Rajia Begum v. Barnali Mukherjee

on the genuineness of the Admission Deed – Arbitration clause does not exist independently but is embedded in the document whose existence is seriously disputed – The dispute relating to the Admission Deed involves serious allegations going to the root of the arbitration agreement itself and is not amenable to arbitration at this stage – Arbitration is founded upon consent – A party may be bound by the arbitral process only if it is first shown, even at a prima facie level, that such a party had agreed to submit disputes to arbitration – Where the arbitration agreement itself is alleged to be forged or fabricated, the disputes cease to be merely contractual and strikes at the very root of arbitral jurisdiction – A controversy of this nature falls squarely within the category of disputes that are generally recognized as non-arbitrable – Order passed by the High Court allowing the respondent no.1’s application u/s.8 of the Act referring the dispute in Suit to be resolved through arbitration is unsustainable and is quashed and set aside – Order of the High Court rejecting the respondent no.1’s application u/s.11 of the Act for the appointment of arbitrator warrants no interference and is affirmed. [Paras 15, 16, 20, 24] Fraud – Arbitration and Conciliation Act, 1996 – Impact of fraud on arbitrability of a dispute: Held: Mere allegation of fraud simpliciter may not be a ground to nullify the arbitration agreement between the parties, but where the court finds that there are serious allegations of fraud which make a case of criminal offence or where the allegations of fraud are so complicated, which need to be decided on the basis of voluminous evidence, the court can sidetrack the arbitration agreement and proceed with the suit – Court can proceed with the suit in cases where the fraud is alleged against the arbitration provision itself or is of a such a nature which permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself which contains an arbitration clause or the validity of the arbitration clause itself. [Para 12] Constitution of India – Article 227 – Arbitration and Conciliation Act, 1996: Held: Both the Trial Court and the First Appellate Court had concurrently held that the allegations of fraud in the present case were serious and that the respondent no.1 had failed to Rajia Begum v.

Barnali Mukherjee 272 [2026] 2 S.C.R. produce the original Admission Deed or a certified copy thereof, as required u/s.8(2) of the Act – The aforesaid findings were not perfunctory, but were grounded in the material on record and in the statutory requirements – Supervisory jurisdiction of the High Court under Article 227 of the Constitution is not an appellate jurisdiction in disguise, and it does not permit reappreciation of evidence – High Court, while exercising jurisdiction under Article 227 of the Constitution, was not justified in dislodging the concurrent findings and directing reference of the dispute to arbitration, particularly when the very existence of the arbitration agreement was under serious doubt – Conversely, the High Court was correct in dismissing the respondent no.1’s application u/s.11 of the 1996 Act – When the existence of the arbitration agreement itself is in serious dispute and requires adjudication, appointment of an arbitrator would be premature and legally impermissible. [Paras 21-23] Arbitration and Conciliation Act, 1996 – s.9 – Appellant (in CA No.675 of 2026), respondent no.2 and respondent no.3, constituted a partnership firm – Respondent no.1 issued notice to the appellant and relied upon an Admission Deed as the source of her induction into the firm and as foundation of arbitration agreement – Appellant denied the execution of the Admission Deed and stated that Admission Deed is a forged and fabricated document – Respondent no.1 applied to the Trial Court u/s.9, 1996 Act, allowed by Trial Court – Appeal filed by the appellant, allowed by High Court – Appeal filed by respondent no.1, dismissed by Supreme Court and the order of the High Court rejecting the application of the respondent no.1 u/s.9 of the Act, attained finality – Appellant filed civil suit inter alia seeking a declaration that the ‘Admission Deed’ is a forged document; respondent no.1 filed application u/s.8 to refer the suit to arbitration – Application dismissed by Trial Court – Appeal thereagainst also dismissed – Revision filed by respondent no.1 – Allowed by High Court, orders of the Trial Court and First Appellate Court set aside, and the dispute in Suit was referred to be resolved through arbitration – Parallelly, respondent no.1 had filed petition u/s.11 for the appointment of an arbitrator – Dismissed by High Court: Held: Findings in s.9 proceedings are undoubtedly prima facie in nature, such findings, when they attain finality, cannot be ignored Supreme Court Reports [2026] 2 S.C.R. 273 in subsequent proceedings founded on the very same issue – The prima facie satisfaction recorded by the High Court regarding the doubtful existence of the arbitration agreement was, therefore, a relevant consideration while examining applications u/ss.8 and 11 of the Act. [Para 19] Case Law Cited A. Ayyasamy v.

