Allegations of fraud or forgery do not preclude Section 11 referral where disputes require evidence.

Tata Capital Limited filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking appointment of a sole arbitrator for disputes arising under a Loan-cum-Guarantee Agreement dated 12 December 2024.

Respondent No. 2 initially appeared in person and indicated that the dispute might be settled through mediation; however, the mediation failed.

Respondent No. 2 thereafter objected that no agreement existed with the Petitioner and alleged that the documents relied upon were forged and fabricated.

The Petitioner maintained that a valid arbitration clause existed between the parties.

The Petitioner claimed approximately ₹26 lakhs.

1. Whether, at the stage of a petition under Section 11(6) of the Act, the Court should undertake a detailed examination of allegations concerning the genuineness, execution, forgery or fabrication of the underlying agreement.

2. Whether the allegations of fraud and forgery raised by Respondent No. 2 justified refusal to refer the disputes to arbitration and appointment of a sole arbitrator.

3. Whether a sole arbitrator ought to be appointed to adjudicate the disputes arising between the parties.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, under which the judicial enquiry is confined to examining the prima facie existence of an arbitration agreement.

Relying on SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754, the Court held that a detailed examination of the genuineness, execution or substantive validity of the underlying agreement is generally beyond the limited Section 11 jurisdiction where it requires appreciation of evidence.

The Court also relied on Triom Hospitality v. J.S. Hospitality Services (P) Ltd., 2025 SCC OnLine Del 8647, for the principle that allegations of fraud and forgery requiring examination of disputed documents and evidence should ordinarily be left for determination by the arbitral tribunal under Section 16 of the Act.

The Court treated Respondent No. 2’s allegations of forgery, fabrication and non-execution as matters requiring substantive examination of disputed documents and evidence.

Such an enquiry would exceed the prima facie jurisdiction contemplated under Section 11.

The mere assertion of fraud or forgery therefore could not, by itself, justify refusing reference to arbitration.

The Court accordingly left all questions concerning the existence, validity and enforceability of the arbitration agreement open for determination by the arbitral tribunal under Section 16, while appointing an arbitrator to adjudicate the disputes.

The arbitrator was directed to enter upon the reference within three weeks and furnish the requisite disclosures under Section 12(2) within two weeks of entering upon the reference.

The arbitration was directed to be conducted under the rules and aegis of the Delhi International Arbitration Centre, with fees payable according to the DIAC Schedule of Fees.

The parties were permitted to raise all objections, including those concerning arbitrability and the existence or validity of the arbitration agreement, before the arbitrator.

The Court clarified that its observations were limited to disposal of the Section 11 petition and would not influence the arbitrator’s independent adjudication on merits.

The petition was disposed of accordingly.