Mr. Baban Piraji Ghadge vs Mr. Amit Jayant Sheth And Anr
2017 Latest Caselaw 1784 Bom

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                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                        CIVIL APPELLATE JURISDICTION

                            ABITRATION PETITION NO. 61 OF 2016

            Mr. Baban Piraji Ghadge
            aged 52 years, occupation : business,
            residing at H4, 3/4,
            Paradise Co-op Housing Society Ltd.
            Sector 7, Sanpada, Navi Mumbai.                                                     ... Petitioner

                        vs.

1.          Mr. Amit Jayant Sheth
            aged 41 years, occupation : business
            having address at A-6, Sunflower,
            Survey No.77/1, Near Prime Rose Mall,
            Baner Road, Pune - 411 045.

2.          M/s. Avenue Realty
            (original M/s. Avenue S.K. Builders
            A partnership firm, having address
            at A-6, Sunflower, Survey No.77/1,
            Near Prime Rose Mall,
            Baner Road, Pune - 411 045.                                                         ... Respondents
                                     ....

Mr. Abhishek Pungliya for the Petitioner.
Mr. P.S. Dani, Senior Advocate a/w Mr. Nachiket Khaladkar for the
Respondent Nos. 1 and 2.
                               ....
                                                                                    Coram : A.A.Sayed, J.

Date : 18 April 2017

ORAL JUDGEMENT :

1 This Arbitration Petition is filed under section 11 of the Arbitration

and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration

Act") seeking appointment of a sole Arbitrator to adjudicate the

disputes between the Petitioner and the Respondent No.1.

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2           The Petitioner and the Respondent No. 1 had entered into a

Partnership Deed dated 10 December 2013 under the name of

'M/s. Avenue S.K. Builders'. The shares of Petitioner and Respondent

No. 1 in the net profit and losses was 50% each. The business of the

partnership was of sale and purchase of land and construction of

buildings. The Partnership Deed contained a clause (clause 14) for

reference to arbitration in case of any disputes between the parties.

3           The case of the Petitioner is as follows:

            (1)         Prior to entering into partnership with the object of starting

business in Pune, on the representation of Respondent No.1, the

Petitioner alongwith the Respondent No.1 had purchased a land

bearing Survey No.23/1A/1 admeasuring 5 Ares at Balwadi, Pune vide

Sale Deed dated 25 October 2011. After executing the Partnership

Deed dated 10 December 2013, the partnership firm 'M/s. Avenue S.K.

Builders' entered into a Development Agreement dated 10 December

2013 in respect of a land bearing Survey No.23/2A/1/7 admeasuring 5

Ares, Balewadi, Pune, with the owner Shrikant Chimaji Burk. The

owner of the land executed a Power of Attorney in favour of the

Respondent No.1 being a partner of the partnership firm. On execution

of the Development Agreement the partnership firm paid an amount of

Rs.50,00,000/- as and by way of refundable security deposit.

Inasmuch as on the day of the execution of the Agreement there was

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no bank account existing in the name of the partnership firm, as agreed

between the partners, the amount was paid from the proprietorship

account of Respondent No.1 standing in the name of "Avenue

Realtors" with State Bank of Mysore, Baner Branch, Pune. As the

Petitioner and the Respondent No.1's share in the partnership firm was

50% each, it was incumbent on both the partners to invest an amount

of Rs.25,00,000/- each as their respective shares. However, the

Respondent No.1 represented to the Petitioner that he was not in a

position to contribute the whole of his share and requested the

Petitioner to invest an amount of Rs.40,00,000/- with the assurance

that the Respondent No.1 would recompensate the same later. Thus,

on the representations of the Respondent No.1, the Petitioner as a

partner of M/s. Avenue S.K. Builders transferred an amount of

Rs.40,00,000/- on the very next day i.e. 11 December 2013 to the

account held by the Respondent No.1 in State Bank of Mysore, Baner

Branch, Pune. Thereafter, the partnership firm M/s. Avenue S.K.

