The Union government cannot claim immunity from legal provisions pertaining to a contract merely because one of the parties to it is the president, the Supreme Court ruled on Friday, reported The Hindu.

A Constitution bench of the Supreme Court headed by Chief Justice of India DY Chandrachud passed the judgement in a petition filed by Glock-Asia Pacific Limited against the Centre regarding the appointment of an arbitrator by the firm in a dispute regarding a tender.

Glock Asia-Pacific Limited had entered into a contract with the Union home ministry for the supply of pistols. However, after a dispute arose about the invocation of a bank guarantee, the company in July issued a notice invoking arbitration in July, the Hindustan Times reported.

However, the Centre cited a condition of the tender which mandated that the dispute had to be referred to sole arbitration of an officer from the law ministry, who was to be appointed by the home secretary.

Glock challenged the provision in the agreement that enabled the appointment of an officer from the law ministry as the arbitrator.

The Supreme Court said that a person chosen by the State as an arbitrator must be “impartial and independent” with no past or present professional ties with the government.

Additional Solicitor General Aishwarya Bhati, representing the Union government, contended that as Glock had entered into a contract with the president, the case was different from others. However, the court did not accept this argument.

“We are of the clear opinion that a contract entered into in the name of the President of India, cannot and will not create an immunity against the application of any statutory prescription imposing conditions on parties to an agreement, when the government chooses to enter into a contract,” the bench said.

The Supreme Court also said that Article 299 (contracts made by the Union or State in the name of the President or Governor) of the Constitution does not give the government power to break statutory laws.

The court appointed former Supreme Court judge, Justice Indu Malhotra, as the sole arbitrator to adjudicate the dispute.