Why the Supreme Court Says Lopsided Government Contracts Fail the Test of Article 14

A recent Supreme Court ruling holds that even in commercial contracts, the State cannot write terms so one-sided that they offend the constitutional guarantee of fairness — reopening the old question of how far Article 14 reaches into the government's contractual life.

The Supreme Court has ruled that contractual terms imposed by the government or a public-sector entity on a private party can be struck down as unconstitutional if they are one-sided, oppressive or lack reciprocity — for instance, clauses letting the department terminate at will, forfeit deposits, deny interest on withheld payments, and deny the contractor any remedy for the government's own defaults.

The Court held that a government contract is never purely a private bargain, because the State is bound by Article 14 at every stage of its action. Article 14's guarantee against arbitrariness extends beyond discriminatory classification to any unreasonable or unequal exercise of power, including contractual terms. This applies where the other party qualifies as "State" under Article 12, and remedies can be sought under Article 226, alongside the contractual framework of Articles 298 and 299, and the property/business-rights texture of Articles 300A and 19(1)(g).

Exam takeaway: Article 14 covers not just discriminatory classification but non-arbitrariness in State action, extending into contractual relations with instrumentalities of the State; remember the linkage between Articles 12, 14, 226, 298, 299, 300A, and 19(1)(g) in this context.