Supreme Court Refers Validity of Pre-Deposit Clauses in Arbitration Agreements to Larger Bench

Case Snapshot

• Case Name: M/s Santosh Associate Private Limited v. Haryana State Industrial and Infrastructure Development Corporation Ltd.

• Citation: 2026 INSC 872

• Bench: Justice Manmohan and Justice Manoj Misra

• Date of Judgment: August 17, 2026

• Area of Law: Arbitration Law, Contract Law, Constitutional Law

The Judgment in One Line

Pre-deposit clauses in arbitration agreements referred to larger Bench to determine conflict between S.K. Jain and ICOMM Tele Ltd.

Why This Judgment Matters

This judgment is significant as it raises fundamental questions about the validity of pre-deposit clauses in arbitration agreements. The Supreme Court has referred the matter to a larger Bench to resolve the apparent conflict between a three-Judge Bench decision in S.K. Jain (which upheld pre-deposit clauses) and a two-Judge Bench decision in ICOMM Tele Ltd. (which struck them down as arbitrary). The Court has also framed six crucial questions, including whether such clauses violate Article 14, Section 18 of the Arbitration Act (equal treatment), and Section 28 of the Contract Act. The outcome will impact all government contracts containing similar clauses and determine whether arbitration remains an accessible dispute resolution mechanism.

Background

The Respondent invited tenders on November 7, 2016, for executing storm water drainage systems. The Appellant was awarded the contract on May 17, 2017, for Rs. 5,14,11,635/-. The contract contained an arbitration c

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