Government Contracts

Question 1

Some guidelines for government contracts

Answer 1

Government contracts should be awarded by public auction or by inviting tender. Should be advertisement. Award of the contract should be quashed on grounds such as not giving adequate publicity to the inviting tender or not making adequate arrangement for the supply of tender documents to the persons wishing to take part in the tender.

Question 2

Terms of government contracts

Answer 2

Should not be arbitrary and discriminatory. A public authority cannot award a contract to whomsoever it pleases. Whenever a public authority is giving tender to a person who quoted a higher rate it has to record valid, relevant and cogent reasons for doing so.

Question 3

Lower tender ought to be accepted

Answer 3

In the interest of revenue, past experience and efficiency must also be taken into consideration.

Question 4

States with public procurement policy

Answer 4

There should be guidelines and procedure laid down for procurement, but only four states Karnataka, TN, Andhra, and Rajasthan have laid down so far.

Question 5

Constitution and Tender process

Answer 5

Article 298 allows the Union and the state to enter into contracts for carrying out its executive power

Article 299 requires certain formalities to be fulfilled. When a contract is made by tender and acceptance, the acceptance must be made by a duly authorised person. A contract not complying with 299 is void and not binding or enforceable.

Question 6

Formalities in Article 299

Answer 6

All contracts made in the executive power shall be expressed to be made by President or Governor. Shall be executed by the same.

Neither the president or governor will be personally liable in respect of any contract. Immunity is personal and does not immunise the government

Contract under 299 must be in writing, an oral contract not sufficient.

Question 7

State of West Bengal v. B.K. Mondal

Answer 7

Where Article 299 not fulfilled but still liable.

Question 8

New Marine Coal v. Union of India

Question 9

Davecos Garments Factory V. State of Rajasthan

Question 10

Ramana Dayaram Shetty v. International Airport Authority

Question 11

Main guidelines established in Ramana

Answer 11

1. Govt does not have open and unrestricted choice in the matter of awarding contracts
2. Must exercise discretion in conformity with some rational, non-discriminatory standard or principles.
3. Govt must serve public cause and do public good in awarding contract.
4. Must eliminate favouritism and discrimination in awarding contract.

Question 12

Tata Cellular v. Union of India

Answer 12

The Court can review administrative discretion in awarding a contract on the following grounds:
- Illegality
- Irrationality
- Procedural impropriety
A public authority even in contractual matters should not have unfettered discretion. award can be quashed on grounds such as mala fide, corruption, favouritism etc.

Question 13

3 categories of cases where breach of contractual obligations can be done by state

Answer 13

Where there is promissory estoppel against the state
Where there is an alleged breach of a statutory rule
Where breach of a non-statutory contractual obligation is alleged.

In first two cases, writ jurisdiction can be invoked. Proper remedy in third is a civil suit.

Question 14

Mahavir Auto Store v. Indian Oil Corporation