2019 Supreme(Gau) 1117

IN THE HIGH COURT OF GAUHATI
Ujjal Bhuyan, J.
Purushottam Lall Basudeo and Ors. - Appellants
Vs.
State of Assam and Ors. - Respondents
W.P. (C) Nos. 2610, 2611, 6467, 6478, 6475 and 6800 of 2017
Decided On : 28-06-2019

Headnote:

Constitution of India – Article 299 – Government of India Act, 1935 – Section 175 – Indian Contract Act, 1872 – Section 70 – Assam Rules of Executive Business, 1968 – Rule 12 – Withholding of Payments in Govt. Agreements – Matter relates to claim of the petitioners for release of their respective bill amounts against supply of various quantities of polar blankets under the Chief Ministers Special Programme for the year 2015-16 – Learned counsel for the petitioners have argued that petitioners had executed the supply orders issued either by the Director of Handloom and Textiles or by the Managing Director of AGMC, both Government instrumentalities – Respondents have admitted that petitioners had made the requisite supplies as per supply orders backed by agreements – There is also no complaint regarding deficiency in supply, either of quality or of quantity – Supply orders were issued to the petitioners at L1 rate – Therefore, there was no pecuniary loss to the Government. In such circumstances, withholding of payment to the petitioners is not justified – Reference has been made to Section 70 of the Indian Contract Act, 1872 – As such necessary directions may be issued to the respondents for payment of the due amounts to the petitioners – Held, Thus what emerges from the above is that Government contracts must be expressed in the name of the President or the Governor. Such contract shall be executed by the competent person and in the prescribed manner – If the requirements of clause (I) of Article 299 are not satisfied, then the Government is not bound by the contract – Rule 12 of the Assam Rules of Executive Business, 1968 says that every order or instrument of the Government of the State shall be expressed to be made in the name of the Governor and shall be signed either by a Secretary, an Additional Secretary, a Special Secretary, a Joint Secretary, a Deputy Secretary, an Under Secretary or such other officer as may be specially empowered in that behalf and such signature shall be deemed to be the proper authentication of such order or instrument Carefully read, this provision mentions three requirements – Thus, on a careful reading of Section 70 what is evident is that a claim under the section is for compensation – But for payment of such compensation three conditions must be fulfilled – Firstly, the thing or act must be done lawfully – Secondly, it must not be gratuitous – Lastly, the person who is called upon to make compensation must enjoy the benefit of the act or thing on the basis of which compensation is claimed – Upshot of the above discussion is that the contract agreements signed by the Director of Handloom and Textiles, Assam are not valid as the conditions under Article 299 (1) of the Constitution have not been satisfied; so also the requirement of Rule 12 of the Assam Rules of Executive Business, 1968 – On the other hand, those contract agreements signed by the AGMC with the suppliers cannot be the basis of any claim by the suppliers against the Government, there being no privity of contract between the two – Therefore, Article 299 (1) would rule out any payment by the Government to the suppliers on the strength of such contract agreements – That brings Section 70 of the Contract Act into the picture – While certainly supplies were not made by the petitioners gratuitously, for a lawful relationship to be established between the petitioners and the State it is required to be ascertained as to whether the goods (polar blankets) were accepted and enjoyed by the latter – A decision has to be taken by the State in this regard – While denial of payment would result in hardship to the suppliers, it will also not be just, proper, ethical as well as lawful to turn a blind eye to such illegality and apparent misuse of Governmental machinery –Conclusions and decisions – In such circumstances, Court is of the view that a High Powered Committee is required to be constituted to look into the above aspects and thereafter to take appropriate decisions – The above committee shall be constituted within 15 days from the date of a receipt of a certified copy of this order and will have its first meeting within 7 days of its constitution – The committee shall examine payment of dues to the petitioners for supply of polar blankets having due regard to quantity and quality of the materials supplied and having regard to the discussions made above particularly in the context of Section 70 of the Contract Act; in this regard, Committee shall take a decision whether the goods (polar blankets) were accepted and enjoyed – Further, committee shall examine violation of tendering norms and guidelines in the tender process pursuant to NIT and fix responsibility whereafter departmental steps may be taken – The mode and manner of issuance of supply orders by AGMC shall be looked into – Committee shall also examine as to whether there was any criminality involved in the tendering and supply process involving various persons – If such examination results in an affirmative finding, Commissioner and Secretary to the Government of Assam, Handloom, Textiles and Sericulture Department shall lodge first information before the CID Police Station where after law will take its own course – Ordered accordingly – The High Powered Committee as above shall complete the exercise within 4 (four) months from the date of its first sitting – Writ petitions are accordingly disposed of – Writ Petition Disposed Of