Contractual Liability of the State
Synopsis
Contractual liability under the Constitution of India
Contractual liability and executive power
Contractual liability under the Constitution of India
The contractual liability of the State or Government is dealt with under Articles 298 and 299 of the Constitution of India. According to Article 298, the Government can enter into contracts for the purpose of carrying out the functions of the State. According to Article 299, the Government has to fulfill certain essential formalities for the purpose of entering into contracts.
Contractual liability and executive power
The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose. 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 the Governor by Such persons and in such manner as he may direct or authorize. 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 here to fore i force, nor shall any person making or executing any such contract or Insurance on behalf of any of them be personally liable in respect thereof.State of Assam v. Kesabd Prasad Singh, AIR 1953 SC 309, it has been held that a Government contract in order to be valid, besides satisfying the requirements of Article 299, must also fulfill the requirements of Section 10 of the Indian Contract Act which deals with the essentials of a valid contract. Mulam Chandv. State of Madhya Pradesh, AIR 1961 SC 1218, it has been held that the provisions of Article 299(1) are mandatory and therefore the contract made in contravention thereof is void and cannot be ratified and cannot also be enforced even by invoking the doctrine of estoppel.
Points to Remember
Contractual liability of State is dealt under Articles 298 and 299
All contracts made in the exercise of executive power of State
All contracts or assurances of property made exercise power
It is executed on behalf of the President
Neither President nor the Governor shall be personally liable
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