Builders by Sale Deed dated 1 January 2014 purchased the land

bearing Survey No.62/1/1, Baner, Pune, admeasuring 4 Ares from Mrs.

Sushama Jayprakash Agarwal for a consideration of Rs.95,00,000/-.

(2) Out of the total consideration of Rs.95,00,000/- payable to

the owner of the land Mrs. Sushma Jayprakash Agarwal, a sum of

Rs.75,00,000/- was contributed by the Petitioner from his proprietorship

current account with Bank of Maharashtra, CBD Belapur Branch. The

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balance consideration of Rs.20,00,000/- was contributed by the

Respondent no.1 with due representation at the relevant time that as

he was undergoing certain financial difficulties he would be paying

back his share of the contribution to the Petitioner subsequently. Thus,

the Petitioner acting in good faith, transferred the amount of

Rs.75,00,000/- to the account of the partnership firm. The Petitioner

had paid almost 80% of the consideration amount though he was

bound to invest only 50% of it as per the ratio sharing stipulated in the

Partnership Deed.

(3) Inasmuch as the Petitioner had invested 80 to 90% of the

purchase price of the properties purchased in the partnership firms

name, the Petitioner was entitled to get himself reimbursed the amount

in excess invested by him. Consequently the Petitioner was paid a sum

of Rs.25,00,000/- in the month of December 2014 and a sum of

Rs.25,00,000/- in the month of January 2015. The Petitioner further

required an amount of Rs.25,00,000/- as he was facing certain financial

liquidity problems and requested Respondent No.1 for a sum of

Rs.25,00,000/- as and by way of loan. The Respondent No.1

represented that the Petitioner could borrow the amount required from

the partnership firm itself and issued a cheque dated 15 February 2015

drawn from the account of the partnership firm. However, when the

cheque was presented for payment, the same was dishonoured with

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the reason "payment stopped by drawer". The Petitioner was duly

surprised and called up the Respondent No.1 who represented that he

had intentionally instructed for stop payment as there was no sufficient

funds in the partnership account and it was better that the Petitioner

arranged for the funds separately. The Petitioner though was disturbed

did not anticipate any mischief or wrongdoings at that particular point of

time by the Respondent No.1. Though initially the Respondent no.1

was quite responsive and amenable to the involvement of the

Petitioner as a partner in the business, the Respondent No.1 slowly

started ignoring the Petitioner and at one particular point of time, even

refused to show the accounts of the partnership business. When the

Petitioner visited Pune in the month of April 2014, he was shocked to

see that the name of the partnership firm on the signboard was

changed from "M/s. Avenue S.K. Builders" to "M/s. Avenue Realty". On

enquiry, the Respondent No.1 even refused entry to the Petitioner on

the ground that the Petitioner was no more a partner and stated that

the Petitioner has retired from the partnership firm and the partnership

firm was being run by the Respondent No.1 and his wife and that he

was not entitled to ask from any records. Surprised at this volte face,

the Petitioner realized that the Respondent No.1 had committed fraud

on the Petitioner and cheated him.

(4) The Petitioner thereafter, immediately approached

Corporation Bank, Baner Branch, Pune, seeking for the account

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statement of the partnership firm. However, to the shock of the

Petitioner, he was refused any details on the ground that he had no

authority. The Bank officials represented to the Petitioner that by virtue

of two separate documents deposited with them, the Petitioner was no

more a partner of the partnership firm. The Petitioner realized that the

Respondent No.1 had cheated the Petitioner and had executed

fraudulent documents. Therefore, the Petitioner immediately addressed

a letter dated 9 April 2015 (which due to typographical error is referred

to as 9 April 2014) to the Corporation Bank, Baner Branch, Pune,

stating that the Petitioner has been cheated and he has not signed any

documents and sought for freezing of the account. However, as the

account was not freezed by the Bank, the Petitioner followed up the

request by his letter dated 4 May 2015. The Petitioner also insisted for

the copies of the documents deposited by the Respondent No.1 with

the Bank which the Bank was initially reluctant to share with the

Petitioner.

