Government Contracts & Liability of the State — KSLU Administrative Law Notes

Government Contracts & Liability of the State

flowchart TD
    A["State LIABILITY"]:::root
    A --> B["In CONTRACT — Article 299"]:::leaf
    B --> B1["(i) in the President's/Governor's name<br/>(ii) executed by an authorised person<br/>(iii) expressed to be made by the President/Governor"]:::sub
    A --> C["In TORT"]:::leaf
    C --> C1["Sovereign functions -> immunity<br/>(Kasturilal, 1965 — now diluted)"]:::sub
    C --> C2["Non-sovereign functions -> liable<br/>(P&O; Vidhyawati, 1962)"]:::sub
    C --> C3["CONSTITUTIONAL TORT — Art. 21<br/>(Rudul Sah; Nilabati Behera)"]:::sub

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A government contract is enforceable only if it satisfies the mandatory requirements of Article 299(1): made in the name of the President/Governor, executed by a duly authorised person, and expressed to be made by the President/Governor. A contract not in this form is void and unenforceable (K.P. Chowdhry v. State of M.P.), though quantum meruit may give restitution. For tort, the old sovereign/non-sovereign distinction (P&O Steam Navigation) gave immunity for sovereign functions in Kasturilal v. State of U.P. (1965) — but Kasturilal is diluted and distinguished (notably N. Nagendra Rao v. State of A.P., 1994) though not formally overruled, and it has no application to fundamental-rights breaches, where the constitutional tort (Rudul Sah, Nilabati Behera) gives compensation under Arts. 32/226.