M/S SANTOSH ASSOCIATE PRIVATE LIMITED v. HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD
2026 INSC 872 · SLP (C) No. 31245 of 2025
Coram: Manmohan; Manoj Misra
A Bench of lower strength that doubts the correctness of a judgment delivered by a Bench of larger strength cannot disagree or dissent from that view; it must invite the attention of the Chief Justice of India and request that the matter be listed before a Bench of greater strength. This two-Judge Bench, doubting the correctness of the three-Judge Bench decision in S.K. Jain as a binding precedent, accordingly referred the matter rather than deciding it itself.
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)
In the Court's own words
Paragraph 25This Court, mindful of the bounds of judicial discipline and the enduring authority of precedents, is constrained to observe that ICOMM Tele Ltd. (supra), being a decision of a two Judge Bench, could not override the principle of law enunciated by the three Judge Bench in S.K. Jain (supra), even though this Court is prima facie in agreement with the reasoning advanced in ICOMM Tele Ltd. (supra).
Paragraph 26Subsequently, a three Judge Bench of this Court in Lombardi Engineering Ltd. (supra) expressly held in paragraph 61 that there is no conflict between S.K. Jain (supra) and ICOMM Tele Ltd. (supra). Consequently, it is difficult for this two Judge Bench combination to hold that S.K. Jain (supra) judgment is sub silientio or no longer good law. It bears reiteration that neither Lombardi Engineering Ltd. (supra) nor the Constitution Bench in CORE (supra) has held that S.K. Jain (supra) is not good law.
Paragraph 30Keeping in view the aforesaid judgments and this Court (sitting in a combination of two Judges) having doubts about the legality and validity of a three Judge Bench judgment in S.K. Jain (supra) as a binding precedent, is of the opinion that the matter calls for reference to a larger Bench.
Paragraph 31In Aligarh Muslim University vs. Naresh Agarwal & Ors., (2025) 6 SCC 1, a seven Judge Bench of this Court reiterated the legal precepts which apply to orders of reference and reiterated the position of law as expounded in Central Board of Dawoodi Bohra Community & Anr. vs. State of Maharashtra & Anr., (2005) 2 SCC 673 as under:- “40.1. Decisions of this Court rendered by a Bench of larger strength are binding on Benches of a less or equal strength; 40.2. If a Bench of lower strength is doubtful about the correctness of a judgment delivered by a Bench of larger strength, it cannot disagree or dissent from the view taken by the larger Bench. In case of doubt, it can invite the attention of the Chief Justice of India to its opinion and request the Chief Justice to list the matter before a Bench, the strength of which is greater than that which delivered the judgment which has been doubted; 40.3. The correctness of the view taken by any Bench can only be doubted by a Bench of equal strength. The matter will then be placed for hearing before a Bench of greater strength; 40.4. There are two exceptions to the rules discussed above: (i) The discretion of the Chief Justice is not bound by the rules. As the master of the roster, the Chief Justice may list any case before any Bench of any strength; (ii) Despite the rules discussed above, if a particular case has come up for hearing before a Bench of larger strength and that Bench is of the opinion that the judgment of the Bench of lower strength requires reconsideration or correction, or is otherwise doubtful of its correctness, it may dispense with the need for a reference in the terms described above or an order of the Chief Justice and hear the matter for reasons given by it.”
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