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CHAPTER 2
CONTRACTS WITH GOVERNMENT
2.1. Statutory requirements
Article 299 reads:
“299 Contracts –(1) All contracts made in 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 by the Governor by such persons and in such
manner as he may direct or authorize.
(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, or for the purposes of any enactment relating to the Government
of India heretofore in force, nor shall any person making or executing any
such contractor assurance on behalf of any of them be personally liable in
respect thereof”
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA
CE 6010 – CONSTRUCTION CONTRACTS & SPECIFICATIONS
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA
CE 6010 – CONSTRUCTION CONTRACTS & SPECIFICATIONS
the public interest as it also entails avoidable wastage of public money and
time
For cases involving government departments inter se or with public sector
undertakings, recourse in the first instance, should be taken to a high powered
committee.
2.8 Only duty authorized official can enter into contract
It is well settled that Government can only be bound by contracts that are
entered into in a particular way and which are signed by the proper Authority.
Article 299 makes a specific reference not merely to the authorization but also
directions by the Governor in the alternative. The result, therefore, is that the
person executing the contract on behalf of the Governor should be found to
have either an authority or direction to do so.
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA
CE 6010 – CONSTRUCTION CONTRACTS & SPECIFICATIONS
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA
CE 6010 – CONSTRUCTION CONTRACTS & SPECIFICATIONS
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA
CE 6010 – CONSTRUCTION CONTRACTS & SPECIFICATIONS
Even though the rights of the citizen are in the nature of contractual rights, the
manner, the method and the motive of a decision of entering or not entering into a
contract, are subject to judicial review on the touchstone of relevance and
reasonableness, fair play and natural justice, equity and non-discrimination.
2.16 Rates once accepted cannot be changed
A natural and logical meaning of a term in a contract of the price being firm and
fixed and not subject to escalation, obviously means that the price will be firm and
fixed during the period of performance of the contract i.e., no additional amount
towards the price will be payable for any reason whether for foreign exchange
variation or otherwise during the payment of amounts towards tranches of prices
over the elongated performance of the contract.
The terms and conditions of a contract are regulated and guided by the terms and
conditions of the tender notice and agreement between the parties, if any. At the
time of allotment of the contract with the Respondent, the lower rates quoted by
him was the consideration. All the tenderers while quoting rates in their respective
tenders must have calculated their respective profits by taking into consideration
the rates prevalent in the district and other relevant considerations. Subsequently,
rates cannot be allowed to be enhanced. If, after the allotment of contract, the
enhancement of rates is allowed it would not only harm the sanctity of the tender
system but also it will cause loss to public exchequer.
Once a contract is entered into then it cannot be altered to the prejudice of the
either of the parties unilaterally.
The agreement once reduced in writing, binds both the parties and the parties are
bound by contractual obligations contained therein and no party has right to
relieve itself of its contractual obligations much less unilaterally.
EXTRACTS FROM BUILDING & ENGINEERING CONTRACTS ( LAW & PRACTICE) BY DR. P C MARKANDA