Uttarakhand High Court
Mr. Arvind Vashisth vs Parvathini on 9 September, 2022
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
SRI JUSTICE VIPIN SANGHI, C.J.
9th SEPTEMBER, 2022
ARBITRATION APPLICATION NO. 01 OF 2022
Between:
Dr. Sumantu Virmani ......Applicant
and
Shri S.K. Kapoor and others. ....Respondents
Counsel for the applicant : Mr. Arvind Vashisth, learned Senior
Counsel with Mr. Kaushal Pandey,
learned counsel.
Counsel for the respondents : Mr. Pankaj Miglani, learned counsel.
Upon hearing the learned Counsel, the Court made the
following
ORDER:
Mr. Arvind Vashisth, learned Senior Counsel for
the applicant, submits that the reliance placed by the
respondents on the decision of the Supreme Court in the
case of Velugumanti Hari Babu vs. Parvathini
Narasimha Rao and another, (2016) 14 SCC 126, Para
23, is inappropriate, inasmuch, as, in the later decision in
the case of N.N. Global Mercantile Private Limited vs.
Indo Unique Flame Limited and others, (2021) 4 SCC
379, the Supreme Court has observed that the earlier view
that an Arbitral Tribunal cannot determine the allegations of
fraud, and such disputes are not arbitrable, is an archaic
view, which has become obsolete, and deserves to be
discarded. He has placed reliance on Paragraphs 50 and 51
of the said decision, which read as under:-
"50. The ground on which fraud was held to be
non arbitrable earlier was that it would entail
voluminous and extensive evidence, and would be
too complicated to be decided in arbitration. In
contemporary arbitration practice, Arbitral
Tribunals are required to traverse through
volumes of material in various kinds of disputes
such as oil, natural gas, construction industry, etc.
The ground that allegations of fraud are not
arbitrable is a wholly archaic view, which has
become obsolete, and deserves to be discarded.
However, the criminal aspect of fraud, forgery, or
fabrication, which would be visited with penal
consequences and criminal sanctions can be
adjudicated only by a court of law, since it may
result in a conviction, which is in the realm of
public law.
51. In the present case, the allegations of fraud
with respect to the invocation of the bank
guarantee are arbitrable, since it arises out of
disputes between parties inter se, and is not in
the realm of public law."
2. I may observe that while the decision in Vallu K Hari
Babu (supra) is a decision of two Hon'ble Judges of the
Supreme Court, the decision in N.N. Global Mercantile
Private Limited (supra) is a decision of three Hon'ble
Judges. It is also subsequent judgment, which considers
the earlier decision of the Supreme Court, which held that
the issues of fraud are not arbitrable.
3. The dispute between the parties, as arisen before me,
is regarding as to which of the two agreements produced
before the Court-one by the applicant and the other by the
opposite parties, is the correct agreement. The difference in
the two agreements is in relation to certain terms and
conditions, which have a bearing on the percentage of rights
and profits of the partnership business. However, both the
agreements contain the same Arbitration Clause. Both the
parties are alleging against each other that the agreement
produced by them is a genuine one, and the agreement
produced by the other party is forged and fabricated.
4. Learned counsel for the respondents seeks a short
adjournment to examine the judgment in N.N. Global
Mercantile Private Limited (supra).
5. At his request, list on 30.09.2022.
________________
VIPIN SANGHI, C.J.
Dt: 9th September, 2022
Rathour
