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CASE NO.:

Appeal (civil) 5895 of 2004

PETITIONER:

Shrikant

RESPONDENT:

Vasantrao & Ors.

DATE OF JUDGMENT: 20/01/2006

BENCH:

CJI,B. N. Srikrishna & R. V. Raveendran

JUDGMENT:

J U D G M E N T

Raveendran J.

This appeal under section 116-A of the Representation of the

People Act, 1951 [for short the 'Act'] is by the returned candidate

against the judgment dated 31.8.2004 passed by the learned single

Judge of the Bombay High Court in Election Petition No. 1 of 2002

filed by the first respondent herein.

2. Notice of Election dated 29.5.2002 was given by the Returning

officer in respect of an election to be held to elect a member to the

Maharashtra Legislative Council from Aurangabad Division

Graduates' Constituency. As per calendar, the last date for filing

nominations was 5.6.2002, the scrutiny of nomination papers was

taken up on 6.6.2002 and the poll was held on 23.6.2002. The

appellant, who was one of the candidates, was declared elected on

26.6.2002. On 9.8.2002, the first respondent, one of the rival

candidates, filed Election Petition No. 1/2002 in the High Court of

Bombay, Aurangabad Bench, challenging the election of the

appellant under section 9-A, 98, 100 (1) (a) & (d) and 101(1)(a) of

the Act.

3. In the said election petition, the first respondent alleged that

the appellant was a government contractor carrying on business

under the trade name of M/s. Precision Press Fabricon at

Aurangabad. He further alleged that the appellant had entered into

three contracts with the State Government, in the course of his

business for execution of works undertaken by the appropriate

Government, and such contracts were subsisting, on the date of

filing of nomination/scrutiny of the nomination papers/declaration of

result [in June, 2002]. The said contracts were :

a) Contract as per work order dated 19.5.1996 issued by

the Executive Engineer, Medium Project Irrigation

Division, Latur, for the work of designing, fabricating,

and erecting the Automatic stilt doors at the canal of

Tawarja Project.

b) Contract as per work order dated 31.12.1998 issued by

the Executive Engineer, Maharashtra Jeevan

Pradhikaran, Works Division No.2, Latur, for execution

of the work relating to water supply scheme in ten

villages surrounding Pangaon.

c) Contract as per work order dated 12.4.1999 issued by

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the Executive Engineer, Maharashtra Jeevan

Pradhikaran for the work relating to water supply

scheme, Stage-II Taluk Geora, District Beed.

The first respondent contended that Maharashtra Jeevan

Pradhikaran is part and parcel of the State Government and

therefore, contracts with the said Pradhikaran are in effect contracts

with the State Government. First Respondent contended that as

these three contracts (the first with the State Government and the

other two with Maharashtra Jeevan Pradhikaran) were subsisting in

June, 2002, the appellant was disqualified for being chosen as a

Member of Legislative Council, under section 9A of the Act.

4. The appellant did not dispute that he had entered into such

contracts and that they were subsisting in June, 2002. He, however,

submitted that the correct position in regard to the three contracts

was thus:

a) The contract dated 19.5.1996 with the State

Government, stood transferred to "Godawari Marathwada

Irrigation Development Corporation [for short 'GMIDC'],

an authority constituted under the Maharashtra Godawari

Marathwada Irrigation Development Corporation Act

1998 [for short 'MGMIDC Act'] with effect from

1.10.1998.

b) Contracts dated 31.12.1998 and 12.4.1999 were entered

into with Maharashtra Jeevan Pradhikaran (for short

'MJP'), an authority constituted under the Maharashtra

Jeevan Authority Act, 1976 (for short 'MJA Act') and not

with the State Government.

