Bombay High Court
I A And I C Private Limited And Ors vs Atul And Arkade Realty on 27 July, 2026
CNR No : HCBM020028462025
2026:BHC-OS:16683
carbp(l) 2846-2025.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 2846 OF 2025
I.A. & I.C. Private Limited and Ors. ... Petitioners.
Versus
Atul & Arkade Realty ... Respondent.
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Mr. Sharan Jagtiani, Senior Advocate a/w. Mr. Karl Tamboly, Mr. Ketan
Gaur, Neil Chatterjee, Mr. Ankit Pal and Hridhay Khurana i/by Trilegal
for the Petitioners.
Mr. Rohaan Cama a/w. Mr. Pranav Dessai, Mr. Pheroze Mehta, Ms.
Bhakti Mehta, Ms. Shubadha Khandekar i/by Wadia Ghandy & Co. for
Respondents.
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Coram : Sharmila U. Deshmukh, J.
Reserved on : May 07, 2026
Pronounced on : July 27, 2026
ORDER :
1. The present Petition has been filed under Section 34 of the
Arbitration and Conciliation Act, 1996 (for short, “Arbitration
Act“), challenging the impugned Award dated 21 st October, 2024
passed by the Learned Sole Arbitrator.
2. A preliminary objection of maintainability has been raised, as
according to Respondent, the impugned order is passed under
Section 16 of Arbitration Act, which is required to be challenged
alongwith the final award under Section 34 of Arbitration Act. The
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rival contention is that the impugned Award is an interim Award
under Section 31(6) of the Arbitration Act, as against which,
petition under Section 34 of the Arbitration Act would be
maintainable.
3. For the purpose of deciding the preliminary objection, the
facts necessary to be exposited, as borne out of the Petition, are
that in the year 2004, the Petitioner No.3 i.e. JIK Industries Limited
was declared as a sick company by Board for Industrial and Financial
Reconstruction. Seeking to fulfill its debt obligations, Petitioner
No.3 negotiated for one time settlement with its lenders which
required payments to be made in excess of INR 23 Crores and
allotment of equity shares of Petitioner No.3. The directors of
Petitioner No.3 entered into negotiations with one Mr. Atul Patel,
who proposed to provide funding of approximately INR 23 Crore to
buy-out the debt of Petitioner No.3. The case of Petitioners is that
there is no conclusive agreement between the parties as to the
arrangement by which INR 23 Crores rupees was to be
adjusted/repaid and there was no agreement for joint development
as claimed under the purported joint venture agreement dated
28th March, 2007, which was not executed by the Petitioners.
4. A sum of INR 23 Crores was remitted by Mr. Atul Patel
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between the period from 20th March, 2007 and 3rd May, 2007. In the
year 2012, the Respondent herein made attempts to take illegal
and forcible possession of the subject property. The Petitioners
filed a complaint with the Commissioner of Police, Thane and in
response to the same, the Petitioners learnt about purported joint
venture agreement, which according to the Petitioners was forged
by Atul Patel/Respondent. The Respondent also filed complaint
with MIDC Police Station, Andheri and the criminal complaints
against each other are pending.
5. The Respondent invoked the arbitration agreement under
the purported joint venture agreement vide notice dated 4 th
September, 2012 nominating an Arbitrator and calling upon the
Petitioner to nominate its Arbitrator within period of 30 days. On
the very next date, the Respondent filed Petition under Section 9
of the Arbitration Act seeking interim relief premised on existence
and validity of purported joint venture agreement and associated
documents i.e. power of attorney dated 28 th March, 2007, deed of
indemnity dated 28th March, 2007, deed of confirmation dated 3 rd
May, 2007 and the receipt dated 3rd May, 2007, which were denied
by the Petitioners as forged and fabricated documents. On 3 rd
October, 2012, the Petitioner responded to the notice invoking
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arbitration reiterating their stand of the joint venture agreement
being forged and fabricated.
6. On 11th February, 2013, the Respondent filed Arbitration
Petition No.72 of 2013 under Section 11 of the Arbitration Act for
appointment of Arbitrator. In view of the defence that the joint
venture agreement was unstamped and forged and fabricated
document, this Court vide order dated 27th March, 2014, directed
the parties to lead evidence on the execution of the Joint Venture
Agreement (“JVA”) of 28th March, 2007, and also directed deposit
of sum of Rs.1 Crore towards the differential stamp duty and
penalty payable in respect of the documents. In compliance of the
order of 27th March, 2014, evidence of Atul Patel (CW-1) was filed
before this Court.
7. In the meanwhile, the Respondent approached the Hon’ble
Apex Court by way of Special Leave Petition(Civil) No.D 24275 of
2021 against the order of 27 th March, 2014, with the application
that in view of the development of law and the judicial
pronouncements, the application pending before this Court can be
disposed of. The Hon’ble Apex Court noted the submissions of the
Respondent that the subsequent judgments passed by the Hon’ble
Apex Court covers the issues raised in the SLP and/or pending
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before the High Court and disposed of the SLP with a request to
the High Court to dispose of the matters pending adjudication
before it.
8. Vide order dated 28th February, 2022, this Court disposed of
the Section 9 petition by consensus as the Petitioner made a
statement not to create third party rights till passing of Award.
Vide order dated 6th May, 2022, the application under Section 11 of
Arbitration Act was allowed and the Learned Sole Arbitrator was
appointed with the direction that the Arbitrator shall first decide
as preliminary issue as to whether the purported joint venture
agreement is legal and valid instrument and whether an arbitration
agreement exists between the parties. The evidence recorded and
documents tendered in the application during the mini-trial was
directed to be read as evidence in arbitration proceedings.
9. The order of appointment of Arbitrator was challenged by
the Petitioners before the Hon’ble Apex Court which came to be
dismissed vide order dated 19th July, 2022.
10. The Respondent examined three witnesses and the
Petitioners examined the handwriting expert as its witness. Vide
the impugned order dated 21st October, 2024, the learned Sole
Arbitrator answered the preliminary issue as under:
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“(i) The Joint Venture agreement is a legal and valid
instrument and not vitiated by fraud, forgery and
is not got up document.
(ii) There exists an arbitration agreement between
the parties”.
11. Hence, the present petition came to be filed under Section 34
of the Arbitration Act, terming the impugned order as interim
Award under Section 31(6) of the Arbitration Act.
SUBMISSIONS:
12. Mr. Cama, learned counsel for the Respondent would point
out the pre 2015 and post 2015 amendment position to the
Arbitration Act to contend that post 2015 amendment, the High
Court in Section 11 application was mandated to determine prima
facie existence of arbitration agreement leaving the final
determination of jurisdiction to the Arbitral Tribunal under Section
16 of Arbitration Act, which has been done in present case. He has
taken this Court in detail through the order of 27 th March, 2014
passed in the Section 11 application to contend that the order was
rightly passed as per the prevailing legal position and had directed
leading of evidence to determine the question of existence of
arbitration clause which ipso facto required determination of the
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existence of the main JVA dated 28th March, 2007.
13. He submits that post 2015 amendment, the issue was
required to be determined by the Arbitral Tribunal and hence the
preliminary issue came to be framed. He submits that the Learned
Arbitrator was enjoined to determine the issue of existence and
validity of arbitration agreement and mere reference to the issue
as preliminary issue does not make it anything more than a Section
16 exercise. He submits that the question of alleged forgery and
fabrication of JVA was put in issue only in the context of
determining existence of arbitration agreement for making a
reference under Section 11 of Arbitration Act. He submits that such
determination cannot be termed as a preliminary award or interim
award.
