{"id":211775,"date":"2019-03-11T19:01:13","date_gmt":"2019-03-11T13:31:13","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=211775"},"modified":"2019-03-19T17:21:12","modified_gmt":"2019-03-19T11:51:12","slug":"clauses-stipulating-deposit-at-call-before-invoking-arbitration-defeats-the-purpose-of-adr-process","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2019\/03\/11\/clauses-stipulating-deposit-at-call-before-invoking-arbitration-defeats-the-purpose-of-adr-process\/","title":{"rendered":"Clauses stipulating \u2018deposit-at-call\u2019 before invoking arbitration defeats the purpose of ADR process"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Supreme Court<\/strong>: In the case where a Notice Inviting Tender had a clause asking the parties invoking arbitration to furnish a \u201cdeposit-at-call\u201d for 10% of the amount claimed, the bench of <strong>RF Nariman<\/strong> and Vineet Saran, JJ struck down the said clause on the premise that:<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cDeterring a party to an arbitration from invoking this alternative dispute resolution process by a pre-deposit of 10% would discourage arbitration, contrary to the object of de-clogging the Court system, and would render the arbitral process ineffective and expensive.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">The Court was hearing the matter where the Punjab State Water Supply &amp; Sewerage Board Bhatinda had issued notice inviting tender for extension and augmentation of water supply, sewerage scheme, pumping station and sewerage treatment plant for various towns mentioned therein on a turnkey basis. Clause 25(viii) of the Notice inviting Tender was challenged before the Court which read<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cIt shall be an essential term of this contract that in order to avoid frivolous claims the party invoking arbitration shall specify the dispute based on facts and calculations stating the amount claimed under each claim and shall furnish a \u201cdeposit-at-call\u201d for ten percent of the amount claimed, on a schedule bank in the name of the Arbitrator by his official designation who shall keep the amount in deposit till the announcement of the award.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Noticing that a 10% deposit has to be made before any determination that a claim made by the party invoking arbitration is frivolous, the Court said that such a clause would be unfair and unjust and which no reasonable man would agree to.<\/p>\n<p style=\"text-align: justify;\">The Court said that since arbitration is an important alternative dispute resolution process which is to be encouraged because of high pendency of cases in courts and cost of litigation, any requirement as to deposit would certainly amount to a clog on this process. It also said:<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cit is easy to visualize that often a deposit of 10% of a huge claim would be even greater than court fees that may be charged for filing a suit in a civil court.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Striking down the said clause, the Court said that unless it is first found that the litigation that has been embarked upon is frivolous, exemplary costs or punitive damages do not follow.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cClearly, therefore, a \u201cdeposit-at-call\u201d of 10% of the amount claimed, which can amount to large sums of money, is obviously without any direct nexus to the filing of frivolous claims, as it applies to all claims (frivolous or otherwise) made at the very threshold.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">[ICOMM Tele Ltd. v. Punjab State Water Supply &amp; Sewerage Board, <a href=\"http:\/\/scconline.com\/DocumentLink\/E01ecmx8\"><b>2019 SCC OnLine SC 361<\/b><\/a>, decided on 11.03.2019]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court: In the case where a Notice Inviting Tender had a clause asking the parties invoking arbitration to furnish a \u201cdeposit-at-call\u201d <\/p>\n","protected":false},"author":121,"featured_media":154914,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[26333,3226,3174,34263,34262,9321],"class_list":["post-211775","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-adr","tag-arbitration","tag-contract","tag-deposit","tag-notice-inviting-tender","tag-tender"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium 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Intent? Supreme Court answers","author":"Apoorva","date":"March 30, 2024","format":false,"excerpt":"Supreme Court said that when there is a reference in the second contract to the terms and conditions of the first contract, the arbitration clause would not ipso facto be applicable to the second contract unless there is a specific mention\/reference thereto.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"arbitration clause","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/arbitration-clause.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/arbitration-clause.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/arbitration-clause.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/arbitration-clause.