section 9 of the Arbitration and Conciliation Act, 1996 [“1996 Act”] -Share Subscription Agreement [“SSA”] was entered into between HSBC and the Appellants.- HSBC has made out a strong prima facie case necessitating that USD 60 million, being the principal amount awarded to them, is kept apart in the manner indicated by the learned Single Judge of the Bombay High Court. The balance of convenience is also in its favour. It is clear that in case HSBC was to enforce the Foreign Final Award in India in accordance with section 48 of the 1996 Act, irreparable loss would be caused to it unless at least the principal sum were kept aside for purposes of enforcement of the award in India. Accordingly, we dismiss Civil Appeal No.5145 of 2016 filed by Avitel India and the Jain family, and allow Civil Appeal No.5158 of 2016 filed by HSBC.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5145 OF 2016
AVITEL POST STUDIOZ LIMITED & ORS. …APPELLANTS
VERSUS
HSBC PI HOLDINGS (MAURITIUS) LIMITED …RESPONDENT
AND
CIVIL APPEAL NO. 5158 OF 2016
HSBC PI HOLDINGS (MAURITIUS) LIMITED …APPELLANT
VERSUS
AVITEL POST STUDIOZ LIMITED & ORS. …RESPONDENTS
WITH
CIVIL APPEAL NO. 9820 OF 2016
J U D G M E N T
R.F. Nariman, J.

  1. These two appeals being Civil Appeal No. 5145 of 2016 by Avitel
    Post Studioz Ltd. [“Avitel India”] and its promoters [the “Jain family”],
    1
    and the cross appeal being Civil Appeal No. 5158 of 2016 by HSBC PL
    Holdings (Mauritius) Ltd. [“HSBC”], impugn the interlocutory judgment
    and order passed in the appeal under section 9 of the Arbitration and
    Conciliation Act, 1996 [“1996 Act”] dated 31.07.2014. To dispose of the
    said appeals, we refer to the facts in Civil Appeal No. 5145 of 2016. The
    brief facts necessary to appreciate the controversy that arises in the
    present case are as follows:
    (i) On 21.04.2011, a Share Subscription Agreement [“SSA”] was
    entered into between HSBC and the Appellants. HSBC made an
    investment in the equity capital of Avitel India for a consideration of USD
    60 million in order to acquire 7.8% of its paid-up capital. This SSA
    contained an arbitration clause which reads as follows:-
    “16. DISPUTE RESOLUTION
    16.1. Arbitration
    16.1.1. Any dispute, controversy or claim arising out of or in
    connection with this Agreement, including any question
    regarding its existence, validity, interpretation, breach or
    termination shall be referred to and finally resolved by
    binding arbitration at the Singapore International Arbitration
    Centre (“SIAC”) in accordance with the International
    Arbitration Rules in force at the date of this Agreement
    (“Rules”), which Rules are deemed to be incorporated by
    reference into this clause and as may be amended by the
    rest of this clause.
    16.1.2. The seat of arbitration shall be Singapore.
    16.1.3. The language of the arbitration proceedings shall be
    English.
    2
    16.1.4. The arbitration tribunal shall consist of three (3)
    arbitrators: the claimant party shall nominate one (1)
    arbitrator, the respondent party shall nominate one (1)
    arbitrator and the two (2) arbitrators thus appointed shall
    nominate the third arbitrator who shall be the presiding
    arbitrator (the “Arbitration Tribunal”). If there is more than
    one claimant party and/or more than one respondent party,
    the claimant parties (for the purposes of this Clause 16.1
    together a “party”) shall together designate one (1) arbitrator
    and the respondent parties (for the purposes of this Clause
    16.1 together a “party”) shall together designate one (1)
    arbitrator. If within 30 days of a request from the other party
    to do so, a party fails to designate an arbitrator, or if the two
    (2) arbitrators fail to designate the third arbitrator within 30
    days after the confirmation of the appointment of the second
    arbitrator, the appointment shall be made, upon request of a
    party, by the SIAC council in accordance with the Rules.
    16.1.5. If within 14 days of a request from the other party to
    do so, a party fails to nominate an arbitrator, or if the two (2)
    arbitrators fail to nominate the third arbitrator within 14 days
    after the confirmation of the appointment of the second
    arbitrator, the appointment shall be made, upon request of a
    party, by the SIAC council in accordance with the Rules.
    16.1.6. The parties waive any right to apply to any court of
    law and/or other judicial authority to determine any
    preliminary point of law and/or review any question of law
    and/or the merits, insofar as such waiver may be validly
    made. The parties shall not be deemed, however, to have
    waived any right to challenge any award on the ground that
    the tribunal lacked substantive jurisdiction and/or the ground
    of serious irregularity affecting the tribunal, the proceedings
    or the award to the extent allowed by the law of the seat of
    the arbitration.
    16.1.7. Nothing in this Clause 16.1 shall be construed as
    preventing any party from seeking conservatory or interim
    relief in any court of competent jurisdiction.
    16.1.8. Any award of the arbitration tribunal shall be made in
    writing and shall be final and binding on the parties from the
    day it is made and the parties agree to be bound thereby
    and to act accordingly. The parties undertake to carry out the
    award without delay.
    3
    16.1.9. During the conduct of any arbitration proceedings
    pursuant to this Clause 16.1, this Agreement shall remain in
    full force and effect in all respects except for the matter
    under arbitration and the parties shall continue to perform
    their obligations hereunder, except for those obligations
    involved in the matter under dispute, and to exercise their
    rights hereunder.
    16.2. Costs
    The costs and expenses of the arbitration, including the fees
    of the arbitration and the Arbitration Tribunal, shall be borne
    equally by each Party to the dispute or claim and each Party
    shall pay its own fees, disbursements and other charges of
    its counsel, except as may be determined by the Arbitration
    Tribunal. The Arbitration Tribunal would have the power to
    award interest on any sum awarded pursuant to the
    arbitration proceedings and such sum would carry interest, if
    awarded, until the actual payment of such amounts.
    16.3. Final and Binding
    It is agreed by the Parties that any award made by the
    Arbitration Tribunal shall be final and binding on each of the
    Parties that were parties to the dispute.
    16.4. Application of Arbitration Act
    Save for section 9, Part 1 of the Indian Arbitration and
    Conciliation Act, 1996 (the “Arbitration Act”), the provisions of
    Part 1 of the Arbitration Act shall not apply to the terms of
    this Agreement.”
    (ii) On 06.05.2011, the aforesaid parties entered into a Shareholders’
    Agreement [“SHA”] which defined the relationship between the parties
    after the SSA dated 21.04.2011 had been entered into. The SHA also
    contained an arbitration clause which was identical to the arbitration
    clause contained in the SSA. It is the case of HSBC that a
    representation had been made by Appellants No. 2-4 (the Jain family)
    4
    that the Appellants were at a very advanced stage of finalising a contract
    with the British Broadcasting Corporation [“BBC”] to convert the BBC’s
    film library from 2D to 3D. This contract was expected to generate a
    revenue of USD 300 million in the first phase, and ultimately over USD 1
    billion. It is the further case of HSBC that this investment of USD 60
    million was required by Avitel India to purchase equipment for Avitel Post
    Studioz FZ LLC [“Avitel Dubai”] to service the BBC contract (Avitel
    Dubai is a 100% subsidiary of Avitel Holdings Ltd., Mauritius [“Avitel
    Mauritius”], which, in turn, is a 100% subsidiary of Avitel India. Avitel
    India, Avitel Mauritius, and Avitel Dubai are collectively referred to as the
    “Avitel Group”).
    (iii) In early April 2012, HSBC grew suspicious about the Avitel Group’s
    business of digitising films and Ernst & Young and KPMG Dubai were
    appointed to inquire into and return findings as to the business activities
    of the Avitel Group. It is the further case of HSBC that they discovered,
    thanks to certain preliminary findings of Ernst & Young and KPMG
    Dubai, inter alia, that the purported BBC contract was non-existent and
    was set up by the Appellants to induce HSBC into investing the
    aforesaid money of USD 60 million in the shares of Appellant No. 1. It is
    also HSBC’s case that though Avitel Dubai received the entire
    investment proceeds of USD 60 million on or about 10.05.2011, it
    5
    appeared that around USD 51 million were not used to purchase any
    equipment to service the BBC contract, but appeared to have been
    siphoned off to companies in which the Jain family had a stake.
    (iv) As disputes arose between the parties, on 11.05.2012, notices of
    arbitration were issued by HSBC to the Singapore International
    Arbitration Centre [“SIAC”] to commence arbitral proceedings. On
    14.05.2012, the SIAC appointed Mr. Thio Shen Yi, SC, as an Emergency
    Arbitrator pursuant to an application dated 11.05.2012. On 17.05.2012,
    the Appellants’ challenge to the appointment of the Emergency Arbitrator
    was considered by the SIAC and rejected. On 25.05.2012, the
    Appellants filed their response to the notices of arbitration.
