Case: State Of Punjab And Ors Vs. Om Prakash Baldev Krishan

to arbitration. Section 175(3) of the Government of India Act, 1935 provided as followsSubject to the provisions of this Act with respect to the Federal Railway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall be, expressed to be made by the Governor-general, or by the Governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor-general or Governor by such persons and in such manner as he may direct or authorise. 13. This Court reiterated that under that section a contract entered into by the Governor of a Province must satisfy three conditions, namely, (i) it must be expressed to be made by the Governor; (ii) it must be executed; and (iii) the execution should be by such persons and in such manner as the Governor might direct or authorise. These three conditions are required to be fulfilled. This position was reiterated by this court again in Seth Bikhraj Jaipuria v. Union of India ((1962) 2 SCR 880 : AIR 1962 SC 113 ). This Court explained that three conditions as mentioned in State of Bihar v. M/s. Karam Chand Thapar ((1962) 1 SCR 827 : AIR 1962 SC 110 ) had to be fulfilled, and further reiterated that the object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and, hence, it was provided that the contracts must show on their faces that these were made by the Governor-General and executed on his behalf in the manner prescribed by the person authorised. It is based on public policy. No question of waiver arises in such a situation. If once that position is reached, and that position is well settled by the authorities over a long lapse of time, no question of examining the purpose of this requirement arises. In Union of India v. A. L. Rallia Ram ((1964) 3 SCR 164 : AIR 1963 SC 1685 ) this Court again reiterated that the agreement under arbitration with the government must be in accordance with Section 175(3) of the Government of India Act, 1935. These principles were again reiterated by this Court in Timber Kashmir Pvt. Ltd. v. Conservator of Forests, Jammu ((1977) 1 SCR 937 : (1976) 4 SCC 497 ). There, the court was concerned with Section 122(1) of the Jammu & Kashmir Constitution which corresponded to Article 299(1) of the Constitution of India. In that case all the three applications filed by the respondent State for a reference to an arbitrator under Section 20 of the Jammu & Kashmir Arbitration Act, were dismissed by a Single Judge of the Jammu & Kashmir Arbitration Act, were dismissed by a Single Judge of the Jammu & Kashmir High Court on the ground that the arbitration clause was, in each case, a part of an agreement which was not duly executed in accordance with the provisions of Section 122(1) of the Jammu & Kashmir Constitution which corresponded to those of Article 299(1) of the Constitution of India. But the Division Bench allowed the appeals holding that if contracts were signed by the Conservator of Forests in compliance with an order of the government, the provisions of Section 122(1) of the Jammu & Kashmir Constitution could not be said to have been infringed. This Court held that the contract could not be executed without the sanction. Nevertheless, if the sanction could be either expressly or impliedly given by or on behalf of the government, as it could, and, if some acts of the government could fasten some obligations upon the government, the lessee could also be estopped from questioning the terms of the grant of the sanction even where there is no written contract executed to bind the lessee. But, once there had been a valid execution of lessee by duly authorised officers, the documents would be the best evidence of sanction. In that case, the contracts were executed on behalf of the Government of Jammu & Kashmir. The only question with which the court was concerned in that case was whether the contracts executed by duly authorised officials had been proved or not. It was held that it was so proved. 14. In Bihar Eastern Gangetic Fishermen Co-operative society Ltd. v. Sipahi Singh ((1977) 4 SCC 145 : (1978) 1 SCR 375 ) where this Court relied on a previous decision in Mulamchand v. State of Madhya Pradesh ((1968) 3 SCR 214 : AIR 1968 SC 1218 ) and reiterated that there cannot be any question of estoppel or ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution. The reason is that the provisions of Section 175(3) of the Government of India Act and the corresponding provisions of Article 299(1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the government against unauthorised contracts. The provisions are embodied in Section 175(3) of the Government of India Act and Article 299(1) of the Constitution on the ground of public policy - on the ground of protection of general public .... and these formalities cannot be waived or dispensed with. This Court again reiterated the three conditions mentioned hereinbefore. The same principle was again reiterated by this Court in Union of India v. M/s. Hanuman Oil Mills Ltd. (1987 Supp SCC 84). 15. In the instant case, we have referred to the letter dated August 31, 1976 which towards the end stated that the parties were to attend the office within 10 days to sign the agreement which is under preparation. It is common ground that no such agreement was signed. 