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Contracts With The Government

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Lectures by Dr. Tabrez Ahmad

Lectures by Dr. Tabrez Ahmad

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  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT
  • Contracts with the Government Tuesday, October 23, 2012 Dr. Tabrez Ahmad, KLS, KIIT

Contracts With The Government Contracts With The Government Presentation Transcript

  • Contracts with the Government Dr. Tabrez AhmadArt. 299 of the Constitution of India Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 1
  • Article 299(1) of the Constitution of India lays down:“ 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 Governor …by such persons and in such manner as he may direct or authorise.” Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 2
  • K.P. Chowdhary v State of Madhya Pradesh AIR 1967 SC 203In view of Art. 299(1) there can be no implied contract between the government and another person, the reason being that if scuh implied contracts between the Govt. and another person were allowed, they would in effect make Art. 299(1) useless, for then a person who had a contract with Govt. which was not executed at all in the manner provided in Art. 299(1) could get away by saying that an implied contract may be inferred on the facts and circumstances of a particular case…. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 3
  • The second consequence which follows from these decisions is that if the contract between Govt. and another person is not in full compliance with Art. 299(1) it would be no contract at all and could not be enforced either by the Govt. or by the other person as a contract.” Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 4
  •  But if, however, there is valid contract as envisaged by Art. 299(1), the court may imply a term which the parties had failed to incorporate in order to give full effect to the intention of the parties. In Mahabir Auto Stores v Indian Oil Corporation AIR 1990 SC 1013 (para 12) the basic principle relating to power of the state to enter into or not to enter contract with individuals has been clearly laid down. “It is well settled that every action of the state or an instrumentality in exercise of executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Art. 226 or 32 of the Constitution.” Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 5
  •  Where a State or an instrumentality of State constituted under Art. 12 of the constitution, an action of its executive authority to enter or not to enter into contracts is subject Art. 14 of the constitution. Whatever be the activity of public authority in monopoly or semi- monopoly dealings, it should meet the test of Art. 14 of the Constitution. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 6
  • State of West Bengal v B.K Mondal &Sons AIR 1962 SC 779.Supreme Court held that the object of Art. 299 of the Constitution of India is to protect the state not to saddle with liability for unauthorised contracts. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 7
  • Sate of Punjab v Omprakash Baldeo Krishan AIR 1988 SC 2149.Accordingly in this case SC held that if a letter of acceptance is signed by the executive engineer for construction of a bridge and not in the name of the Governor, it can not be said that there is a valid contract in conformity with Art. 299(1) of the Constitution of India. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 8
  • Art. 299 of the Constitution and Sec. 65 of the Contract Act 1872 Where a contract is not enforceable for non compliance with the requirement of Art. 299 of the Constitution, parties to such contract are to restore the benefits under the agreement according to the provisions of sec. 65 of the Contract Act 1872 (Hindustan Construction Co. v State of Bihar AIR 1963 Pat 254.) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 9
  • Art. 299 of the Constitution and Sec. 70 of the Contract Act 1872When an agreement becomes invalid for non – compliance with Art. 299 of the Constitution, person enjoying benefit must restore under Sec. 70 of the contract. ( State of W.B v B.K Mondal & Sons AIR 1962 SC 779.Obligation of person enjoying benefit of non-gratuitous act Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 10
  • Other provisions of the Indian Contract Act 1872 Govt. contracts subject to the provisions of Art. 299 of the Constitution of India and other rules and notifications of the Govt. touching any such contract, will ordinarily be governed by the provisions of the Indian Contract Act 1872. So the provisions relating to performance of the reciprocal promises, contracts which need not be performed, consequences of breach of contract, indemnity, guarantee, agency will apply with full force. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 11
  • Union of India v HindustanDevelopment Corp. AIR 1994 SC 980 Where in response to an offer for inviting offers for entering into contract with the Govt. both big and small manufacturers had offered tenders. The Tender Committee of the Railway Board fixed one rate for big manufacturers and another for smaller manufacturers Such an action under the circumstances was held reasonable and bona fide and it is not hit by Art. 14 of the Constitution. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 12
  • Lifting the Corporate veil in Govt. contracts. In Sterling Computers Ltd. V M & N Publications Ltd. AIR 1996 SC 51 SC held that: in exercising the power of judicial review in govt. contracts, the court is to consider primarily as to whether there has been any infirmity in the “decision making process” by way of judicial review the court can not examine the details of the terms of the contract which have been entered into by the public bodies or the state. The court has the inherent limitations on the scope of any such enquiry but at the same time the courts can certainly examine whether “ decision making process” was reasonable, rational, not arbitrary and violation of Art. 14 of the Constitution. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 13
  • Doctrine of indoor management in Govt. contracts In U.P Rajkiya Nirman Nigam Ltd. V Indure Pvt. Ltd. AIR 1996 SC 1373 SC held that: the doctrine of indoor management can not be extended to formation of contract or essential terms of contract unless the contract with the other parties is duly approved and signed on behalf of a public undertaking or the Govt. with its seal by authorised or competent officer. Otherwise, it would be hazardous for public undertaking or Govt. or its instrumentalities to deal on contractual relations with third parties. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 14
  • Challenges to Govt. Contracts. Expressing annoyance at the Uttar Pradesh governments failure to implement its order to check mafia infiltration in government contracts, the Lucknow bench of the Allahabad High Court directed the chief secretary to implement the directive in "letter and spirit". A single-judge bench of Justice D P Singh passed the order after perusing affidavits filed by the chief secretary and state police chief on the implementation of the courts earlier directive. The bench directed that the order be implemented with effect immediate effect one in letter and spirit and posted the matter for further hearing. The court rejected the state advocate generals assertion that in the absence of any act or statute, the government might not have power to implement the directions issued by the court in their totality. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 15
  •  The court had directed that the Pattanaik Committee report, recommending measures to prevent the mafia from bagging government contracts, be implemented. The court, while accepting the report, said all government contracts above Rs 1, 00,000 should be put on official websites along with the provision to file tender documents online. It also directed that adequate security arrangements and thorough verification of police records be made at the place where tender bids are opened. The court had also directed that no contract or tender worth Rs 2, 00,000 or more be accepted unless no-objection certificates of the income tax and trade tax departments, district magistrate and superintendent of police are furnished Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 16
  • Thanks we will continue… Dr. Tabrez Ahmad,http://corpolexindia.blogspot.in 17