    (v) The Emergency Arbitrator then passed two Interim Awards dated
    28.05.2012 and 29.05.2012, in the SSA and the SHA, respectively, in
    favour of HSBC, directing the Appellants and Avitel Dubai to refrain from
    disposing of or dealing with or diminishing the value of their assets up to
    USD 50 million, and permitting HSBC to deliver a copy of the Interim
    Awards to financial institutions in India and the UAE with which any of
    the Appellants hold or may hold or be signatory to accounts, together
    with a request that the financial institutions freeze such accounts
    consistent with the Interim Awards. On 27.07.2012, the Emergency
    Arbitrator made an amendment to Interim Awards dated 28.05.2012 and
    6
    29.05.2012 passed in the SSA and the SHA, respectively, granting
    further relief to HSBC by, inter alia, directing the Appellants and Avitel
    Dubai to cease and desist from prohibiting or inhibiting Ernst & Young
    and KPMG Dubai from conducting investigations into the financial affairs
    of Avitel Dubai and Avitel Mauritius.
    (vi) On 30.07.2012, HSBC filed Arbitration Petition No. 1062 of 2012
    under section 9 of the 1996 Act in the Bombay High Court, inter alia
    seeking directions to call upon the Appellants to deposit a security
    amount to the extent of HSBC’s claim in the arbitration proceedings that
    had begun under both the SSA and the SHA.
    (vii) On 03.08.2012, a learned Single Judge of the Bombay High Court
    passed an interim order under the section 9 petition, inter alia directing
    the Corporation Bank to allow the Appellants to withdraw a sum of INR 1
    crore from their account on or before 09.08.2012, but not to allow any
    further withdrawals until further orders, till which time, the account was to
    remain frozen.
    (viii) Meanwhile, the Appellants challenged the jurisdiction of the threemember Arbitral Tribunal comprising of Mr. Christopher Lau, SC as its
    Chairman, and Dr. Michael C. Pryles and Justice (Retd.) Ferdino I.
    Rebello as co-arbitrators [“Arbitral Tribunal”] set up under the auspices
    7
    of the SIAC. On 25.09.2012, the Arbitral Tribunal decided that this would
    be decided as a preliminary issue. On 17.12.2012, the Arbitral Tribunal
    passed a unanimous “final partial award on jurisdiction”, dismissing the
    jurisdictional challenge, and stating that since Singapore law governs the
    arbitration agreement, allegations of fraud and complicated issues
    relating to facts are arbitrable.
    (ix) Meanwhile, in the section 9 petition pending before the Bombay
    High Court, an order was passed by a learned Single Judge dated
    22.01.2014, in which the Appellants were directed to deposit any
    shortfall in their account with the Corporation Bank so as to maintain a
    balance of USD 60 million. The learned Single Judge gave prima facie
    findings that the seat of arbitration was at Singapore and that the
    arbitration agreement was governed by Singapore law; hence,
    arbitrability of the dispute at hand would be governed by Singapore law.
    It held that the unanimous “final partial award on jurisdiction” dated
    17.12.2012, delivered by the Arbitral Tribunal in Singapore, upholding
    the jurisdiction of the Arbitral Tribunal to proceed, had not been
    challenged in Singapore by the Appellants, and further held that this
    being the case, since HSBC has a good chance of success in the final
    arbitral proceedings, the aforesaid order to deposit the shortfall in the
    account so as to maintain a balance of USD 60 million was passed.
    8
    (x) An appeal against the order of the learned Single Judge was
    disposed of by the impugned judgment and order of the Division Bench
    dated 31.07.2014, returning a prima facie finding that since Singapore
    law governs the arbitration agreement, there was no need to interfere
    with the findings of the learned Single Judge in this respect. Further, it
    was held that there is no estoppel in filing the present proceeding
    despite the Emergency Awards being passed in Singapore as the
    section 9 petition could be maintained on a plain reading of the
    arbitration agreement itself. It was further held that an issue of fraud in
    the context of sections 17 and 18 of the Indian Contract Act, 1872
    [“Contract Act”] referred to want of free consent, and was a wellaccepted ground that would vitiate the contract, rendering it voidable.
    After referring to various judgments of this Court, it was held that there
    was a distinction between the “suitability” and “arbitrability” of disputes,
    and on the facts of the present case, it could not be said that the dispute
    was not arbitrable because of an allegation of fraud made by HSBC.
    After then referring to the claim statement of HSBC before the Arbitral
    Tribunal at Singapore, it was held that the allegations of fraud and
    misrepresentation were primarily in the context of “fraud” and
    “misrepresentation” as defined in sections 17 and 18 of the Contract Act,
    thus establishing a civil profile of the disputes that had arisen between
    9
    the parties. However, after referring to certain judgments on interim
    mandatory injunctions, the High Court prima facie found that HSBC had
    carried out due diligence by engaging leading agencies like Ernst &
    Young and Clifford Chance. Also, it was held that the measure of
    damages that may ultimately be awarded may not be the amount of loss
    ultimately sustained by HSBC, but can at best be the difference between
    the price paid by HSBC in acquiring Avitel India’s shares and the price
    HSBC would have received had it resold the said shares in the market.
    This being the case, and an interim mandatory injunction being in the
    nature of equitable relief, the Division Bench was of the opinion that the
    interest of justice would be served if the Appellants are directed to
    deposit an additional amount equivalent to USD 20 million in its
    Corporation Bank account, so that the total deposit in the said account is
    maintained at half the said figure of USD 60 million, i.e., at USD 30
    million. The appeal against the order dated 22.01.2014 was therefore
    partly allowed.
    (xi) By a Final Award in the SSA dated 27.09.2014 [“Foreign Final
    Award”], the Arbitral Tribunal held as follows:
    “21. FORMAL FINAL AWARD
    21.1 The Tribunal has carefully considered the oral and
    documentary evidence as well as the submissions of the
    Parties and given due weight thereto and rejecting all
    submissions to the contrary hereby makes, issues and
    10
    publishes this Final Award and for the reasons set out above
    FINDS, AWARDS, ORDERS AND DECLARES as follows:
    21.2 Finds that the Respondents jointly and severally
    represented to the Claimant the following:
    a. the Avitel Group’s propriety stereoscopy
    technology was superior to that of its competitor;
    b. Avitel Dubai played an important role in the
    Avitel Group’s business;
    c. the Avitel Group was in advanced negotiations
    with the BBC and that the BBC Contract was
    close to execution;
    d. the Claimant’s investment was required and
    was to be utilized for purchasing equipment in
    order to enable Avitel Dubai to service the BBC
    Contract;
    e. the Avitel Group had the benefit of the Material
    Contracts with Kinden, SPAC and Purple
    Passion with a total value of approximately USD
    658 million;
    f. the Avitel Group’s key customers Kinden,
    SPAC and Purple Passion as well as Avitel
    Dubai’s key supplier, Digital Fusion, and key
    service provider, Highend, were all independent
    and legitimate companies;
    g. the representations and warranties contained
    in Clauses 6.1 and 6.2 of the SSA and in Clauses
    7.1, 7.3, 7.5 , 8, 10 and 11 of Schedule 3 of the
    SSA to be true, complete, accurate and not
    misleading;
    21.3 Finds that the Respondents made the representations
    and/or warranties in order to induce the Claimant to invest in
    the First Respondent;
    21.4 Finds that the Claimant did rely on the representations
    and/or warranties in making its investment in the First
    Respondent;
    21.5 Finds that the representations and/or warranties
    referred to in paragraph 21.2 (a) to (g) above were false
    and/or misleading;
    21.6 Finds that the Respondents made the representations
    and/or warranties referred to in paragraph 21.2 (a) to (g)
    11
    above knowing that these were false and/or without belief in
    their truth;
    21.7 Finds that the Respondents are jointly and severally
    liable to the Claimant in tort for deceit;
    21.8 Finds that the Respondents are jointly and severally
    liable to the Claimant for fraudulent misrepresentation under
    the Contract Act;
    21.9 Finds that the Respondents are jointly and severally
    liable to the Claimant for breach of warranty;
    21.10 Finds that the Second, Third and Fourth Respondents
    are to jointly and severally indemnify the Claimant for the
    loss of its investment in the amount of USD 60 million as well
    as for the costs of and associated with this arbitration and
    associated court actions;
    21.11 Finds that the Claimant in respect of its claim for
    fraudulent misrepresentation and its claim in tort for deceit is
    entitled to damages in the total amount of USD 60 million;
    21.12 Finds that the Claimant is entitled to interest on the
    sum of USD 60 million from 6 May 2011 to the date of this
    Final Award at the rate of 4.25 % per annum;
    21.13 Finds that the Claimant is entitled to its legal and other
    costs as well as the costs of the arbitration in the total
    amount of SGD 827,615.67 comprising of the following:
    (a) the amount of SGD 29,235.88 in respect of
    the Emergency Arbitrators fees and expenses
    (b) the amount of SGD 756,513.19 in respect of
    the Tribunal’s fees and expenses;
    (c) the amount of SGD 41,866.60 in respect of
    SIAC administrative fees and expenses;
    21.14 Finds that upon the Respondents’ paying in full and
    unconditionally the sums awarded to the Claimant in
    paragraphs 21.15, 21.16, 21.18, 21.19 below, the Claimant’s
    Preference Subscription Shares and Equity Subscription
    Shares (as defined in the SSA) in Avitel India are to be
    cancelled forthwith;
    21.15 Awards to the Claimant and Orders the Respondents
    to pay damages in the amount of USD 60 million in respect
    of which award the First, Second, Third and Fourth
    Respondents are jointly and severally liable;
    12
    21.16 Awards to the Claimant and Orders the Respondents
    to pay interest on the sum of USD 60 million from 6 May
    2011 to the date of this Final Award at the rate of 4.25% per
    annum in respect of which award the First, Second, Third
    and Fourth Respondents are jointly and severally liable;
    21.17 Orders in terms identical to the orders in the Interim
    Award (as amended by the Addendum and Amendment to
    Interim Award dated 15 June 2012 and by the Amendment to
    Interim Award dated 27 July 2012), which orders are to
    remain in force up to and including the date on which the
    Respondents comply with all other orders in this Final Award;
    21.18 Awards to the Claimant and Orders the Respondents
    to pay the Claimant’s legal and other costs amounting to
    USD 1,652,890.14 in respect of which award the First,
    Second, Third and Fourth Respondents are jointly and
    severally liable;
    21.19 Awards to the Claimant and Orders the Respondents
    to pay all the costs of this arbitration in the total amount of
    SGD 827,615.67 as follows:
    (a) the amount of SGD 29,235.88 in respect of
    the Emergency Arbitrator’s fees and expenses;
    (b) the amount of SGD 756,513.19 in respect of
    the Tribunal’s fees and expenses;
    (c) the amount of SGD 41,868.60 in respect of
    SIAC administrative fees and expenses;
    21.20 Declares the Second, Third and Fourth Respondents
    jointly and severally liable to indemnify the Claimant for the
    loss of its investment in the amount of USD 60 million
    together with interest thereon for the period and at the rate
    specified in paragraph 21.16 hereinabove and the Claimant’s
    legal costs, related expenses as well as the costs of this
    arbitration as specified in paragraph 21.19 hereinabove;
    21.21 Declares and Orders that upon the Respondents’
    paying in full and unconditionally the sums awarded to the
    Claimant in paragraphs 21.15, 21.16, 21.18, 21.19
    hereinabove and all costs arising out of and incidental to the
    cancellation of the Claimant’s Preference Subscription
    Shares and Equity Subscription Shares (as defined in the
    SSA) in Avitel India, that the said shares be cancelled and
    that in this regard, the Parties take the requisite steps to
    13
    effect the said cancellation within 30 days of receipt of such
    payment.”
