You are on page 1of 15

GOVERNMENT

CONTRACTS

. as the case may be.299 narrates: – 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. – All such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. or by the Governor of the State. LIABILITY OF THE STATE IN CONTRACTS • Art.

– No liability of the President or Governor: • 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. – Execution: All the contracts shall be executed by the competent person and in the prescribed manner. . nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof. or for the purposes of any enactment relating to the Government of India heretofore in force.

. – Quantum merit or quantum valebat (service or goods received): If the Government enjoys the benefit of performance by the other party to the contract.– If the requirement of the Article 299 are not complied with. the officer executing the contract would be personally liable. The Principles as laid down in Sections 65 to 70 (Quasi-contracts) of the Indian Contract Act. 1872 shall also apply in the Government contacts also. shall be bound to give recompense on the principle of Quantum merit or quantum valebat (service or goods received).

. – Depending upon the facts and circumstances the Doctrine of Estoppel may also apply in the Government contracts under Article 299. the President or the Governor is not personally liable on the contract.– In any case.

The Civil Supplies had been utilizing the said constructions. Mondal & Sons submitted a Bill for Rs.K.325. Arambagh.K. . B.K. the contractors.K.19. B. Mondal & Sons (AIR 1962 SC 779) • On the request of the Sub-Divisional Officer. The State Government rejected their claim contending that there was no contract between the Government and B. Mondal & Sons. Mondal & Sons. constructed certain godowns for the use of civil supplies. B.State of West Bengal vs.

• The Supreme Court gave judgement in favour of B. compensation and suit costs.K. Mondal & Sons and ordered the Appellant-State Government to pay the Bill of construction. .

• It is called as “Promissory Estoppel” or “Equitable Estoppel”.DOCTRINE OF PROMISSORY ESTOPPEL • The Doctrine of Estoppel is well settled in administrative law and Constitutional Law. .

ESTOPPEL • What is Estoppel? • Estoppel is a rule of evidence defined under sections 113 to 115 of Indian Evidence Act. . 1872.

• Or • A man should keep his words. • This Doctrine of Equity is broader than the Doctrine embodied in Section 115 of the Indian Evidence Act. cannot deny those facts later. 1872. all the more so when the promise is not a bare promise but is made with the intention that the other party should act upon it.• In Equity. . a person. who has misrepresented facts. relying upon which the other has acted.

– The person to whom such a promise/assurance is made should act relying upon such promise/assurance. – It should cause severe loss to the other person to whom such a promise/assurance was made.• Three Ingredients: – There must be a promise or representation by a person who has real authority to give such promise/assurance. .

but the Commissioners issued an import licence for Rs.1. UNION OF INDIA V. the respondent exported goods worth Rs. AIR 1968 SC 718 • The Textile Commissioner published a scheme of export promotion and represented to the exporters of woollen goods that they would be entitled to import raw material of the total amount equal to 100% of the free on board (FOB) value of exports. ANGLO AFGHAN AGENCIES.99 lakhs only. • In the instant case. . 5 lakhs. (Commissioner estopped from the earlier promise).

therefore. not binding on the Government. the Government took the plea that the scheme is merely administrative in character and.• On the order being challenged. the Government is not entitled to break the promises at its whim. . • The Supreme Court rejected the contention and held that even if the scheme has no statutory force.

the Government could still be bound by Estoppel. LTD. Vs. stands for the propositions: – The Doctrine could be used as a shield or as a sword. – The Doctrine is not based on any contract and. MOTILAL PADAMPAT SUGAR MILLS CO. therefore. STATE OF U. (1979) 2 SCC 409 • It marks a significant development in law relating to the Doctrine of Promissory Estoppel.P. . even when a Government contract is void for non-compliance with Article 299. – The Doctrine cannot be defeated on the plea of executive necessity of freedom of future executive action.

application of the doctrine of promissory estoppel is a welcome step in India. CONCLUSION • Doctrine of Promissory Estoppel applies for the government contract also. For eg.. • Thus. . • This principle is excluded if the government acts under any statute. Income Tax Act.