Chief Minister V.D. Satheesan, who had an active practice in the Kerala High Court for more than a decade and is a constitutional expert, is not expected to take such a stance, which is per se unconstitutional. File.
| Photo Credit: PTI
The stance of the United Democratic Front (UDF) government that it cannot withdraw from an MoU entered into between the Secretary, Education Department, Kerala, and the Secretary, Education Department, Government of India, on 16/10/2025 on the Prime Minister’s Schools for Rising India (PM SHRI) scheme is unsustainable.
Chief Minister V.D. Satheesan, who had an active practice in the Kerala High Court for more than a decade and is a constitutional expert, is not expected to take such a stance, which is per se unconstitutional.
Article 299 of the Constitution stipulates the manner in which the Union of India and State governments enter into legally binding contracts. In accordance with the said Article, all binding contracts of the Union of India have to be expressed to be made by the President and all contracts regarding the State government by the Governor.
The said Article stipulates that its execution should be by the persons duly authorised. The Supreme Court has consistently held from 1961 onwards in the State of Bihar vs Karam Chand Thapar & Bros. Ltd. (AIR 1962 SC 110) that a contract entered into in violation of the procedure mentioned in Article 299 not in the name of the Governor of the State or the President, is not a contract and is a nullity. The said declaration of law was followed by the Kerala High Court also (Trivandrum Golf Club vs State of Kerala [2008 (4) KHC 472].
Thus, any agreement which is not expressed in the name of the Governor of Kerala cannot constitute a legally enforceable contract regarding the State government.
The MoU was entered into by the Secretary, Education Department, Government of Kerala, and the Additional Secretary, Department of Education, Government of India, and not in the name of the President and the Governor as mandated under Article 299. Hence, the said MoU is a nullity.
Under Rule 10 of the Rules of Business in Government, it is clearly provided that all decisions having financial repercussions for the State shall have the consent of the Finance department. Any decision taken by a department without such consultation is legally unsustainable.
In the present case, for implementing the PM SHRI scheme, 40% of the expenditure will have to be borne by the State government. Hence, the scheme will have financial implications for the State government and sanction from the Finance department is necessary. Many High Courts across the country, including in Bal Kalyani and others vs State of Maharashtra and others (1993 KHC 1414), have held that any decision by a department having financial implications without the consent of the Finance department is void abinitio.
Under Article 166 of the Constitution, Kerala has framed Rules of Business in Government relating to the administrative functions of the State government. As per the said Rules, important policy decisions are to be taken only by the Council of Ministers (Cabinet).
Various High Courts, including in Chandrapur District Central Cooperative Bank Limited v. State of Maharashtra [2023 KHC Online 5010], have categorically stated that a decision on a policy matter taken unilaterally by an individual Minister, even Chief Minister, without the consent of the Council of Ministers is void abinitio.
Here, the implementation of the PM SHRI scheme is a policy matter for which a decision has to be taken by the Council of Ministers. The Cabinet of the previous Left Democratic Front government had held discussions for taking a policy decision for implementing the scheme. However, no decision was taken and the issue was adjourned till the expiry of the government’s term in 2026.
In the meantime, the MoU was executed by the department secretaries of the Union and State governments. Since the aforesaid matter is a policy decision, any decision taken unilaterally by any individual Minister without any Cabinet decision is a nullity.
In view of the aforesaid legal situation, it is certain that the MoU is only an in-principle decision of the department, which has no legal force. Hence, the stance of the UDF government that it cannot withdraw from the MoU is not sustainable. It is difficult to believe that Mr. Satheesan is unaware of the aforesaid legal position.
(Ranjith Thampan is a Senior Advocate at the High Court of Kerala.)
Published – June 24, 2026 09:28 pm IST