    Initially, this Foreign Final Award was challenged by the Appellants in a
    section 34 proceeding in the Bombay High Court. By a judgment dated
    28.09.2015, the section 34 petition was dismissed as being not
    maintainable. An appeal under section 37 of the 1996 Act was dismissed
    on 05.05.2017. Meanwhile, HSBC moved the Bombay High Court on
    15.04.2015 to enforce the Foreign Final Award in the SSA dated
    27.09.2014, which enforcement proceedings are still pending.
  2. Mr. Mukul Rohatgi, learned Senior Advocate and Mr. Saurabh
    Kirpal, learned counsel, appearing on behalf of the Appellants, took us
    through the Single Judge order and the Division Bench judgment, and
    then referred to the Indian law on the allegations of fraud made in arbitral
    proceedings, which, according to them, show that if the transaction
    entered into between the parties involve serious criminal offences such
    as forgery and impersonation, then it is clear that under Indian law, such
    dispute would not be arbitrable. In fact, they stated that a criminal
    complaint was filed by HSBC against the Appellants dated 16.01.2013,
    alleging offences under sections 420, 467, 468, read with section 120B
    of the Indian Penal Code, 1860, with the Economic Offences Wing,
    Mumbai [“EOW”], resulting in an FIR being registered. However, the
    EOW informed HSBC that a closure report was filed before the
    14
    concerned Magistrate in Mumbai. This closure report was then accepted.
    HSBC then filed a protest petition seeking rejection of the closure report,
    which was dismissed by the learned Magistrate on 05.05.2018. This
    order passed by the Magistrate was in turn challenged by HSBC in Writ
    Petition (Criminal) No. 5659 of 2018, which petition is still pending. They
    then argued that, ultimately, in enforcement proceedings in India, the
    gateways of section 48 of the 1996 Act have to be met. “The public
    policy of India” is contained in the judgments of this Court regarding
    serious allegations of fraud made in arbitral proceedings, and if HSBC
    cannot pass this gateway, then enforcing a foreign award in India would
    not be possible. It was from this prism that a prima facie case had to be
    made out under section 9 of the 1996 Act. They, therefore, attacked both
    the Single Judge order and the Division Bench judgment, stating that a
    prima facie case for enforcement of such foreign awards cannot possibly
    refer to the Singapore law on fraud being alleged in arbitral proceedings,
    but can only refer to Indian law. They further argued that the Division
    Bench of the Bombay High Court had relied upon a Single Judge
    judgment of this Court reported as Swiss Timing Ltd. v.
    Commonwealth Games 2010 Organising Committee, (2014) 6 SCC
    677 [“Swiss Timing”] which had held the judgment in N.
    Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72 [“N.
    Radhakrishnan”] per incuriam, vitiating the entire Division Bench
    15
    judgment. This is clear because a Single Judge judgment of this Court
    under section 11 of the 1996 Act has no precedential value as has
    correctly been held in State of West Bengal v. Associated
    Contractors, (2015) 1 SCC 32 [“Associated Contractors”]. Mr. Rohatgi
    also indicated that Mr. Christopher Lau, SC, the Chairman of the Arbitral
    Tribunal in the Singapore proceedings was biased, in that HSBC was a
    client of the firm to which he belonged, and this is one of the important
    grounds taken up in the section 48 proceeding which is pending in the
    Bombay High Court. He also sought to raise an argument (for the first
    time before us) that the award being insufficiently stamped could not be
    looked at and that this would also go to show that there is no prima facie
    case in order to sustain the interim mandatory orders passed by the
    Division Bench of the High Court. It was further added that Report No.
    246 of the Law Commission of India on ‘Amendment to the Arbitration
    and Conciliation Act, 1996’ of August 2014 [“246th Law Commission
    Report”] had recommended that a section 16(7) be added so as to do
    away with the ratio of N. Radhakrishnan (supra). However, Parliament
    thought it fit, when it passed the Arbitration and Conciliation
    (Amendment) Act, 2015 [“2015 Amendment Act”], not to incorporate
    such a section, showing that N. Radhakrishnan (supra) holds the field
    and that, therefore, serious questions of fraud raised, like in the present
    arbitral proceedings, would render such dispute inarbitrable. For this
    16
    proposition, they relied heavily on the House of Lords judgment in
    President of India and La Pintada Compania Navigacion S.A., [1985]
    A.C. 104 [“La Pintada”].
  3. Mr. Harish Salve, learned Senior Advocate appearing on behalf of
    the Respondent, HSBC, countered all these submissions by relying upon
    several judgments of this Court, including the recent judgment in Rashid
    Raza v. Sadaf Akhtar, (2019) 8 SCC 710 [“Rashid Raza”]. According to
    the learned Senior Advocate, this judgment has, with great clarity,
    explained the judgment in A. Ayyasamy v. A. Paramasivam, (2016) 10
    SCC 386 [“Ayyasamy”], which in turn had explained N. Radhakrishnan
    (supra), as referring only to such serious allegations of fraud as would
    vitiate the arbitration clause along with the agreement, and allegations of
    fraud which are not merely inter parties, but affect the public at large. He
    argued that a reading of the pleadings in the present case would show
    that neither of these two tests has been met. He also copiously read
    from the Foreign Final Award dated 27.09.2014, which found not merely
    on impersonation, which was one small leg on which it stood, but also on
    siphoning off or diversion of a substantial portion of the USD 60 million
    paid by HSBC into companies owned or controlled by the Jain family. He
    said that these issues are predominantly civil law issues to be decided
    inter parties. He further argued that insofar as Mr. Christopher Lau SC’s
    17
    alleged bias is concerned, this was not the time or place to go into such
    allegations, which would only be fully met in the section 48 proceedings
    which are pending. He indicated that in any case, this Foreign Final
    Award was unanimous and consisted of two other arbitrators, Dr.
    Michael C. Pryles and Justice (Retd.) Ferdino I. Rebello, retired Chief
    Justice of the Allahabad High Court. He also asked us not to go into the
    stamping aspect of the Foreign Final Award inasmuch as it was raised
    here for the first time without any proper pleading; if properly pleaded,
    then his client would have had an opportunity to rebut the same to show
    that there was no insufficiency of stamp duty paid. Mr. Salve therefore
    supported the ultimate order of the learned Single Judge of the Bombay
    High Court, and said that the Division Bench ought not to have reduced
    the amount of USD 60 million to half, i.e., USD 30 million without any
    reasoning worth the name, particularly because the Foreign Final Award
    had held that the USD 60 million was to be paid by way of damages with
    interest and costs, the shares in HSBC’s name standing cancelled. Once
    it is clear that the aforesaid shares stood cancelled, it is clear that the
    7.8% of the paid-up share capital of Avitel India that was held by HSBC
    reverts to Avitel India. This being the case, there would be no awarding
    of the difference between market value of the shares as on the date of
    breach and USD 60 million, as the shares are back in the hands of Avitel
    India.
    18
  4. Having heard learned counsel appearing on behalf of both the
    parties, the only real question that needs to be addressed in the section
    9 proceedings is the extent to which HSBC could be said to have a
    strong prima facie case in the enforcement proceedings under section
    48 which are pending before the Bombay High Court. If so, whether
    irreparable prejudice would be caused to HSBC if protective orders were
    not issued in its favour, and generally, whether the balance of
    convenience tilts in its favour and to what extent.
