Is a dispute non-arbitrable at the Section 11(6) stage of the Arbitration and Conciliation Act, 1996 where the arbitration clause is embedded in a document whose genuineness is seriously disputed?

Paragraph 8The question of what becomes of an arbitration clause, when the allegation of fraud is directed not at the underlying contract but at the arbitration clause itself, has received the considered attention of the Supreme Court, recently in Rajia Begum (supra). The parallel between that case and the one at hand is not merely persuasive, but is striking. In that case, the Supreme Court was confronted with an arbitration clause that did not exist as an independent covenant, but lay embedded within a document, whose very execution was under sustained and substantial challenge as forged and fabricated. The Supreme Court, tracing the arc of its own jurisprudence, reaffirmed that while a bare allegation of fraud will not be permitted to derail arbitration, a serious and well-founded allegation that strikes at the genesis of the arbitration agreement itself, renders the dispute non-arbitrable at the very threshold. It is apposite to refer to paragraph 23 of the said judgment hereunder: "23. The cumulative effect of the aforesaid circumstances lends considerable credence to contention of the appellant that the admission deed is not genuine. At the very least, the admission deed is under grave cloud of doubt, requiring a detailed and full-fledged inquiry. In the present case, arbitration clause does not exist independently but is embedded in the document whose existence is seriously disputed. Arbitration, it bears reiteration, 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." [emphasis supplied]

Paragraph 9It is trite that arbitration is the child of consent, and consent cannot be presumed into existence merely because a document bearing an arbitration clause has been produced. Where the very parentage of that document is disputed and it is alleged to be the offspring of forgery or fabrication, the dispute sheds its purely contractual character and assumes a jurisdictional dimension. It ceases to be a question the Arbitral Tribunal may resolve as a matter of course and becomes a question that strikes at the root of whether any Tribunal may be convened at all.

Paragraph 10Measured against the yardstick laid down by the Supreme Court in the aforesaid decision, the case at hand falls within the category the Supreme Court has described as non-arbitrable. Several circumstances, taken together, compel this conclusion:

Paragraph 11In the case at hand, the arbitration clause, in the language of Rajia Begum (supra), "does not exist independently but is embedded in the document whose existence is seriously disputed." The petitioner has not shown that the respondent ever lent its consent to arbitration. Without consent, howsoever elegantly the clause may be drafted, there is no arbitration agreement upon which this Court's jurisdiction under Section 11(6) of the Act can be made to stand.