State of UP v Murari lal and Brothers

The Supreme Court’s decision in State of Uttar Pradesh v. Murari Lal & Brothers Ltd. (AIR 1971 SC 2210) clarified the mandatory requirements of Article 299(1) of the Indian Constitution for government contracts.

The judgment established that non-compliance with these constitutional provisions renders a contract void, preventing its enforcement against the government or its agents. The case also examined the applicability of Sections 230(3) and 235 of the Indian Contract Act, 1872, in situations where agents act on behalf of the government without proper authorisation.

Free Notes

Key Legal Issues

1. Applicability of Article 299(1): Whether the purported contract complies with the constitutional requirements of Article 299(1), which mandates that government contracts must be expresse and executed in the name of the President or Governor.
2. Personal Liability of Agents (Section 230(3) of the Contract Act): Whether the government official could be held personally liable for entering into a void contract.
3. Implied Warranty of Authority (Section 235 of the Contract Act): Whether the plaintiff could claim damages for breach of implied authority against the government agent. Judgment
   The Supreme Court held that the contract was void due to non-compliance with Article 299(1) and
   dismissed the suit against the government and its officials. Key findings included:
4. Mandatory Nature of Article 299(1): The Court reaffirmed that Article 299(1) is mandatory and prohibits any contract with the government unless it is expresse and executed in the name of the President or Governor and complies with statutory requirements. Non-compliance renders such a contract void and unenforceable.
5. Emphasise Personal Liability Under Section 230(3): The Court rejects the High Court’s reliance on Section 230(3), which makes agents personally liable if their principal cannot be sue. The Court emphasised that the provision applies only where a valid contract exists. Since the contract in this case was void, Section 230(3) was inapplicable.
6. Implied Warranty of Authority Under Section 235: The Court did not provide a definitive ruling on Section 235 but observed that it applies only when the agent’s principal could ratify the contract. As a void contract under Article 299(1) cannot be ratified, Sec

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