14. He submits that it is a settled position in law that all
jurisdictional issues are required to be decided as preliminary issues
under Section 16 of Arbitration Act, and the issue as the existence
of arbitration agreement is a jurisdictional issue. He submits that
what is relevant to be considered is the nature of the application
filed. He submits that while ruling on its jurisdiction under Section
16, if the Arbitral Tribunal decides on the question of main
agreement, which decision touches upon an issue which would
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otherwise arise in the arbitration proceedings, does not make the
order any less than an order under Section 16 of Arbitration Act. He
submits that having invited the Arbitral Tribunal to decide the issue
and leading evidence thereon, the order of the Arbitral Tribunal
under Section 16 can only be challenged with the final Award under
15. Drawing attention of the Court to the statutory provisions of
Section 2(1)(c) and Section 31(6) of Arbitration Act, he submits that
in order to constitute an interim Award, the Award must decide a
claim and at the stage of Section 11 proceedings, there is no
statement of claim filed and resultantly, no decision on a claim. He
submits that an interim Award must decide an issue arising from
the pleadings or claim on merits and must grant a final relief, albeit
at an interim stage. He submits that the contention that the
impugned order decides matters beyond deciding the pure
question of existence of arbitration agreement would have to await
challenge of the final Award under Section 34. He submits that if
the impugned order is permitted to be challenged under Section 34
of the Arbitration Act, Section 5 r/w Section 16(5) and 16(6) of the
Arbitration Act would be rendered otiose. He submits that without
prejudice even if an order transgresses beyond the scope of the
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Arbitrator’s authority under Section 16, it cannot convert an
application under Section 16 into an application for interim award
permitting a challenge under Section 34 of the Arbitration Act. He
submits that all the parties were aware about the nature of inquiry
being one under Section 16 of the Arbitration Act and had
proceeded on the same basis. He submits that to allow a challenge
to Section 16 order would violate Section 37 and would open the
floodgates for litigation as the party would thereafter be entitled
to challenge Section 16 order, under Section 34 rendering Section
37 otiose and rendering the mandate of Section 16(5) and Section
16(6) entirely redundant.
16. He submits that in accordance with the directions of this
Court, the Arbitral Tribunal has analysed the evidence on record
and has given conclusive findings on limited aspect of existence of
JVA and consequently the arbitration agreement. He submits that
in the process of ruling on its jurisdiction, the Arbitral Tribunal was
mandated to decide existence of JVA. He submits that the
significant indicia is the nature of application, which evidently was
under Section 16 of Arbitration Act. He submits that
notwithstanding that the existence of JVA is an issue in dispute,
the issue being presented as jurisdictional issue would render the
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impugned order a Section 16 order, even if having a touch of
finality.
17. He submits that the Petitioner’s contention of absence of
arbitration agreement to resist Section 11 application was founded
on the JVA being forged and fabricated, which issue has been
concluded by the impugned order. In support, he relies upon the
following decisions:
(i) MCM Worldwide (P) Ltd. v. Construction Industry
Development Council1,
(ii) Union of India vs. East Coast Boat Builders and
Engineers Ltd.2 ,
(vii) Practical Properties Pvt. Ltd. vs. Comet Overseas
Pvt.Ltd.7 ,
(viii) SBP and Co. vs. Patel Engineering Ltd. and Anr. 8,
(ix) National Insurance Company Ltd. vs. Boghara
Polyfab Pvt.Ltd.9 ,
(x) Bharat Rasiklal Ashra vs. Gautam Rasiklal Ashra
and Anr.10,
1 2026 SCC OnLine SC 717
2 1998 (47) DRJ
3 2007 (94) DRJ 435
4 1961 SCC OnLine SC 344
5 (2011) 8 SCC 333
6 (2016) 10 SCC 386
7 2016 SCC OnLine Del 1228
8 (2005) 8 SCC 618
9 (2009) 1 SCC 267
10 (2012) 2 SCC 14410 of 53
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(xi) Pravin Electricals Pvt. Ltd. vs. Galaxy Infra &
Engineering Pvt. Ltd.11 ,
Ltd.13 ,
(xiv) Adavya Projects Pvt. Ltd. vs. Vishal Structurals
Pvt. Ltd.14
(xv) BGM and M-RPL-JMCT (JV) vs. Eastern Coalfields
Limited15,
(xvi) M.S. Commercial & Ors. vs. Calicut Engineering
Works Ltd.16,
(xvii) Harinarayan G. Bajaj vs. Sharedeal Financial
Consultants17
(xviii)Lindsay International Pvt. Ltd. vs. IFGL
Refractories Limited18
(xix) Uttarkhand Purv Sainik Kalyan Nigam Ltd. vs.
Northern Coal Field Ltd.19,
(xx) Interplay between Arbitration & Agreements
under Arbitration and Councilation Act, 1996 &
Stamp Act, 189920,
(xxi) Bharat Sanchar Nigam Ltd. and Anr. vs. Nortel
Networks India Pvt. Ltd.21
18. Mr. Jagtiani, learned Senior Advocate appearing for the
Petitioners would submit that the objection to the Section 11
application was founded on the purported joint venture agreement
11 (2021) 5 SCC 671
12 2002 SCC OnLine Bom 1546
13 (2013) 10 SCC 535
14 (2025) 9 SCC 686
15 2025 SCC OnLine 1471
16 (2004) 10 SCC 656
17 2003 (2) Mh.L. J. 598
18 2022 SCC OnLine Cal 1880
19 (2020) 2 SCC 455
20 In re. [(2024) 6 SCC 1
21 (2021) 5 SCC 738
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being unstamped and forged and fabricated documents. He would
point out that the learned Single Judge in the order of 6 th May,
2022 has considered that the allegations of fraud are of such a
nature that if proved, would negate the very existence of the
agreement containing the arbitration clause and that the question
which comes up is whether the joint venture agreement is legal and
valid. He points out that the Court framed two issues to be decided
as preliminary issues as to whether the joint venture agreement is
legal and valid instrument and whether the arbitration agreement
exists between the parties.
19. He submits that considering the doctrine of separability, the
learned Arbitrator had an option of deferring the issue of existence
of arbitration agreement to a later date or could have ruled only on
the jurisdiction of the Arbitrator. However, in the present case, the
learned Arbitrator has not only conclusively decided the existence
of the joint venture agreement but has rendered conclusive
findings on existence and validity of the other associated
documents such as the power of attorney, deed of confirmation,
etc.
20. He submits that Section 31(6) of the Arbitration Act, uses the
expression “matter” as opposed to “claim” and therefore even if
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there was no claim which was pending, the fact that the decision
was rendered on a matter which arose in the arbitration
proceedings, the order constitutes an interim Award.
21. He has taken this Court in detail through the impugned order
and would point out the length and the width of the inquiry
undertaken by the learned Arbitrator. He submits that in view of
the extensive trial and expert evidence, the findings of learned
Arbitrator cannot be said to be prima facie findings. He points out
that the learned Arbitrator has termed the associated documents
as questioned documents and has rendered conclusive findings as
regards its validity and existence. He submits that the Petitioners
are thus precluded from challenging their authenticity in
arbitration proceedings. He submits that there has been an
independent assessment of all the five questioned documents,
which takes the impugned order beyond the purview of a Section
16 order. He has further taken this Court in detail through the
observations of the learned Arbitrator and points out that the
learned Arbitrator has considered the substance of joint venture
agreement to deal with the Petitioner’s submission of the
agreement between the parties being commercially implausible.
He submits that the reliance on Order VI of CPC and Section 100 of
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the Evidence Act shows the conclusive nature of the findings, which
would constitute an interim Award.
22. He submits that under Section 16, the validity and existence
of arbitration agreement is assessed and not existence and validity
of the main contract by virtue of principle of separability. He
submits that it is this principle which insulates an arbitration
agreement from being impeached when the main contract is
sought to be impeached. He submits that under Section 16, the
issues to be decided are existence of arbitration agreement, proper
constitution of arbitral tribunal and whether the matters submitted
to arbitration are in accordance with arbitration agreement. He
submits that this Court on 6 th May, 2022 had directed both Issue
No.1 and Issue No.2 to be independently decided and the decision
on Issue No.1 is the subject matter of present Petition and not the
ruling on jurisdiction.
