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Article 299 of the Constitution

Facts for Prelims (FFP)

 

Source: IE

 Context: The recent ruling by the Supreme Court states that when the government enters into a contract under the President’s name, it cannot claim immunity from the legal provisions of that contract under Article 299 of the Constitution.

About the case: 

The case involved Glock Asia-Pacific Limited, a pistol manufacturing company, and the Centre (government). Glock had a contract with the Ministry of Home Affairs to supply pistols, but a dispute arose when the government invoked a performance bank guarantee. Glock invoked arbitration, but the government challenged the appointment of the arbitrator based on a tender condition.

The Supreme Court decided in favour of Glock, stating that the arbitration clause allowing a government officer as an arbitrator conflicted with the law. The court appointed a retired Supreme Court judge as the arbitrator to resolve the dispute.

Article 299 of the Constitution:

Article 299 specifies the manner in which government contracts should be concluded and executed. The objective of this article is to ensure that contracts made by agents acting on the government’s behalf adhere to a defined procedure to prevent unauthorized or illegitimate contracts that may deplete public funds.

ProvisionExplanation
Contracts must be expressed to be made by President/GovernorAll contracts made in the exercise of executive power must be clearly stated to be made by the President of India or the Governor of a State.
Execution of contractsContracts and assurances of property made in the exercise of executive power shall be executed on behalf of the President or Governor by persons authorized by them.
Personal liability exemptionNeither the President nor the Governor shall be personally liable for any contract or assurance made or executed in accordance with Article 299.
Exemption for persons executing contractsIndividuals executing contracts on behalf of the President or Governor shall also not be personally liable for those contracts.
Compliance with statutory lawArticle 299 does not grant the government immunity from the application of statutory laws when entering into contracts. The government is still bound by applicable laws.