Santosh Associate Private Limited Vs Haryana State Industrial And Infrastructure Development Corporation Ltd. (Supreme Court of India)
Summary: The Supreme Court considered a challenge to a contractual arbitration clause requiring a contractor raising claims of ₹1 lakh or more to deposit 10% of the claim amount as security before the dispute could be referred to arbitration. The appeal arose from proceedings in which the Sole Arbitrator, acting on the Respondent’s Section 16 application under the Arbitration and Conciliation Act, 1996, had directed the Appellant to deposit 10% of its claim and, following refusal, dismissed the claim in entirety. The Commercial Court, Gurugram, subsequently dismissed the Appellant’s appeal under Section 37(2), relying upon the three-Judge Bench decision in S.K. Jain v. State of Haryana, (2009) 4 SCC 357.
The underlying contract concerned execution of storm water drainage systems and contingent works at Sector-35, Udyog Vihar, Phase-VII, Gurugram. The contract was awarded on 17 May 2017 for ₹5,14,11,635/-. Following site-related challenges and reduction in scope, the contract value was revised to ₹2,40,93,059/- on 19 January 2021. The High Court of Punjab and Haryana appointed Justice (Retd.) Surender Gupta as Sole Arbitrator on 8 August 2024. The Appellant’s claim was thereafter dismissed for failure to make the stipulated 10% deposit.