A Paramasivam & Others, 2016 INSC 948 : [2016] 11 SCR 521; Rashid Raza v. Sadaf Akhtar, 2019 INSC 1002 : [2019] 12 SCR 460; Vidya Drolia & Ors. v. Durga Trading Corporation, 2020 INSC 697 : [2020] 11 SCR 1001; N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. [2021] 4 SCR 933 : (2021) 4 SCC 379; Avitel Post Studioz Ltd. & Ors. v. HSBC PI Holdings (Mauritius) Ltd., 2024 INSC 242 : [2024] 3 SCR 971; Sushma Shivkumar Daga & Anr. v. Madhurkumar Ramkrishnaji Bajaj & Ors. 2023 INSC 1081 : [2023] 15 SCR 909; K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr., 2025 INSC 687 : [2025] 5 SCR 1199; ITI Ltd. v. Siemens Public Communications Network Ltd., 2002 INSC 282 : [2002] 3 SCR 1122; Nirma Ltd. v. Lurgi Lentjes Energietechnik GMBH, 2002 INSC 23 : [2002] 3 SCR 911; Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd. & Anr., 2019 INSC 1299 : [2019] 17 SCR 995; Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd.

2021 INSC 9 : [2021] 1 SCR 1; SBP & Co. v. Patel Engineering Ltd. and Anr., 2005 INSC 526 : [2005] Supp. 4 SCR 688; Managing Director Bihar State Food and Civil Supply Corporation Limited and Another v. Sanjay Kumar, 2025 INSC 933 : [2025] 8 SCR 1551 – referred to. Arbitration and Conciliation Act, 1996; Constitution of India. List of Acts List of Keywords Allegation of fraud is made with regard to arbitration agreement; Arbitrability in cases involving allegations of serious fraud; Impact of fraud on arbitrability of a dispute; Existence of arbitration agreement itself is seriously disputed on the allegations of forgery and fabrication; Dispute non-arbitrable; Admission Deed; Admission Deed foundation of arbitration agreement; Admission Deed not genuine; Serious doubt on the genuineness of the Rajia Begum v. Barnali Mukherjee 274 [2026] 2 S.C.R. Admission Deed; Existence of the arbitration agreement under serious doubt; Doubtful existence of the arbitration agreement; Existence of the arbitration agreement itself is in serious dispute; Dispute relating to Admission Deed involves serious allegations; Allegations going to the root of the arbitration agreement itself; Allegations of forgery and fabrication; Not amenable to arbitration; Supervisory jurisdiction of the High Court under Article 227 of the Constitution.

Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 674 of 2026 From the Judgment and Order dated 11.03.2021 of the High Court at Calcutta in AP No. 350 of 2018 With Civil Appeal No. 675 of 2026 Appearances for Parties Advs. for the Appellant(s): Siddhartha Dave, Shailesh Madiyal, Sr. Advs., Aakash Sirohi, Indra Lal, Subhojit Seal, Sunando Raha, Sk Sayan Uddin, Ms. Manishitha Bhattacharjee, Aviral Saxena. Advs. for the Respondent(s): Siddhartha Dave, Shailesh Madiyal, Sr. Advs., Subhojit Seal, Sunando Raha, Aviral Saxena, Aakash Sirohi, Indra Lal. Judgment / Order of the Supreme Court Judgment Alok Aradhe, J. Leave granted.

The present appeals arise from a partnership dispute in which appellant claims entry into the firm by virtue of a document whose execution is stoutly denied and is alleged to be forged. The High Court on the same factual foundation involving the same alleged arbitration agreement, has in one proceeding directed the parties to resolve their disputes through arbitration and whereas in another Supreme Court Reports [2026] 2 S.C.R. 275 proceeding, declined to appoint an arbitrator on the ground, that the existence of an arbitration agreement is itself in serious doubt. A common issue namely, whether the disputes can be referred to arbitration or an arbitrator can be appointed when the very existence of arbitration agreement itself is seriously disputed on the allegations of forgery and fabrication, arises for consideration in these appeals. (i) NARRATION OF FACTS

The appellant, Barnali Mukherjee, in the appeal @ SLP (C) No. 20262 of 2021 (appellant), Aftabuddin (respondent no.2) and Raihan Ikbal (respondent no.3), constituted a partnership firm styled as ‘M/s RDDHI Gold’ (firm) by virtue of partnership deed dated 01.12.2005. Rajia Begum (respondent no.1) claims that the respondent nos.2 and 3 executed a power of attorney on 17.04.2007 empowering her to manage the affairs of the firm on their behalf pursuant to which she executed a deed of admission and retirement (Admission Deed) by which respondent nos.2 and 3 retired from the firm.