He contended that the question of disqualification under section 9-A

of the Act would arise only if any contract entered into by him [in

the course of his trade or business] with the appropriate

government (State Government) for the supply of goods or for

execution of any works undertaken by that government, subsisted

on the date of filing of nomination/scrutiny of nominations/

declaration of results. He pointed out that the first contract had

been transferred to GMIDC in the year 1998 itself, and the second

and third contracts were with MJP and not with the State

Government. He, therefore, contended that he had no subsisting

contract with the appropriate government in June, 2002 and

therefore, did not suffer disqualification under section 9-A of the

Act.

5. After considering the provisions of MGMIDC Act and MJA Act,

the High Court allowed the election petition by order dated

31.8.2004 and declared the election of Appellant as void. It held

that GMIDC and MJP were statutory corporations wholly controlled

by the State Government and therefore, fell within the expression

'State' as defined in Article 12 by applying the principles laid down

by this Court in Ramana Dayaram Shetty vs. The International

Airport Authority of India [AIR 1979 SC 1628]; Ajay Hasia Vs. Khalid

Mujib Sehravardi [1981 (1) SCC 722]; The Mysore Paper Mills Ltd.

Vs. The Mysore Paper Mills Officers Association & Anr. [2002 (2)

SCC 167]; and Pradeep Kumar Biswas vs. Indian Institute of

Chemical Biology & Ors. [2002 (5) SCC 111]. The High Court also

held that GMIDC and MJP being 'State' under Article 12, they are

the same as being 'State Government' and therefore, GMIDC and

MJP can be termed as 'appropriate Government'. Consequently, the

High Court held that the Appellant had subsisting contracts with the

appropriate government and therefore, incurred disqualification

under section 9-A of the Act.

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6. Feeling aggrieved, the appellant has filed this appeal. On the

contentions raised, the following questions arise for consideration:

i) Whether a statutory body or authority which answers

the definition of 'State' under Article 12, for purposes

of Part-III and IV of the Constitution of India, is an

'appropriate government' for purposes of section 9-A

of the Act.

AND

Whether GMIDC and MJP can be termed as

'appropriate government' (that is 'State Government'

having regard to definition under section 7 of the Act)

for purposes of section 9-A of the Act.

ii) Whether the contract dated 19.5.1996 entered into

by the Appellant with the State Government,

continued to be a contract with the State

Government, after its transfer to GMIDC with effect

from 1.10.1998.

iii) Whether the Appellant incurred any disqualification

under section 9-A of the Act, on account of his

contracts dated 19.5.1996, 31.12.1998 and

12.4.1999.

Re : Question (i)

7. Article 191 of the Constitution of India prescribes the

disqualifications for a person being chosen as, and for being, a

member of the Legislative Assembly or Legislative Council of a

State. Apart from specifying four grounds of disqualifications, it

provides that a person can be disqualified by or under any law

made by the Parliament. The Representation of the People Act,

1951, a law made by the Parliament, has introduced six

disqualifications for a person being chosen as and for being Member

of Legislative Assembly of Legislative Council of a State under

sections 8, 8-A, 9, 9-A, 10 and 10-A of the Act.

8. In Jyoti Basu vs. Debi Ghosal [AIR 1982 SC 983], this

Court clarified that the right to elect, the right to be elected and the

right to dispute an election, though fundamental to democracy, are

neither fundamental rights nor Common Law Rights, but are pure

and simple statutory rights. This Court held :-

"Outside of statute, there is no right to elect, no right to be

elected and no right to dispute an election. Statutory

creations they are, and therefore, subject to statutory

limitation. An election petition is not an action at Common

Law, nor in equity. It is a statutory proceeding to which

neither the common law nor the principles of equity apply but

only those rules which the statute makes and applies. It is a

special jurisdiction, and a special jurisdiction has always to be

exercised in accordance with the statute creating it. Concepts

familiar to Common Law and Equity must remain strangers to

Election Law unless statutorily embodied. A Court has no right

to resort to them on considerations of alleged policy because

policy in such matters, as those, relating to the trial of

election disputes, is what the statute lays down. In the trial of

election disputes, Court is put in a straight jacket. "