(5) After constant follow up in response to a written

Application/letter dated 20 May 2015, the Bank furnished the copies of

two documents titled as Deed of Partnership dated 30 November 2014

and dated 1 December 2014 respectively. On perusal of the said

documents, the Petitioner was shell shocked. The Respondent No.1

had executed a document dated 30 November 2014 titled as 'Deed of

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Partnership', whereby the Respondent No. 1 had introduced his wife

Mrs. Leena Amit Sheth as a partner. The Petitioner was also shown

one of the executants of the said Deed and the signature of the

Petitioner is forged. In the said Partnership Deed, the share of the

Petitioner was reduced to 25% from the existing 50%. The Respondent

No. 1, by the said document also changed the name of the partnership

firm from 'M/s. Avenue S.K Builders' to 'M/s. Avenue Realty'

(Respondent No.2). The signature of the Petitioner has been forged

and the said document titled as 'Deed of Partnership' is a fraudulent

document and void-ab-initio. The Respondent No. 1 has also executed

another document on the very next day i.e. 1 December 2014 titled

'Deed of Partnership' wherein it is shown that the Petitioner had retired

from the partnership firm. The signature of the Petitioner in the said

document is also forged. In the said fraudulent document, it has been

shown that the Petitioner has expressed his desire to retire from the

partnership firm with effect from 1 December 2014 and that he had

released all his rights, title and interest in the partnership business. The

said document, was also forged and void-ab-initio and would have no

legal consequence.

(6) The Partnership Firm is titled as M/s. Avenue Realty

(Respondent No.2) and the name has been changed from the original

name of M/s. Avenue S.K. Builders and both the Partnership Deeds

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are one and the same. The Respondent No.1 has accepted huge

amounts from third parties by executing various Agreements in respect

of the construction being carried out in the partnership firm's property

bearing Survey No.23/2A/1/7, Balewadi, Pune, and has siphoned these

amounts. The Petitioner has filed a Complaint with the Chaturshringi

Police Station, however no action has been taken against the

Respondent No.1. The Petitioner has obtained an opinion from Mr.

Madhusudan Ghanekar, a handwriting expert in respect of the two

alleged Partnership Deeds dated 30 November 2014 and 1 December

2014 and the said expert has clearly opined that the signature of the

Petitioner has been forged.

(7) The Petitioner has also filed an Application under Section 9

of the Arbitration and Conciliation Act, 1996, bearing Miscellaneous

Civil Application No.503/2016 before the District Court, Pune. In the

said proceedings the Respondent No.1 appeared and challenged the

maintainability of the Application by filing a separate application on the

ground that the Petitioner had already retired from the partnership firm

and is not entitled to invoke the arbitration clause. However, the said

Application has been rejected by the District Court by its order dated 16

July 2016.

(8) In the said Application filed under section 9 of the

Arbitration and Conciliation Act, 1996, the Respondent No.1 himself

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has produced on record the two fraudulent Deed of Partnership dated

30 November 2014 and 1 December 2014. The fraudulent act of the

Respondent No.1 is exposed by the dissimilarity in the documents

procured by the Petitioner from the Corporation Bank and the

documents produced by the Respondents. The two Deed of

Partnership dated 30 November 2014 and 1 December 2014 furnished

by Corporation Bank to the Petitioner does not bear any signature of

the witness. However, the documents produced by the Respondent

No.1 bears supposedly the signature of the witness. This glaring

contrast in the documents itself evidences prima facie proof that the

documents being relied upon by the Respondent No.1 are murky and

establishes that these documents are forged.

