In a Recent Glock Asia Pacific case the Supreme Court ruled that the government cannot claim immunity from the legal provisions of a contract entered into in the President’s name under Article 299 of the Constitution.
THE CONCEPT OF GOVERNMENT CONTRACT
A contract to which The Central Government or a State Government is a party is called a ‘Government Contract’.
A contract entered into by or with the Central or State Government has to fulfill certain formalities as prescribed by Article 299 of the Indian Constitution.
THE INDIAN CONTRACT ACT,1872
THE INDIAN CONSTITUTION
- A Government Contract, like other contracts, is governed by the Indian Contract Act, but it is distinct. A Government Contract must conform with the stipulations of Article 299 in addition to the requirements of the Indian Contract Act, such as offer, acceptance, and consideration.
Article 298, The Indian Constitution
Allows Government to make Contracts for any purpose
Article 299, The Indian Constitution
It lays down the provisions on how a particular contract would be exercised in India.
- Section 2(h) of the Indian Contract Act, 1872: defines a contract as “An agreement enforceable by law”
- Art 299 (2) , Neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution
‘K.P. Chowdhry v. State of Madhya Pradesh, 1966
Supreme Court laid down essential requirements for government contracts under Article 299:
- the contract must be expressed to be made by the Governor,
- it must be executed in writing, and,
- the execution should be by such persons and in such manner as the Governor might direct or authorise,
State of Bihar v Majeed (1954)
the Supreme Court held that subject to the formalities prescribed by Article 299 the contractual liability of the Central or State Government is the same as that of any individual under the ordinary law of contract.
Article 299 and Government Contracts
A contract that is in accordance with Article 299 may be enforced by or against the government.
It is subject to general contract law provisions, and its terms cannot be modified by invoking Article 14 of the Constitution.
A contract that does not meet any of the standards set out in Article 299(1) of the Constitution is not binding on or enforceable by the government, is null and void (save for collateral purposes), and cannot be ratified.
Under this clause, no damages can be claimed for breach unless the contract is completed.