9. In S. Narayanaswami vs. G. Panneerselvam [AIR 1972 SC

2284], the correctness of a decision of the Madras High Court which

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held that a non-graduate was not qualified to be a candidate for

election to the Graduates' Constituency, (though the Constitution or

any law made by the Parliament did not prescribe graduation as a

qualification for election to Graduate's constituency), fell for

consideration of this Court. A Constitution Bench of this Court

reversed the decision of the High Court, on the following reasoning:

"It could not even be said that qualifications of the electors as

well as of those to be elected were not matters to which the

attention of the law makers, both in the Constituent Assembly

and in Parliament, was not specially directed at all or that the

omission must be by mere oversight. The provisions

discussed above demonstrate amply how legislative attention

was paid to the qualifications of the electors as well as of the

elected in every case. Hence, the correct presumption, in

such a case would be that the omission was deliberate.

We think that the view contained in the judgment under

appeal, necessarily results in writing some words into or

adding them to the relevant statutory provisions, to the effect

that the candidates from graduates' constituencies of

Legislative Councils must also possess the qualification to

having graduated. This contravenes the rule of "plain

meaning" or "literal" construction which must ordinarily

prevail. A logical corollary of that rule is that "a statute may

not be extended to meet a case for which provision has

clearly and undoubtedly not been made" (See Craies on

Statute Law \026 6th Edn. P. 70). An application of the rule

necessarily involves that addition to or modification of words

used in statutory provisions is not generally permissible.

We think that the language as well as the legislative history

of Articles 171 and 173 of the Constitution and Section 6 of

the Representation of People Act, 1951, enable us to presume

a deliberate omission of the qualification that the

representative of the Graduates should also be a graduate. In

our opinion, no absurdity results if we presume such an

intention. We cannot infer as the learned Judge of the Madras

High Court had done, from the mere fact of such an omission

and opinions about a supposed scheme of "functional

representation" underlying Article 171 of our Constitution,

that the omission was either unintentional or that it led to

absurd results. We think that, by adding a condition to be

necessary or implied qualifications of a representative of the

Graduates which the Constitution-makers, or, in any event

the Parliament, could have easily imposed, the learned Judge

had really invaded the legislative sphere. The defect, if any,

in the law could be removed only by law made by

Parliament."

10. In N. S. Varadachari vs. G. V. Pai [AIR 1973 SC 38], this

Court held thus :-

"Section 8 to 10-A of the Act set out the grounds which

disqualify a person from being a candidate. If a person

possesses all the qualifications prescribed in the

Constitution as well as in the Act and has not incurred any

of the disqualifications mentioned therein then he is

qualified to be a candidate. It may look anomalous that a

non-graduate should be a candidate in a Graduates'

Constituency. But if a candidate possesses the qualifications

prescribed and has not incurred any of the disqualifications

mentioned in the Constitution or in the Act other

consideration becomes irrelevant.

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11. A person cannot, therefore, be disqualified unless he suffers a

disqualification laid down in Article 191 of the Constitution or under

sections 8, 8-A, 9, 9-A, 10 or 10-A of the Act. It is not possible to

add to or subtract from the disqualifications, either on the ground of

convenience, or on the grounds of equity or logic or perceived

legislative intention. A combined reading of Article 191 of the

Constitution of India and Chapter III of the Representation of the

People Act, 1951 makes it clear that a person can be held to be

disqualified for being chosen as, and for being, a Member of the

Legislative Assembly or Legislative Council of a State only on the

following, and no other, grounds :

Disqualifications under the Constitution of India :

i) If he holds any office of profit under the Government of

India or the Government of any State [specified in the

First Schedule], other than an office declared by the

Legislature of the State by law not to disqualify its holder

\026 vide Article 191 (1) (a);

ii) If he is of unsound mind and stands so declared by a

competent court \026 vide Article 191(1) (b);

iii) If he is an undischarged insolvent \026 vide Article 191(1)