  5. First and foremost, it is correct to state that this prima facie case
    would necessarily depend upon what is the substantive law in India qua
    arbitrability when allegations of fraud are raised by one of the parties to
    the arbitration agreement. The law on this point has its origins in a
    judgment under the Arbitration Act, 1940 [“1940 Act”], the predecessor
    to the 1996 Act, which repealed the 1940 Act. Thus, in Abdul Kadir
    Shamsuddin Bubere v. Madhav Prabhakar Oak, [1962] 3 SCR 702
    [“Abdul Kadir”], disputes arose out of an agreement between the
    parties, which contained an arbitration clause. Consequently,
    respondents no.1 and 2 filed an application under section 20 of the 1940
    Act, as it then stood. This application was opposed by the appellant on
    four grounds before the Hon’ble Supreme Court. The fourth ground is
    important from our point of view and reads thus:
    19
    “xxx xxx xxx
    (4) The respondents had made allegations of fraud against
    the appellant in their application and that was also a ground
    for not referring the dispute to arbitration.”
    (at p. 707)
    In dealing with this ground, the Court first referred to section 20(4) of the
    1940 Act, which laid down that “where no sufficient cause is shown, the
    Court shall order the agreement to be filed, and shall make an order of
    reference to the arbitrator appointed by the parties, whether in the
    agreement or otherwise or, where the parties cannot agree upon an
    arbitrator, to an arbitrator appointed by the Court.” This Court referred to
    the fact that the words of this sub-section leave a wide discretion with
    the Court to consider whether an order for filing an agreement should be
    made and reference thereon should also be made. Various English
    judgments were referred to. Russel v. Russel, [1880] 14 Ch D 471 was
    referred to for the proposition that the Court will, in general, refuse to
    send a dispute to arbitration if the party charged with fraud desires a
    public inquiry, but where the objection to arbitration is by the party
    charging the fraud, the Court will not necessarily accede to it, and will
    never do so unless a prima facie case of fraud is proved [see Abdul
    Kadir (supra) at p. 713]. The next English judgment is Charles Osenton
    & Co. v. Johnston, 1942 A.C. 130. This case held that as the
    professional reputation of a particular firm was involved, the matter
    20
    should not be referred to arbitration for the reason that the normal
    tribunal of a High Court with a jury, from which there is recourse to a
    right to appeal, could not be substituted by proceedings before an official
    referee under section 89 of the Judicature Act, 1925. After referring to
    these cases, this Court cautioned:
    “There is no doubt that where serious allegations of fraud
    are made against a party and the party who is charged with
    fraud desires that the matter should be tried in open court,
    that would be a sufficient cause for the court not to order an
    arbitration agreement to be filed and not to make the
    reference. But it is not every allegation imputing some kind
    of dishonesty, particularly in matters of accounts, which
    would be enough to dispose a court to take the matter out of
    the forum which the parties themselves have chosen. This to
    our mind is clear even from the decision in Russel
    case [1880 14 Ch D 471]. In that case there were allegations
    of constructive and actual fraud by one brother against the
    other and it was in those circumstances that the court made
    the observations to which we have referred above. Even so,
    the learned Master of the Rolls also observed in the course
    of the judgment at p. 476 as follows:
    “Why should it be necessarily beyond the
    purview of this contract to refer to an arbitrator
    questions of account, even when those questions
    do involve misconduct amounting even to
    dishonesty on the part of some partner? I do not
    see it. I do not say that in many cases which I will
    come to in the second branch of the case before
    the Court, the Court may not, in the exercise of
    its discretion, refuse to interfere; but it does not
    appear to me to follow of necessity that this
    clause was not intended to apply to all questions,
    even including questions either imputing moral
    dishonesty or moral misconduct to one or other
    of the parties.”
    We are clearly of opinion that merely because some
    allegations have been made that accounts are not correct or
    21
    that certain items are exaggerated and so on that is not
    enough to induce the court to refuse to make a reference to
    arbitration. It is only in cases of allegations of fraud of a
    serious nature that the court will refuse as decided
    in Russel’s case [1880 14 Ch D 471] to order an arbitration
    agreement to be filed and will not make a reference. We may
    in this connection refer to Minifie v. Railway Passengers
    Assurance Company [(1881) 44 LT 552]. There the question
    was whether certain proceedings should be stayed; and it
    was held that notwithstanding the fact that the issue and the
    evidence in support of it might bear upon the conduct of a
    certain person and of those who attended him and so might
    involve a question similar to that of fraud or no fraud, that
    was no ground for refusing stay. It is only when serious
    allegations of fraud are made which it is desirable should be
    tried in open court that a court would be justified in refusing
    to order the arbitration agreement to be filed and in refusing
    to make a reference.”
    (at pp. 714-716)
    The Court then turned to the facts of the case before it and held that
    allegations as to the correctness or otherwise of entries in accounts are
    not serious allegations of fraud, stating that such allegations are often
    made in suits for accounts, which are purely civil proceedings. It was
    added:
    “That is why we emphasise that even in the leading case
    of Russel [1880 14 Ch D 471], the learned Master of the
    Rolls was at pains to point out that it could not necessarily
    be said in a case of accounts that no reference to arbitration
    should be made, even though questions relating to accounts
    which might involve misconduct amounting even to
    dishonesty on the part of some partner might arise in the
    arbitration proceedings and even cases where moral
    dishonesty or moral misconduct is attributed to one party or
    the other might be referred to arbitration. It seems to us that
    every allegation tending to suggest or imply moral
    dishonesty or moral misconduct in the matter of keeping
    22
    accounts would not amount to such serious allegation of
    fraud as would impel a court to refuse to order the arbitration
    agreement to be filed and refuse to make a reference.
    Looking to the allegations which have been made in this
    case we are of opinion that there are no such serious
    allegations of fraud in this case as would be sufficient for the
    court to say that there is sufficient cause for not referring the
    dispute to arbitration. This contention of the appellant must
    also therefore fail.”
    (at pp. 717-718)
  6. In N. Radhakrishnan (supra), differences between the partners of
    a firm were sought to be adjudicated in a civil suit filed by the
    respondents. The appellant filed an application under section 8 of the
    1996 Act stating that as there was an arbitration clause between the
    partners, the matter should now be referred to arbitration. This Court,
    after considering the judgment in Abdul Kadir (supra), extracted one
    sentence from the said judgment at p. 714 as follows:
    “There is no doubt that where serious allegations of fraud
    are made against a party and the party who is charged with
    fraud desires that the matter should be tried in open court,
    that would be a sufficient cause for the court not to order an
    arbitration agreement to be filed and not to make the
    reference.”
    This sentence, according to the learned Division Bench, being the ratio
    in Abdul Kadir (supra), would necessarily mean that wherever serious
    allegations of fraud are raised in a case in which there is an arbitration
    agreement, they should be tried in a court of law. In the fact situation
    before the Court, the Court found that the appellant had made serious
    23
    allegations against the respondents alleging that they were committing
    malpractices in the account books and had manipulated the finances of
    the partnership firm. This, according to the learned Division Bench of this
    Court, was enough to dismiss the section 8 application. We may also
    refer to the fact that the appellant’s counsel had relied upon the
    judgment in Hindustan Petroleum Corporation Ltd. v. Pinkcity
    Midway Petroleums, (2003) 6 SCC 503 [“Hindustan Petroleum”], in
    which it was stated that it is mandatory for a civil court to refer to
    arbitration a dispute that arises between parties with an arbitration
    agreement, under section 8 of the 1996 Act. We may only note at this
    stage that this judgment was not dealt with at all by the Court. On the
    contrary, a judgment delivered under section 20(4) of the 1940 Act was
    referred to, in order to arrive at the conclusion arrived at by the Court.
  7. In Afcons Infrastructure Ltd. v. Cherian Varkey Construction
    Co. (P) Ltd., (2010) 8 SCC 24 [“Afcons”], this Court held as follows:
    “27. The following categories of cases are normally
    considered to be not suitable for ADR process having regard
    to their nature:
    (i) Representative suits under Order 1 Rule 8
    CPC which involve public interest or interest of
    numerous persons who are not parties before the
    court. (In fact, even a compromise in such a suit
    is a difficult process requiring notice to the
    persons interested in the suit, before its
    acceptance).
    24
    (ii) Disputes relating to election to public
    offices (as contrasted from disputes between two
    groups trying to get control over the management
    of societies, clubs, association, etc.).
    (iii) Cases involving grant of authority by the
    court after enquiry, as for example, suits for grant
    of probate or letters of administration.
    (iv) Cases involving serious and specific
    allegations of fraud, fabrication of documents,
    forgery, impersonation, coercion, etc.
    (v) Cases requiring protection of courts, as for
    example, claims against minors, deities and
    mentally challenged and suits for declaration of
    title against the Government.
    (vi) Cases involving prosecution for criminal
    offences.”
    It will be seen that items (iv) and (vi) are relevant from our point of view
    and require to be explained in the light of subsequent decisions of this
    Court.
