The Supreme Court of India has ruled that disputes cannot be sent to arbitration when the very document containing the arbitration clause is alleged to be forged. In a detailed judgment delivered on February 2, 2026, the top court held that arbitration is based on consent, and such consent cannot be presumed when the existence of the agreement itself is in serious doubt.
The ruling came in cross-appeals arising from a long-running partnership dispute between Rajia Begum and Barnali Mukherjee, involving claims of forged documents and conflicting High Court orders.
Background of the Case
The dispute traces back to a partnership firm, M/s RDDHI Gold, formed in 2005. Barnali Mukherjee and two others were the original partners. Rajia Begum later claimed that she was inducted into the firm through a deed dated April 17, 2007, known as the Admission Deed. This document allegedly recorded the retirement of two partners and included an arbitration clause.
Mukherjee strongly denied this claim. She asserted that the Admission Deed was never executed and was a forged and fabricated document. According to her, Begum was never a partner and had no ownership stake in the firm.
The conflict deepened when Begum surfaced the Admission Deed for the first time in 2016 nearly nine years after its alleged execution claiming a majority share in the partnership.
Multiple proceedings followed. Begum first approached the civil court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection. The High Court rejected her plea, noting that the very existence of the Admission Deed was doubtful. This finding later attained finality when the Supreme Court dismissed the challenge to that order.
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Meanwhile, Mukherjee filed a civil suit seeking a declaration that the Admission Deed was forged. Begum responded by seeking reference of the suit to arbitration under Section 8 of the Act. Both the trial court and appellate court refused, citing serious allegations of fraud and Begum’s failure to produce the original deed.
However, the High Court later intervened under Article 227 of the Constitution and referred the dispute to arbitration. At the same time, in a parallel proceeding, the High Court refused to appoint an arbitrator under Section 11, holding that the existence of the arbitration agreement itself was in doubt.
These contradictory outcomes led both sides to approach the Supreme Court.
Court’s Observations
A Bench comprising Justice Alok Aradhe and Justice P.S. Narasimha examined whether arbitration could be invoked when the arbitration clause was embedded in a document alleged to be forged.
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The Court noted several red flags. It pointed out that Begum’s husband, who was said to have retired from the firm in 2007, admittedly continued to act as a partner until 2010. The alleged Admission Deed also found no mention in any records for nearly a decade.
“The arbitration clause does not exist independently but is embedded in a document whose existence is seriously disputed,” the Bench observed, adding that arbitration “is founded upon consent” and such consent must be shown even at a prima facie level.
The Court emphasized that allegations of fraud going to the root of the arbitration agreement itself fall into the category of non-arbitrable disputes.
Final Decision
Setting aside the High Court’s order that had referred the civil suit to arbitration, the Supreme Court held that the dispute was not fit for arbitration at this stage. It restored the concurrent findings of the trial court and appellate court, which had refused to invoke arbitration due to serious allegations of fraud.
At the same time, the Court upheld the High Court’s earlier decision refusing to appoint an arbitrator under Section 11, calling such an appointment “premature and legally impermissible” when the existence of the arbitration agreement itself is under a cloud.
In conclusion, the Court dismissed Begum’s appeal and allowed Mukherjee’s appeal, bringing the arbitration proceedings to a halt. No costs were imposed.
Case Title: Rajia Begum v. Barnali Mukherjee