(9) Under clause 14 of the Deed of Partnership dated 10

December 2013, there is an Arbitration clause stating that in case of

dispute between the partners, the same is to be settled by referring the

same to the Arbitrator. Accordingly, the Petitioner invoked the

Arbitration clause and issued a notice dated 18 March 2016 to the

Respondent No. 1 to refer the dispute to an Arbitrator and called upon

the Respondent No.1's consent to the nomination of Shri C.V. Atre,

Advocate, as the Arbitrator as named in the notice. The Respondent

No. 1 disputed the same by his Reply dated 22 April 2016 by falsely

contending that the Petitioner has voluntarily retired from the

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partnership firm and the Petitioner is no more partner and was not

entitled to invoke the arbitration clause. Inasmuch as, the parties have

failed to agree on the appointment of a sole Arbitrator within 30 days of

the Respondent No.1's receipt of the Petitioner's request for

appointment of a sole arbitrator this Court is requested to appoint a

sole arbitrator to adjudicate the disputes and differences between the

parties.

(10) In the notice dated 18 March 2016 addressed to the

Respondent No.1 invoking the Arbitration clause of the Deed of

Partnership dated 10 December 2013, the Petitioner inadvertently due

to a typographical error referred to the date of Partnership Deed as "30

November 2014" instead of "10 December 2013" and the word "M/s.

Avenue Realty" was used instead of "Avenue S.K. Builders". The

Petitioner therefore addressed another notice dated 14 June 2016

rectifying the said error. In essence the Arbitration clause in the Deed

of Partnership dated 10 December 2013 has been duly invoked. The

said notice dated 14 June 2016 has also been replied by reply dated

20 June 2016 where Respondent No.1 has not consented for

appointment of the Arbitrator. Consequently, the Petitioner is compelled

to file this petition under section 11 of the Arbitration and Conciliation

Act, 1996 for appointment of Arbitrator.

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4          Affidavit-in-Reply has been filed by the Respondent No.1

opposing the Petition. The case of the Respondent No.1 in the Reply is

as follows:

(i) It is denied that the Petitioner contributed an amount of

Rs.40,00,000/- into the partnership firm in order to acquire the

development rights in respect of the land bearing Survey No. 23/2A/1/7

situated at Balewadi, Pune, owned by one Shrikant Chimaji Burk. The

Petitioner and the Respondent No.1 had purchased the land bearing

Survey No. 23/1A/1 in individual names by virtue of the Sale Deed

dated 25 October 2011 and the said amount of Rs. 40,00,000/- was

deposited by the Petitioner essentially to utilize the same to commence

development activity on the land bearing Survey No.23/1A/1 which was

situated on the rear side of the land bearing Survey No. 23/2A/1/7

owned by Shrikant Chimaji Burk.

(ii) The Petitioner decided to retire from the said partnership

firm within the short time by accepting an amount of Rs. 75,00,000/-

from him and accordingly, the Petitioner had executed the said Deed of

Partnership (Deed of Retirement) on 1 December 2014 and in

pursuance of the same understanding, the Respondent No.1 had also

paid an amount of Rs.50,00,000/- to the Petitioner towards the amount

of compensation and it was agreed between the Petitioner and

Respondent No.1 to adjust the balance amount of Rs. 25,00,000/-

upon settlement of accounts of the Respondent No. 2 firm and

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alternatively upon settlement of accounts in another partnership firm

viz. M/s. Krish Enterprises in which he and the Petitioner are still

partners. It is denied that the amount of Rs. 50,00,000/- paid by the

Respondent No.1 was accepted by the Petitioner by way of refund

towards the excess amount.

5 The Petitioner had filed a Petition under Section 9 of the

Arbitration and Conciliation Act, 1996 being Misc. Civil Application

No.503/2016 before the District Court, Pune, in the month of April,

2016. An Application was filed by the Respondent No.1 challenging the

maintainability of the section 9 Petition. It is pointed out in the said

Application by the Respondent No.1 that the Petitioner cannot be

permitted to rely upon the arbitration clause in Deed of Partnership

dated 30 November 2014 as he is alleging the said Deed to be forged

(the Petitioner has relied upon the arbitration clause in the Deed of

Partnership dated 30 November 2014 in his averments in the section 9

Petition). It was only after this that the Petitioner issued second notice

dated 14 June 2014. The entire theory of the Petitioner having

committed typographical error in the first notice is false and an

afterthought. The Deed of Partnership dated 30 November 2014 was

executed under which his wife became a partner in the partnership firm

and Deed of Partnership dated 1 December 2014 by which the

Petitioner retired from the partnership firm. The Deed of Partnership

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dated 10 December 2013 is replaced by the Deed of Partnership