  8. In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011)
    5 SCC 532 [“Booz Allen”], this Court decided that proceedings in rem,
    such as a mortgage suit filed under Order XXXIV of the Civil Procedure
    Code, 1908 (which was a proceeding in rem), would not be arbitrable. In
    a significant passage, this Court held:
    “36. The well-recognised examples of non-arbitrable
    disputes are: (i) disputes relating to rights and liabilities
    which give rise to or arise out of criminal offences; (ii)
    matrimonial disputes relating to divorce, judicial separation,
    restitution of conjugal rights, child custody; (iii) guardianship
    matters; (iv) insolvency and winding-up matters; (v)
    testamentary matters (grant of probate, letters of
    administration and succession certificate); and (vi) eviction
    25
    or tenancy matters governed by special statutes where the
    tenant enjoys statutory protection against eviction and only
    the specified courts are conferred jurisdiction to grant
    eviction or decide the disputes.
  9. It may be noticed that the cases referred to above relate
    to actions in rem. A right in rem is a right exercisable against
    the world at large, as contrasted from a right in personam
    which is an interest protected solely against specific
    individuals. Actions in personam refer to actions determining
    the rights and interests of the parties themselves in the
    subject-matter of the case, whereas actions in rem refer to
    actions determining the title to property and the rights of the
    parties, not merely among themselves but also against all
    persons at any time claiming an interest in that property.
    Correspondingly, a judgment in personam refers to a
    judgment against a person as distinguished from a judgment
    against a thing, right or status and a judgment in rem refers
    to a judgment that determines the status or condition of
    property which operates directly on the property itself.
    (Vide Black’s Law Dictionary.)
  10. Generally and traditionally all disputes relating to rights in
    personam are considered to be amenable to arbitration; and
    all disputes relating to rights in rem are required to be
    adjudicated by courts and public tribunals, being unsuited for
    private arbitration. This is not however a rigid or inflexible
    rule. Disputes relating to subordinate rights in personam
    arising from rights in rem have always been considered to be
    arbitrable.
  11. The Act does not specifically exclude any category of
    disputes as being not arbitrable. Sections 34(2)(b) and 48(2)
    of the Act however make it clear that an arbitral award will be
    set aside if the court finds that “the subject-matter of the
    dispute is not capable of settlement by arbitration under the
    law for the time being in force”.”
    The Court then held, following Haryana Telecom Ltd. v. Sterlite
    Industries (India) Ltd., (1999) 5 SCC 688, that similarly, winding up
    proceedings under the Companies Act, 1956 cannot be referred to
    arbitration (see paragraph 42). As against this, suits for specific
    26
    performance are arbitrable despite the fact that the court is vested with
    discretion to be exercised based upon principles laid down as to when
    not to decree specific performance (see paragraphs 43 and 44). The
    Court then concluded:
    “46. An agreement to sell or an agreement to mortgage does
    not involve any transfer of right in rem but creates only a
    personal obligation. Therefore, if specific performance is
    sought either in regard to an agreement to sell or an
    agreement to mortgage, the claim for specific performance
    will be arbitrable. On the other hand, a mortgage is a transfer
    of a right in rem. A mortgage suit for sale of the mortgaged
    property is an action in rem, for enforcement of a right in
    rem. A suit on mortgage is not a mere suit for money. A suit
    for enforcement of a mortgage being the enforcement of a
    right in rem, will have to be decided by the courts of law and
    not by Arbitral Tribunals.
  12. The scheme relating to adjudication of mortgage suits
    contained in Order 34 of the Code of Civil Procedure,
    replaces some of the repealed provisions of the Transfer of
    Property Act, 1882 relating to suits on mortgages (Sections
    85 to 90, 97 and 99) and also provides for implementation of
    some of the other provisions of that Act (Sections 92 to 94
    and 96). Order 34 of the Code does not relate to execution
    of decrees, but provides for preliminary and final decrees to
    satisfy the substantive rights of mortgagees with reference to
    their mortgage security.”
  13. We now come to a learned Single Judge’s judgment in Swiss
    Timing (supra). There is no doubt that this judgment delivered by a
    learned Single Judge under a section 11 jurisdiction cannot be said to be
    a binding precedent [see Associated Contractors (supra) at paragraph
    17]. However, the learned Judge’s reasoning has strong persuasive
    value which we are inclined to adopt. The learned Single Judge first held
    27
    that the judgment in P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4
    SCC 539, was not brought to the notice of this Court in N.
    Radhakrishnan (supra). The judgment of Hindustan Petroleum (supra)
    which was brought to the notice of the Court was not dealt with at all.
    Further, the provisions of sections 5 and 16 of the 1996 Act were also
    not referred to. Section 5 of the 1996 Act states as follows:
    “5. Extent of judicial intervention.—Notwithstanding
    anything contained in any other law for the time being in
    force, in matters governed by this Part, no judicial authority
    shall intervene except where so provided in this Part.”
    Section 16(1) of the 1996 Act states:
    “16. Competence of arbitral tribunal to rule on its
    jurisdiction.—(1) The arbitral tribunal may rule on its own
    jurisdiction, including ruling on any objections with respect to
    the existence or validity of the arbitration agreement, and for
    that purpose,—
    (a) an arbitration clause which forms part of a
    contract shall be treated as an agreement
    independent of the other terms of the contract;
    and
    (b) a decision by the arbitral tribunal that the
    contract is null and void shall not entail ipso jure
    the invalidity of the arbitration clause.”
    These provisions, together with section 8 of the 1996 Act, which now
    makes it mandatory to refer an action which is brought before a judicial
    authority, which is the subject matter of an arbitration agreement, to
    arbitration, if the conditions of the section are met, all point to a sea
    change from the 1940 Act which was repealed by this 1996 Act. By way
    28
    of contrast with section 8 of the 1996 Act, section 20 of the 1940 Act is
    set out hereinbelow:
    “20. Application to file in Court arbitration agreement.—
    (1) Where any persons have entered into an arbitration
    agreement before the institution of any suit with respect to
    the subject-matter of the agreement or any part of it, and
    where a difference has arisen to which the agreement
    applies, they or any of them, instead of proceeding under
    Chapter II, may apply to a Court having jurisdiction in the
    matter to which the agreement relates, that the agreement
    be filed in Court.
    (2) The application shall be in writing and shall be numbered
    and registered as a suit between one or more of the parties
    interested or claiming to be interested as plaintiff or plaintiffs
    and the remainder as defendant or defendants, if the
    application has been presented by all the parties, or, if
    otherwise, between the applicant as plaintiff and the other
    parties as defendants.
    (3) On such application being made, the Court shall direct
    notice thereof to be given to all parties to the agreement
    other than the applicants, requiring them to show cause
    within the time specified in the notice why the agreement
    should not be filed.
    (4) Where no sufficient cause is shown, the Court shall order
    the agreement to be filed, and shall make an order of
    reference to the arbitrator appointed by the parties, whether
    in the agreement or otherwise or, where the parties cannot
    agree upon an arbitrator, to an arbitrator appointed by the
    Court.
    (5) Thereafter the arbitration shall proceed in accordance
    with, and shall be governed by, the other provisions of this
    Act so far as they can be made applicable.”
    It will be seen from section 20 of the 1940 Act, as was held in Abdul
    Kadir (supra), that a wide discretion is vested in the Court if sufficient
    cause is made out not to refer parties to arbitration. It was in that context
    29
    that the observations in Abdul Kadir (supra) as to serious allegations of
    fraud triable in a civil court, being “sufficient cause” shown under section
    20(4) of the 1940 Act were made. Also, the approach of the 1940 Act is
    made clear by section 35(1), which is set out hereinbelow:
    “35. Effect of legal proceedings on arbitration.—(1) No
    reference nor award shall be rendered invalid by reason only
    of the commencement of legal proceedings upon the
    subject-matter of the reference, but when legal proceedings
    upon the whole of the subject-matter of the reference have
    been commenced between all the parties to the reference
    and a notice thereof has been given to the arbitrators or
    umpire, all further proceedings in a pending reference shall,
    unless a stay of proceedings is granted under Section 34, be
    invalid.
    xxx xxx xxx”
    Thus, even where arbitral proceedings are ongoing, such proceedings
    become invalid the moment legal proceedings upon the whole of the
    subject matter of the reference have been commenced between all the
    parties to the reference and a notice thereof has been given to the
    arbitrators or umpire. As against this, sections 5, 8 and 16 of the 1996
    Act reflect a completely new approach to arbitration, which is that when
    a judicial authority is shown an arbitration clause in an agreement, it is
    mandatory for the authority to refer parties to arbitration bearing in mind
    the fact that the arbitration clause is an agreement independent of the
    other terms of the contract and that, therefore, a decision by the arbitral
    tribunal that the contract is null and void does not entail ipso jure the
    30
    invalidity of the arbitration clause. Even otherwise, N. Radhakrishnan
    (supra) did not refer to the ratio of Abdul Kadir (supra) correctly. As has
    been seen by us hereinabove, Abdul Kadir (supra) held that serious
    allegations of fraud are not made out when allegations of moral or other
    wrongdoing inter parties are made. In particular, it was held that
    discrepancies in account books are the usual subject matter in account
    suits, which are purely of a civil nature. For all these reasons, we are
    broadly in agreement with the observations of Nijjar, J. rendering N.
    Radhakrishnan (supra) lacking in precedential value.
