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1981 Supreme(Ori) 113

High Court Of Orissa
N. K. Das And R. C. Patnaik, JJ.
RAJENDRA SINGH BHATIA - Appellant
Versus
STATE OF ORISSA - Respondent
Orl. Jurn. Case 678  Of  1977
Decided On : 10/28/1981

Advocates Appeared:
G.RATH, N.C.PANIGRAHI, R.K.RATH

The provisions of Article 299 (1) of the Constitution of India are mandatory and cannot be waived or ratified. Any contract between the Government and another person that is not executed in accordance with Article 299 (1) is void and unenforceable.

Headnote:

CONTRACT - PUBLIC POLICY - ARTICLE 299 (1) OF THE CONSTITUTION OF INDIA - MANDATORY - NO IMPLIED CONTRACT BETWEEN GOVERNMENT AND ANY OTHER PERSON - WAIVER OR RATIFICATION NOT PERMITTED.

Fact of the Case:

Petitioner, a Forest Contractor, participated in an auction for the sale of forest produce. His bid was accepted, but no agreement was executed as required by Article 299 (1) of the Constitution of India. The Divisional Forest Officer nullified the auction and put the lots of timber to re-auction, resulting in a shortfall. Certificate proceedings were initiated against the petitioner to recover the deficiency.

Finding of the Court:

The court held that the provisions of Article 299 (1) of the Constitution of India are mandatory and in the absence of a contract as contemplated by the said provision, no rights accrued in favor of one party nor liability incurred by the other. The court further held that waiver or ratification of the non-execution of the agreement is not permitted as it would defeat the purpose of Article 299 (1) and undermine the protection of the general public.

Issues: Whether the provisions of Article 299 (1) of the Constitution of India are mandatory and whether waiver or ratification of the non-execution of an agreement between the Government and another person is permissible.

Ratio Decidendi: The court relied on the Supreme Court judgments in K. P. Chowdhry v. State of Madhya Pradesh (AIR 1967 SC 203) and Mulamchand v. State at Madhya Pradesh (AIR 1968 SC 1218) to hold that Article 299 (1) of the Constitution of India is mandatory and that waiver or ratification of the non-execution of an agreement between the Government and another person is not permissible. The court reasoned that such a waiver or ratification would render Article 299 (1) useless and would allow unauthorized contracts to be enforced, thereby defeating the purpose of the provision, which is to safeguard the Government and the general public.

Final Decision: The court allowed the writ petition, quashed the certificate cases, and held that no costs were to be awarded.

PATNAIK, J.

( 1 ) THIS writ application Eas been filed for quashing certain Certificate proceedings started against the petitioner by the Certificate Officer, Panchpir, Karanjia in Certificate Case Nos. 5/77, 6/77, 7/77, 9/77 and 10/77.

( 2 ) THE petitioner alleges that he is a Forest Contractor and in pursuance of a sale notice, for sale of forest produce, he participated in the auction relating to sale of "departmentally worked (stacked) timbers" and his bid amount being the highest, his bid was accepted, As per the General Conditions of Sale contained in Part-III of the sale notice, the contractor,

"whose bid is conditionally accepted By the Divisional Forest Officer, subject to the approval of the competent authority and the latter, authority, to approves it".

may be granted the right to take the contract for exploiting the forest produce. No sale is binding or complete until approval where necessary, has been obtained and communicated to the bidder and the formal agreement is executed by the parties to the contract The clause being :

"no sale shall be binding on the Government until such approval has been obtained and communicated to the bidder and the formal agreement is executed on behalf of the Government. '" Further, Clause 10 (d) in the said part provides :-- "on payment of security deposit as demanded by the Divisional Forest Officer the bidder shall sign the necessary agreement. This signing of the agreement by the bidder will not confer any right to the Forest produce unless the sale is ratified by the competent authority and ratification order, is communicated to him". Clause 10 (e) reads :--"no sale of any lot will be considered valid or complete unless the above conditions have been complied with. . . . . "

According to the petitioner, it is clear from the aforesaid that ratification, wherever necessary, and execution of agreement are the most essential prerequisites for the bid maturing into a contract.

( 3 ) THE petitioner alleges that his bid for several lots being the highest was provisionally accepted and he was called upon to deposit 10 per cent of the total sale

value as security deposit. In due course orders ratifying the bid were communicated and the petitioner was called upon to pay the consideration by 15-11-1975. Thereafter the petitioner requested the Divisional Forest Officer, Karanjia, to take steps for execution of the agreement. However, no effective step was taken for execution of the agreement by the petitioner and the Government and the petitioner alleges that the Divisional Forest Officer on the contrary asked him to deposit the consideration money. The petitioner, however, was apprehensive and did not part with money without the agreement having been executed. It is said, the Divisional Forest Officer nullified the auction and put the lots of timber to re-auction. At the re-auction there was a short fall of about Rs. 51,000/ -. Steps having been taken by the Divisional Forest Officer for realisation of the deficiency, the petitioner has filed this writ application to quash the Certificate cases.

( 4 ) SRI G. Rath, learned counsel for the petitioner, contends that the provisions contained in Article 299 (1) of the Constitution of India are mandatory and in the absence of a contract as contemplated by the said provision, no rights accrued in favour of one party nor liability incurred by the other. He relies on two well known cases of the Supreme Court in K. P. Chowdhry v. State of Madhya Pradesh (AIR 1967 SC 203) and in Mulamchand v. State at Madhya Pradesh (AIR 1968 SC 1218 ).

( 5 ) IT is an admitted case that no agreement as contemplated by Article 299 (1) of the Constitution of India has been executed by the parties. In the counter affidavit, the opposite parties, however, take the stand that it is a case of waiver and the petitioner having proceeded some way, it is not open to him to say that there was no duly executed agreement. The signing of the agreement was a mere formality. In K



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