Absence of Proof of Execution of Main Agreement Negates Existence of Incorporated or Independent Arbitration Clause

The Petitioner, a consultancy firm, claimed it entered into a Consultancy Agreement (CA) dated 07.07.2014 with the Respondent to provide services for a power distribution tender in Bihar.

Following a dispute over an unpaid invoice dated 01.07.2017, the Petitioner invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996.

The Supreme Court, in a prior appeal, set aside a High Court finding that a contract concludedly existed, instead directing the Sole Arbitrator to decide as a preliminary issue whether an arbitration agreement existed between the parties.

The Arbitrator subsequently issued an award on 07.08.2023, finding that the CA was not executed, signatures were forged, and no independent agreement was formed through subsequent correspondence.

The Petitioner challenged this award under Section 34 of the Act.

1. Whether the Arbitrator erred in finding that the Consultancy Agreement (CA) dated 07.07.2014 was not executed and that the signatures were forged.

2. Whether an independent arbitration agreement was concluded through correspondence exchanged between the parties subsequent to 07.07.2014.

3. Whether the arbitral award suffered from patent illegality or perversity warranting interference under Section 34 of the Act.

The Court applied Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to grounds of patent illegality, contravention of fundamental policy of Indian law, or basic notions of justice.

It relied on *Vidya Drolia v. Durga Trading Corpn.* regarding the "prima facie" review of arbitration agreements.

It relied on *Ramesh Kumar Jain v. BALCO* (2025) and *Consolidated Construction Consortium Ltd. v. STPI* (2025) to affirm that Section 34 is not an appellate provision and courts cannot re-appreciate evidence or correct mere factual/legal errors unless they are perverse.

The Court observed that the Petitioner failed to discharge the initial onus of proving the CA's execution.

Several factors supported the Arbitrator’s finding of forgery and non-execution: the agreement was notarized in Faridabad despite neither party having a presence there; the notary’s license had expired; and witnesses were not examined.

Furthermore, an email dated 15.07.2014 (after the alleged execution date) showed the parties were still exchanging drafts, proving no concluded contract existed on 07.07.2014.

Regarding the alternative plea of an "agreement by correspondence," the Court held it was inconsistent with the primary plea of a signed CA.

Even on merits, the correspondence showed ongoing negotiations rather than a *consensus ad idem*, as the Petitioner had rejected financial terms in subsequent emails.

The Court found the Arbitrator’s reasoning plausible and held that a "roving inquiry" to find jurisdiction is not permissible once the foundation of the referral (the CA) is found to be non-existent.

The Court affirmed that it cannot sit in appeal or re-evaluate evidence under Section 34.

The final holding is that no arbitration agreement existed between the parties, and the award dated 07.08.2023 is upheld.