Contractual Limits on Arbitral Power: The Supreme Court’s Reconsideration of Bharat Drilling

A three-judge Bench of the Supreme Court, in The State of Jharkhand v. The Indian Builders, Jamshedpur (2025), reopened the question of whether arbitral tribunals may award claims expressly barred by contract. In doing so, it referred Bharat Drilling & Foundation Treatment Pvt. Ltd. v. State of Jharkhand (2009) to a Larger Bench. This marks a significant development in Indian arbitration jurisprudence, with contractual consent being viewed as the primary source for arbitral jurisdiction. This blog examines the rationale behind Bharat Drilling, situates the referral within the Supreme Court’s evolving emphasis on party autonomy, and reflects on its implications for public procurement and fiscal governance.