In Brief
The State of Jharkhand challenged a High Court decision that restored an arbitral award granting claims for idle labour, machinery, and business loss—despite explicit contractual clauses (4.20.2 and 4.20.4) prohibiting such claims. The High Court had relied mechanically on Bharat Drilling without examining the specific contract terms. The Supreme Court held that whether prohibitory clauses bind the Arbitral Tribunal depends primarily on the parties' contractual agreement and party autonomy, not on a blanket principle. Bharat Drilling, which concerned statutory interest, does not authoritatively establish that such clauses apply only to the employer. The Court referred the matter to a larger bench for authoritative reconsideration of how excepted or prohibited claim clauses in government contracts should be interpreted.
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