The grounds of fraud and forgery alleged in the plaint do not make out any case which would prevent the matter from being decided by an Arbitral Tribunal. The Trial Court and the Appellate Court acted without jurisdiction in refusing to refer the matter to arbitration under Section 8 of the 1996 Act.

JUDGMENT :

Sabyasachi Bhattacharyya, J

1. The present challenge under Article 227 of the Constitution of India has been preferred against an order passed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”), by the Appellate Court, affirming an order passed by the Trial Court rejecting the application of the defendant no.1/petitioner under Section 8 of, read with Section 5, of the 1996 Act.

2. Both the courts below proceeded on the premise that a serious allegation of fraud was involved in the adjudication of the suit, which required detailed evidence and ought to be heard by the Civil Court itself, not by an arbitrator.

3. The Trial Court also held that it can be prima facie said that the impugned deed dated April 17, 2007 may not have been acted upon or have not come into existence at all. Since the existence of the deed was found to be questionable, the Trial Court held that further adjudication of the matter, taking into consideration cogent evidence, was required, which was to be done by the Civil Court.

4. Learned counsel appearing for the petitioner contends that both the courts below acted without jurisdiction in refusing to refer the matter to arbitration within the purview of Section 8 of the 1996 Act. It is submitted that the petitioner had previously filed an application under Section 11 of the 1996 Act for appointment of arbitrator, before this court, which was dismissed by an order dated March 11, 2021 upon recording that the issue of existence of arbitration agreement was pending before this court in a revisional application, giving liberty to the petitioner to file afresh subject to the revisional court returning any finding on the existence of the arbitration agreement. The said order was passed during pendency of the instant revisional application.

5. Learned counsel for the petitioner contends that both the courts below misinterpreted the principles laid down by the Supreme Court in A. Ayyasamy Vs. A. Paramasivam and others, reported at (2016) 10 SCC 386, without examining the allegations of fraud as pleaded in paragraph no. 25 of the plaint. There was no consideration of the seriousness of the allegations of fraud and the courts below, it is argued, proceeded on extraneous facts irrelevant for the consideration of the issue of arbitrability qua fraud.

6. Learned counsel relies on Rashid Raza Vs. Sadaf Akhtar, reported at (2019) 8 SCC 710 which, referring to A. Ayyasamy (supra), reiterated that there is a distinction between serious allegation of forgery/fabrication and a simple allegation of fraud. In particular, paragraph 25 of A. Ayyasamy (supra) is relied on by the petitioner.

7. Next citing Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and others, reported at (2011) 5 SCC 532, learned counsel submits that paragraph 36 of the said report cites instances of non-arbitrable disputes which are to be expressly reserved for adjudication by public fora. The same principle was reiterated by the Supreme Court, it is contended, in the three-judge Bench decision of the Supreme Court in Vidya Drolia and others Vs. Durga Trading Corporation, reported at (2021) 2 SCC 1.

8. In Vidya Drolia (supra), the Supreme Court laid down and crystallised the legal principles for determining non-arbitrability. It was clarified that the Arbitration Act does not make any specific provision for excluding any category of dispute, terming them as non-arbitrable, but there are pronouncements which hold that fraud is one of such category where the disputes would be considered non-arbitrable. It was, however, reiterated that mere allegation of fraud is not sufficient but should be of such a nature that makes it a virtual case of criminal offence. In the concurring judgment of Justice Chandrachud, it was specifically held that the allegation of fraud can be made the subject of arbitration and the fact that the allegation of criminal wrongdoing or a statutory violation would not detrac