14th January, 1981


No. SO (L) D. S. (R) – (33) /80. – In exercise of the power conferred on him by section 39 read with section 167 of the Punjab Local Government Ordinance, 1979 (VI of 1979) here in after called the Ordinance, the Governor of the Punjab is pleased to make the following rules, namely: —


1.                  Short title and commencement. –

1.                  These rule may be called the Punjab Local Council (Contract) Rules, 1981.

2.                  They shall come into force at once.


2.                   Definitions. —           

1.      In these rules, unless the subject or context otherwise require, the following expressions shall have the meaning hereby respectively assigned to them, that is to say –

a.                   “agreement” means any kind of undertaking expressed or implied, made between a Local Council and other person for consideration, for the purchase or supply of goods or materials, or for the acquisition, purchase or transfer by grant, gift, sale mortgage, lease exchange or otherwise of any movable or immovable property or for the execution of work or for the performance of any service;

b.                  “Contract” means an agreement enforceable by law;

c.                   “Contractor” means a person entering into a contract with a local council and shall include a person submitting a tender under rule 7;

d.                  “form” means a form appended to these rules;

e.                   “Schedule” means the schedule annexed to these rules;

3    Words and expressions used but not defined in these rules and defined in the       Ordinance shall have the same meanings respectively assigned to them in the Ordinance .


3.                  Local Council not Responsible for unauthorized contract. — No contract shall be binding on a Local Council unless it is made in conformity with the provisions of these rules.


4.                  Authority to make contract. —         

1.                  Subject tot he provisions of the Ordinance and the rules framed there under all contracts shall be made on behalf of a Local Council by its Chairman; provided that if a contract is for an amount exceeding the powers of the Chairman specified in column 2 of Schedule I, it shall no be made without the prior approval of the Local Council.

2.                  All contracts made by the Chairman on his own authority shall be reported to the Local Council in Form C-I at the meeting next following the making of the contract.

3.                  The provisions of this rule shall apply to every variation or discharge of contract to he same extent as to the original contract.


5.                   Manner of making contracts. –

1.                  A formal deed of agreement shall be executed between the local council and the contractor for every contract.

a.                   The performance whereof is subject to such conditions as may be specified;

b.                  Which is to be made after inviting tender; or

c.                   For the acquisition, purchase, lease, sale or transfer to any immovable property.

2.                  All agreements by or on behalf of a local council shall be signed by the Chairman and attested by tow witnesses and shall bear the seal of the local council and shall be executed in such form as would bind him if it were made on his own behalf and may in the like manner and form be varied and discharged.

3.                  All agreements shall be written on a stamped paper of the appropriate value and shall, where necessary, be registered under the law for the time being in force.

4.                  All contracts shall be recorded in a Contract Register to be maintained in Form C-2.

5.                  All agreements and other documents to the contract shall be kept in the custody of the Chairman.


6.                  Personal responsibility of the person approving or making contract. –      The Chairman making or approving a contract shall be personally responsible for ensuring that –

i.                    the contract is made without coercion, under influence, fraud or misrepresentation;

ii.                  the parties are competent to make the contract;

iii.                the contract does not involve any favoritism;

iv.                no official or member or the local council is directly or indirectly interested in the contract;

v.                  the contract s in the best interest of the local council and in making it full advantage has been taken of the comparative rate available in the market; and

vi.                the contract is legally in order.


7.                   Tender when to be invited. –

1.                  Subject to the provisions of sub-rule (2), the Chairman shall, at least seven days before entering into a contract involving an expenditure exceeding rupees twenty five thousand, give public notice n a newspaper inviting tender for such contract and may accept any of the tenders so made which appear to him, upon a view of all the circumstances, to be the most advantageous


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