(Retirement of Petitioner) dated 1 December 2014. The Petitioner

cannot therefore rely on the clause of the Deed of Partnership dated 10

December 2013 as he has ceased to be a partner in the partnership

firm, unless the Petitioner gets the Deed of Partnership (Retirement of

Petitioner) dated 1 December 2014 declared as void and illegal. The

Handwriting Expert's Report issued by International Forensic Sciences

Private Limited on 13 August 2016 submitted by the Petitioner in the

Arbitration Petition filed by him in the Pune Court also confirms that the

signature of the Petitioner on the Deed of Partnership (Retirement of

Petitioner) dated 1 December 2014 is genuine. Hence, the issue of

fraud, forgery, cheating etc. needs to be tried by the Civil Court and

cannot be gone into by an Arbitrator and detail investigation would

necessary to be carried out by the Civil Court. No arbitration agreement

exists in the partners as on today and no relationship exists between

the parties as partners as on today and there was novation of contract

and therefore, the Arbitration Petition is liable to be dismissed.

6 An Additional Affidavit has been filed by the Respondent No.1,

wherein reference is made to the Police Complaint against the

Petitioner for threatening the Respondent No.1 on telephone. It is

averred that the Police has recorded the Statement of the Petitioner,

wherein he has admitted that he has retired from the partnership firm.

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7          Affidavit-in-Rejoinder has been filed by the Petitioner. He has

denied that he had stated to the Police that he has retired from the

partnership. He has averred that the signature appearing on the said

Statement is not his. It is contended that the fact that his signatures

on the alleged Reconstitution Deed dated 30 November 2014 and the

alleged Retirement Deed dated 1 December 2014 are forged is beyond

doubt and this is confirmed by the fact that copies of the alleged

Reconstitution Deed and the Retirement Deed produced to various

authorities/forums are different. Whereas the copies of the

Reconstitution Deed and the Retirement Deed submitted by the

Respondents to the Bank are obtained by the Petitioner from the

Corporation Bank, Baner Branch, Pune, show that there were no

witnesses, the copies of the alleged Deeds filed by the Respondent

No.1 in the proceedings of Regular Civil Suit No. 561/2016 in the Court

of C.J.S.D, Pune, (pertaining to stop work notice for construction) show

that there were two witnesses, Pappu Maurya and Raghav Kulkarni, to

the said alleged Deeds. In the criminal proceedings being Criminal

Case No.14718 of 2016 filed by the Respondent No.1, (in relation to

the alleged threat by the Petitioner on telephone), copies of the said

alleged Deeds submitted by the Respondent No.1 to the Abhyudaya

Bank, Baner Branch, Pune, and produced by the said Bank's officer in

the said criminal proceedings show that the said Deeds are executed in

presence of three witnesses including a third witness, Arun Bhat. The

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very fact that three different versions of his said Deeds dated 30

November 2014 and 1 December 2014 are submitted by the

Respondent No.1 to various authorities/forum proves that the Deeds

are fabricated and forged.

8 Affidavit-in-sur-Rejoinder has been filed by the Respondent No.

1. He has stated that the Petitioner is trying to mislead the Court by

producing report of hand-writing expert Shri. Ghanekar. He has

obtained the Statement from the record of the Police Station under the

Right to Information Act, 2005 and hence, genuineness of the

documents cannot be denied or doubted by the Petitioner. The

Petitioner has submitted the report before the Pune Court. The

Respondent No.1 had submitted a report of another handwriting expert.

