Summary
Rajia Begum relied on a 2007 deed of admission and retirement, containing an arbitration clause, to claim a stake in a partnership firm; Barnali Mukherjee alleged the deed was forged. The Court held that where the very existence of the arbitration agreement is seriously disputed on allegations of forgery, the dispute is not arbitrable at that stage: it set aside the High Court's Article 227 order referring the civil suit to arbitration and upheld the refusal to appoint an arbitrator under Section 11.
Issues
- Whether disputes can be referred to arbitration under Section 8, or an arbitrator appointed under Section 11, when the existence of the arbitration agreement is seriously disputed on allegations of forgery and fabrication.
- Whether a prima facie finding in Section 9 proceedings that has attained finality is relevant when deciding applications under Sections 8 and 11.
- Whether the High Court could, under Article 227, set aside concurrent findings rejecting the Section 8 application.
Provisions considered
- Section 8, Arbitration and Conciliation Act, 1996The trial and first appellate courts had rightly rejected the application to refer the suit to arbitration, finding the fraud allegations serious and noting that the original deed or a certified copy, required by Section 8(2), had not been produced; the High Court's reference was set aside. (¶¶ 6, 11, 21, 24)
- Section 9, Arbitration and Conciliation Act, 1996The High Court's 2018 order in Section 9 proceedings, refusing interim relief because the existence of the deed was doubtful, attained finality after this Court dismissed the SLP; though prima facie, it was relevant to the later Section 8 and 11 applications. (¶¶ 5, 17, 18, 19)
- Section 11, Arbitration and Conciliation Act, 1996Appointment of an arbitrator was held premature and impermissible while the existence of the arbitration agreement itself was seriously in dispute and required adjudication. (¶¶ 8, 23, 24)
- Article 227, Constitution of IndiaSupervisory jurisdiction is not an appeal and does not permit reappreciation of evidence; the High Court was not justified in displacing concurrent findings and directing reference to arbitration. (¶¶ 7, 22)
Held
- Where fraud is alleged against the arbitration agreement itself, as distinct from the underlying contract, the dispute is generally treated as non-arbitrable, and the court examines the allegation as a jurisdictional question of whether the dispute has become non-arbitrable. (¶¶ 12, 13, 14, 15)
- Arbitration rests on consent: a party can be bound only if it is shown, at least prima facie, that it agreed to arbitrate. Where the arbitration clause is embedded in a document whose execution is alleged to be forged and there is cogent material casting serious doubt on its genuineness, the dispute strikes at the root of arbitral jurisdiction and is not arbitrable at that stage. (¶¶ 16, 20, 24)
- On the record, the deed was under grave doubt: its recitals that two partners retired in 2007 were inconsistent with the claimant's own admission that her husband continued as partner until 2010, the deed surfaced only in a 2016 legal notice, and contemporaneous bank documents of 2009-2010 showed her as guarantor rather than partner. (¶¶ 16, 20)
- Findings in Section 9 proceedings are prima facie, but once they attain finality they cannot be ignored in later proceedings on the same issue, absent changed circumstances. (¶¶ 18, 19)
- Under Article 227 the High Court cannot act as an appellate court or reappreciate evidence; it erred in overturning the concurrent findings of the trial and first appellate courts and referring the suit to arbitration. (¶¶ 21, 22)
- When the existence of the arbitration agreement is seriously disputed and needs adjudication, appointing an arbitrator under Section 11 is premature; the High Court rightly dismissed the Section 11 petition. (¶ 23)
Result
Appeal against the dismissal of the Section 11 petition (CA No. 674 of 2026) dismissed; appeal against the Article 227 order referring the suit to arbitration (CA No. 675 of 2026) allowed and that order set aside; no order as to costs.