The appellant contends that the business of the reconstituted partnership firm was absorbed and taken over by a company named ‘RDDHI Gold Pvt. Ltd.’ (company) pursuant to the absorption deed dated 27.02.2011. On 02.10.2016, the respondent no.1 issued a notice to the appellant asserting that, on the basis of the aforesaid Admission Deed dated 17.04.2007, she had acquired an interest to the extent of 50.33% in the erstwhile partnership firm and that respondent nos.2 and 3 had retired as partners in 2007 itself. The appellant by reply dated 21.11.2016, categorically denied the execution of the Admission Deed by her or by the other respondents and further denied the very induction of the respondent no.1 in the firm as a partner at any point in time. Thus, the appellant took a stand that the Admission Deed is a forged and fabricated document, concocted by the respondent no.1. (ii) APLICATION UNDER SECTION 9 OF THE ACT

The respondent no.1 applied to the Trial Court under Section 9 of the Arbitration and Conciliation Act, 1996 (Act), for preservation of the subject matter of dispute and for appointment of receiver for the Company which came to be allowed by the Trial Court. The High Rajia Begum v. Barnali Mukherjee 276 [2026] 2 S.C.R. Court, by an order dated 04.05.2018, allowed the appeal filed by the appellant inter alia finding that the very existence/execution of the ‘Admission Deed’ is in dispute and, in view of the availability of cogent material which would indicate the non-existence of the Admission Deed, it would not be prudent on the part of the Court exercising jurisdiction under Section 9 of the Act, to accord interim protection to the respondent no.1 who has failed to demonstrate the existence of an arbitration agreement in a prima facie manner. Aggrieved by the order of the High Court dated 04.05.2018, the respondent no.1 preferred an Appeal to this Court which came to be dismissed. Thus, the said order of the High Court dated 04.05.2018, rejecting the application of the respondent no.1 under Section 9 of the Act, attained finality between the parties. (iii) APPLICATION UNDER SECTION 8 OF THE ACT

The appellant, on 16.05.2018, filed a civil suit bearing No.71/2018 before the competent civil court seeking the relief of declaration and injunction against the respondent no.1 inter alia seeking a declaration that the ‘Admission Deed’ is a forged document. The respondent no.1, in the said suit, preferred an application to the Trial Court under Section 8 of the Act, to refer the suit to arbitration, owing to the existence of an arbitration agreement between the parties in respect of disputes concerning the ‘Admission Deed’. The said application preferred by the respondent no.1, under Section 8 of the Act, came to be dismissed by the Trial Court vide order dated 06.09.2018 which inter alia held that the allegations of fraud relating to the validity of the impugned Admission Deed were complicated in nature and that the respondent no.1 had failed to produce either the original Admission Deed or a certified copy thereof.

The respondent no.1 preferred an appeal against the said Order dated 06.09.2018, before the Additional District Judge, who also dismissed the appeal in terms of the order dated 25.09.2020. Being aggrieved, the respondent no.1 further preferred a revision under Article 227 of the Constitution to the High Court, which by order dated 24.09.2021 set aside the orders of the Trial Court and the First Appellate Court, and allowed the revision filed by the respondent no.1 by referring the dispute in Suit No.71/2018 to be resolved through arbitration. Supreme Court Reports [2026] 2 S.C.R. 277 (iv) APPLICATION UNDER SECTION 11 OF THE ACT

Parallelly, when the aforesaid proceedings under Sections 8 and 9 were ongoing, the respondent no.1 had also filed a petition under Section 11 of the Act before the High Court, seeking appointment of an arbitrator for resolving the disputes between the parties which had arisen in terms of the arbitration clause contained in the ‘Admission Deed’. The High Court dismissed the petition filed by the respondent No.1, under Section 11 of the Act, by order dated 11.03.2021, inter alia holding that it would not be expedient to appoint an arbitrator till such time that the issue regarding the existence of an arbitration agreement between the parties has been answered finally. In the appeal @ SLP (c) No.6013 of 2021, the respondent no.1 has challenged the judgment and order dated 11.03.2021 by which her application under Section 11 of the Act has been dismissed. In the appeal @ SLP (C) No.20262 of 2021, the appellant has assailed the judgment dated 24.09.2021 by which petition filed by the respondent no.1 under Article 227 was allowed and the title suit filed by the appellant was referred to arbitration. (v) SUBMISSIONS

The learned counsel for respondent no.1 submitted that the observations made by the High Court while deciding an appeal, arising out of an order under Section 9 of the Act, are only for the purposes of deciding the appeal and it has been clarified that the views expressed in the order are tentative and should not prejudice the respondent no.1 in any other proceeding. Alternatively, it is contended that prima facie observation on the existence of arbitration agreement made in an appeal, arising out of an order under Section 9 of the Act, cannot affect the jurisdiction of the Court under Section 11 of the Act. It is urged that the dispute pertains to allegations of fraud challenging the arbitration agreement itself, is arbitrable and well within the jurisdiction of the arbitrator. It is submitted that the High Court, in exercise of supervisory powers under Article 227, has rightly set aside the orders passed by the Trial Court and the Appellate Court. It is, therefore, contended that the dispute be referred to the arbitration by appointing an arbitrator and the order dated 24.09.2021 passed by the High Court under Article 227 be Rajia Begum v. Barnali Mukherjee 278 [2026] 2 S.C.R. maintained. In support of the aforesaid submissions, reliance has been placed on the decisions of this Court1.