16. In the aforesaid view of the matter the High Court was right in the view it took and the submissions made on behalf of the appellants cannot be entertained. 17.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]13. This Court reiterated that under that section a contract entered into by the Governor of a Province must satisfy three conditions, namely, (i) it must be expressed to be made by the Governor; (ii) it must be executed; and (iii) the execution should be by such persons and in such manner as the Governor might direct or authorise. These three conditions are required to be fulfilled. This position was reiterated by this court again in Seth Bikhraj Jaipuria v. Union of India ((1962) 2 SCR 880 : AIR 1962 SC 113 ). This Court explained that three conditions as mentioned in State of Bihar v. M/s. Karam Chand Thapar ((1962) 1 SCR 827 : AIR 1962 SC 110 ) had to be fulfilled, and further reiterated that the object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and, hence, it was provided that the contracts must show on their faces that these were made by theand executed on his behalf in the manner prescribed by the person authorised. It is based on public policy. No question of waiver arises in such a situation. If once that position is reached, and that position is well settled by the authorities over a long lapse of time, no question of examining the purpose of this requirement arises. In Union of India v. A. L. Rallia Ram ((1964) 3 SCR 164 : AIR 1963 SC 1685 ) this Court again reiterated that the agreement under arbitration with the government must be in accordance with Section 175(3) of the Government of India Act, 1935. These principles were again reiterated by this Court in Timber Kashmir Pvt. Ltd. v. Conservator of Forests, Jammu ((1977) 1 SCR 937 : (1976) 4 SCC 497 ). There, the court was concerned with Section 122(1) of the Jammu & Kashmir Constitution which corresponded to Article 299(1) of the Constitution of India. In that case all the three applications filed by the respondent State for a reference to an arbitrator under Section 20 of the Jammu & Kashmir Arbitration Act, were dismissed by a Single Judge of the Jammu & Kashmir Arbitration Act, were dismissed by a Single Judge of the Jammu & Kashmir High Court on the ground that the arbitration clause was, in each case, a part of an agreement which was not duly executed in accordance with the provisions of Section 122(1) of the Jammu & Kashmir Constitution which corresponded to those of Article 299(1) of the Constitution of India. But the Division Bench allowed the appeals holding that if contracts were signed by the Conservator of Forests in compliance with an order of the government, the provisions of Section 122(1) of the Jammu & Kashmir Constitution could not be said to have been infringed. This Court held that the contract could not be executed without the sanction. Nevertheless, if the sanction could be either expressly or impliedly given by or on behalf of the government, as it could, and, if some acts of the government could fasten some obligations upon the government, the lessee could also be estopped from questioning the terms of the grant of the sanction even where there is no written contract executed to bind the lessee. But, once there had been a valid execution of lessee by duly authorised officers, the documents would be the best evidence of sanction. In that case, the contracts were executed on behalf of the Government of Jammu & Kashmir. The only question with which the court was concerned in that case was whether the contracts executed by duly authorised officials had been proved or not. It was held that it was soIn Bihar Eastern Gangetic Fishermensociety Ltd. v. Sipahi Singh ((1977) 4 SCC 145 : (1978) 1 SCR 375 ) where this Court relied on a previous decision in Mulamchand v. State of Madhya Pradesh ((1968) 3 SCR 214 : AIR 1968 SC 1218 ) and reiterated that there cannot be any question of estoppel or ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution. The reason is that the provisions of Section 175(3) of the Government of India Act and the corresponding provisions of Article 299(1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the government against unauthorised contracts. The provisions are embodied in Section 175(3) of the Government of India Act and Article 299(1) of the Constitution on the ground of public policyon the ground of protection of general public .... and these formalities cannot be waived or dispensed with. This Court again reiterated the three conditions mentioned hereinbefore. The same principle was again reiterated by this Court in Union of India v. M/s. Hanuman Oil Mills Ltd. (1987 Supp SCCIn the instant case, we have referred to the letter dated August 31, 1976 which towards the end stated that the parties were to attend the office within 10 days to sign the agreement which is under preparation. It is common ground that no such agreement wasIn the aforesaid view of the matter the High Court was right in the view it took and the submissions made on behalf of the appellants cannot be entertained.