Serious Allegation of Forgery Going to Arbitration Agreement Itself Renders Dispute Non-Arbitrable: Supreme Court Quashes Section 8 Reference
Case Name: Rajia Begum v. Barnali Mukherjee; with Barnali Mukherjee v. Rajia Begum & Ors.
Citation: 2026 INSC 106
Date of Judgment/Order: 02 February 2026
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe
Held: The Supreme Court held that when serious allegations of forgery are made against the very document containing the arbitration clause, and the existence of the arbitration agreement itself is in grave doubt, the dispute falls within the realm of non-arbitrability. Arbitration is founded on consent, and where the arbitration clause is embedded in a document alleged to be forged and fabricated, courts must first determine the validity of such document before referring parties to arbitration under Section 8 or appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Summary: The dispute arose from an alleged Admission Deed dated 17.04.2007 by which Rajia Begum claimed induction into a partnership firm and relied upon an arbitration clause contained therein. Barnali Mukherjee denied execution of the deed and alleged it to be forged and fabricated. In proceedings under Section 9 of the Act, the High Court had earlier recorded a prima facie finding doubting the genuineness of the Admission Deed, and that finding had attained finality. Subsequently, conflicting orders were passed by the High Court—referring the suit to arbitration under Section 8 in one proceeding while declining to appoint an arbitrator under Section 11 in another. The Supreme Court examined the settled law on arbitrability of fraud as laid down in A. Ayyasamy, Avitel Post Studioz, Vidya Drolia and Managing Director, Bihar State Food and Civil Supply Corporation Ltd., and reiterated the two tests governing serious allegations of fraud. The Court found that the arbitration clause did not exist independently but was embedded in a document whose execution was seriously disputed, was unsupported by contemporaneous records, and had surfaced only after several years. Since the allegation went to the very existence of the arbitration agreement, the dispute was not fit for reference to arbitration at this stage.
Decision: The Supreme Court dismissed the appeal challenging the High Court’s refusal to appoint an arbitrator under Section 11, allowed the appeal against the High Court’s order referring the suit to arbitration under Section 8, quashed the order dated 24.09.2021 directing arbitration, affirmed the order dated 11.03.2021 rejecting appointment of arbitrator, and held that the civil suit shall proceed in accordance with law. There was no order as to costs.