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Government contracts and state liability: the administrative-law angle

Administrative Law · Unit IV · Topic 14 of 18 · 6 min read

What a government contract is, the heads of liability, and how Article 14 reaches into tenders, largesse, blacklisting and termination; constitutional tort as a public law remedy.

On this page
  1. 1. What is a government contract?
  2. 2. The heads of liability in brief
  3. 3. The administrative-law addition: Article 14 in the contractual field
  4. 4. The limit: judicial restraint in tenders
  5. 5. Constitutional tort: the administrative-law reading
  6. How this is examined
Cases checked to exist. Read the judgment before quoting a holding.

Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.

Read with the Constitutional Law II note. The formal law of Articles 298, 299 and 300 (Chatturbhuj Vithaldas, Karam Chand Thapar, Mulamchand, section 70 of the Contract Act, Vidyawati, Kasturilal, Nagendra Rao, Rudul Sah, Nilabati Behera) is in the note on State liability in tort and contract. This note summarises it in a paragraph and then covers what administrative law adds: the duty of the State to act fairly and non-arbitrarily when it contracts.

1. What is a government contract?

A government contract is a contract made by the Union or a State in the exercise of its executive power under Article 298, which extends to carrying on trade or business, acquiring, holding and disposing of property, and making contracts for any purpose. It includes contracts for supply of goods, works contracts, leases of public property, licences to sell liquor or extract minerals, and appointments on contract. Article 299(1) requires that it be expressed to be made by the President or the Governor, and executed on his behalf by a person authorised to do so. Article 299(2) frees the President, the Governor and the executing officer from personal liability.

2. The heads of liability in brief

3. The administrative-law addition: Article 14 in the contractual field

A private person can choose with whom he deals and on what terms. The State cannot. Because it acts for the public and holds public resources, it must act fairly, reasonably and without discrimination even when it contracts. That is the contribution of administrative law here, and it is the part of the answer most students leave out.

4. The limit: judicial restraint in tenders

The courts do not run tender processes. In Tata Cellular v. Union of India, 1994 INSC 283, (1994) 6 SCC 651, concerning licences for cellular telephone services in the four metros, the Court set out the principles:

Once a contract is concluded, disputes about its performance are ordinarily private law matters to be resolved by suit or arbitration, not by writ. The writ court intervenes where the State uses its contractual power arbitrarily or for a collateral purpose, or where the action is in the exercise of a statutory power.

5. Constitutional tort: the administrative-law reading

The cases are in the Constitutional Law II note. The point for administrative law is about remedies: compensation for violation of fundamental rights is a public law remedy for the failure of the administration to observe constitutional limits. It is awarded by the writ court, liability is strict, and sovereign immunity is irrelevant. It is in addition to, not a substitute for, damages in a civil suit, and amounts paid may be adjusted against damages later awarded. It is appropriate where the facts are clear and the violation is gross, such as death in custody or illegal detention.

How this is examined

January 2026: “Explain State liability in contracts.” June 2025: “What is a government contract? Discuss the various liabilities of Government in government contracts with the help of decided cases.” Answer: definition and Article 298; Article 299 requirements with Karam Chand Thapar and Mulamchand; section 70; promissory estoppel; then section 3 above, which lifts the answer above a constitutional law answer. A problem on blacklisting without hearing is answered from Erusian Equipment; on a tender awarded to an ineligible bidder, from Ramana Dayaram Shetty.

Now try the real questions: Administrative Law past question papers.