Subsequently, the Petitioner submitted another detailed report issued

by one International Forensic Sciences Private Limited, Pune, in

respect of signatures on the Deed of Retirement. The third witness has

signed on the Deeds at the instance of the person in charge of the

liaisoning work on the apprehension that the Bank may raise an

objection.

9 I have heard the learned Counsel for the Petitioner and the

learned Senior Counsel for the Respondent.

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10         There is no dispute that the parties had initially entered into a

Partnership Deed dated 10 December 2013 and the said Partnership

Deed contained an arbitration clause (clause 14). Having provided for

resolution of disputes through arbitration, ordinarily, the parties cannot

be permitted to avoid arbitrator. There are, however, exceptions to this

and certain category of cases are not to be referred to arbitration

despite the arbitration agreement, as held by the Supreme Court. The

question for consideration is, having regard to the nature of dispute in

the present case where the Petitioner as come with the case that the

subsequent documents [Deed of Partnership (Reconstitution of firm)

dated 30 November 2014 and the Deed of Partnership (Retirement of

Petitioner) dated 1 December 2014] are forged and fabricated by the

Respondent No.1, whether, the matter is required to be referred to

arbitration by appointing an arbitrator or the matter would fall under the

exceptions indicated above and parties are to be left to take recourse

to the remedy of filing proceedings before a Court.

11 The Supreme Court in a recent judgment dated 4 October 2016

in the case of A. Ayyasamy Vs. A. Paramastivam and Ors., (2016)

10 SCC 386, after reviewing the various judgments on this aspect has

held that mere allegation of fraud simplicitor is not a ground to nullify

effect of arbitration agreement between the parties. However, in certain

cases the arbitration clause can be ignored by the Court and the Court

may refuse reference to arbitration particularly in cases of serious

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allegations of fraud/fabrication of documents where the fraud goes to

the validity of the contract itself. Though the Supreme Court in that

case was dealing with Section 8 of the Arbitration Act, the principles

laid down in the said judgment would be applicable to the present case

filed under Section 11 of the Arbitration Act. His Lordship Dr. Justice

A.K. Sikri, in paras 14, 23 and 25 of the judgment has held as follows:

"14 In the instant case, there is no dispute about the arbitration agreement inasmuch as there is a specific arbitration clause in the partnership deed. However, the question is as to whether the dispute raised by the respondent in the suit is incapable of settlement through arbitration. As pointed out above, the Act does not make any provision excluding any category of disputes treating them as non-arbitrable. Notwithstanding the above, the Courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. The Courts have held that certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, cannot be referred to arbitration. The following categories of disputes are generally treated as non- arbitrable (See O.P. Malhotra on 'The Law and Practice of Arbitration and Conciliation', 3rd Edn., authored by Indu Malhotra. See also note 10 ibid.):

(i) patent, trademarks and copyright;

(ii) anti-trust/competition laws;

(iii) insolvency/winding up;

(iv) bribery/corruption;

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                          (v) fraud;

                          (vi) criminal matters.

Fraud is one such category spelled out by the decisions of this Court where disputes would be considered as non-

arbitrable.

23 A perusal of the aforesaid two paragraphs brings into fore that the Law Commission has recognized that in cases of serious fraud, courts have entertained civil suits. Secondly, it has tried to make a distinction in cases where there are allegations of serious fraud and fraud simplicitor. It, thus, follows that those cases where there are serious allegations of fraud, they are to be treated as non-arbitrable and it is only the civil court which should decide such matters. However, where there are allegations of fraud simplicitor and such allegations are merely alleged, we are of the opinion it may not be necessary to nullify the effect of the arbitration agreement between the parties as such issues can be determined by the Arbitral Tribunal.

