a person authorized by the President/Governor.
Failure to comply with any of these conditions renders the contract void and unenforceable.
⚖️ Contractual Liability of the Government
The government can be sued for breach of contract, only if the contract is made in accordance with Article 299(1).
If a contract does not comply, it is void, and no suit can be brought against the government to enforce it, even under principles of equity or implied contract.
🧾 Important Case Laws
Here are more than four landmark judgments explaining and applying Article 299 and the government’s contractual liability:
1. Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram (1954)
Facts:
A contract was entered into with the government but not in the name of the Governor.
Held:
The Supreme Court held that for a contract to be valid under Article 299, it must be expressly made in the name of the Governor or President. The formality is mandatory, and non-compliance makes the contract void.
Significance:
Strict interpretation of Article 299(1). The form, not just the substance, is crucial for enforceability.
2. K.P. Chowdhary v. State of Madhya Pradesh (1966)
Facts:
An oral agreement was made between a government officer and a contractor.
Held:
The Court held that oral contracts are not valid under Article 299. A contract must be in writing, signed, and executed by authorized persons.
Significance:
Reinforced that oral contracts with the government are unenforceable even if performed in part.
3. Bhikraj Jaipuria v. Union of India (1962)
Facts:
A contract was entered into by a government officer, but not executed on behalf of the President.
Held:
The contract was held void due to non-compliance with Article 299. However, the Court recognized that the plaintiff could claim compensation under Section 70 of the Indian Contract Act (quasi-contract) if benefit was derived by the government.
Significance:
Though the contract was void, equitable compensation was allowed for services already rendered.
4. State of Bihar v. Karam Chand Thapar & Bros. (1962)
Facts:
The contractor claimed breach of contract where authorization from the Governor was missing.
Held:
The Supreme Court held that where the person signing was not authorized, the contract is not binding on the government.
Significance:
Authorization is not assumed—must be specifically proved for validity under Article 299.
5. Mulamchand v. State of Madhya Pradesh (1968)
Facts:
A private firm supplied goods to the government based on a contract that was not made in accordance with Article 299.
Held:
The contract was declared void ab initio. However, the firm was allowed to claim compensation under Section 70 of the Indian Contract Act for the benefit received by the State.
Significance:
Affirms that though void under Article 299, quantum meruit or unjust enrichment remedies may apply.
🔍 Key Doctrines Developed
| Principle | Explanation |
|---|---|
| Strict Compliance Rule | Contract must strictly comply with Article 299(1); else, it's void. |
| No Estoppel Against State | Government cannot be bound by defective contracts through estoppel. |
| Quasi-Contractual Relief | Even void contracts may allow compensation under Section 70 (benefit-based). |
| No Oral Contracts | Oral contracts with government are unenforceable. |
📌 Summary of Cases
| Case Name | Issue | Held |
|---|---|---|
| Chatturbhuj Jasani (1954) | Contract not in name of Governor | Void due to formality violation |
| K.P. Chowdhary (1966) | Oral agreement with govt | Oral contract unenforceable |
| Bhikraj Jaipuria (1962) | Improper execution | Void under Art. 299, compensation allowed |
| Karam Chand Thapar (1962) | Unauthorized signatory | Void; authorization is essential |
| Mulamchand (1968) | Non-compliant written contract | Void, but Section 70 compensation allowed |
✅ Conclusion
Article 299(1) acts as a safeguard against unauthorized and corrupt contracts by requiring strict compliance in form, execution, and authority.
The contractual liability of the government is limited strictly to legally valid contracts made under Article 299.
Courts have consistently held that no estoppel or equity can override Article 299.
However, courts have evolved the doctrine of quasi-contractual relief to prevent unjust enrichment when the government benefits from invalid contracts.
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