(c);

iv) If he is not a citizen of India, or has voluntarily acquired

the citizenship of a foreign State, or is under any

acknowledgment of allegiance or adherence to a foreign

State \026 vide Article 191(1)(d);

Disqualifications under the Act :

v) If he is convicted and sentenced for any offence as

provided/enumerated in Section 8 of the Act;

vi) If he is found guilty of corrupt practices by an order

under section 99 of the Act \026 vide section 8-A of the Act;

vii) If he is a person who having held an office under the

Government of India or under the Government of any

State has been dismissed for corruption or for disloyalty

of the State \026 vide section 9 of the Act;

viii) If he is a person having a subsisting contract with the

State Government for the supply of goods to or for the

execution of any works undertaken by that Government.

\026 vide section 9-A of the Act;

ix) If he is a person who is a managing agent, manager or

secretary of any company or corporation, in the capital of

which the State Government has not less than twenty-

five per cent share \026 vide section 10 of the Act;

x) If he is a person who has been declared as disqualified

by the Election Commission for having failed to lodge

account of election expenses within the time and in the

manner required by or the under the Act \026 vide section

10-A of the Act.

12. The disqualifications under sections 8 to 10-A of the Act are

clear and very specific. They do not leave any room at 'elbow joints'

to widen or narrow the disqualifications. For example, section 10 of

the Act disqualifies only persons who are working or functioning as

managing agent, manager or secretary of a company or corporation

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in which the State Government has not less than twenty-five per

cent shares, but does not disqualify other employees of such

company or corporation. Section 9 disqualifies a person who had

held an office under the Government of India or any State

Government and who has been dismissed for disloyalty to the State

or for corruption, but it does not disqualify a person who had held

an office under a local or other authority and who has been

dismissed for corruption. Similarly, all and every conviction do not

lead to disqualification under Section 8. The disqualification will be

attracted under section 8 only in cases where (i) the conviction is

followed by sentence of not less than two years; or (ii) the

conviction is for the offences enumerated in sub-section (1); or (iii)

the conviction is in respect of a contravention of a law referred in

sub-section (2) and the sentence is not less than six months.

Section 9-A only disqualifies person having a subsisting contract

with the State Government either for supply of goods or for

execution of any works undertaken by that government, but does

not disqualify persons who have such contracts with any local or

other authority nor disqualifies persons having subsisting contracts

with the State Government if such contracts are not for supply of

goods or for execution of any works undertaken by the State

Government.

13. At this juncture, it is of some relevance to notice the

distinction between Articles 102(1)(a) and 191(1)(a) which deal

with disqualification for membership of Houses of Parliament and

the membership of the State Legislative Assembly/Council on the

one hand and Articles 58(2) and 66(4) which deal with

disqualification for election as President and Vice President, on the

other hand. While Article 102 (1)(a) and 191(1)(a) disqualify any

person holding any office of profit under the Government of India or

Government of any State, Articles 58(2) and 66(4) disqualify any

person holding any office of profit under the Government of India or

the Government of any State or under any local or other

authority subject to the control of any of the said

Governments. There is thus a conscious and deliberate omission of

the words 'office of profit under any local or other authority

subjected to the control of any of the said Governments' while

listing the disqualifications for membership of Houses of Parliament

and membership of Legislative Assembly/Council of a State. Holding

an 'office of profit under local or other authority' is not a

disqualification for being elected to either house of Parliament or

State Legislative Assembly/Council, but disqualification for being

elected as the President or Vice-President. In Gurushanthappa vs.

