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2018 Supreme(Del) 246
IN THE HIGH COURT OF DELHI AT NEW DELHI
GITA MITTAL, C. HARI SHANKAR, JJ.
Sulekh Agarwal – Appellant
Versus
M/s Shiv Astha Construction Company Ltd. – Respondent
FAO (OS) No. 110 of 2017
Decided On : 05-04-2018
For the Appellant : Mr. Vishwendra Verma.
For the Respondents: Mr. Sameer Rohatgi, Mr. Namit Suri, Mr. Akshit Pradhan.
Mere allegations of fraud or fabrication should not ordinarily lead to the court refusing to consider the existing arbitration clause.
Headnote:
Arbitration - Section 9 of the Arbitration and Conciliation Act - 11, 9 - The court declined relief under Section 9 of the Arbitration and Conciliation Act, 1996. The court examined the authenticity of the documents and the existence of a valid arbitration agreement. The court held that mere allegations of fraud or fabrication should not ordinarily lead to the court refusing to consider the existing arbitration clause. The court found that the pendency of the matter could be duly explained in accordance with the law. The impugned order was upheld, and the appeal was dismissed.
Fact of the Case:
The appellant filed petitions under Section 11 and Section 9 of the Arbitration and Conciliation Act, seeking relief, which were rejected by the Single Judge. The appellant appealed the decision, arguing that the FSL reports regarding the authenticity of the documents were doubtful and that a definitive opinion on the fabrication or forgery containing the arbitration clause needed to be considered.
Finding of the Court:
The court declined relief under Section 9 of the Act, upholding the Single Judge's decision. The court found that the pendency of the matter could be duly explained in accordance with the law.
Issues: The authenticity of the documents, existence of a valid arbitration agreement, and the pendency of the matter.
Ratio Decidendi: Mere allegations of fraud or fabrication should not ordinarily lead to the court refusing to consider the existing arbitration clause. The pendency of the matter can be duly explained in accordance with the law.
Final Decision: The appeal was found devoid of merit and dismissed.
GITA MITTAL, J.
1. Four petitions filed under Section 11 of the Arbitration and Conciliation Act being Arbitration Petition Nos. 476, 209, 210, 211/2015 as well as four petitions under Section 9 of the Arbitration and Conciliation Act being OMP Nos. 352, 353, 354, 355/2012, separately filed by the appellant with three other persons stand rejected by a common order dated 16th January, 2017 passed by the learned Single Judge.
2. So far as the present appeal is concerned, it assails the aforesaid common order dated 16th January, 2017 so far as OMP No. 355/2012, being a petition under Section 9 of the Arbitration and Conciliation Act, is concerned.
3. Challenge to this very order dated 16th January, 2017, so far as it decided OMP Nos. 352, 353, 354/2012, was laid by way of FAO (OS) Nos. 104, 105, 106/2017. These appeals were listed and heard by a Coordinate Bench of this court on the 12th of April, 2017 and disposed of on the same date. For expediency, we extract the order dated 12th of April, 2017 on these appeals hereunder:
CM No. 13397/2017 in FAO (OS) No. 104/2017
CM No. 13400/2017 in FAO (OS) No. 105/2017
CM No. 13414/2017 in FAO (OS) No. 106/2017
Exemption is allowed subject to just exceptions.
4. The appellant is aggrieved by the judgment of learned Single Judge who declined to grant relief under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "Act"). On 16.01.2017 a common order was made rejecting the application under Section 9 of Act and the appellant’s request for an order under Section 11 of Act.
5. The court had taken note of its previous directions of 23.4.2015 as well as subsequent orders, especially of the order dated 11.08.2016. The Court had required the appellant to furnish several details such as the payment of tax, whether the sale consideration allegedly paid by the petitioner was in cash, whether such financial transactions were disclosed, statements etc. After noticing the response as well as the contentions urged on behalf of the respondent as to the authenticity or genuineness of the documents, the Court proceeded to examine the affidavit in response to its order dated 23.04.2015. The learned Single Judge observed as follows:
“12. Interestingly, the Petitioner does not mention when each of the persons gave the said sum. The Petitioner does not mention whether he issued them any receipt for such payment. The Court is prima-facie not satisfied with the reply given by the Petitioner as regards the source of his income. Although he has enclosed with the affidavit his bank account statements and claims that he has been filing income tax returns on regular basis, the Court is of the view that a fresh detailed investigation is required in this regard.
13. The question that arises is whether the Court should appoint an Arbitrator and refer all the questions to the Arbitrator as prayed for by the Petitioner or should the Court decline it given the nature of dispute that has arisen and as mentioned in its order dated 23rd April, 2015. In the latter order the Court has already extracted the passage from the decision of the Supreme Court in Bharat Rasiklal Ashra vs. Gautam Rasiklal Ashra, (2012) 2 SCC 144 where it was stated that the mere fact that the allegations of fraud, forgery, fabrication are likely to involve recording of evidence or involve some delay in disposal “are not grounds for refusing to consider the existence of a valid arbitration agreement.”
14. However, there are limits to the extent to which a Court can undertake such exercise in a petition under Section 11 of the Act. Given that arbitration itself is supposed to be an efficacious remedy, if even at the stage of appointment of arbitrator, the Court is going to have to take evidence and satisfy itself that the agreements in question are not forged or fabricated as alleged by the Respondent, the exercise would be complicated and time consuming thus defeating the very object of the Act.
15. In the present case, the arb