23. He would further point out the final conclusion of the
learned Arbitrator which answers not only the issue of existence of
arbitration agreement but also the about the validity of the joint
venture agreement as not being vitiated by fraud and forgery to
support his submission of the Award being an interim award. He
submits that the findings of learned Arbitrator of existence of
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concluded contract decides an issue in dispute between the parties
with an air of finality, which constitutes an Interim Award. He
submits that considering the conclusive findings on JVA and
associated documents, there is nothing left to determine in the
arbitration. He would place reliance on the following decisions:
(i) MCM Worldwide Pvt. Ltd. vs. Constructions Industry
Development Council22,
(ii) Aptec Advance Protective Technologies AG vs. Union
of India23,
(iii) Union of India vs. Aptec Advance Protective
Technologies AG24 ,
(iv) Indian Farmers Fertilizer Cooperative Limited vs.
Bhadra Products25
(v) Sushma Arya & Ors. v. Palmview Investment
Overseas Ltd.26,
(vi) Palmview Investment Overseas Ltd. vs. Ravi Arya
and Ors.27;
(vii) Sushma Arya and Ors. v. Palmview Investment
Overseas Ltd. and Ors.28,
(viii) Centrotrade Minerals and Metal Inc. vs. Hindustan
Copper Limited29,
(ix) In re: Interplay Between Arbitration Agreements
under Arbitration30,
(x) Official Trustee vs. Sachindra Nath31 ,
22 2026 SCC OnLine 717
23 FAO(OS) (Comm) 227/2024 and CM APPL. 59210/2024 dated 13.01.2025
24 Spl. Leave Petition (Civil) Dairy No.47211 of 2025 dated 26.09.2025
25 (2018) 2 SCC 534
26 2022 SCC OnLine Bom 4335
27 Commercial Appeal (L) No. 36947 2022
28 SLP (C) No. 16356 of 2023
29 (2017) 2 SCC 228
30 1996 [(2024) 6 SCC 1
31 AIR 1969 SC 823sa_mandawgad 15 of 53
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(xv) Pandurang Jivaji Apte v. Ramchandra Gangadhar
Ashtekar36,
(xvi) Murari Lal vs. State of Madhya Pradesh37 ,
(xvii) Dulichand Laxminarayan v. CIT, Nagpur38,
(xviii) Jindal Steel Limited vs. India Coke and Power Pvt.
Ltd.39,
(xix) Cinevistaas Ltd. vs. Prasar Bharati40,
(xx) Zillion Infraprojects Pvt. Ltd. vs. Bridge and Roof
Company India Ltd.41,
24. In rejoinder, Mr. Cama would submit that if the Petitioner’s
contention is accepted, in every single Section 16 application,
wherein issue arises as to existence of an arbitration agreement or
questions of fraud, limitation or jurisdiction, the parties would
simply submit their case for adjudication and then challenge the
same under Section 34 which would defeat the very object of the
25. He submits that the impugned order cannot be treated as an
32 (2008) 4 SCC 530
33 AIR 2007 Bom 29]
34 2014 (5) Mh.L.J. 726
35 (2002) 7 SCC 441
36 (1981) 4 SCC 569
37 (1980) 1 SCC 704
38 AIR 1956 SC 354
39 CARBP(L)/5605/2026 dated 04.03.2026
40 2019 SCC OnLine Del 7071
41 2026 SCC OnLine Cal 372
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interim award as no application was filed under Section 31(6) of the
Arbitration Act. He submits that the decisions cited would show
that in order to constitute an interim award, a claim or point raised
in pleadings of the parties must be decided. He submits that the
reference to the other documents which are executed on co-
terminus terms with the joint venture agreement, was referred by
the learned Sole Arbitrator only to prove the existence of the joint
venture agreement and therefore the existence of the arbitration
agreement therein. He would point out the relevant extracts of the
impugned order qua the other documents to contend that the
findings were necessitated as the same were put in evidence under
the direction of this Court and are necessary for deciding the
existence of the main joint venture agreement. He would further
submit that said documents referred to and relied upon the joint
venture agreement. He submits that it is open for the Petitioner to
argue about the validity of the other documents and the Arbitral
Tribunal can determine at the final hearing which are the aspects
are not covered by Section 16 order. However, that by itself is no
ground to challenge the impugned order under Section 34 of the
Arbitration Act. He submits that despite the decision on the
existence of joint venture agreement, the issue of specific
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performance of JVA and associated documents still remains.
26. He further submitted that merely because Section 31(6)
uses the expression “matter”, it cannot mean that the discussion on
matter constituting a decision on a Section 16 application or a
jurisdictional question as to existence of an arbitration agreement,
which would also be a matter arising in arbitration, would
constitute an interim award. He would submit that notwithstanding
that the detailed order has been passed by the learned Arbitrator,
the same is only a determination of the existence of an arbitration
agreement as contained in the JVA and constitutes an order passed
under Section 16 of Arbitration Act. He would further submit that it
is open for the Petitioners to contend before the Arbitral Tribunal
that the issues which would arise for determination in the
arbitration proceedings are not covered by the impugned order.
27. Rival contentions now fall for determination.
28. The issue as to the maintainability of the present petition
would require consideration of the proceedings before the Section
11 Court. The opposition by the Petitioners to the reference to
arbitration before the Section 11 Court stemmed from the denial
to the very existence and validity of JVA containing the arbitration
clause. The specific objection was that no arbitration agreement
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exists as the JVA was forged and fabricated document. In view of
the allegation of forgery of the underlying contract containing the
arbitration agreement, the pre-2015 amendment position,
mandated the Section 11 Court to determine conclusively the
existence of arbitration agreement, which issue was not available
to the Arbitral Tribunal for adjudication.
29. The order of 27th March, 2014 was in consonance with the
prevailing legal position and directed the parties to lead evidence
on the issue of execution of JVA dated 28 th March, 2007. According
the parties commenced their evidence and in the interregnum, in
view of the development of law post 2015 amendment to the
Arbitration Act, on an application of Respondent, the Hon’ble Apex
Court directed this Court to decide the pending applications. The
post 2015 amendment position required the Section 11 Court, at
the pre-reference stage, to prima facie ascertain the existence of
arbitration agreement, while shifting the inquiry of conclusive
determination of existence of arbitration agreement to the Arbitral
Tribunal.
30. Noting that the nature of allegations of fraud and forgery are
rooted in the execution of JVA and applying the test of prima facie
review, the Section 11 Court opined that the Arbitral Tribunal must
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determine existence of arbitration agreement as preliminary issue
in light of challenge to the execution of JVA. The relevant clauses
of the operative part of the order in Paragraph 66 reads, thus:
“(iii) The Arbitrator shall first decide, as a preliminary
issue, as to whether the joint venture agreement is a legal
and valid instrument and whether the arbitration
agreement exists between the parties.
(v) The evidence recorded and the documents tendered in
this application during the mini trial shall be read in
evidence in the arbitration proceedings
(vi) Only after the learned Arbitrator finds that the
Arbitration Agreement exists, the learned Arbitrator shall
adjudicate upon the claims and counter claims, if any,
and/or all the disputes which arise out the Joint Venture
Agreement dated 28th March, 2007.
(vii) In the event the aforesaid preliminary issue is
answered in the negative, the mandate of the Arbitrator
would stand terminated.”
31. The referral order makes it clear that the inquiry, mandated
to be conducted by Section 11 Court in pre-2015 amendment era,
in view of the development of law, was shifted to the Arbitral
Tribunal to be considered as preliminary issue before the
respective claims/counter claims are decided on merits. At that
stage, neither the statement of claim nor the statement of defence
was filed, no issues were framed and parties were conscious of the
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nature of inquiry. The issue presented for adjudication was lack of
jurisdiction attached to the adjudicating authority premised on the
denial of the existence of the arbitration agreement and not an
issue on the merits of the claim, which claim was not yet filed and
was not under consideration. The stage of proceedings, the nature
of order and the findings of the learned Arbitrator are
determinative factors while considering whether the impugned
order is Section 16 order or order passed under Section 31(6) of the
Arbitration Act determining the substantive claim of the parties.