Abdul Khuddus [AIR 1969 SC 744], this difference between

disqualification under Article 58(2)/66(4) and Article

102(1)/191(1)(a) was highlighted thus :

"In this connection, a comparison between Article 58(2) and

66(4) and Articles 102(1) and 191(1) (a) of the Constitution

is of significant help. In Arts. 58(2) and 66(4) dealing with

eligibility for election as President or Vice-President of India,

the Constitution lays down that a person shall not be eligible

for election if he holds any office of profit under the

Government of India or the Government of any State or

under any local or other authority subject to the control of

any of the said Governments. In Articles 102(1)(a) and

191(1)(a) dealing with membership of either House of

Parliament or State Legislature, the disqualification arises

only if the person holds any office of profit under the

Government of India or the Government of any State other

than an office declared by Parliament or State Legislature by

law not to disqualify its holder. Thus, in the case of election

as President or Vice-President, the disqualification arises

even if the candidate is holding an office of profit under a

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local or any other authority under the control of the Central

Government or the State Government, whereas, in the case

of a candidate for election as a Member of any of the

Legislatures, no such disqualification is laid down by the

Constitution if the office of profit is held under a local or any

other authority under the control of the Governments and not

directly under any of the Governments. This clearly

indicates that in the case of eligibility for election as a

member of a Legislature, the holding of an office of

profit under a corporate body like a local authority

does not bring about disqualification even if that local

authority be under the control of the Government. The

mere control of the Government over the authority having

the power to appoint, dismiss, or control the working of the

officer employed by such authority does not disqualify that

officer from being a candidate for election as a member of

the Legislature in the manner in which such disqualification

comes into existence for being elected as the President or the

Vice-President."

(Emphasis supplied)

The above brings into focus that 'State Government' is different

from 'local or other authorities under the control of the State

Government' for purposes of disqualification.

14. We will not deal with the disqualification prescribed under

Section 9-A of the Act in more detail, as that is the subject matter

of the appeal before us. The said section reads thus :-

"9-A. Disqualification for Government contracts,

etc.- A person shall be disqualified if, and for so long as,

there subsists a contract entered into by him in the

course of his trade or business with the appropriate

Government for the supply of goods to, or for the

execution of any works undertaken by, that Government.

Explanation : for the purpose of this section, where a

contract has been fully performed by the person by the

person by whom it has been entered into with the

appropriate government, the contract shall be deemed

not to subsist by reason only of the fact that the

government has not performed its part of the contract

either wholly or in part."

Section 7 defines the terms 'appropriate government' and

'disqualified' used in Chapter III (which includes section 9-A) of the

Act, thus :-

"7. Definitions. - In this Chapter.-

(a) 'appropriate Government' means in relation any

disqualification for being chosen as or for being a

member of either House of Parliament, the Central

Government and in relation to any disqualification

for being chosen as or for being a member of the

Legislative Assembly or Legislative Council of a

State, the State Government;"

(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

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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 (1) of section 2 of the

Act provides that unless the context otherwise requires, each of the

expressions defined in section 2 or sub-section (1) 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 2(j) of the

Representation of the People Act, 1950 defines "State Government"

as follows :-

"2(j). 'State Government'.- State Government in

relation to Union Territory means the administration

thereof."

Section 2(60) of the General Clauses Act, 1897, provides that the

term "State Government", as respects anything done or to be done,

shall mean in a State, the Governor.

16. The High Court after an exhaustive consideration of the

provision of MGMIDC Act and MJA Act, and the principles laid down

by this Court with reference to Article 12, has held that GMIDC and

MJP answer the definition of "State" under Article 12 of the

Constitution. This is not seriously disputed by the Appellant. Having

reached the conclusion that both GMIDC and MJP answer the

definition of State under Article 12, the High Court wrongly and if

we may say so, without any logical basis, assumed that they are

'appropriate government' and consequently, the appellant who had

subsisting contracts with GMIDC and MJP incurred disqualification

under section 9-A of the Act. Neither Article 12 nor the decisions

rendered with reference to Article 12 is of any assistance for

interpreting Section 9A of the Act. The term 'State Government' (as

also the term 'Central Government') is used in the various

provisions relating to disqualification, in contradistinction from its

instrumentalities or local or other authorities. While it is true that

the meaning of the terms 'State' and 'State Government' may

depend on the context in which they are used, the manner in which

the said terms are used in the various provisions relating to

disqualification leaves no doubt that 'State' refers to an entity

described in the First Schedule to the Constitution of India and

'State Government' refers to the three wings of governance of the

'State' that is Executive, Legislature and Judiciary. The term 'State

Government' in section 9A (read with section 7 of the Act) should,

therefore, be understood in its ordinary and normal sense, and not

with reference to the extended meaning under Article 12 of the

Constitution of India.

