SHRIKANT v. VASANTRAO AND ORS

Citation: [2006] 1 S.C.R. 496

Court: Supreme Court of India

Bench: Y.K. SABHARWAL, B.N. SRIKRISHNA, R.V. RAVEENDRAN

Case summary

SHRIKANT v. VASANTRAO AND ORS.pdf

Judgment text

SHRIKANT v. VASANTRAO AND ORS. JANUARY 20. 2006 [Y. K. SABHARWAL, CJ. , B. N. SRIKRISHNA AND R. V. RAVEENDRAN, JJ. ] Representation ofthe People Act, 1951; Ss. 2. 7, 8, 8~A, 9, 9-A, JO, 10- A and 116-A/General Clauses Act, 1987; Section 2(60): Election Petition-Election for legisla1ive Council-Re/urned candidate having subsisling comracls with a s/atulory body as on 1he dale offiling of nominalion--Disqualificalion--Held: Disqualificalion as defined under the provisions ofthe 1951 Act is very clear and specific-A candidate having a subsisting contract with the Staie/State Government for supply ofgoods/works contracts could only disqualifY him from con' \ (b) 'disqualified' means disqualified for being chosen as, and for being, a member of either Houses of Parliament or of the Legislative Assembly or Legislative Council of a State".

As we are dealing with disqualification for being chosen as a Member of the Legislative Council, the term 'appropriate government' in section 9-A refers to and means the 'State Government'. 15. The term 'State Government' is not defined either in the Constitution of India or in the Act (that is Representation of the People Act, 1951 ). Clause (a) of sub-section (I) of section 2 of the Act provides that unless the context otherwise requires, each of the expressions defined in section 2 or sub-section (I) of section 27 of the Representation of the People Act. 1950, but not defined in the Act, shall have the same meaning as in that Act. Section 2U) of the Representation of the People Act, 1950 defines "State Government" as follows :- "2(j).

'State Gov ferred 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 Government. 23. What is relevant under section 9-A of the Act is that the contractor should have some obligations to perform towards the State Government on the relevant date. In fact, the explanation to section 9-A makes 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 section 9-A of the Act. 24.

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 i I 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 necessary. 25. 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 object of the Act was to make special provisions for promotion and operation of irrigation projects, command area development and schemes for generation of hydroelectric 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. Sub-section (2) of section 3 provides that Corporation established under sub-section (I) 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 purpose of the Act and may sue and be sued in its corporate name.

Section 15 relates to vesting and transfer of property, assets, liabilities and obligations to the Corporation. It reads thus: "15( I). From such date as may be specified, from time to time, by the State Government (hereinafter in this section referred to as "the appropriated date"), (a) ! he properlies and assets comprising movables and immovables including /rrigalion Projecrs. Hydro-Electric Power Projects, works under construction and management of completed schemes, specified in that behalf, situated in the area of operation of the Corporation, which immediarely before rhe appoinled dale vested in the State Government and were under rhe control ofrhe Irrigation Department, shall vest in and s1a11d /rans/erred 111 1he Corporation and all income > • derived and expenses incurred in that behalf be brought on books of the Corporation; and (b) the rights. liabilities and obligations of the State Government. SHRIKANT v. VASANTRAO [RAVEENDRAN. J.

] 517 whether arising out of any contract or otherwise pertaining to the said projects of the State Government shall be deemed to be the rights, liabilities and obligations of its corporation. (2) Such properties, assets, rights, liabilities and obligations shall be valued in such manner as the State Government may determine. (3) All suits and other legal proceedings willl respect to any scheme for the development of Irrigation Projects and Hydro-Electric power Projects vested in the Corporation, under sub-section (I), instituted against or defended by the State Government before the appointed date may be continued, or defended by or against, the Corporation.

" The projects that stood transferred to and vested in GMIDC from the State Government are described in the Schedule to the Act, namely, "all completed, on-going and major, medium and minor irrigation projects within the area of operation of the Corporation (excluding Bhandaradara Hydro- Electric Power Project and Ghatgar Hydro-Electric Power Projects)" in the districts of Aurangabad, Jaina, Parbharri, Beed, Usmanabad, Latur, Nanded, Ahmednagar and Nashik. 26. 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 r~ghts, 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 ofsuch 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 GMIDC. Re : Question (iiiJ 27. 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 ihe date of filing the nomination, the date ofscrutiny of nominations and the date of declaration of result). Consequently, the appellant did not incur any disqualification under Section 9A of the Act. 28. Accordingly, we allow this appeal and set aside the order of the High Court and reject the challenge to the election of appellant by the first respondent in Election Petition No.

I of 2002 on the file of the High Court of Bombay, (Aurangabad Bench). The said Election Petition stands dismissed. Parties to bear their respective costs. S. K. S. Appeal allowed. ' .