Forgery Allegations Over Arbitration Agreement Strike at Root of Arbitral Jurisdiction: Supreme Court
Appointment of arbitrator is premature and legally impermissible where the very existence of the arbitration agreement is under serious dispute, Court holds
The Supreme Court rules that allegations of forgery and fabrication of an arbitration agreement go to the root of arbitral jurisdiction
A Bench comprising Justice P S Narasimha and Justice Alok Aradhe observed that a party can be bound by the arbitral process only if it is shown, even at a prima facie level, that the party had agreed to submit disputes to arbitration. Where the arbitration agreement itself is alleged to be forged or fabricated, the dispute ceases to be merely contractual and assumes a jurisdictional character.
The Court held that when serious allegations of fraud are raised concerning the arbitration agreement itself, such disputes fall within the realm of non arbitrability and require judicial examination before any reference to arbitration can be made.
Referring to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996, the Bench stated that when the existence of the arbitration agreement is in serious dispute and requires adjudication, the appointment of an arbitrator would be premature and legally impermissible.
The Court further held that the High Court was not justified in exercising supervisory jurisdiction under Article 227 of the Constitution to dislodge concurrent findings and direct reference of the dispute to arbitration, particularly when the very existence of the arbitration agreement was under serious doubt.
It reiterated that the supervisory jurisdiction under Article 227 is not an appellate jurisdiction in disguise and does not permit reappreciation of evidence.
The judgment arose from appeals filed by Rajia Begum and Barnali Mukherjee in connection with a partnership dispute. The controversy stemmed from an alleged Admission Deed through which one party claimed induction into the partnership firm and relied upon it as the foundation of an arbitration agreement. The execution of this document was categorically denied by the other party, who alleged that the document was forged and fabricated.
The Supreme Court noted that on the same factual foundation involving the same alleged arbitration agreement, the High Court had adopted inconsistent approaches. In one proceeding, it had directed the parties to resolve their disputes through arbitration, while in another proceeding, it had declined to appoint an arbitrator on the ground that the existence of the arbitration agreement itself was in serious doubt.
The central issue before the Court was whether, in such circumstances, disputes could be referred to arbitration under Section 8 of the Act and whether an arbitrator could be appointed under Section 11 when the existence of the arbitration agreement was itself disputed.
The Bench emphasised that a plea regarding the non existence of an arbitration clause or agreement amounts to a serious allegation of fraud and renders the subject matter non arbitrable at that stage.
In the facts of the case, the Court observed that the Admission Deed relied upon as the basis of induction into the firm and as the source of the arbitration agreement was under a grave cloud of suspicion. On a prima facie consideration of the material on record, the Bench found substantial and cogent material casting serious doubt on the genuineness of the document.
It was noted that by an order dated May 4, 2018, the High Court had itself recorded a prima facie finding that the existence of the Admission Deed was doubtful and had declined to grant interim protection. The Trial Court and the First Appellate Court had also concurrently held that the allegations of fraud were serious and that the original Admission Deed or a certified copy had not been produced as required under Section 8(2) of the Act.
The Court pointed out that the arbitration clause did not exist independently but was embedded in a document whose existence and authenticity were seriously disputed and required a detailed inquiry.
In view of these findings, the Supreme Court held that the High Court was correct in rejecting the application for appointment of an arbitrator under Section 11 of the Act. It reaffirmed that when the existence of the arbitration agreement itself is in serious dispute and requires adjudication, appointment of an arbitrator is legally impermissible.
Accordingly, the Court quashed and set aside the High Court’s order dated September 24, 2021, which had allowed the application under Section 8 of the Act. It also affirmed the High Court’s order dated March 11, 2021, rejecting the application under Section 11, holding that it warranted no interference.
Case Title: Rajia Begum vs Barnali Mukherjee
Bench: Justice P S Narasimha and Justice Alok Aradhe
Date of Judgment: February 2, 2026