LexTHE STATE OF JHARKHAND versus THE INDIAN BUILDERS JAMSHEDPUR
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[2025] 12 S.C.R. 417 : 2025 INSC 1388 The State of Jharkhand v. The Indian Builders Jamshedpur (Civil Appeal No(s). 8261-8262 of 2012) 05 December 2025 [Pamidighantam Sri Narasimha and Atul S. Chandurkar, JJ.] Issue for Consideration Bharat Drilling & Foundation Treatment Pvt. Ltd. v. State of Jharkhand and Ors. (2009) 16 SCC 705, if requires to be referred to a larger bench for reconsideration and authoritative decision in order to obviate uncertainty and for clear declaration of law as regards applicability of prohibited claims in a contract. Headnotes† Arbitration and Conciliation Act, 1996 – Arbitral Tribunal allowed certain claims of the respondent-claimant but the Civil Court set aside the claims 3, 4 and 6 on the ground that they were specifically prohibited under the contract between the parties – Appeal filed by the respondent, allowed by the High Court on the ground that the issue arising for consideration is covered by decision of this Court in Bharat Drilling and thus, allowed the claims barred under the contract restoring the arbitratal award – Challenge to – Plea of the State that the decision in Bharat Drilling is being applied, regularly and wrongly, to interpret prohibitory claim clauses in all Government contracts and thus, there is a compelling necessity to clarify the position of law: Held: Bharat Drilling is not an authority for the proposition that an excepted clause or a prohibited claim in a contract applies only to the employer and not to the Arbitral Tribunal – High Court did not examine the contractual clauses and proceeded to dispose of the appeal under the impression that the issue is conclusively covered by the decision of this Court in Bharat Drilling – In Bharat Drilling, the Court has not examined the contractual clauses that have fallen for consideration herein – Contractual clauses that limit claims are founded on freedom to contract – They are agreements that crystalise informed choices of parties – Applicability of excepted or prohibitory clauses would primarily depend upon the agreement between the parties, which alone is the guiding principle for the 418 [2025] 12 S.C.R. Supreme Court Reports Arbitral Tribunal – The judgment in Bharat Drilling, relying on the judgment of this Court in Port of Calcutta, dealing with the principle of grant of interest pendente lite, is not appropriate – Further, the approach adopted in Bharat Drilling is not in tune with the principles laid down by this Court in the recent decisions of Cox and Kings Ltd. v. SAP India Private Ltd. CORE and In Re: Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 – In order to ensure clarity and consistency, the ratio of Bharat Drilling requires to be reconsidered – Bharat Drilling referred to a larger bench for reconsideration and authoritative decision – Registry to place the present judgment and order before the Hon’ble Chief Justice for appropriate orders for placing the matter before a larger bench of appropriate strength. [Paras 1, 8, 9, 11] Case Law Cited Bharat Drilling & Foundation Treatment Pvt. Ltd. v. State of Jharkhand and Ors. (2009) 16 SCC 705 – requires to be reconsidered. Board of Trustees For The Port of Calcutta v. Engineers-De- Space-Age [1995] Supp. 6 SCR 327 : (1996) 1 SCC 516; Central Organisation for Railway Electrification (CORE), 2024 INSC 857 : [2024] 11 SCR 2173 : 2024 SCC OnLine SC 3219; Pam Developments Private Limited v. State of West Bengal [2024] 8 SCR 615 : (2024) 10 SCC 715; Cox and Kings Ltd. v. SAP India Private Ltd. [2023] 15 SCR 621 : (2024) 4 SCC 1; Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 [2023] 15 SCR 1081 : 2023 SCC OnLine SC 1666 – referred to. List of Keywords Excepted clause; Prohibited claim in a contract; Prohibitory clauses; Claims barred under the contract; Bharat Drilling referred to a larger bench for reconsideration. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 8261-8262 of 2012 From the Judgment and Order dated 11.05.2012 of The High Court of Jharkhand at Ranchi in AA No. 17 of 2007 and AA No. 24 of 2007 [2025] 12 S.C.R. 419 The State of Jharkhand v. The Indian Builders Jamshedpur Appearances for Parties Advs. for the Appellant(s): Rajiv Shankar Dwivedi, Ms. Tulika Mukherjee, Beenu Sharma, Venkat Narayan. Adv. for the Respondent(s): Manoj C. Mishra. Judgment / O
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