Document Fragment View

Matching Fragments

"The tender together with letter of acceptance thereof shall constitute a binding contract between the successful tenderer and the department and shall form the foundation of rights and obligations of both the parties."

The learned Sub-Judge recorded that the above tender form was duly signed by the respondent and the appellant. On an analysis of the evidence on records, the learned Judge came to the conclusion that there was a valid contract and accordingly the application under section 33 of the Act was dismissed with costs. There was a revision to the High Court. The High Court after discussing the relevant evidence came to the conclusion that there was no valid contract. The learned Judge of the High Court noted that in the acceptance letter Ext. P. 7 and Ext. RW 1/14, the Executive Engineer had required the respondent at the end to sign the agreement which was under preparation within ten days. No such agreement was ever signed. That position is undisputed. Therefore, the High Court was of the view that no contract in conformity with Article 299(1) of the Constitution, which was a constitutional requirement in this case, has been entered into and came to the conclusion that there was no contract between the parties. In that view of the matter the revision was allowed and the order passed by the trial Judge was set aside. This appeal arises from the said decision. Shri C.M. Nayar advocate for the appellant contended that there was a valid and subsisting contract. He strenuously argued that there Was authority for the PG NO 540 Executive Engineer to enter into the contract on behalf of the Governor. He drew our attention to clause 2.76 of the Public Works Department Code which provides as follows :

Shri Nayar further sought to urge that Article 299 was for the Governments' protection in order to protect it against unauthorised contracts being entered on behalf of the Government. In the instant case, according to Shri Nayar, the Executive Engineer had issued the tender and had accepted the tender, authority to accept the tender on behalf of the Governor, is thus established. Shri Nayar submitted that once that authority is established and it is made clear from the evidence that the authorities have acted on that basis, then it must be presumed that the contract had been entered into in accordance with the provisions of Article 299 of the Constitution. ln view of the clear position in law, it is, however, not possible to accept this submission.

This Court reiterated that under that section a contract entered into by the Governor of a Province must satisfy three conditions, namely, (i) it must be expressed to be made by the Governor; (ii) it must be executed; and (iii) the execution should be by such persons and in such manner as the Governor might direct or authorise. These three conditions are required to be fulfilled. This position was reiterated by this Court again in Seth Bikhraj Jaipuria v. Union of India, [l962] 2 S.C.R. 880. This Court explained that three conditions as mentioned in State of Bihar v. M/S. Karam Chand Thapar (supra) had to be fulfilled, and further reiterated that the object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and, hence, it was provided that the contracts must show on their faces that these were made by PG NO 544 the Governor-General and executed on his behalf in the manner prescribed by the person authorised. It is based on public policy. No question of waiver arises in such a situation. If once that position is reached, and that position is well-settled by the authorities over a long lapse of time, no question of examining the purpose of this requirement arises. In Union of India v. A.L. Rallia Ram, [1964] 3 S.C.R. 164, this Court again reiterated that the agreement under arbitration with the Government must be in accordance with section 175(3) of the Government of lndia Act, 1935. These principles were again reiterated by this Court in Timber Kashmir Pvt. Ltd. etc. etc. v. Conservator of Forests, Jammu & Ors. etc., [1977] 1 S.C.R. 937. There, the Court was concerned with section 122(1) of the Jammu & Kashmir Constitution which corresponded to Article 299(1) of the Constitution of India. In that case all the three applications filed by the respondent State for a reference to an arbitrator under section 20 of the Jammu & Kashmir Arbitrator Act, were dismissed by a single Judge of the Jammu & Kashmir High Court on the ground that the arbitration clause was, in each case, a part of an agreement which was not duly executed in accordance with the provisions of section 122(1) of the Jammu & Kashmir Constitution which corresponded to those of Article 299(1) of the Constitution of India. But the Division Bench allowed the appeals holding that if contracts were signed by the Conservator of Forests in compliance with an order of the Government, the provisions of section 122(1) of the Jammu & Kashmir Constitution could not be said to have been infringed. This Court held that the contract could not be executed without the sanction. Nevertheless, if the sanction could be either expressly or impliedly given by or on behalf of the Government, as it could, and, if some acts of the Government could fasten some obligations upon the Government, the lessee could also be estopped from questioning the terms of the grant of the sanction even where there is no written contract executed to bind the lessee. But, once there has been a valid execution of lessee by duly authorised officers, the documents would be the best evidence of sanction. In that case, the contracts were executed on behalf of the Government of Jammu & Kashmir. The only question with which the Court was concerned in that case was whether the contracts executed by duly authorised officials had been proved or not. lt was held that it was so proved.

In Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh and others, [1978] 1 S.C.R. 375 where this Court relied on a previous decision in Mulamchand v. State of Madhya Pradesh, [1968] 3 S.C.R. 214 and reiterated that there cannot be any question of estoppel or PG NO 545 ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution. The reason is that the provisions of section 175(3) of the Government of India Act and the corresponding provisions of Article 299(1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorised contracts. The provisions are embodied in section 175(3) of the Government of India Act and Article 299(1) of the Constitution on the ground of public policy-on the ground of protection of general public ..... and these formalities cannot be waived or dispensed with. This Court again reiterated the three conditions mentioned hereinbefore. The same principle was again reiterated by this Court in Union of India v. M/s. Hanuman Oil Mills Ltd., and others, [1987] Suppl. S.C.C. 84.