Case: Shrikant Vs. Vasantrao

the first respondent alleged that the appellant was a government contractor carrying on business under the trade name of M/s. Precision Press Fabricon at Aurangabad. He further alleged that the appellant had entered into three contracts with the State Government, in the course of his business for execution of works undertaken by the appropriate Government, and such contracts were subsisting, on the date of filing of nomination/scrutiny of the nomination papers/declaration of result [in June, 2002]. The said contracts were :  a) Contract as per work order dated 19.5.1996 issued by the Executive Engineer, Medium Project Irrigation Division, Latur, for the work of designing, fabricating, and erecting the Automatic stilt doors at the canal of Tawarja Project.  b) Contract as per work order dated 31.12.1998 issued by the Executive Engineer, Maharashtra Jeevan Pradhikaran, Works Division No.2, Latur, for execution of the work relating to water supply scheme in ten villages surrounding Pangaon.  c) Contract as per work order dated 12.4.1999 issued by the Executive Engineer, Maharashtra Jeevan Pradhikaran for the work relating to water supply scheme, Stage-II Taluk Geora, District Beed.  The first respondent contended that Maharashtra Jeevan Pradhikaran is part and parcel of the State Government and therefore, contracts with the said Pradhikaran are in effect contracts with the State Government. First Respondent contended that as these three contracts (the first with the State Government and the other two with Maharashtra Jeevan Pradhikaran) were subsisting in June, 2002, the appellant was disqualified for being chosen as a Member of Legislative Council, under section 9A of the Act.

Reasoning:
19. It is clear from section 9A of the Act that only certain type of contracts with the State Government will result in disqualification. For example subsistence of a mining lease granting by a government to the candidate to win minerals from a specified area was held not to attract section 9A in Kartar Singh Bhadana (supra). A contract for collection of tolls at a government ferry was held to be not a contract for execution of any work undertaken by the appropriate government in Dewan Joynal Abedin vs. Abdul Wazed [1988 Supp. SCC 580]. A subsisting contract for sale of liquor with the appropriate government was held to be not a contract falling under section 9A in Ranjeet Singh vs. Harmohinder Singh Pradhan [1999 (4) SCC 517 ]20. Therefore, when section9Aprovides that subsistence of a contract with the appropriate government (either for supply of goods or for execution of any work undertaken by that government) will disqualify a candidate for being elected as a member of the Legislative Assembly or Legislative Council, the term appropriate Government refers to the State Government alone, and not to any instrumentality of the State Government. We, therefore, hold that GMIDC and MJP constituted under the MGMIDC Act and MJA Act respectively, are not State Government and, therefore, any contracts with them are not contracts entered into by the candidate with the appropriate government. We accordingly answer both parts of question (i) in the negative21. We will next consider the question as to whether the contract dated 19.5.1996 entered by the appellant with the Maharashtra State Government which stood transferred to GMIDC in the year 1998 could be considered to be a subsisting contract with the State Government in the year 2002. The first respondent contended that the said contract dated 19.5.1996 was between the appellant and the state government; that the said contract was not amended substituting GMIDC as the employer in place of State of Maharashtra; that the said contract was entered by the appellant in the course of his business with the State Government for execution of work undertaken by the State Government; and that the said contract was subsisting as on the date of scrutiny and acceptance of the nomination; and that the subsistence of the said contract attracted the disqualification under section9Aof the Act22. The appellant does not dispute the fact that his concern entered into the said contract dated 19.5.1996 with the State Government for execution of a work undertaken by the State Government, or the fact that the said contract dated 19.5.1996 was subsisting on the date of his nomination and scrutiny of nominations. What is contended is that the contract stood transferred to GMIDC in the year 1998 by virtue of the provisions of MGMIDC Act and, thereafter, the said contract ceased to be a contract with the State Government and therefore, what was subsisting in June, 2002 (at the time of filing nomination/scrutiny of nomination/declaration of result) was a contract with GMIDC and not a contract with the State Government23. What is relevant under section9Aof the Actis that the contractor should have some