32. The parties were conscious of the nature of inquiry which was
continuation of the inquiry directed by order of 27 th March, 2014 to
decide the threshold issue of existence of arbitration agreement
before referral order under Section 11 can be passed. The direction
that the evidence adduced before the Section 11 Court to be read
in evidence in the arbitration proceedings is indicative of the nature
of inquiry.
33. The order of 6th May, 2022 terming the issue as “preliminary
issue” is not suggestive that the reference to Arbitral Tribunal was
anything apart from the determination of existence of arbitration
agreement under Section 16 of Arbitration Act. Section 16(1)
clearly provides that the arbitral tribunal may rule on its own
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jurisdiction including ruling on any objection with respect to
existence and validity of arbitration agreement. It is the existence
of arbitration agreement which was raised as an objection at pre-
reference stage, which inquiry was shifted to arbitral tribunal.
34. The Section 11 Court directed the learned Arbitrator to
decide the preliminary issue (singular as opposed to plural) being
conscious of the objection raised by the Petitioners that as JVA is
forged and fabricated document, no arbitration agreement exists.
Mr. Jagtiani would bifurcate the preliminary issue into Issue No.1
and Issue No.2 to contend that these issues were independent
issues and conclusive findings on Issue No.1 i.e existence and
validity of JVA is susceptible of challenge under Section 34 of
Arbitration Act.
35. Mr. Jagtani’s contention is based on the principle of
separability enshrined in Section 16 of the Arbitration Act that an
arbitration clause forming part of the contract shall be treated as
an agreement independent of the other terms of the contract. In
Young Achievers vs IMS Learning Resources Private Limited
(supra), the Hon’ble Apex Court in context of application under
Section 8 of Arbitration Act, was considering the survival of
arbitration clause in an agreement which has been superseded/
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novated by later agreement. It held that the principle laid down is
that if contract is superseded by another, the arbitration clause,
being a component of part of earlier contract, falls with it. But
where the dispute is whether such contract is void ab initio, the
arbitration clause cannot operated on those disputes, for its
operative force depends on the existence of contract and its
validity.
36. In Re Interplay between arbitration agreements under A &C
Act, 1996 and Stamp Act, 1899 (supra), the Hon’ble Apex Court has
held that the scheme of Arbitration Act shows that although an
Arbitral Tribunal is given priority to determine all issues pertaining
to its jurisdiction based on the principle of competence-
competence, the tribunal’s decision is subject to judicial review at
the stage when an award is challenged. In Uttarakhand Purv Sainik
Kalyan Nigam Ltd vs Northern Coal Field Ltd (supra), the Hon’ble
Apex Court has held that Section 16 is an inclusive provision, which
would comprehended all preliminary issues touching upon the
jurisdiction of Arbitral Tribunal.
37. The learned Single Judge in the order of 6th May, 2022 noted
that the allegations pertain to the very execution of the underlying
agreement and the allegations are of such a nature that if proved,
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they would negate the very existence of arbitration agreement
containing the arbitration clause, favours the finding that the
validity of the joint venture agreement was presented for
adjudication as a jurisdictional issue. It is not a case of underlying
contract being alleged to be non existent by reason of discharge or
frustration or novated etc but on the ground of forgery and
fabrication. The determination of existence of arbitration
agreement was intertwined with the issue of existence and validity
of JVA and presented for consideration to the Learned Arbitrator.
It is in light of directions of this Court that the Arbitrator decided as
preliminary issue, which could not be decided independently of
each other. If the Learned Arbitrator would have accepted that JVA
is forged and fabricated document, the arbitration proceedings
would have been terminated.
38. The non-filing of an application under Section 16 is irrelevant
as pre-2015 amendment and at Section 11 stage, the determination
of existence of arbitration agreement was to be done by the High
Court.
39. The issue is whether the impugned order qualifies as an
interim Award under Section 31(6) of the Arbitration Act and the
resultant remedy which is required to be adopted. The Arbitration
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Act does not define an interim award and only provides that under
Section 31(6) of the Arbitration Act, an Arbitral Tribunal has the
power to make an interim Award on any matter with respect to
which makes an Arbitral Award.
40. The validity of joint venture agreement containing the
agreement clause was presented as a jurisdictional issue which
necessitated that the same be decided at the threshold as noted in
the order of 6th May, 2022. There was no claim filed before the
learned Arbitrator and the order of 6th May, 2022 itself directs
after the preliminary issue is decided, the adjudication be
undertaken on merits of claim/counterclaim. In Harinarayan G.
Bajaj vs Sharedeal Financial Consultants Pvt Ltd & Anr (supra),
this Court exemplified the distinction between decision and Award
in the context of challenge to a decision under Section 27 of
Arbitration Act. Examining the statutory scheme of the 1940 Act
and 1996 Act, this Court held :
“3 …..Therefore, all orders/decisions passed under the Act of
1996 do not necessarily fall under the expression “Awards”. It is
only a decision/order which satisfies the requirements of Section
31 which is an Award. All others are orders and decisions in the
course of the proceedings deciding procedural issues or
terminating the arbitral proceedings themselves on the ground
that the submission does not fall within the arbitration
agreement or that there is no arbitral agreement or that there is
no dispute required to be decided by the Arbitral Tribunal.
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7…..An important indication in holding what is an award, flows
from the expression in matter with respect to which it may make
a final arbitral award. In other words, it must be in respect of
claims or counter claims which have been subject matter of
submission or reference to arbitral tribunal……In M/s Anuptech
Equipment Pvt Ltd (supra0, the issue was of challenge to an order
passed under Section 25(a) terminating the arbitral proceedings
for failure to file statement. Considering the expression “Award”
this is what is observed:-
“What that means is that the expression order and award are
distinct and different. One is termination of proceedings
without deciding the merits of the matter, the other is
termination on merits. Therefore, it is clear that looking at
the Act itself, there is no provision to challenge certain
orders or decisions.”
…. Therefore, an order culminating in termination of arbitral
proceedings with respect to the existence of validity of the
arbitration agreement is not an award. The expression “award”
therefore, must mean something different from mere
termination of proceedings. The award, whether interim award
or final considering the judgment of the Apex Court in Satwant
Singh Sodhi (supra) the English judgment and the scheme of Act
of 1996 must mean the final determination of a claim, part of a
clim or counter claim by the Arbitral Tribunal of a submission to
the Arbitral Tribunal. …For example, the issue of jurisdiction
which has to be decided under Section 16, yet does not form part
of the expression ‘award’, though in a challenge to an award
where proceedings are continued rejecting the challenge to
arbitrability or otherwise that order can be challenged whilst
challenging the Award under Section 34 of Act of 1996. The
decision or order to be an award must result in final
determination of the claim, part of the claim and/or counter
claim referred or submitted to arbitration and must normally
meet the other requirements of Section 31 of which signing the
award is mandatory…”
41. The decision is sought to be distinguished as in those facts,
the issue arose out an order passed under Section 27 of Arbitration
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Act. In my view, the exposition of law is binding and the fact that
the same arose out an order under Section 27 of Arbitration Act is
immaterial. The distinction between decision and award lies in the
final determination of a claim, part of claim or counter claim, which
was present before the Arbitral Tribunal.
42. It is sought to be contended that the expression used in
Section 31(6) is “matter” as opposed to “claim” and it is not
necessary that the statement of claim was required to be filed
before the order can be termed as an interim Award. I am not
inclined to accept the submission that the use of the expression
“matter” would clothe an order under Section 16 with the character
of an interim Award. An order on a Section 16 application would
also be an order on a matter arising in arbitration and if the
contention is accepted, the determination of a matter as opposed
to a claim under Section 16 would also constitute an interim Award.
Such an interpretation would run contrary to the statutory
provisions of Arbitration Act and would render Section 37 otiose.
