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50.The law relating to the Government contracts is provided under Article 299 of the Constitution of India. Article 299 (1) reads as follows:

“All the 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 such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of President or the Governor by such person and in such manner as he may direct or authorise.”

51.Article 299(1) of the Constitution derives its Source from Section 173(3) of the Government of India Act, 1935. Article 299(1) lays down three requisite conditions for the formation of Government Contracts, which are as follows:

“1.All the Contracts shall be expressed to be made by the President or by the Governor as the case may be.
2.All such Contracts and assurances of the property made in the exercise of the executive power shall be executed on the behalf of the President or the Governor as the case may be.
“13. In determining the liability of the Union and the State http://www.judis.nic.in WP(MD) No.20903 of 2016, etc., batch in respect of contracts, regard must be had to Article 299(1) of the Constitution, which prescribes the formal requirements for the making of contracts by the Union and the State for their power to enter into contracts and to carry on trade or business is expressly affirmed by Article 298, which provides that the executive power of the Union and the State extends to the carrying on of any trade or business, acquiring, holding or disposing of any property and the making of contracts. Therefore, if the requirements of Article 299 are complied with, there remains no doubt that under Article 300 a valid contract can be enforced against the Union and the State and in case there is a breach damages in respect of the breach can be claimed. It is a settled law that the provisions of Article 299 are mandatory. It follows, therefore, that any agreement which did not comply with its terms is void. Section 2(e) and (h) of the Contract Act provides that an agreement not enforceable by law is void and an agreement enforceable by law is a contract. If the terms of Article 299 are not complied with in the present case, the contract will be void as being not enforceable in law. The question was considered in Seth Bhikrai Jaipuria v.

17. Likewise Lodha J. in the State of Raiasthan v. Jairam Das AIR 1972 Raj 38 held that the effect of non-compliance of the provisions of Article 299 of the Constitution makes the contract void and it cannot be enforced. This was also a case of lease under the Minor Mineral Concession Rules. 1955.

18. As a result of the foregoing discussion, we have no manner of doubt that the mining lease was though granted to the plaintiff by the Director of Mines and Geology, Udaipur, it was in exercise of the executive function of the State and Article 299 of the Constitution applied to the mining lease in Question.”