  14. The next judgment to be dealt with, chronologically speaking, is
    the judgment in Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8
    SCC 788 [“Vimal Kishor Shah”]. To the six categories of exceptions to
    arbitrability of civil disputes, a seventh category has been added,
    namely, disputes arising under trust deeds governed by the Trusts Act,
  15. Here, it was held that a consideration of the Trusts Act would show
    that the intention of the legislature was to confer jurisdiction only on civil
    courts for deciding disputes arising under the Trusts Act, which would
    amount to an implied bar on other proceedings including arbitral
    proceedings. The Court therefore found:
    “53. We, accordingly, hold that the disputes relating to trust,
    trustees and beneficiaries arising out of the trust deed and
    the Trusts Act, 1882 are not capable of being decided by the
    arbitrator despite existence of arbitration agreement to that
    31
    effect between the parties. A fortiori, we hold that the
    application filed by the respondents under Section 11 of the
    Act is not maintainable on the ground that firstly, it is not
    based on an “arbitration agreement” within the meaning of
    Sections 2(1)(b) and 2(1)(h) read with Section 7 of the Act
    and secondly, assuming that there exists an arbitration
    agreement (Clause 20 of the trust deed) yet the disputes
    specified therein are not capable of being referred to private
    arbitration for their adjudication on merits.
  16. We thus add one more category of cases i.e. Category
    (vii), namely, cases arising out of trust deed and the Trusts
    Act, 1882, in the list of six categories of cases specified by
    this Court in para 36 at pp. 546-47 of the decision rendered
    in Booz Allen & Hamilton Inc. [Booz Allen & Hamilton Inc. v.
    SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC
    (Civ) 781] which as held above cannot be decided by the
    arbitrator(s).”
    [This judgment was referred to with approval in Vidya Drolia and Ors.
    v. Durga Trading Corporation, 2019 SCC OnLine SC 358 at
    paragraph 30].
  17. Now comes the important judgment in Ayyasamy (supra). Two
    separate judgments were delivered by a Division Bench of this Court.
    Sikri, J., after referring to the judgments in Abdul Kadir (supra), N.
    Radhakrishnan (supra), Swiss Timing (supra), and Booz Allen
    (supra), then referred to the 246th Law Commission Report, in particular
    to paragraphs 50 and 51 thereof. He then held:
    “23. A perusal of the aforesaid two paragraphs brings into
    fore that the Law Commission has recognised that in cases
    of serious fraud, courts have entertained civil suits.
    Secondly, it has tried to make a distinction in cases where
    there are allegations of serious fraud and fraud simpliciter. It,
    32
    thus, follows that those cases where there are serious
    allegations of fraud, they are to be treated as non-arbitrable
    and it is only the civil court which should decide such
    matters. However, where there are allegations of fraud
    simpliciter and such allegations are merely alleged, we are
    of the opinion that it may not be necessary to nullify the
    effect of the arbitration agreement between the parties as
    such issues can be determined by the Arbitral Tribunal.
  18. Before we apply the aforesaid test to the facts of the
    present case, a word on the observations in Swiss Timing
    Ltd. case [Swiss Timing Ltd. v. Commonwealth Games 2010
    Organising Committee, (2014) 6 SCC 677 : (2014) 3 SCC
    (Civ) 642] to the effect that the judgment of N.
    Radhakrishnan [N. Radhakrishnan v. Maestro Engineers,
    (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12] was per incuriam,
    is warranted. In fact, we do not have to labour on this aspect
    as this task is already undertaken by this Court in State of
    W.B. v. Associated Contractors [State of W.B. v. Associated
    Contractors, (2015) 1 SCC 32 : (2015) 1 SCC (Civ) 1]. It has
    been clarified in the aforesaid case that Swiss Timing
    Ltd. [Swiss Timing Ltd. v. Commonwealth Games 2010
    Organising Committee, (2014) 6 SCC 677 : (2014) 3 SCC
    (Civ) 642] was a judgment rendered while dealing with
    Section 11(6) of the Act and Section 11 essentially confers
    power on the Chief Judge of India or the Chief Justice of the
    High Court as a designate to appoint an arbitrator, which
    power has been exercised by another Hon’ble Judge as a
    delegate of the Chief Justice. This power of appointment of
    an arbitrator under Section 11, by the Court, notwithstanding
    the fact that it has been held in SBP & Co. v. Patel Engg.
    Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] as a
    judicial power, cannot be deemed to have precedential value
    and, therefore, it cannot be deemed to have overruled the
    proposition of law laid down in N. Radhakrishnan [N.
    Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72 :
    (2010) 1 SCC (Civ) 12].
  19. In view of our aforesaid discussions, we are of the
    opinion that mere allegation of fraud simpliciter may not be a
    ground to nullify the effect of arbitration agreement between
    the parties. It is only in those cases where the court, while
    dealing with Section 8 of the Act, finds that there are very
    serious allegations of fraud which make a virtual case of
    33
    criminal offence or where allegations of fraud are so
    complicated that it becomes absolutely essential that such
    complex issues can be decided only by the civil court on the
    appreciation of the voluminous evidence that needs to be
    produced, the court can side-track the agreement by
    dismissing the application under Section 8 and proceed with
    the suit on merits. It can be so done also in those cases
    where there are serious allegations of forgery/fabrication of
    documents in support of the plea of fraud or where fraud is
    alleged against the arbitration provision itself or is of such a
    nature that permeates the entire contract, including the
    agreement to arbitrate, meaning thereby in those cases
    where fraud goes to the validity of the contract itself of the
    entire contract which contains the arbitration clause or the
    validity of the arbitration clause itself. Reverse position
    thereof would be that where there are simple allegations of
    fraud touching upon the internal affairs of the party inter se
    and it has no implication in the public domain, the arbitration
    clause need not be avoided and the parties can be relegated
    to arbitration. While dealing with such an issue in an
    application under Section 8 of the Act, the focus of the court
    has to be on the question as to whether jurisdiction of the
    court has been ousted instead of focusing on the issue as to
    whether the court has jurisdiction or not. It has to be kept in
    mind that insofar as the statutory scheme of the Act is
    concerned, it does not specifically exclude any category of
    cases as non-arbitrable. Such categories of non-arbitrable
    subjects are carved out by the courts, keeping in mind the
    principle of common law that certain disputes which are of
    public nature, etc. are not capable of adjudication and
    settlement by arbitration and for resolution of such disputes,
    courts i.e. public fora, are better suited than a private forum
    of arbitration. Therefore, the inquiry of the Court, while
    dealing with an application under Section 8 of the Act, should
    be on the aforesaid aspect viz. whether the nature of dispute
    is such that it cannot be referred to arbitration, even if there
    is an arbitration agreement between the parties. When the
    case of fraud is set up by one of the parties and on that
    basis that party wants to wriggle out of that arbitration
    agreement, a strict and meticulous inquiry into the
    allegations of fraud is needed and only when the Court is
    satisfied that the allegations are of serious and complicated
    nature that it would be more appropriate for the Court to deal
    34
    with the subject-matter rather than relegating the parties to
    arbitration, then alone such an application under Section 8
    should be rejected.”
    Chandrachud, J., in a separate judgment, referred to the judgment in N.
    Radhakrishnan (supra) and then held:
    “40. The above extract from the judgment in N.
    Radhakrishnan [N. Radhakrishnan v. Maestro Engineers,
    (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12] relies extensively
    on the view propounded in Abdul Kadir [Abdul Kadir
    Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962
    SC 406]. The decision in Abdul Kadir [Abdul Kadir
    Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962
    SC 406] arose under the Arbitration Act, 1940 and was in the
    context of the provisions of Section 20. In Abdul Kadir [Abdul
    Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR
    1962 SC 406] , this Court emphasised that sub-section (4) of
    Section 20 of the Arbitration Act, 1940 left a wide discretion
    in the court. In contrast, the scheme of the 1996 Act has
    made a radical departure from the position under the
    erstwhile enactment. A marked distinction is made in Section
    8 where no option has been left to the judicial authority but to
    refer parties to arbitration. Abdul Kadir [Abdul Kadir
    Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962
    SC 406] explains the position under the Arbitration Act, 1940.
    The present legislation on the subject embodies a conscious
    departure which is intended to strengthen the efficacy of
    arbitration.
    xxx xxx xxx
  20. Hence, the allegations of criminal wrongdoing or of
    statutory violation would not detract from the jurisdiction of
    the Arbitral Tribunal to resolve a dispute arising out of a civil
    or contractual relationship on the basis of the jurisdiction
    conferred by the arbitration agreement.”
    He then cautioned against the use of N. Radhakrishnan (supra) as a
    precedent, and distinguished it as follows:
    35
    “45. The position that emerges both before and after the
    decision in N. Radhakrishnan [N. Radhakrishnan v. Maestro
    Engineers, (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12] is that
    successive decisions of this Court have given effect to the
    binding precept incorporated in Section 8. Once there is an
    arbitration agreement between the parties, a judicial
    authority before whom an action is brought covering the
    subject-matter of the arbitration agreement is under a
    positive obligation to refer parties to arbitration by enforcing
    the terms of the contract. There is no element of discretion
    left in the court or judicial authority to obviate the legislative
    mandate of compelling parties to seek recourse to
    arbitration. The judgment in N. Radhakrishnan [N.
    Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72 :
    (2010) 1 SCC (Civ) 12] has, however, been utilised by
    parties seeking a convenient ruse to avoid arbitration to raise
    a defence of fraud:
    45.1. First and foremost, it is necessary to emphasise that
    the judgment in N. Radhakrishnan [N. Radhakrishnan v.