17. Article 12 provides that in Part III of the Constitution dealing

with fundamental rights, the word 'State' would refer to and include

not only the Government of India, Parliament of India, the

Government and Legislature of each of the States, but also all local

and other authorities within the territory of India and all local and

other authorities under the control of Government of India. The

significance of Article 12 lies in the fact that it occurs in Part III of

the Constitution which deals with Fundamental Rights. The various

Articles in Part III have placed responsibilities and obligations on

the "State" vis-a-vis the individual, to ensure constitutional

protection of the individual's rights against the "State", including the

right to equality under Article 14, and equality of opportunity in

matters of public employment under Article 16 and most

importantly the right to enforce all or any of those fundamental

rights against the "State" as defined in Article 12, either under

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Article 32 or Article 226 of the Constitution [vide Pradeep Kumar

Biswas (supra)]. The decisions rendered under Article 12 lay down

that a body would answer the definition of State under Article 12 if

it is financially, functionally and administratively dominated by or

under all pervasive control of the "Government". On the other hand,

where the control by the "Government" is merely regulatory,

whether under any statute or otherwise, it would not serve to make

the body 'State'. Thus the very decisions relied on by the High Court

make it clear that 'instrumentalities of State' are different from

'State Government', though both may answer the definition of

'State' under Article 12 for the limited purpose of Part-III of the

Constitution. Further, the very inclusive definition of 'State' under

Article 12 by referring to Government of India, the Government of

each of the States and the local and other authorities, makes it

clear that a 'State Government' and a local or other authorities, are

different and that they fall under a common definition only for the

purpose of Part-III of the Constitution. This Court has consistently

refused to apply the enlarged definition of 'State' given in Part-III

(and Part-IV) of the Constitution, for interpreting the words 'State'

or 'State Government' occurring in other parts of the Constitution.

While the term "State" may include a State Government as also

statutory or other authorities for the purposes of part-III (or Part-

IV) of the Constitution, the term "State Government" in its ordinary

sense does not encompass in its fold either a local or statutory

authority. It follows, therefore, that though GMIDC and MJP may fall

within the scope of 'State' for purposes of Part-III of the

Constitution, they are not "State Government" for the purposes of

section 9-A (read with section 7) of the Act.

18. The object and intent of section 9A of the Act is to maintain

the purity of the legislature and to avoid conflicts between duty and

interest of members of Legislative Assembly and Legislative Council.

The said object is sought to be achieved by ensuring that a person

who has entered into a contract with the State Government and

therefore liable to perform certain obligations towards the State

Government, is not elected as a member of the Legislative

Assembly or Legislative Council, lest he should use his influence as

an elected member of Legislature to dilute the obligations or to seek

and secure undue advantages and benefits in respect of the

subsisting contracts. It seeks to ensure that personal interests will

not override his duties and obligations as a member of Legislature

or Legislative Council. For the purpose of section 9-A, what is

relevant is whether the candidate has a subsisting contract with the

appropriate Government (in this case, the State Government) either

for supply of goods to the State Government or for execution of any

work undertaken by the State Government. The six requirements

for application of disqualification under section 9A of the Act where

a candidate holds a contract for execution of works undertaken by

the appropriate Government have been listed by this Court in

Kartar Singh Bhadana vs. Hari Singh Nalwa [2001 (4) SCC

661] as follows :-

(i) There should be a contract entered into by the

candidate;

(ii) Such contract should be entered into by him in the

course of his trade or business;

(iii) The contract should be entered into with the appropriate

Government;

(iv) The contract should subsist;

(v) The contract should relate to the works undertaken by

the appropriate Government; and

(vi) The contract should be for execution of such works.