On the other hand, learned senior counsel for the appellant submitted that the Admission Deed is forged and fabricated document and there is no privity of contract between the parties. It is submitted that the High Court in its order dated 04.05.2018 has categorically recorded a finding that the Admission Deed is not a genuine document. It is submitted that the material on record does not indicate that the respondent no.1 has acted as a partner since 2007 till date. It is contended that the Admission Deed is a manufactured and a forged document. It is argued that the High Court erred in interfering with the orders passed by the Trial Court and the Appellate Court in exercise of powers under Article 227 of the Constitution of India. In support of the aforesaid submissions, reliance has been placed on the decisions of this Court2. (vi) ISSUE

We have bestowed our consideration upon rival submissions and have carefully traversed the record placed before us. The central question which emerges for our determination is whether in the factual matrix of the case, the disputes between the parties could have been referred to the arbitration under Section 8 of the Act and correspondingly whether the High Court was justified in declining the appointment of an arbitrator under Section 11 of the Act. (vii) IMPACT OF FRAUD ON ARBITRABILITY

The legal position with regard to the impact of fraud on arbitrability of a dispute under the Act is well delineated by decisions of this Court. A two-Judge Bench of this Court3 held that mere allegation 1 2 3 A. Ayyasamy v. A Paramasivam & Others (2016) 10 SCC 386; Rashid Raza v. Sadaf Akhtar (2019) 8 SCC 710; Vidya Drolia & Ors. v. Durga Trading Corporation (2021) 2 SCC 1; N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. (2021) 4 SCC 379; Avitel Post Studioz Ltd. & Ors. v. HSBC PI Holdings (Mauritius) Ltd. (2021) 4 SCC 713; Sushma Shivkumar Daga & Anr. v. Madhurkumar Ramkrishnaji Bajaj & Ors. (2024) 12 SCC 253; K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr. (2025) 8 SCC 299; ITI Ltd. v. Siemens Public Communications Network Ltd. (2002) 5 SCC 510; Nirma Ltd. v. Lurgi Lentjes Energietechnik GMBH (2002) 5 SCC 520; Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd. & Anr. (2020) 15 SCC 706 and Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. (2022) 1 SCC 75. A. Ayyasamy (supra); Vidya Drolia & Ors. (supra); SBP & Co. v. Patel Engineering Ltd. and Anr. (2005) 8 SCC 618 and Deep Industries Ltd. (supra). A. AYYASAMY v. A. PARAMASIVAM AND OTHERS (supra) Supreme Court Reports [2026] 2 S.C.R. 279 of fraud simpliciter may not be a ground to nullify the arbitration agreement between the parties, but where the court finds that there are serious allegations of fraud which make a case of criminal offence or where the allegations of fraud are so complicated, which need to be decided on the basis of voluminous evidence, the court can sidetrack the arbitration agreement and proceed with the suit. It has further been held that the court can proceed with the suit in cases where the fraud is alleged against the arbitration provision itself or is of a such a nature which permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself which contains an arbitration clause or the validity of the arbitration clause itself.

The aforesaid principle was referred to with approval, by another two-Judge Bench of this Court4 and two working tests were laid down for determining serious allegations of fraud, which would render the subject matter of an agreement non-arbitrable namely, (1) does this plea permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (2) whether the allegations of fraud, touch upon the internal affairs of the parties, inter se having no implication in the public domain. It was further held that the first test is satisfied only when it can be said that the arbitration clause or agreement itself cannot be said to exist in a clear case in which the court finds that the party against whom breach is alleged cannot be said to have entered into the agreement relating to arbitration at all. Thus, in a case where plea is taken with regard to non-existence of an arbitration clause or agreement, the same would amount to serious allegation of fraud and would render the subject matter of an agreement non-arbitrable.

Recently, a two-Judge Bench of this Court in Managing Director Bihar State Food and Civil Supply Corporation Limited5 (to which one of us P.S. Narasimha, J. was a party) took note of the previous decisions of this Court6 and restated the principles governing 4 5 6 AVITEL POST STUDIOZ LIMITED AND OTHERS v. HSBC PI HOLDINGS (MAURITIUS) LTD. (supra) Managing Director Bihar State Food and Civil Supply Corporation Limited and Another v. Sanjay Kumar, 2025 SCC OnLine SC 1604