    Maestro Engineers, (2010) 1 SCC 72 : (2010) 1 SCC (Civ)
    12] does not subscribe to the broad proposition that a mere
    allegation of fraud is ground enough not to compel parties to
    abide by their agreement to refer disputes to arbitration.
    More often than not, a bogey of fraud is set forth if only to
    plead that the dispute cannot be arbitrated upon. To allow
    such a plea would be a plain misreading of the judgment in
    N. Radhakrishnan [N. Radhakrishnan v. Maestro Engineers,
    (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12] . As I have noted
    earlier, that was a case where the appellant who had filed an
    application under Section 8 faced with a suit on a dispute in
    partnership had raised serious issues of criminal
    wrongdoing, misappropriation of funds and malpractice on
    the part of the respondent. It was in this background that this
    Court accepted the submission of the respondent that the
    arbitrator would not be competent to deal with matters
    “which involved an elaborate production of evidence to
    establish the claims relating to fraud and criminal
    misappropriation”. Hence, it is necessary to emphasise that
    as a matter of first principle, this Court has not held that a
    mere allegation of fraud will exclude arbitrability. The burden
    must lie heavily on a party which avoids compliance with the
    obligation assumed by it to submit disputes to arbitration to
    establish the dispute is not arbitrable under the law for the
    36
    time being in force. In each such case where an objection on
    the ground of fraud and criminal wrongdoing is raised, it is
    for the judicial authority to carefully sift through the materials
    for the purpose of determining whether the defence is merely
    a pretext to avoid arbitration. It is only where there is a
    serious issue of fraud involving criminal wrongdoing that the
    exception to arbitrability carved out in N. Radhakrishnan [N.
    Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72 :
    (2010) 1 SCC (Civ) 12] may come into existence.
    45.2. Allegations of fraud are not alien to ordinary civil
    courts. Generations of judges have dealt with such
    allegations in the context of civil and commercial disputes. If
    an allegation of fraud can be adjudicated upon in the course
    of a trial before an ordinary civil court, there is no reason or
    justification to exclude such disputes from the ambit and
    purview of a claim in arbitration. The parties who enter into
    commercial dealings and agree to a resolution of disputes by
    an arbitral forum exercise an option and express a choice of
    a preferred mode for the resolution of their disputes. The
    parties in choosing arbitration place priority upon the speed,
    flexibility and expertise inherent in arbitral adjudication. Once
    parties have agreed to refer disputes to arbitration, the court
    must plainly discourage and discountenance litigative
    strategies designed to avoid recourse to arbitration. Any
    other approach would seriously place in uncertainty the
    institutional efficacy of arbitration. Such a consequence must
    be eschewed.”
    After the statement of the law, the learned Judge referred to an
    instructive passage by Gary B. Born as follows:
    “56. The legal position has been succinctly summarised
    in International Commercial Arbitration by Gary B. Born [2nd
    Edn., Vol. I, p. 846] thus:
    “… under most national arbitration regimes,
    claims that the parties’ underlying contract (as
    distinguished from the parties’ arbitration clause)
    was fraudulently induced have generally been
    held not to compromise the substantive validity of
    an arbitration clause included in the contract. The
    fact that one party may have fraudulently
    37
    misrepresented the quality of its goods, services,
    or balance sheet generally does nothing to
    impeach the parties’ agreed dispute resolution
    mechanism. As a consequence, only fraud or
    fraudulent inducement directed at the agreement
    to arbitrate will, as a substantive matter, impeach
    that agreement. These circumstances seldom
    arise: as a practical matter, it is relatively unusual
    that a party will seek to procure an agreement to
    arbitrate by fraud, even in those cases where it
    may have committed fraud in connection with the
    underlying commercial contract.”
    (See also in this context International Arbitration Law and
    Practice by Mauro Rubino-Sammartano [2nd Edn., p. 179].)”
    Mr. Saurabh Kirpal took exception to Sikri, J.’s judgment in that Sikri, J.
    did not refer to paragraph 52 of the 246th Law Commission Report and
    its aftermath. Paragraph 52 of the 246th Law Commission Report reads
    as follows:
    “52. The Commission believes that it is important to set this
    entire controversy to a rest and make issues of fraud
    expressly arbitrable and to this end has proposed
    amendments to section 16.”
    (at p. 28)
    The Law Commission then added, by way of amendment, a proposed
    section 16(7) as follows:
    “Amendment of Section 16
  21. In section 16,
    After sub-section (6), insert sub-section “(7) The arbitral
    tribunal shall have the power to make an award or give a
    ruling notwithstanding that the dispute before it involves a
    serious question of law, complicated questions of fact or
    allegations of fraud, corruption etc.”
    38
    [NOTE: This amendment is proposed in the light of the
    Supreme Court decisions (e.g. N. Radhakrishnan v. Maestro
    Engineers, (2010) 1 SCC 72) which appear to denude an
    arbitral tribunal of the power to decide on issues of fraud
    etc.]”
    (at p. 50)
    He then referred to the fact that the aforesaid sub-section was not
    inserted by Parliament by the 2015 Amendment Act, which largely
    incorporated other amendments proposed by the Law Commission. His
    argument therefore was that N. Radhakrishnan (supra) not having been
    legislatively overruled, cannot now be said to be in any way deprived of
    its precedential value, as Parliament has taken note of the proposed
    section 16(7) in the 246th Law Commission Report, and has expressly
    chosen not to enact it. For this proposition, he referred to La Pintada
    (supra). This judgment related to a challenge to an award granting
    compound interest, inter alia, in a case where a debt is paid late, but
    before any proceedings for its recovery had begun. Lord Brandon of
    Oakbrook, who wrote the main judgment in this case, stated:
    “There are three cases in which the absence of any common
    law remedy for damage or loss caused by the late payment
    of a debt may arise, cases which I shall in what follows
    describe for convenience as case 1, case 2 and case 3.
    Case 1 is where a debt is paid late, before any proceedings
    for its recovery have been begun. Case 2 is where a debt is
    paid late, after proceedings for its recovery have been
    begun, but before they have been concluded. Case 3 is
    where a debt remains unpaid until as a result of proceedings
    for its recovery being brought and prosecuted to a
    39
    conclusion, a money judgment is given in which the original
    debt becomes merged”
    (at p. 122)
    After referring to various precedents, the learned Judge referred to a
    Law Commission Report of 07.04.1978, which contained
    recommendations for alterations in the law and a draft bill which would
    remedy injustice to unpaid creditors in all the three cases set out
    hereinabove. However, when Parliament passed the Administration of
    Justice Act, 1982, it covered cases 2 and 3 but not case 1. In this
    context, Lord Brandon held:
    “My first main reason is that the greater part of the injustice
    to creditors which resulted from the London, Chatham and
    Dover Railway case has now been removed, to a large
    extent by legislative intervention, and to a lesser extent by
    judicial qualification of the scope of the decision itself. My
    second main reason is that, when Parliament has given
    effect by legislation to some recommendations of the Law
    Commission in a particular field, but has taken what appears
    to be a policy decision not to give effect to a further such
    recommendation, any decision of your Lordships’ House
    which would have the result of giving effect, by another
    route, to the very recommendation which Parliament
    appears to have taken that policy decision to reject, could
    well be regarded as an unjustifiable usurpation by your
    Lordships’ House of the functions which belong properly to
    Parliament, rather than as a judicial exercise in departing
    from an earlier decision on the ground that it has become
    obsolete and could still, in a limited class of cases, continue
    to cause some degree of injustice.”
    (at pp. 129-130)
    One can see from the speeches of the other Law Lords, with what great
    reluctance they allowed the appeal and set aside the Court of Appeal’s
    40
    judgment. Each of the Law Lords did so with regret and reluctance. The
    real reason why London, Chatham and Dover Railway Company v.
    South Eastern Railway Company, [1893] A.C. 429 [“London Railway
    Case”] could not be overruled via a common law (as opposed to a
    statutory) route was because the statutory route regarded the award of
    interest on debts as a remedy to which a creditor should not be entitled
    to as of right, but only as a matter of discretion; whereas the common
    law route granted them such interest as a matter of right. If, in overruling
    the London Railway Case (supra), two parallel remedies would be
    created, this would lead to an inconsistent position in law, as a result of
    which, no departure was made from the 1893 decision. Also, in the
    words of Lord Brandon, it was held:
    “In any event the only remaining loophole of injustice to
    creditors paid late is small, has existed for many years and
    does not seem to require closing urgently.”
    (at pp. 130-131)
  22. It is a little difficult to apply this case to resurrect the ratio of N.
    Radhakrishnan (supra) as a binding precedent given the advance made
    in the law by this Court since N. Radhakrishnan (supra) was decided.
    Quite apart from what has been stated by us in paragraph 9 above, as to
    how N. Radhakrishnan (supra) cannot be considered to be a binding
    precedent for the reasons given in the said paragraph, we are of the
    view that the development of the law by this Court cannot be thwarted
    41
    merely because a certain provision recommended in a Law Commission
    Report is not enacted by Parliament. Parliament may have felt, as was
    mentioned by Lord Reid in British Railways Board and Herrington,
    1972 A.C. 877 [House of Lords], that it was unable to make up its mind
    and instead, leave it to the courts to continue, case by case, deciding
    upon what should constitute the fraud exception.1
    Parliament may also
    have thought that section 16(7), proposed by the Law Commission, is
    clumsily worded as it speaks of “a serious question of law, complicated
    questions of fact, or allegations of fraud, corruption, etc.” N.