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":238372,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/11\/02\/ker-hc-any-condition-that-requires-petitioner-to-make-a-pre-deposit-of-any-amount-for-invoking-the-arbitration-would-fall-foul-of-the-law-declared-by-sc-petition-allowed\/","url_meta":{"origin":211775,"position":1},"title":"Ker HC | Any condition that requires petitioner to make a pre-deposit of any amount for invoking the arbitration would fall foul of the law declared by SC; Petition allowed","author":"Editor","date":"November 2, 2020","format":false,"excerpt":"Kerala High Court: A.K. Jayasankaran J., allowed the present petition, clarifying the scope and ambit of powers to be exercised by Courts under Section 11 of the Arbitration and Conciliation Act, 1996 and the effect of pre-condition imposed against invoking of an Arbitration Agreement. Brief Facts Facts of the case\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":330056,"url":"https:\/\/www.scconline.com\/blog\/post\/2024\/09\/04\/delhi-hc-appoints-sole-arbitrator-in-petition-against-national-highway-and-infrastructure-development-corporation-ltd\/","url_meta":{"origin":211775,"position":2},"title":"Delhi High Court appoints Sole Arbitrator in petition against the National Highway and Infrastructure Development Corporation Ltd.","author":"Editor","date":"September 4, 2024","format":false,"excerpt":"As per Clause 26.2 of the Agreement, the Chairman\/Managing Director of the Board of Directors of Contractors was supposed to do the conciliation and not the committee constituted by NHIDCL.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Delhi High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Delhi-High-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Delhi-High-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Delhi-High-Court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Delhi-High-Court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":293883,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/06\/06\/contract-in-name-of-president-not-immune-against-conflict-of-interest-of-parties-supreme-court\/","url_meta":{"origin":211775,"position":3},"title":"Whether contracts entered in name of President are immune from provisions protecting against conflict of interest of a party to contract? Supreme Court answers","author":"Apoorva","date":"June 6, 2023","format":false,"excerpt":"Supreme Court refused to give effect to the appointment of an officer of the Ministry of Law and Justice as an arbitrator.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"contract entered in name of president","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/contract-entered-in-name-of-president.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/contract-entered-in-name-of-president.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/contract-entered-in-name-of-president.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/contract-entered-in-name-of-president.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":267417,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/26\/it-is-only-when-a-purchase-order-is-placed-that-a-contract-would-be-entered-into-and-only-then-arbitration-clause-would-become-part-ther\/","url_meta":{"origin":211775,"position":4},"title":"Ori HC | It is only when a purchase order is placed that a \u2018contract\u2019 would be entered into and only then arbitration clause would become part thereof","author":"Editor","date":"May 26, 2022","format":false,"excerpt":"Orissa High Court: S. Muralidhar, CJ. dismissed the petition, declined the appointment of arbitrator and left it open to the petitioners to avail other remedies as may be available to them in accordance with law. The facts of the case are such that opposite parties 1 and 2 floated a\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":348366,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/20\/limitation-period-for-invoking-arbitration-begins-from-date-of-notice-rajasthan-high-court-appoints-sole-arbitrator-in-bsnl-contract-dispute-scc-times\/","url_meta":{"origin":211775,"position":5},"title":"\u2018Limitation period for invoking Arbitration begins from date of notice\u2019; Rajasthan High Court appoints Sole Arbitrator in BSNL Contract Dispute","author":"Ritu","date":"May 20, 2025","format":false,"excerpt":"\u201cThe agreement executed between the parties is not disputed. This fact is not in dispute that the contract of the petitioner has been terminated and the money has been forfeited by the respondents in the month of October, 2019.\u201d","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Rajasthan High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Rajasthan-High-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Rajasthan-High-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Rajasthan-High-Court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Rajasthan-High-Court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/211775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=211775"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/211775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/154914"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=211775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=211775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=211775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}