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In an appeal to the Beijing High People's Court, the MOF said the first ruling would "break the long-term administrative work pattern and seriously affect government procurement work in the future", the Beijing Morning Post reported on Friday.

In 2005, Beijing Modern Osme Economic and Trade Co Ltd filed a lawsuit against the MOF. It claimed the ministry had not responded promptly to two written requests for it to investigate irregularities during a bidding process in 2004 involving the Ministry of Health (MOH) and the National Development and Reform Commission (NDRC).

The two departments accepted an offer to purchase medical equipment valued at more than 40 million yuan, despite the price being 40 percent higher than those tendered by other bidders, including the plaintiff.

In December, the Beijing No 1 Intermediate People's Court ruled the MOF must address the complaint within 30 days of the ruling, or appeal to a higher court within 15 days.

The ministry denied it had ignored the company's plea, saying it had communicated many times with the company's representatives by telephone. The MOF said it had also held a meeting with officials from the other two ministries and agreed to refer the complaint to the NDRC, the newspaper said.

The MOF also argued that it had no remit over the complaint, as the country's contract bidding law puts this kind of bid under the authority of the NDRC.

The law on bidding appears to contradict the law on government procurement, which says complaints about such procurement should be handled by the relevant financial department.

"All government procurement, which involves hundreds of billions of dollars every year, is handled according to the procedures used in this case," the MOF's attorney was quoted by the paper as saying on Thursday.

"How can the MOF be expected to investigate all bidding cases like this?"

In addition, the lawyer continued, a temporary regulation concerning the inspection and supervision of government procurement for large-scale projects suggests that such complaints be dealt with by the NDRC.

Gu Liaohai, the plaintiff's lawyer said:" We are making a complaint about the NDRC; what is the point if the NDRC handles the investigation?"

Gu did, however, admit, "the contradictory law is to blame in the case".

Qiu Baochang, the dean of Beijing-based Huijia Law Firm, said the result of the case is not the main thing, rather the case itself should be a warning to all government departments to do their jobs according to the law and cherish the power granted to them by the public.

"If departments, especially those with substantial political and economic power, fail to do their duty, which might be as simple as issuing a reply to a complaint from a member of the public, they should be ready to pay the price later," Qiu told China Daily yesterday.

A second session of the trial is to be held soon.