Bombay High Court Allows Arbitration Despite Forgery Allegation in Family Property Dispute
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TL;DR
- Bombay High Court held that an allegation of forgery is not by itself sufficient to stop referral to arbitration under Section 11.
- The dispute concerns redevelopment rights over the family property, Patkar House.
- The court found prima facie evidence of an arbitration agreement despite the forgery claim.
- A Sole Arbitrator was appointed to resolve the dispute.
Overview
The Bombay High Court considered whether an allegation of forgery could prevent referral to arbitration under Section 11 of the Arbitration and Conciliation Act, 1996. In this family property redevelopment dispute, the court held that mere allegations of forgery do not automatically bar arbitration if there is independent material supporting the existence of an arbitration agreement. The court appointed a Sole Arbitrator and left all substantive objections for the arbitral tribunal to determine.
What Happened
The applicant, son of the deceased, sought reference to arbitration under Section 11 concerning redevelopment rights over the family property known as 'Patkar House'.
The respondents, including his mother, contested the existence and execution of the Development Agreement, alleging it was never signed by the now-deceased, elderly father, who was alleged to be bedridden and unable to understand English.
The High Court assessed whether the mere allegation of forgery was enough to bar arbitration, referencing the Supreme Court's Rajia Begum decision.
The court found that the material on record-including a registered Will and a subsequent Gift Deed referring to the redevelopment arrangement-provided prima facie evidence supporting the arbitration agreement's existence.
Consequently, the court appointed a Sole Arbitrator to decide the matter and clarified that all substantive objections, including those about forgery, validity, and non-signatory status, are to be decided by the arbitral tribunal.
Context
Section 11 of the Arbitration and Conciliation Act, 1996 prescribes procedures for court referral to arbitration when parties cannot agree on the appointment of an arbitrator.
The dispute arises in the context of a redevelopment agreement regarding a family-owned property in Mumbai, where allegations regarding a potentially forged agreement were raised.
The decision references and interprets the Supreme Court's ruling in Rajia Begum (2026 SCC OnLine SC 135) on threshold tests for non-existence of arbitration agreements in the face of forgery or fraud claims.
Why It Matters
- Clarifies that Indian courts will not deny reference to arbitration solely on allegations of forgery when independent material supports the existence of the arbitration agreement.
- Affirms the tribunal's power to determine substantive objections such as forgery, validity, and non-signatory status post-referral.
- Provides guidance for future arbitration referral applications under Section 11 of the Arbitration and Conciliation Act.