Business competition: SC places govt in same league as private sector

Rules govt’s commercial activities must be regulated in same manner as private sector

ISLAMABAD: The Supreme Court has declared that when a government is involved in commercial activities, then it must be treated on a par with its competitors in the private sector.

The two-judge bench of the apex court, headed by Justice Mian Saqib Nisar, has adjudicated over a 21-year-old dispute between the Punjab government and a private contractor. The litigation was started in 1993 and landed in the Supreme Court in 2004.

Justice Mian Saqib Nisar, while authoring the judgment, says: “When a government enters into the domain of business and commerce, then it cannot be given a premium of its position, and must be treated on a par with its competitors or near competitors in the private sector.” The judgment says that commercial activities are being undertaken by governments for welfare purposes and for that reason they are to be treated as part of its functions.

“The government in the exercise of its core functions viz, its executive, legislative, judicial and quasi-judicial, and administrative roles exercises sovereign powers. But when it engages in commercial activities, it is not exercising sovereign power; rather it is engaging in business/commercial activities and merits no undue advantage over ordinary litigants.”

The judgment says that governments should litigate only where necessary and the might of the state should not be employed to make an ordinary litigant run from pillar to post.

“It must be subject to the laws of the land. Its commercial activities must be regulated in the same manner as those of the private sector. It cannot be exempted therefrom simply by the dint of being a ‘government’.”

The court observed that when a government is engaged in the ‘business’ of road building through the vehicle of construction contracts with a private contractor, then it cannot be allowed to claim privileges on account of being the government, adding that in these circumstances it would be treated as corporation.

The court directed the Punjab government to make immediate payment of Rs57,534.73 to the respondent as per the award dated 1/11/1993.

On December 16, 1982, work of widening and strengthening of Jhang-Toba Tek Singh-Chichawatni Road in Toba Tek Singh district was awarded to the respondent by the provincial work department which (work) was completed on December 30, 1984.

Thereafter, a dispute arose on account of the respondent (contractor) challenging an amount deducted by the appellant No.2 from its final bill.

The respondent invoked Arbitration Clause 25-A of the agreement.

Published in The Express Tribune, November 28^th, 2016.