The controversial contract between the Passenger Rail Agency of South Africa (Prasa) and Swifambo Rail Agency has been reviewed and set aside by the South Gauteng High Court in Johannesburg.

The court described the contract as "peppered" with "many irregularities" in the judgment.

The R3.5-billion contract was awarded when current Deputy Minister of Finance Sfiso Buthelezi was chairman of the Prasa board and when Lucky Montana was still its chief executive.

Prasa had also filed a civil claim against the company to recoup monies it paid for some 70 unsuitable trains it provided to Prasa.

The contract has been set aside and the company has been ordered to pay costs.

"Harm will be done were I to allow an unlawful tender to remain intact. Harm will be done to the whistleblowers who were able to blow a whistle to members of the reconstituted board.

"Harm will be done if the benefactors of the tender were allowed to reap the benefits of their spoils," the judgment read. Harm will be done to the administration of justice if this award is not set aside from the onset. Corruption will triumph if this does not set aside the tender."

The court found that Swifambo should have been "automatically disqualified" and should not have been allowed to take part in the bid in the first place as it did not have a valid tax clearance certificate.

It found that the methodology used in the scoring process for the contract was "irrational and unreasonable" and "inferred" that the specifications were "tailored to benefit Swifambo".

The application to have the contract reviewed and set aside was brought by the current Prasa board under chairman, Popo Molefe, who has come under fire for the lengthy investigations into contracts which his board had conducted by the Transport Department.

Molefe and his board have reportedly been asked to provide reasons why it should not be dissolved by the minister, after a previous decision to dissolve the board by former transport minister Dipuo Peters was set aside by the court.