Pre-Deposit Clauses To Invoke Arbitration Makes Arbitral Process Ineffective And Expensive: SC [Read Judgment]

The Supreme Court has observed that pre-deposit clauses to invoke arbitration would render the arbitral process ineffective and expensive.

The bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran struck down such a clause in a notice inviting tender by Punjab State Water Supply & Sewerage Board.

The case of the company (ICOMM Tele Ltd.) which was awarded the said tender was that the said arbitration clause contained in the tender condition amounts to a contract of adhesion and arbitration being an alternative dispute resolution process, a 10% deposit would amount to a clog on entering the system. As the High court dismissed their challenge against the said clause, they approached the Apex court.

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