25 In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simpliciter may not be ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court on the appreciation of the voluminous evidence that needs to

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be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself. Reverse position thereof would be that where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no implication in the public domain the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an issue in an application under Section 8 of the Act, the focus of the court has to be on the question as to whether jurisdiction of the court has been ousted instead of focusing on the issue as to whether the court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as non-arbitrable. Such categories of non-arbitrable subjects are carved out by the courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication and settlement by arbitration and for resolution of such disputes, courts i.e. public fora, are better suited than a private forum of arbitration. There, the inquiry of the Court, while dealing with an application under Section 8 of the Act,

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should be on the aforesaid aspect viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between that parties. When the case of fraud is set up by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry into the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject-matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be rejected.

12 His Lordship Dr. Justice D.Y. Chandrachud, in a separate

judgment while supplementing judgment and agreeing with the reasons

of His Lordship Dr. Justice A.K. Sikri added his own reasons. In para

57, His Lordship has concluded thus:

"57. For the above reasons, I agree with the eloquent judgment of my learned Brother in coming to the conclusion that a mere allegation of fraud in the present case was not sufficient to detract from the obligation of the parties to submit their disputes to arbitration. I also agree with the directions issued. A fresh line must be drawn to ensure the fulfillment of the intent of Parliament in enacting the 1996 Act and towards supporting commercial understandings grounded in the faith in arbitration."

13 In the instant case, the Petitioner himself has come with the case

that subsequent to the initial Deed of Partnership dated 10 December

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2013 there were two documents viz. (1) Deed of Partnership

(Reconstitution of the firm) dated 30 November 2014 in which the

Petitioner's share in the Deed of Partnership dated 10 December 2013

was reduced from 50% to 25% and the wife of Respondent No.1 was

inducted as a partner and (2) Deed of Partnership (Retirement of

Petitioner) dated 1 December 2014 in which the Petitioner is shown to

have retired from the partnership firm) were forged and fabricated

documents and the signatures contained therein, are not his signatures

and it amounts to cheating and fraud. The parties have also relied upon

atleast three Reports of handwriting Experts which favour them. In my

view, the acts alleged constitute serious criminal offences and would

involve complex issues and scientific and forensic evidence including

that of independent Experts would be necessary to adjudicate the

dispute. The existence or non-existence of the initial Partnership Deed

hinges on the existence or non-existence of the Partnership Deed

(Retirement of Petitioner) dated 10 December 2013 by which the

Petitioner is stated to have retired. In my view, considering the nature

of dispute, it would be appropriate that the same are decided in a Court

of law.

14 This is not a case that the Petitioner has come forward under

Section 11, and the Respondent No.1 in order to avoid arbitration has

alleged forgery/fabrication/fraud. This is a case where the Petitioner

himself has come with a case alleging forgery/fabrication/fraud by the

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Respondent No.1 with an intention to cheat him. The validity or

otherwise of the initial Partnership Deed dated 10 December 2013 is

itself in dispute and the entire case rests on the issue whether the

subsequent documents i.e. Deed of Partnership (Reconstitution of firm)

dated 30 November 2014 and Deed of Partnership (Retirement of

Petitioner) dated 1 December 2014, are forged and fabricated or are

genuine. Considering the exposition of law laid down by the Supreme

Court in the aforesaid case of A. Ayyasamy Vs. A. Paramasivam &

Ors. (supra) which considers most of the earlier judgments, it is not

necessary for me to deal with all the judgments cited by the learned

Counsel for the Petitioner. However for the sake of completion of

record it my be stated that learned Counsel for the Petitioner has cited

the following judgments:

1 Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway Petroleums (2003) 6 SCC 503;

2 Swiss Timing Limited Vs. Organizing Committee, Commonwealth Games 2010, Delhi, AIR 2014 Supreme Court 3723;

3 Avitel Post Studioz Ltd. & Ors. Vs. HSBC PI Holdings (Mauritius) Ltd, Appeal No. 196 of 2014, decided on 31 July 2014 (Division Bench of this Court);

4 Shri. Roshan Lal Gupta Vs. Shri. Parasram Holdings Pvt. Ltd. & Anr., OMP 205/1997 & RSA 131/2002 decided on 11 February 2009 (High Court of Delhi, at New Delhi);

