This Supreme Court has recently given a judgement in which it has pronounced that it is not possible for the central government to seek immunity because of the reason that the contract has been executed in the name of the President. The central government has recently appeared before the central government and pleaded innocence and ignorance after invoking Article 299 of the Constitution. The Supreme Court has clearly held that the central government is a party to the contract and in the capacity of being a party it cannot just ignore the obligations which have been imposed by the contract on it. The contract was executed for a commercial purpose and since it had got nothing to do with the execution of the sovereign functions of the state the immunity of article 299 of the Constitution cannot be invoked. This judgement is very important in order to keep a check on the activities of the government that keeps on avoiding the obligations over the period of time.
But this immunity has been restricted to only all those activities which are limited to the performance of the sovereign duties of the state. If this interpretation is given the force of law then automatically it will try to increase fraudulent activities at the instance of the state and the central government and this will be a violation of the rule of law which is the basic principle of the Constitution according to the various judgements rendered by this court.
The agreement was between the central government and the Asia Pacific Limited with respect to the supply of the pistols. The failure to invoke the bank guarantee by the Ministry of Home Affairs led to the present case between the parties. The matter was referred to an arbitrator according to the terms of the agreement but due to the lack of consensus the sole arbitrator had to refer the case before the court of law. It is important to understand that this judgement establishes the fact that the name of the President is a mere formality and the government is equally bound by the responsibilities it has undertaken just like an ordinary citizen. This judgement will definitely prevent the government to avoid its liability under any contract and will also force the government to comply with every obligation that has been imposed on it.