This Court in KARTAR SINGH (supra) also clarified that :

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"the provisions of Section 9A disqualify a citizen from

contesting an election; a citizen may, therefore, be

disqualified only if the facts of his case squarely fall

within the conditions prescribed by Section 9A."

[Emphasis supplied]

19. It is clear from section 9A of the Act that only certain type of

contracts with the State Government will result in disqualification.

For example subsistence of a mining lease granting by a

government to the candidate to win minerals from a specified area

was held not to attract section 9A in Kartar Singh Bhadana

(supra). A contract for collection of tolls at a government ferry was

held to be not a contract for execution of any work undertaken by

the appropriate government in Dewan Joynal Abedin vs. Abdul

Wazed [1988 Supp. SCC 580]. A subsisting contract for sale of

liquor with the appropriate government was held to be not a

contract falling under section 9A in Ranjeet Singh vs.

Harmohinder Singh Pradhan [1999 (4) SCC 517]. In Ranjeet

Singh (supra), this Court reiterated the following observations in

Ram Padarath Mahto v. Mishri Sinha (AIR 1961 SC 480) :-

".......section 9-A is a statutory provision which imposes a

disqualification on a citizen. It would, therefore, be

unreasonable to take a general or broad view, ignoring the

essentials of the section and the intention of the legislature.

Purposive interpretation is necessary."

20. Therefore, when section 9-A provides that subsistence of a

contract with the appropriate government (either for supply of

goods or for execution of any work undertaken by that government)

will disqualify a candidate for being elected as a member of the

Legislative Assembly or Legislative Council, the term 'appropriate

Government' refers to the State Government alone, and not to any

instrumentality of the State Government. We, therefore, hold that

GMIDC and MJP constituted under the MGMIDC Act and MJA Act

respectively, are not 'State Government' and, therefore, any

contracts with them are not contracts entered into by the candidate

with the appropriate government. We accordingly answer both parts

of question (i) in the negative.

Re : Question (ii)

21. We will next consider the question as to whether the contract

dated 19.5.1996 entered by the appellant with the Maharashtra

State Government which stood transferred to GMIDC in the year

1998 could be considered to be a subsisting contract with the State

Government in the year 2002. The first respondent contended that

the said contract dated 19.5.1996 was between the appellant and

the state government; that the said contract was not amended

substituting 'GMIDC' as the employer in place of 'State of

Maharashtra'; that the said contract was entered by the appellant in

the course of his business with the State Government for execution

of work undertaken by the State Government; and that the said

contract was subsisting as on the date of scrutiny and acceptance of

the nomination; and that the subsistence of the said contract

attracted the disqualification under section 9-A of the Act.

22. The appellant does not dispute the fact that his concern

entered into the said contract dated 19.5.1996 with the State

Government for execution of a work undertaken by the State

Government, or the fact that the said contract dated 19.5.1996

was subsisting on the date of his nomination and scrutiny of

nominations. What is contended is that the contract stood

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transferred 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 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 hydro-electric 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 (1) 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(1). 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) the properties and assets comprising movables and

immovables including Irrigation Projects, Hydro-Electric

Power Projects, works under construction and management

of completed schemes, specified in that behalf, situated in

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the area of operation of the Corporation, which

immediately before the appointed date vested in the

State Government and were under the control of the

Irrigation Department, shall vest in and stand

transferred to the 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, 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 with respect to

any scheme for the development of Irrigation Projects and

Hydro-Electric power Projects vested in the Corporation,

under sub-section (1), 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 rights, 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 of such 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 (iii) :

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

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supply of any goods or for execution of any work undertaken by

that government in June, 2002 (on the date of filing the

nomination, the date of scrutiny 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. 1 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.