43. During the mini trial conducted in Section 11 application, the
Respondent had filed their evidence and Affidavit of Documents
which included the joint venture agreement dated 28 th March,
2007, power of attorney dated 28th March, 2007, deed of indemnity
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dated 28th March, 2007, deed of confirmation dated 3rd May, 2007
and original receipt dated 3rd May, 2007.
44. The Respondent placed in evidence the joint venture
agreement and the associated documents i.e. power of attorney
dated 28th March, 2007, deed of indemnity dated 28th March, 2007,
deed of confirmation dated 3rd May, 2007 and original receipt dated
3rd May, 2007, in order to establish the chain of documents
substantiating the execution of the joint venture agreement and to
demonstrate that the parties had acted upon the joint venture
agreement. To counter the evidence, the contention of the
Petitioners was that the purported joint venture agreement was
never executed and is forged and fabricated document and the
other alleged ancillary documents are also forged and cannot
render legality to the forged joint venture agreement.
45. In paragraph 34, the Learned Arbitrator noted the assertion
of the Petitioners that the continuous paginations appearing on
top of the alleged joint venture agreement and alleged receipt
though stated to be executed on different dates exemplifies the
fraud. It noted in paragraph 38, that the Petitioners had denied
that they had issued any power of attorney in favour of the
Respondent. In paragraph 47, it noted the denial of the Petitioners
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that any deed of indemnity and deed of confirmation were ever
executed between the parties and the said documents were forged
and fabricated.
46. The conspectus of the Petitioner’s submissions as noted in
paragraph 270 and 271 by the Learned Arbitrator is as under:
“270. The Respondents therefore submit that a harmonious
compilation of the above-mentioned materials when put
together evinces a plausible conclusion that the purported
Joint Venture Agreement, purported Power of Attorney,
Purported Deed of Indemnity, purported Deed of
Confirmation and purported Receipt are fraudulent, forged
and fabricated document. The Respondents therefore submit
that in the absence of existence of the purported Joint
Venture Agreement, the question of Claimant invoking the
arbitration clause therein does not arise.
271. It is apparent therefore that:
(a) The purported Joint Venture Agreement and the other
alleged documents relied upon by the Claimant are
forged and fabricated.
(b) There is therefore no legal and valid instrument interalia
based on which an arbitration agreement can be said to
have been entered into or exist between the Claimant
and the Respondent.”
47. The findings of the Learned Arbitrator on the joint venture
agreement and other documents are contained in paragraph 298,
303, 330, 335 and 336 as under:
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“298. As noted earlier Mr. Surendra C. Gurav has filed Reply
dated 25th October 2012 to arbitration Petition No. 1137 of 2012.
In my opinion, Mr. Rajendra G. Parikh instead of Mr. Surendra C.
Gurav should have filed the reply as it is the case of the
Respondents that the signature, initials and thumb impressions of
Mr. Rajendra G. Parikh are forged and fabricated. It is also
material to note that in reply dated 30 th July 2012 Mr. Parikh
relied upon the fingerprints’ opinion/report dated 28th July 2012
(Exhibit R-1, Pages 13 to 22 of the AOE of RW-1 of Ms. Nisha
Menon). Not only that though Mr. Rajendra G. Parikh had sought
opinion of fingerprint expert, he did not deem it appropriate to
obtain opinion of expert at that time i.e. in July 2012 in respect of
his signatures and/or initials on the Joint Venture Agreement
dated 28th March 2007. No explanation is given by Mr. Rajendra G.
Parikh as to why he did not obtain expert’s opinion in respect of
signatures and initials on the Joint Venture Agreement, Power of
Attorney, Deed of Indemnity, Deed of Confirmation and Receipt
and sought opinion only in respect of thumb impressions on the
Joint Venture Agreement and the Power of Attorney only.
303. Mr. Rajendra G. Parikh thereafter filed Additional Affidavit
dated 15th July 2013 placing on record subsequent events after
filing his Sur-rejoinder dated 20 th March 2013. He has placed on
record Written Statement dated 25th June 2013 filed by Mr.
Ramrao S. Kedar, Notary in complaint No. 1 of 2013 filed by the
Respondents as Annexure-1. He has further placed on record
copies of reports by Ms. Nisha Menon, handwriting and
fingerprint expert as Annexures 2, 3 and 4. Nowhere in the
pleadings is there any dispute about the initials of Mr. Rajendra
Parikh on each and every page of all the 5 questioned documents.
The arbitration agreement at Clause 52 of the Joint Venture
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Agreement is also initialled by ivir. Rajendra G. Farikh and the
same was not disputed. While the pleadings contain general
allegations of fraud and forgery, there are no particulars or
details. Though the Respondents claimed that all the 5
questioned documents are forged, they have not led any evidence
in respect of 3 of the documents viz. (i) Deed of Indemnity dated
28th March 2007; (i) Deed of Confirmation; and (iii) Receipt both
dated 3rd May 2007.
330. As noted earlier, Mr. Surendra C. Gurav had filed Afidavit in
Replies in Section 9 Petition and Section 11 Application.
In fact, he has specifically asserted that he is not dealing with the
factual aspects in respect of the transactions and the same would
be dealt with by Mr. Rajendra G. Parikh. I have already noted the
Affidavit in Sur-Rejoinder dated 20th March 2013 filed by Mr.
Rajendra G. Parikh. It is however material to note that neither Mr.
Surendra C. Gurav nor Mr. Rajendra G. Parikh stepped into witness
box. As per Section 101 of the Evidence Act, the burden of proof
was squarely on the Respondents to establish the plea of fraud.
Section 102 of the Evidence Act lays down that the burden of
proof in the suitor proceeding lies on that person who would fail
if no evidence at all were given on either side. Section 106 of the
Evidence Act lays down that when any fact is especially within the
knowledge of any person, the burden of proving that fact is upon
him. In the instant case, whether Mr. Rajendra G. Parikh has signed
this Joint Venture Agreement, Power of Attorney, Deed of
Indemnity all dated 28th March 2007, Deed of Confirmation and
Receipt both dated 3rd May 2007 is especially within the
knowledge of Mr. Rajendra G. Parikh. In other words, the
Respondents did not examine a party witness/fact witness. This is
more so as Mr. Rajendra G. Parikh was throughout present in the
arbitration proceedings. Having not entered into the witness box
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and having not presented -himself for cross-examination in the
instant case, an adverse presumption has to be drawn against the
Respondents on the basis of the principals contained in
illustration (g) of Section 114 of the Evidence Act.
Illustration (g) of Section 111 provides that the Court nay
presume – that evidence which could be and is not produced
would, if produced, be unfavourable to the person who withholds
it. In this regard, useful reference can be made to paragraph 17 of
Iswar Bhai Patel (Supra) and paragraph 32 of Sardar Gurbakhsh
Singh (Supra).
335. A perusal of Joint Venture Agreement would show that
each and every page of the Joint Venture Agreement and other
agreements has been initialled by Mr. Atul Patel for and on behalf
of the Claimant and Mr. Rajendra G. Parikh for and on behalf of
the Respondents. CW-1 has expressly deposed as regards initials
of Mr. Atul Patel and Mr. Rajendra G. Parikh on each and every
page of the Joint Venture Agreement, Power of Attorney and
Deed of Indemnity all dated 28 th March 2007 and the Deed of
Confirmation and Receipt both dated 3 rd May 2007. The
Respondents have never denied initials of Mr. Rajendra G.
Parikh on the Joint Venture Agreement and other agreements, In
fact, the Respondents did not lead any evidence in respect of the
initials. As mentioned earlier, the Respondent did not examine Mr.
Rajendra Parikh or Mr. Surendra C. Gurav or any other fact witness
to substantiate their contention that Mr. Rajendra G. Parikh did
not initial the Joint Venture Agreement and other agreements,
Even in the pleadings the Respondents have maintained a studied
silence on the point of initials of Mr. Rajendra G. Parikh on the
agreements. This lends support to the contention of the Claimant
that the agreements have been duly initialled by Mr. Rajendra G.
