Article 299 compliance governs State contracts; recovery authority cannot vary instalments like a decree court
A recovery order was upheld where the petitioner had prior notice of the proposed action and had discussed the matter before the final order, so no breach of natural justice was made out. The claimed instalment arrangement was not enforceable against the State because it was not shown to have been made in compliance with Article 299(1), which is mandatory for a valid State contract; non-compliance rendered it void. The recovery authority also could not vary instalments by analogy to Order XX Rule 11(2), since that power belongs only to the court passing the decree, not an execution authority.
Issues: (i) Whether the impugned recovery order was vitiated for breach of natural justice; (ii) whether the instalment arrangement relied upon by the petitioner was a binding contract enforceable against the State in the absence of compliance with Article 299(1) of the Constitution of India; (iii) whether the recovery authority could lawfully vary the instalment arrangement by analogy to an order under Order XX Rule 11(2) of the Code of Civil Procedure, 1908.
Issue (i): Whether the impugned recovery order was vitiated for breach of natural justice.
Analysis: The petitioner had been informed of the earlier proposal, approached the Collector, and discussed the matter before the final order was issued. The later order only modified the earlier proposal and therefore could not be treated as having been made without hearing the petitioner.
Conclusion: The challenge based on natural justice failed.
Issue (ii): Whether the instalment arrangement relied upon by the petitioner was a binding contract enforceable against the State in the absence of compliance with Article 299(1) of the Constitution of India.
Analysis: Even assuming the arrangement amounted to a contract, it was not expressed to be made in the name of and on behalf of the Governor, as required by Article 299(1). Compliance with that provision is mandatory, and non-compliance renders the arrangement void and unenforceable. The arrangement could not therefore bind the State.
Conclusion: The alleged contract was not enforceable against the State.
Issue (iii): Whether the recovery authority could lawfully vary the instalment arrangement by analogy to an order under Order XX Rule 11(2) of the Code of Civil Procedure, 1908.
Analysis: An order granting instalments under Order XX Rule 11(2) can be made only by the court that passed the decree, not by an execution court. The recovery authority stood, at best, in the position of an execution court and therefore lacked power to grant or vary such instalments in that manner.
Conclusion: The recovery authority's order could not be treated as an order under Order XX Rule 11(2) of the Code of Civil Procedure, 1908.
Final Conclusion: The petition was rejected on all substantive grounds and the recovery arrangement enforced by the authority was upheld.
Ratio Decidendi: A contract with the State that is not made in compliance with Article 299(1) of the Constitution of India is void and unenforceable, and an execution authority cannot assume the power to grant or vary instalments that belongs only to the court passing the decree.
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