Can an arbitration clause impose a pre-deposit condition so onerous as to curtail the right to sue in ordinary courts, given that Section 28 of the Indian Contract Act, 1872 voids any agreement that absolutely restrains a party from enforcing contractual rights by the usual proceedings in ordinary tribunals?

No. The right to sue inheres in every individual save where expressly barred by statute, and arbitration remains an exception to litigation in courts, not its substitute or alternative; an arbitration clause cannot impose pre-deposit conditions so onerous as to render the right to sue, at the very threshold, illusory or nugatory.

Arbitration and Conciliation Act, 1996 — Section 37(2), Section 16, Section 18 — Article 14 of the Constitution of India — pre-deposit clause — arbitrariness — pre-deposit condition — frivolous claims — direct nexus — Held: A stipulation mandating a pre-deposit of a percentage of the claim amount as a precondition to invoking arbitration, imposed before any determination of frivolousness, lacks a direct nexus with the object of curbing frivolous claims and stands on the reasoning in ICOMM Tele Ltd. as arbitrary — a view that stands in tension with the three-Judge Bench in S.K. Jain, which upheld a similarly structured deposit as a legitimate balancing factor. (¶21–22) judicial discipline — precedent — Bench of lower strength — reference to larger Bench — Held further: A Bench of lower strength that doubts the correctness of a judgment of a Bench of larger strength cannot itself disagree with that view; it must request that the matter be placed before a Bench of greater strength through the Chief Justice of India. (¶25–26, ¶30–31) right to sue — Section 28, Indian Contract Act, 1872 — arbitration as exception, not substitute — Held further: The right to sue inheres in every individual save where expressly barred by statute; arbitration remains a statutory exception to litigation in courts, not its substitute, and a pre-deposit condition cannot be so onerous as to render the right to sue illusory or nugatory at the threshold. (¶27–29) reference to larger Bench — questions formulated — no final decision on merits — Held further: Without deciding the correctness of S.K. Jain itself, the Court formulated six questions on the validity of arbitration pre-deposit clauses and directed the Registry to place the appeal before the Chief Justice of India for listing before a larger Bench. (¶30–33)

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