Parikh for and on behalf of the Respondents. The Respondents
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have not led any evidence on initials of Mr. Rajendra G. Parikh on
each and every page of the 5 questioned documents. None of the
reports issued by RW-1, Ms. Nisha Menon deal with the initials on
the agreements In fact, in her cross-examination Ms. Nisha Menon
admitted that she wanted to analyse the initials of Mr. Rajendra
Parikh appearing on the agreements and were also marked them
for examination, but later on the assignment was cancelled and
she was instructed not to examine the initials. This also lends
support to the contention of the Claimant that adverse inference
ought to be drawn against the Respondents as although Ms. Nisha
Menon had informed them that initials ought to be examined,
they instructed her not to do so.
336. The Deed of Confirmation and Receipt both dated 3 rd May
2007 confirmed the execution of the Joint Venture
Agreement and Power of Attorney. No evidence is led by the
Respondents on these documents. As the contents of the Deed
of Confirmation and Receipt remain uncontroverted, the
contention of the Claimant that the same establishes the
existence, legality and validity of the Joint Venture Agreement
and Power of Attorney deserves acceptance.” (Emphasis supplied)
48. In context of the evidence presented for consideration and
the submissions canvassed, the Arbitral Tribunal held in paragraph
344 as under:
“344. In the light of the aforesaid discussion, it is not possible to
accept the submissions advanced on behalf of the Respondents
that the evidence on record demonstrates that:
(i) The Joint Venture Agreement dated 28 th March 2007 was
never executed and is a forged and a fabricated document.
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(ii) The Power of Attorney, the Deed of Indemnity, Deed of
Confirmation and Receipt are forged and fabricated documents.
(iii) The signatures on the questioned documents are not of
Mr.Rajendra Parikh as the Report at Exhibit R-3 dated 15 th
October 2012 is not based on the analysis of original letters dated
25th August 2008 and 29th September 2007 but was based on the
photocopies of these letters.”
49. Perusal of the said paragraph would indicate that the same
crystallizes the submissions advanced on behalf of the Petitioners,
which have been rejected. The Petitioners herein have called upon
the learned Arbitrator to render a finding on the documents in a
proceeding under Section 16 and having presented the issue as
jurisdictional issue cannot thereafter characterise the adjudication
on the other documents as constituting an interim Award.
50. The Learned Arbitrator dealt with the submission of the
Petitioners that the alleged thumb impressions on the purported
joint venture agreement are not of Atul Patel and Rajendra Parikh
in paragraph 363 as under:
“363. The Respondents have contended that the alleged thumb
impressions on the purported Joint Venture Agreement are not
of Mr. Rajendra G. Parikh and/or of Mr. Atul Patel.
They have further contended that the rubber stamps of the
Respondents are forged. The Claimant has contended that there
are no thumb impressions/seals on (1) Deed of Indemnity dated
28th March 2007, (2) Deed of Confirmation and Receipt both34 of 53
carbp(l) 2846-2025.docdated 3rd May 2007. The Respondents have not led evidence as
regards to these documents. As noted earlier, the Deed of
Confirmation and the Receipt both dated 3rd May 2007 confirm
execution of Joint Venture Agreement and Power of Attorney.
That apart the Respondents have not led any evidence as regards
initials of Mr. Rajendra G. Parikh on the five questioned
documents. This lends support to the contention of the Claimant
that the common seals and thumb impressions are not required
for the document to be executed and to come into existence.
Common seals/thumb impressions are not required in law to
execute a document. That apart Mr. Rajendra G. Parikh did not
step into the witness box to depose that the agreements were
not received by him in his office and that thumb impressions
were not affixed by him in his office. The burden of proof was
squarely on the Respondents to establish the said fact. In any
event once the initials and signatures are proved, the existence
of the arbitration agreement is proved and also, the legality and
validity of the Joint Venture Agreement and other documents.
The alleged forgery by reference to thumb impression/ company
gal has no relevance. The very fact that the agreement is in
writing containing the initials and signatures of both the parties
and it contains an arbitration clause, establishes beyond that
there is a concluded contract in existence.” (Emphasis supplied)
51. In paragraph 373, the Learned Arbitrator Arbitral Tribunal
answered the preliminary issue as under:
“373. As now after considering the evidence on record, I have
come to the conclusion that the arbitration agreement exists, it
is now necessary to adjudicate upon the claims and
counterclaims, if any and/or all the disputes which arise out of
the Joint Venture Agreement dated 28th March 2007.”
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52. The conspectus of the findings of the Learned Arbitrator can
be stated as under:
(i) There is no categorical pleading by the Petitioners that
Rajendra Parikh has not signed the joint venture
agreement dated 28th March, 2007. There is no dispute
in the pleadings about initials of Rajendra Parikh on each
and every page of all five questioned documents.
(ii) There is no explanation for not obtaining the expert’s
opinion in respect of signatures and initials on the joint
venture agreement, power of attorney, deed of
indemnity, deed of confirmation and receipt and opinion
was sought only in respect of thumb impression of
Rajendra Parikh on the joint venture agreement and
power of attorney.
(iii) Though Petitioners claim that all five questioned
documents are forged, they did not lead evidence in
respect of deed of indemnity, deed of confirmation and
receipt.
(iv) Rajendra Parikh has signed the joint venture agreement,
power of attorney, deed of indemnity all dated 28 th
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dated 3rd May, 2007, which was especially within his
knowledge and did not enter the witness box.
(v) The background in which the documents came to be
executed by the parties was noted as the proposal of
one time settlement by the Petitioner No 3 to the
lenders on 28th March, 2007 enclosing demand draft and
bankers cheque for Rs.19,27,06,000/, the execution of
the Joint venture agreement, power of attorney and
deed of indemnity on 28th March, 2007, the payments
made on 29th March, 2007 and 3rd May, 2007 and the
receipt and deed of confirmation dated 3rd May, 2007
executed in favour of Respondent confirming execution
of the joint venture agreement.
(vi) The Deed of Confirmation and receipt dated 3 rd May,
2007 confirmed execution of the joint venture
agreement and power of attorney and as they remain
uncontroverted, the contention of the Respondent that
the same establishes the existence, legality and validity
of the joint venture agreement and power of attorney
deserves acceptance.
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53. The Learned Arbitrator has termed the associated documents
i.e. power of attorney, deed of indemnity all dated 28th March,
2007, deed of confirmation and receipt both dated 3 rd May, 2007, as
questioned documents for the reason that the associated
documents produced to support the Respondent’s case were
disputed by the Petitioners. The submissions canvassed by the
Respondent summarised as under clearly indicates that the
associated documents were produced to establish the execution of
the joint venture agreement:
(a) The joint venture agreement and power of attorney
both dated 28th March, 2007 have been executed by
both sides.
(b) The questioned documents have initials on all pages.
(c) The power of attorney dated 28th March, 2007 refers to
the execution of the joint venture agreement.
(d) The deed of indemnity dated 28 th March, 2007 bears
initials of Rajendra Parikh.
(e) The receipt dated 3rd May, 2007 refers to the execution
of the joint venture agreement.
(f) The deed of confirmation dated 3rd May, 2007 contains
the signature of Rajendra Parikh and refers to the joint
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(g) The power of attorney and deed of indemnity were
executed alongwith the joint venture agreement at the
time of Rajendra Parikh handing over the payments to
the officials of the asset reconstruction company.
54. The submissions are indicative of the fact that reference to
the various correspondence and documents other than the JVA
was to built up the case of execution of JVA by showing
contemporaneous documents accepting the existence of the JVA
agreement and some of the documents were of the same date as
that of the JVA corroborating the execution of JVA.
55. Pertinently, the evidence led by the Petitioners through their
forensic expert was not restricted to the joint venture agreement
and the report of the expert tendered in evidence was in respect of
joint venture agreement as well as the power of attorney both
dated 28th March, 2007.
