The Constitution of India
Article 299
Contracts
(1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
(2) Neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution, or for the purposes of any enactment relating to the Government of India heretofore in force, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof.
Why this exists
Article 299 continues a practice from the Government of India Act, 1935, which required government contracts to be made in the name of the Crown (later, the President/Governor) rather than in the name of individual officials. The idea is to separate the ceremonial head of state from everyday government business deals, ensure accountability rests with the government machinery rather than one person, and give contracts a formal, verifiable process so that citizens and companies dealing with the state know the agreement is authentic and binding on the government, not on any individual.
How courts read it
The Supreme Court, notably in cases like Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram (1954) and K.P. Chowdhry v. State of Madhya Pradesh (1966), has held that the formal requirements in clause (1)—that a contract be expressed in the name of the President/Governor and executed by an authorised person—are meant to protect government funds and are generally treated as mandatory, so a contract not following this form usually cannot be enforced against the government. However, courts have also allowed some flexibility, using principles like promissory estoppel or restitution, so that a private party who has genuinely relied on a government promise or has performed work is not left with no remedy at all, even if the formal contract requirements were not fully met.
Common misconceptions
- Myth: The President or Governor personally negotiates and signs every government contract.
Fact: In practice, contracts are signed by authorised officials 'on behalf of' the President or Governor; the top leader is never personally involved or liable. - Myth: If a government contract doesn't follow Article 299's formalities, the private party gets nothing.
Fact: Courts have sometimes allowed remedies like restitution or applied fairness principles even when the strict formal contract requirements were not met, so as not to unjustly harm someone who relied in good faith on government promises.