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            5          K.N. Venkiteshwara Pai & Anr. Vs. K.G. Sathish
                       Chandra Babu & Ors., AR. No. 10 of 2010 (High
                       Court of Kerala);
            6          HSBC PI Holdings (Mauritius) Limited Vs. Avitel

Post Studioz Limited & Ors.,Arbitration Petition No. 1062 of 2012 (Single Bench of this Court);

            7          M/s. Sundaram Finance Limited and Anr. Vs. T.

                       February 20 2015 (Supreme Court of India);
            8          Sundeep Kumar Bafna Vs. State of Maharashtra &
                       Anr., AIR 2014 Supreme Court 1745;
            9          VBHC, Mumbai Value Homes Pvt. Ltd. Vs. Laxman
                       Bhoir & Ors. MANU/MH/2008/2015;
           10          State of west Bengal & Ors. Vs. Associated Contractors
                       (2015) 1 Supreme Court Cases 32.

15         Though the learned Counsel for the Petitioner vehemently urged

that this Court ought to follow the judgment in the case of Hindustan

Petroleum Corporation Limited vs. Pinkcity Midway Petroleums

(supra) which was earlier in point of time than the case of A.

Ayyasamy v/s. A. Paramasivam & ors. (supra), I am unable to accept

his contention. That was a case pertaining to Dealership of Petroleum

products and did not involve any serious offences under the Indian

Penal Code or validity of the arbitration Agreement itself. The said case

is therefore distinguishable on facts. It is pertinent to note that the

Petitioner himself has filed a Complaint being Criminal Complaint

No.4819/2016 before the Judicial Magistrate First Class, at Pune

against the Respondent No.1 and has added two other persons as

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accused who are alleged to be the witnesses in the aforesaid two

subsequent documents. In this Complaint not only the Petitioner

alleged fraud and forgery of the aforesaid two documents, but also of

Form B in respect of partnership firm of M/s. Avenue S.K. Builders

dated 27 January 2015 notarized on 1 February 2015 before a Notary.

According to the Petitioner he had never gone to the office of the said

Notary. The Complaint of the Petitioner alleges that the Respondent

No.1 has committed serious offences under section 409, 420, 467, 468,

471 read with Section 120 (A) of the Indian Penal Code. Under Section

468 of Indian Penal Code, forgery with an intention that the document

forged shall be used for the purpose of cheating is punishable with

imprisonment for a term which may extend to seven years, apart from

fine.

16 Where the actions alleged tantamount to/constitute serious

offences which goes to the validity of the arbitration Agreement itself, it

would only be appropriate that the trial is conducted in a Court of law

and the witnesses are cross-examined in a witness box in an open

Court room and not a closed door private forum. In the present case,

as indicated earlier, both the parties have relied upon opinions of hand-

writing experts which are favourable to them. If the trial is conducted in

a Court, if necessary, the documents can be sent to independent

Government Agencies and the Court can issue appropriate and

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effective directions in that behalf. The deterrence of rigours of being

cross-examined in a Court of law vis-a-vis an arbitral tribunal behind

closed doors, cannot be overlooked in cases where the acts alleged

tantamount to serious criminal offences. The subject matter of dispute

has an eminently criminal profile and it would be more suitable and

appropriate that the case is tried in a Court of law.

17 In these circumstances, on facts, I am satisfied that the

allegations of forgery and fabrication of the subsequent Partnership

Deeds constitute serious criminal offences which permeates the

original Deed of Partnership and goes to the validity of the said Deed of

Partnership itself and the arbitration clause contained therein. The

allegations of fraud are very serious in nature and can in no manner be

said to be allegations of fraud simplicitor.

18 In light of the above discussion, no relief can be granted to the

Petitioner. The Petition is dismissed. No order as to costs. It will be

open for the Petitioner to take recourse to the remedy of filing

proceedings in a Court of law.

(A.A.Sayed, J.)