56. The contention of Mr. Jagtiani that the finding on the other
documents precludes his right from disputing the genuineness of
the other documents overlooks the fact that it was the Petitioners
themselves, who had presented the dispute for adjudication before
the learned Arbitrator for objecting to the jurisdiction and had
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canvassed the submissions that not only the joint venture
agreement but also the other documents are forged and fabricated
documents. The issue of existence and validity of JVA could not
have been considered in isolation without considering the
corroborative evidence in form of the contemporaneous
documents. It is open for the Petitioners to raise an objection to
the finality of findings on the associated documents before the
learned Arbitrator.
57. The evidence was assessed by the learned Arbitrator and as
the Petitioners herein claimed that the joint venture agreement
was a forged and fabricated and got up document, the provisions
of Code of Civil Procedure, 1908, Indian Evidence Act, 1872, the
Indian Contract Act, 1872 as well as the Indian Penal Code, 1860,
were considered, and as against the statutory provisions, the issue
of fraud was adjudicated by the learned Arbitrator. In paragraph
289, the learned Arbitrator notes that the Petitioners herein had
specifically come with a case that the joint venture agreement and
associated documents are forged and fabricated and got up
documents and in view of the case of the Petitioners have ventured
into the issue of other documents. The learned Arbitrator has
concluded that the existence of the arbitration agreement is
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proved and also the legality and validity of the joint venture
agreement and other documents, which establishes that there is a
concluded contract in existence containing the arbitration clause
and answered the issue in favour of the Respondent.
58. Mr. Jagtiani would submit that the conclusive nature of the
findings that the joint venture agreement is valid and legal
document would constitute a finding on the substantive claim and
would constitute an interim Award. There can be no dispute that
the existence and validity of JVA was presented as jurisdictional
issue and decision on jurisdiction would be an order under Section
16 of Arbitration Act. The decision of the Hon’ble Apex Court in
MCM Worldwide Pvt Ltd vs Constructions Industry Development
Council (supra) clinches the issue. In the case of Indian Farmers
Fertilizer Cooperative Limited vs. Bhadra Products (supra), the
issue for consideration was whether an award delivered by the
Arbitrator which decides the issue of limitation can be said to be an
interim award, which can thereafter be challenged under Section 34
of the Arbitration Act. In that case, the issues came to be framed
and the learned Arbitrator thought it fit to take up the issue of
limitation first. The issue was decided in favour of the claimant
therein as against which the petition came to be filed under Section
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34 of the Arbitration Act claiming the award to be the first partial
award. The Hon’be Apex Court considered the submissions on
behalf of the Respondent that a ruling on the point of limitation is
a ruling on jurisdiction and that being the case the drill of Section
16 has to be followed and the challenge has to be postponed only
after all the issues have been decided. The Hon’ble Apex Court
considered the scheme of Section 16 and 31(6) of the Arbitration
Act, and held that a reading of Section 31(6) makes it clear that it
extends to any matter with respect to which the arbitral tribunal
may make a final arbitral award and even subsumes issues at which
the parties are in dispute. It noted that more than one award finally
determining any particular issue before the arbitrator can be made
made on before aspect of the matters to be determined. It held
that as the Arbitrator had disposed of one matter between the
parties i.e. the issue of limitation, the award was an interim award
and was subsumed within the expression “Arbitral Award” which
could be challenged under Section 34 of the Arbitration Act.
59. Pertinently, it held that the jurisdiction mentioned in Section
16 has reference to three things, (i) as to whether there is existence
of valid arbitration agreement, (ii) whether the Arbitral Tribunal is
properly constituted, and (iii) matter submitted to arbitration
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should in accordance with the arbitration agreement. The decision
in the case of Indian Farmers Fertilizer Cooperative Limited vs.
Bhadra Products (supra), was clarified in MCM Worldwide Pvt. Ltd.
vs. Constructions Industry Development Council (supra). The
Hon’ble Apex Court noted that the decision in the case of Indian
Farmers Fertilizer Cooperative Limited vs. Bhadra Products
(supra), did not refer to an order passed under Section 16 of the
Arbitration Act. It further held in paragraph 13, 14 and 15, as under:
“13. However, if an arbitrator deals with the very same
issue of limitation on an application filed under Section 16 of
the Arbitration Act, on the ground that the arbitrator lacks
jurisdiction on that count, it would be traceable to Section
16(2) of the Arbitration Act and if the arbitrator rejects that
plea, Sections 16(5) and Section 16(6) would apply. In that
situation, there is no option for the party aggrieved by the
decision of the arbitrator upon the application filed under
Section 16 except to wait till the conclusion of the arbitral
proceedings and then raise that issue by way of an
application under Section 34 against the final award.
14. Though the final award, even in this situation, would
not focus upon the issue of limitation as it already stood
decided by the rejection of the application filed under
Section 16(2) of the Arbitration Act, the scheme of Section
16 and, more particularly, Sections 16(5) and 16(6), would
keep the issue alive and enable the party aggrieved to
challenge the validity of the rejection order under Section 16
at the final stage, even after the passing of the final award.
15. However, the scheme of Sections 16(5) and 16(6) would
not apply if the arbitrator deals with limitation as a
preliminary issue and makes a decision thereon in favour of
the claimant. That is the reason why this Court observed
that, in such a situation, the drill of Sections 16(5) and 16(6)sa_mandawgad 43 of 53
carbp(l) 2846-2025.docwould not have to be followed. This Court went on to
observe that even such interim awards should be made
amenable to challenge under Section 34 of the Arbitration
Act after the passing of the final award, instead of going in
for ‘piecemeal’ challenges.”
60. The Hon’ble Apex Court has therefore clarified that where
the same issue is dealt by the Arbitrator in an application filed
under Section 16 of Arbitration Act on the ground of jurisdiction,
the same is traceable to Section 16(2) of the Arbitration Act. The
decision squarely applies to the facts of the present case inasmuch
as though a formal application under Section 16 of the Arbitration
Act was not filed, the proceedings before the Arbitral Tribunal
were in the context of the Arbitrator’s jurisdiction in view of the
objection raised that there is no arbitration agreement in existence.
The ruling in the present case is therefore a ruling on the
jurisdiction of the arbitral tribunal under Section 16, which will have
to await the final outcome and cannot be termed as an interim
Award.
61. The contention that by virtue of rendering the findings on
the joint venture agreement and other documents, there is nothing
further remaining for determination cannot constitute a ground for
terming the order as an interim Award irrespective of the fact that
the issue of whether the agreement is required to be specifically
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performed still survives for adjudication. The Arbitral Tribunal in
view of specific direction in order of 6 th May, 2022 was required to
decide the issue as preliminary issue before adjudication on merits
and could not have deferred the jurisdictional issue to a later stage.
62. Dealing with the citations on which reliance is placed in
support of maintainability, in the case of Aptec Advance Protective
Technologies AG vs. Union of India (supra), the issue for
consideration was whether the Award was an interim award and
subject to a challenge under Section 34 of Arbitration Act. The
factual background as noted in the said decision is that on
completion of pleadings of the parties therein ,the final issues
came to be framed in the arbitration proceedings as well as in the
counter claim. Affidavit of evidence came to be filed and
applications came to be filed before the learned Sole Arbitrator
seeking discovery of documents, which came to be dismissed by the
Arbitrator by its decision dated 18th November, 2010, and was
challenged terming the decision as an interim Award. Learned
Single Judge dismissed the Section 34 petition observing that the
decision is not an interim award and the Hon’ble Division Bench
considered one of the issues, which were framed by the Arbitrator
related to the aspect of discovery of documents and held that the
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learned Arbitrator had given a final finding on the issue framed and
held the same to be an interim Award.
63. It is not only the finality of finding which is a sole
determinative factor in deciding the whether the same constitutes
an interim award. It is the nature of proceedings coupled with the
findings which would determine whether the finding can be termed
as an interim award or ruling on jurisdiction. At the cost of
repetition, the decision in MCM Worldwide Pvt. Ltd. vs.
