In a landmark judgment, the Supreme Court of India has strongly criticized the practice of drafting ambiguous arbitration clauses, calling it a "criminal wastage of judicial time." The apex court emphasized that such vaguely worded clauses, often inserted deliberately, lead to unnecessary legal disputes and burden the judicial system.

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A bench comprising Justices Surya Kant and N. Kotiswar Singh delivered this significant verdict, urging judicial forums across the country to take strict action against such "malafide cases." The court highlighted that these poorly drafted clauses have been allowed to persist for too long, wasting valuable judicial resources.

"This Willful Wastage of Judicial Time is Deplorable": Supreme Court

The Supreme Court highlighted India's progress in arbitration law but expressed concern over the persistent problem of poorly drafted clauses. The court stated:

"This willful and wanton wastage of judicial time is a practice that is highly deplorable. It is high time that arbitration clauses are phrased with precision and not couched in ambiguous phraseology."

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The bench further advised the legal fraternity to avoid such malpractices, warning that personal liability may soon be imposed for such actions.

The Supreme Court did not stop at just criticism. It called upon judicial forums to use their suo motu powers—initiating action on their own without a formal complaint—to identify and reject cases involving "shoddily drafted arbitration clauses" at the initial stage.

The court added:

"Such cases which prima facie disclose malafide [...] into the very agreement must be thrown out of the Court as they have been indulged for far too long. We urge the Courts to invoke their suo motu powers in appropriate cases."

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The bench warned that in the future, those responsible for deliberately drafting misleading clauses could face personal liability, including severe sanctions and punishments.

Appearance: Senior Advocate Sanjeev Sen, AoR Umesh Kumar Khaitan (for appellant-South MCD); Senior Advocate Ritin Rai, AoRs Sandeep Devashish Das and Farrukh Rasheed (for respondent)

Case Title: South Delhi Municipal Corporation v. SMS Limited, SLP (C) No. 16913/2017