Agreement to refer disputes to arbitration cannot be rendered void merely because of government rule – SC

Union of India Vs. Col. L.S.N. Murthy & ANR. (SC) –  An agreement to refer disputes to arbitration will not be void because a government instruction which makes the deal unprofitable. A contract in such cases will be valid unless it is unlawful. In this case, the government invited tenders for supply of fruits for the army. The successful bidder began the supply but stopped when the prices rose and the deal became unprofitable. This gave rise to disputes over payments which were referred to arbitration. The contractor argued that a government instruction on prices of goods rendered ...