Constructions Industry Development Council (supra), has clarified
that when the same issue is decided under Section 16 of Arbitration
Act on the ground of lack of jurisdiction, it would be traceable to
Section 16(2) of the Arbitration Act.
64. In the case of Palmview Investment Overseas Ltd. vs. Ravi
Arya and Ors. (supra), the pleadings filed by the party and evidence
of the Appellant therein was recorded and witness’s affidavit of
two persons were filed. After completion of cross-examination of
one of the witnesses and before the cross-examination of the other
witnesses, an application under Section 31(6) r/w Section 32 of the
Arbitration Act was filed by Respondent Nos.1 and 2, specifically
seeking an interim award. In this factual scenario, the Hon’ble
Division Bench of this Court held that the application under Section
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34 was maintainable. It considered the decision in the case of
Indian Farmers Fertilizer Cooperative Limited vs. Bhadra
Products (supra). The Hon’ble Division Bench noted that one of the
observations of the Hon’ble Division Bench was that Section 31(6)
of the Arbitration Act is very wide in nature and uses the expression
“matter” which may subsume issues at which the parties are at
dispute. In those facts there was a specific application filed seeking
an interim award and that too after the pleadings were filed issues
were framed and it is in that context that the observations of the
Hon’ble Division Bench can be traced.
65. In the case of Centrotrade Minerals and Metal Inc. vs.
Hindustan Copper Limited (supra), the issue which arose for
consideration whether the settlement of dispute through three tier
arbitration procedure as provided in Clause 15 of the contract
therein between the parties is permissible under the laws of India.
The Hon’ble Apex Court observed that while decision is generic, an
Award is more specific decision that affects the rights of the parties
and has important consequences and can be enforced. It observed
that an Award (i) concludes the dispute as to the specific issue
determined in the award, so that it has res judicata effect between
the parties as if it is a final award, if it terminates the Tribunal’s
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jurisdiction, (ii) disposes of parties’ respective claims, (iii) may be
confirmed by recognition and enforcement, and (iv) may be
challenged in the courts of the place of arbitration. The Hon’ble
Apex Court quoted the passage from Comparative International
Commercial Arbitration, where the distinction was drawn between
an award and decision of the Tribunal. It is not possible to read the
distinction disjunctively and there has to be a cumulative
satisfaction of the distinction set out therein.
66. In the case of In re: Interplay Between Arbitration
Agreements under Arbitration, 1996 and Stamps Act, the Hon’ble
Apex Court observed that the concept of separability and
severability of an arbitration agreement from an underlying
contract being a legal fiction which acknowledges the separate
nature of an arbitration agreement to hold that the separability
presumption contained in Section 16 is applicable not only for the
purpose of determining the jurisdiction of arbitral tribunal and it
encapsulates the general law on the substantial independence of
an arbitration agreement. There is no quarrel with the said
proposition.
67. The decision of Official Trustee vs. Sachindra Nath (supra),
explains the concept of jurisdiction, which needs no debate.
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68. In the case of Jindal Steel Limited vs. India Coke and Power
Pvt. Ltd. (supra), this Court considered an identical issue as to
whether in that case the order was an interim award or ruling on
jurisdiction under Section 16. This Court noted in that case that the
learned Arbitrator had framed the issues in arbitration and the
finding of the Arbitrator on binding nature of the documents
therein transgressed into the prohibited arena of the merits of the
dispute. It is in the facts of that case where the pleadings were
completed and the issues came to be framed and this Court on
consideration of the order of the Tribunal came to a finding that
the impugned order rendered findings one on jurisdictional aspect
and other on merits of the dispute.
69. In the case of Cinevistaas Ltd. vs. Prasar Bharati (supra),
the petition came to be filed under Section 34 challenging the
decision of the Arbitrator in respect of amendment of claim and did
not pertain to the ruling on jurisdiction under Section 16 of the
Arbitration Act. It held that whether the impugned award
constitutes an interim award is not, is to be decided by seeing the
nature of the order and not the title of the application which was
cited.
70. The facts of the present case are peculiar inasmuch as by
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virtue of the development in law, the inquiry of conclusively
determining the existence of the arbitration agreement was shifted
from Section 11 Court to the Arbitral Tribunal and it is in these
proceedings, the order has been passed.
71. In the case of Zillion Infraprojects Pvt. Ltd. vs. Bridge and
Roof Company India Ltd. (supra), the impugned order held that the
claims raised by the Petitioner were barred by limitation. In that
facts of the case, it was held that it is in effect the substance of the
order that governs the issue of maintainability and as to whether it
constitutes an interim award. The subsequent decision in the case
of MCM Worldwide (P) Ltd. v. Construction Industry Development
Council (supra), passed by the Hon’ble Apex Court would govern
the law on the subject. It cannot be debated that the issue of the
validity of the joint venture agreement to object to the existence of
the arbitration agreement was presented as a jurisdictional issue
which came to be decided by the Arbitrator and it is these facts
which make the difference in the present case.
72. In the case of Lindsay International Pvt. Ltd. vs. IFGL
Refractories Limited (supra), the Calcutta High Court considered
whether the order was one passed under Section 16 of the
Arbitration Act or constituted an interim award. It noted the
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arguments that the Arbitrator could not have decided on the
novation/supersession issue since this amounted to a decision on
merits of the case and the finding of the Arbitrator is rendered on
one of the primary disputes between the parties. One of the
contentions was that the Arbitrator had prejudged issue Nos.5 and
6 framed in arbitration proceeding. The Calcutta High Court held
that the application was made under Section 16 of the Act
questioning the jurisdiction of the arbitral tribunal and was not an
application under Section 31(6). The Arbitrator was invited to
decide the issue of novations in the Section 16 application, which
was raised as a jurisdictional issue and not as an issue on the merits
of the dispute. It further noted that the issues were framed by the
Arbitrator after the impugned decision and therefore, did not
accept that the Arbitrator decided on or the issues framed.
73. Mr. Jagtiani would distinguish the judgment in the case of
Lindsay International Pvt. Ltd. vs. IFGL Refractories Limited
(supra), by contending that in the present case, there were two
preliminary issues which were framed and the petition did not
invite the ruling. It is also not possible to accept the contention that
the Petitioner did not invite the ruling on the validity of the joint
venture agreement and other associated documents as the same
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was presented as jurisdictional issue.
74. As discussed above, the objection to the jurisdiction was
premised on the joint venture agreement being forged and
fabricated document and hence, the arbitration agreement does
not exist between the parties. It is in order to support the case of
the joint venture agreements being a duly executed document that
the associated documents were put in evidence and the
Petitioner’s own evidence was in respect of the joint venture
agreement as well as the power of attorney. It was a specific claim
of the Petitioner that all the documents are forged and fabricated
documents. It is precisely in view of this evidence which was
presented for consideration of the Learned Arbitrator that the
Learned Arbitrator decided the issue as regards the existence of
arbitration agreement. Merely because the referral order refers to
this issue as preliminary issue, the issue cannot be said to
constitute an issue on merits of the claim.
75. In the case of Jindal Steel Limited vs. India Coke and Power
Pvt. Ltd. (supra), this Court had distinguished the decision in the
case of Lindsay International Pvt. Ltd. vs. IFGL Refractories
Limited (supra), as in the case of Jindal Steel Limited vs. India
Coke and Power Pvt. Ltd. (supra), the Arbitrator had adjudicated
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the specific issue No.4, which was framed and rendered a finding
which it could not have done under Section 16 of the Arbitration
Act, as there was dual finding on the jurisdictional aspect as well as
on the merits of the case.
76. In light of the above discussion, the impugned order is a
ruling on the jurisdiction under Section 16(2) of the Arbitration Act
and will have to be challenged along with the final award.
77. The petition under Section 34 of Arbitration Act is not
maintainable and is dismissed on the ground of maintainability. It is
open for the Petitioners to raise the issue as regards the findings
on the associated documents not being conclusive findings before
the learned Arbitrator.
[Sharmila U. Deshmukh, J.]
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