obligations to perform towards the State Government on the relevant date. In fact, the explanation to section9Amakes it clear that where a contractor has performed all his obligations, but the government is yet to perform its obligations (for example, where the work assigned under a work order is completed by the contractor and that is duly certified, but payment therefore is not yet made by the Government) then there is no contract subsisting within the meaning of section9Aof the Act24. A contract subsists till the rights and obligations thereunder are finally performed. The general rule is that though an employer may assign the benefits and obligations of a contract to an assignee, he will not be relieved of his obligations towards the contractor, unless the contractor is also a party to the assignment, in which event there is an assignment coupled with novation, (a new contract between the assignee and the contractor). But the exception to this general rule is where a statute vests certain assets of the State in a statutory corporation (or Government Company or other specified person) and provides that as a consequence, the rights and obligations of the State relating to such assets shall stand transferred to such statutory corporation (or Government Company or specified person). In that event, the statute engrafts itself into the existing contract and as a consequence, the statutory corporation stands substituted in place of the original employer, and the existing contracts become contracts between the statutory corporation and the contractor. In case of such statutory vesting/transfer, the consent of the contractor for the substitution of the contracting party and the assignment/transfer of the contract is not necessary25. The Maharashtra State Legislature enacted the Maharashtra Godawari Marathwada Irrigation Development Corporation Act, 1998 (published in the Maharashtra Government Gazette dated 17.8.1998) The objectof the Actwas to make special provisions for promotion and operation of irrigation projects, command area development and schemes for generation ofc energy to harness the water of Godawari river pertaining to State of Maharashtra and other allied and incidental activities by establishing the Godawari Marathwada Irrigation Development Corporation. Section 3 required the State Government to establish a Corporation by notification in the Official Gazette. Accordingly, by Notification dated 28.8.1998, the Corporation (GMIDC) was so established under the Act.n (2) of section 3 provides that Corporation established undern (1) of section 3 shall be a body corporate having perpetual succession and a common seal, with power to contract, acquire, hold and dispose of property and to do all things necessary for the purposeof the Actand may sue and be sued in its corporate name26. It is not in dispute that from the appointed date (1.10.1998), the Tawarja Project (a Medium Irrigation Project in Latur Division) with all rights, liabilities and obligations of the State Government stood vested in and transferred to the Corporation (GMIDC). As a consequence, all rights, liabilities and obligations relating to the said project, including the rights, liabilities, and obligations under the contract dated 19.5.1996 (which was one of the contracts relating to the said project) statutorily vested in and stood transferred to GMIDC, and the contract ceased to be a contract with the State Government. When all rights and obligations of the State Government under the contract were transferred and vested in the statutory corporation (GMIDC) by virtue of the statute, no separate instrument of transfer or assignment is necessary, nor the consent of the contractor is necessary for the transfer and vesting, as the statute engrafts itself over the subsisting contract. The contract, on such statutory transfer and vesting, though originally entered with the State Government ceased to be a subsisting contract with the State Government from the date of such transfer and vesting and will be considered as a subsisting contract with the statutory corporation (GMIDC). Therefore, the contract dated 19.5.1996 though subsisting on the date of filing of nominations and scrutiny of nomination, was not a contract with the appropriate Government, but with GMIDC27. Out of the three subsisting contracts, the contract dated 19.5.1996 was with GMIDC and contracts dated 31.12.1998 and 12.4.1999 were with MJP. We have already held that neither GMIDC nor MJP is appropriate government. Therefore, the appellant had no subsisting contract with the appropriate government either for supply of any goods or for execution of any work undertaken by that government in June, 2002 (on the date of filing the nomination, the date of scrutiny of nominations and the date of declaration of result). Consequently, the appellant did not incur any disqualification under Section9Aof the