Madras HC Appoints Arbitrator In Land Deal, Citing Aggregator’s Own Acquisition Letter Despite His Forgery Claim

The petitioners alleged that they entered into a Land Aggregator Agreement with the respondent on 06.03.2016, under which he agreed to acquire an adjacent 24½-cent plot and convey it to them for ₹90 lakh, paid in cash

The respondent later acquired the property from Moses by settlement deed dated 02.03.2022 and, by letter dated 12.01.2023, reportedly confirmed the acquisition and promised to complete the sale; instead, he executed a power of attorney in favour of a third party

The respondent disputed the agreement as forged and denied receiving payment, taking differing positions in his pleadings

The petitioners sought appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, and interim restraint under Section 9

Section 11 of the Arbitration and Conciliation Act, 1996 empowers the Court to appoint an arbitrator where the statutory requirements for appointment are met; a dispute over the genuineness or execution of an agreement containing an arbitration clause may, in an appropriate case, be considered by the arbitral tribunal as a preliminary issue

In Salson Liquors Private Limited v. United Spirits Limited, the Supreme Court held that such questions may be left to the arbitrator, with the parties’ contentions kept open.

Rajia Begum v. Barnali Mukherjee recognises that a serious dispute about the existence of an underlying agreement may prevent referral in exceptional circumstances, including where the document is absent from contemporaneous records, lacks a standalone arbitration clause, and prior Section 9 proceedings have produced a prima facie finding against its existence.

Sections 9 and 17 provide for interim measures by the Court and arbitral tribunal, respectively; Section 16 permits the tribunal to rule on its jurisdiction

The Court found that the respondent’s letter acknowledging the acquisition and promising registration, together with his inconsistent pleadings, distinguished the case from Rajia Begum and meant that the existence of the arbitration clause was not genuinely in doubt.

It considered the forgery allegation insufficient to defeat referral at the threshold and, applying Salson Liquors, held that the arbitrator could consider the genuineness and execution objections as preliminary issues, leaving the parties’ contentions open.

To preserve the subject matter pending that determination, the Court continued the existing interim order until the arbitrator decided a Section 17 application.

It continued the interim order in O.A. No. 528 of 2025 until the arbitrator decides the petitioners’ Section 17 application, which they were permitted to file within 30 days of the arbitrator entering upon the reference.

The respondent was permitted to raise a Section 16 challenge; all other contentions were left open, and there was no order as to costs.