Case Note & Summary
The matter arose from writ petitions and writ appeals filed by OTIS Elevator Company (India) Limited before the Madras High Court. The appellant challenged the validity of Schedule 4-Procurement Procedure Section 2 (Eligible Nationality) contained in a Loan Agreement dated 21.12.2018 between the Japanese International Cooperation Agency (JICA) and the Government of India. The company contended that the clause restricted eligibility for procurement to entities of certain nationalities, thereby discriminating against Indian companies and violating their fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution, as well as being contrary to Articles 298 and 299 and Section 27 of the Indian Contract Act, 1872. The appellant had earlier filed two writ petitions (WP Nos. 10934 and 10948 of 2024) challenging the clause, which were dismissed by a Single Judge on 19-06-2024. Aggrieved, the appellant filed WA Nos. 2026 and 2028 of 2024 to set aside those orders. Simultaneously, the appellant filed WP No. 21995 of 2024 directly before the Division Bench seeking a declaration that the eligibility clause is illegal, arbitrary, and unconstitutional, and a direction to the Union of India to modify the agreement. The respondents included the Union of India, State of Tamil Nadu, Chennai Metro Rail Limited, and JICA. The core legal issue was whether the procurement eligibility condition based on nationality violated constitutional guarantees and statutory provisions. The court's analysis and final decision are not available in the provided extract. Consequently, the full reasoning and outcome are not mentioned.
Headnote
A) Constitutional Law – Validity of Procurement Clause in International Loan Agreement – Articles 14, 19(1)(g), 21, 298, 299 Constitution of India, 1950 – The challenge involved whether the nationality eligibility condition in a JICA loan agreement violated fundamental rights and constitutional provisions. Not mentioned. B) Contract Law – Restrictive Covenants – Section 27 Indian Contract Act, 1872 – The clause was alleged to constitute a restraint on trade, making it void. Not mentioned.
Issue of Consideration
Whether Schedule 4-Procurement Procedure Section 2 (Eligible Nationality) of the JICA Loan Agreement dated 21.12.2018 is illegal, arbitrary and unconstitutional.
Law Points
- constitutional validity of procurement eligibility conditions in international loan agreements
- equality before law
- freedom of trade
- right to livelihood
- executive power
- contracts
- void agreements