    Radhakrishnan (supra) did not lay down that serious questions of law or
    complicated questions of fact are non-arbitrable. Further, “allegations of
    fraud, corruption, etc.” is vague. For this reason also, Parliament may
    have left it to the courts to work out the fraud exception. In any case, we
    have pointed out that dehors any such provision, the ratio in N.
    Radhakrishnan (supra), being based upon a judgment under the 1940
    Act, and without considering sections 5, 8 and 16 of the 1996 Act in their
    proper perspective, would all show that the law laid down in this case
    cannot now be applied as a precedent for application of the fraud mantra
    to negate arbitral proceedings. For the reasons given in this judgment,
    the House of Lords’ decision would have no application inasmuch as N.
    1 This case is referred to in Lord Brandon’s judgment in La Pintada (supra) and
    distinguished at p. 130 of his judgment.
    42
    Radhakrishnan (supra) has been tackled on the judicial side and has
    been found to be wanting.
  23. The judgment in Ayyasamy (supra) was then applied in Ameet
    Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC 678. After
    extracting paragraph 25 from Sikri, J.’s judgment and paragraph 48 of
    Chandrachud, J.’s judgment in Ayyasamy (supra), the Court held:
    “37. It is only where serious questions of fraud are involved,
    the arbitration can be refused. In this case, as contended by
    the appellants there were no serious allegations of fraud; the
    allegations levelled against Astonfield is that Appellant 1
    Ameet Lalchand Shah misrepresented by inducing the
    respondents to pay higher price for the purchase of the
    equipments. There is, of course, a criminal case registered
    against the appellants in FIR No. 30 of 2015 dated 5-3-2015
    before the Economic Offences Wing, Delhi. Appellant 1
    Ameet Lalchand Shah has filed Criminal Writ Petition No.
    619 of 2016 before the High Court of Delhi for quashing the
    said FIR. The said writ petition is stated to be pending and
    therefore, we do not propose to express any views in this
    regard, lest, it would prejudice the parties. Suffice to say that
    the allegations cannot be said to be so serious to refuse to
    refer the parties to arbitration. In any event, the arbitrator
    appointed can very well examine the allegations regarding
    fraud.”
  24. In a recent judgment reported as Rashid Raza (supra), this Court
    referred to Sikri, J.’s judgment in Ayyasamy (supra) and then held:
    “4. The principles of law laid down in this appeal make a
    distinction between serious allegations of forgery/fabrication
    in support of the plea of fraud as opposed to “simple
    allegations”. Two working tests laid down in para 25 are: (1)
    does this plea permeate the entire contract and above all,
    the agreement of arbitration, rendering it void, or (2) whether
    43
    the allegations of fraud touch upon the internal affairs of the
    parties inter se having no implication in the public domain.”
    After these judgments, it is clear that “serious allegations of fraud” arise
    only if either of the two tests laid down are satisfied, and not otherwise.
    The first test is satisfied only when it can be said that the arbitration
    clause or agreement itself cannot be said to exist in a clear case in
    which the court finds that the party against whom breach is alleged
    cannot be said to have entered into the agreement relating to arbitration
    at all. The second test can be said to have been met in cases in which
    allegations are made against the State or its instrumentalities of
    arbitrary, fraudulent, or malafide conduct, thus necessitating the hearing
    of the case by a writ court in which questions are raised which are not
    predominantly questions arising from the contract itself or breach
    thereof, but questions arising in the public law domain.
  25. At this stage, it is necessary to deal with the broad statement of
    the law in Afcons (supra) and Booz Allen (supra). When Afcons
    (supra) refers in paragraph 27(iv) to “cases involving serious and specific
    allegations of fraud, fabrication of documents, forgery, impersonation,
    coercion, etc.”, this must now be understood in the sense laid down in
    Ayyasamy (supra) and Rashid Raza (supra). When it comes to
    paragraph 27(vi) in Afcons (supra), and paragraph 36(i) in Booz Allen
    44
    (supra), namely, cases involving prosecution for criminal offences, it is
    also important to remember that the same set of facts may have civil as
    well as criminal consequences. Thus, in K.G. Premshanker v.
    Inspector of Police, (2002) 8 SCC 87 [“Premshanker”], this Court had
    to answer a reference made to it as follows:
    “7. This Court on 9-11-1998, passed the following order:
    “Since we are of the view that the judgment of this Court in
    V.M. Shah v. State of Maharashtra [(1995) 5 SCC 767 : 1995
    SCC (Cri) 1077] which has been relied upon by Mr Gopal
    Subramaniam, learned Senior Counsel appearing for the
    petitioner, requires reconsideration, we refer this petition to a
    larger Bench for disposal. Let the record be placed before
    Hon. the Chief Justice for necessary orders.”
    The observations in V.M. Shah v. State of Maharashtra, 1995 (5) SCC
    767, which led to the reference, are set out in paragraph 11 as follows:
    “11. In the background of the aforesaid facts, we would refer
    to the observations made in V.M. Shah case [(1995) 5 SCC
    767 : 1995 SCC (Cri) 1077] which are as under: (SCC p.
    770, para 11)
    “11. As seen that the civil court after full-dressed
    trial recorded the finding that the appellant had
    not come into possession through the
    Company but had independent tenancy rights
    from the principal landlord and, therefore, the
    decree for eviction was negatived. Until that
    finding is duly considered by the appellate court
    after weighing the evidence afresh and if it so
    warranted reversed, the findings bind the
    parties. The findings, recorded by the criminal
    court, stand superseded by the findings recorded
    by the civil court. Thereby, the findings of the civil
    court get precedence over the findings recorded
    by the trial court, in particular, in summary trial for
    offences like Section 630. The mere pendency of
    45
    the appeal does not have the effect of
    suspending the operation of the decree of the
    trial court and neither the finding of the civil court
    gets nor the decree becomes inoperative.”
    (emphasis in original)
    After referring to sections 40 to 43 of the Indian Evidence Act, 1872, and
    the judgment in M.S. Sheriff v. The State of Madras, 1954 SCR 1144,
    this Court held:
    “32. In the present case, the decision rendered by the
    Constitution Bench in M.S. Sheriff case [AIR 1954 SC 397 :
    1954 Cri LJ 1019] would be binding, wherein it has been
    specifically held that no hard-and-fast rule can be laid down
    and that possibility of conflicting decision in civil and criminal
    courts is not a relevant consideration. The law envisages
    “such an eventuality when it expressly refrains
    from making the decision of one court binding on
    the other, or even relevant, except for limited
    purpose such as sentence or damages”.
  26. Hence, the observation made by this Court in V.M. Shah
    case [(1995) 5 SCC 767 : 1995 SCC (Cri) 1077] that the
    finding recorded by the criminal court stands superseded by
    the finding recorded by the civil court is not correct
    enunciation of law. Further, the general observations made
    in Karam Chand case [(1970) 3 SCC 694] are in context of
    the facts of the case stated above. The Court was not
    required to consider the earlier decision of the Constitution
    Bench in M.S. Sheriff case [AIR 1954 SC 397 : 1954 Cri LJ
    1019] as well as Sections 40 to 43 of the Evidence Act.”
    Likewise, in P. Swaroopa Rani v. M. Hari Narayana, (2008) 5 SCC 765,
    this Court laid down the proposition:-
    “11. It is, however, well settled that in a given case, civil
    proceedings and criminal proceedings can proceed
    simultaneously. Whether civil proceedings or criminal
    proceedings shall be stayed depends upon the facts and
    46
    circumstances of each case. (See M.S. Sheriff v. State of
    Madras [AIR 1954 SC 397], Iqbal Singh Marwah v.
    Meenakshi Marwah [(2005) 4 SCC 370 : 2005 SCC (Cri)
    1101] and Institute of Chartered Accountants of India v.
    Assn. of Chartered Certified Accountants [(2005) 12 SCC
    226 : (2006) 1 SCC (Cri) 544].)”
    In Syed Askari Hadi Ali Augustine Imam v. State (Delhi Admn.),
    (2009) 5 SCC 528 , it was held:
    “24. If primacy is to be given to a criminal proceeding,
    indisputably, the civil suit must be determined on its own
    merit, keeping in view the evidence brought before it and not
    in terms of the evidence brought in the criminal proceeding.
    The question came up for consideration in K.G.
    Premshanker v. Inspector of Police [(2002) 8 SCC 87 : 2003
    SCC (Cri) 223] ……
  27. It is, however, significant to notice that the decision of
    this Court in Karam Chand Ganga Prasad v. Union of India
    [(1970) 3 SCC 694] , wherein it was categorically held that
    the decisions of the civil courts will be binding on the criminal
    courts but the converse is not true, was overruled ……
    Axiomatically, if judgment of a civil court is not binding on a
    criminal court, a judgment of a criminal court will certainly not
    be binding on a civil court. ”
    In Kishan Singh v. Gurpal Singh (2010) 8 SCC 775, the Court referred
    to all the relevant judgments on the subject and ultimately held thus:
    “13. In V.M. Shah v. State of Maharashtra [(1995) 5 SCC 767
    : 1995 SCC (Cri) 1077] this Court has held as under: (SCC
    p. 770, para 11)
    “11. As seen that the civil court after full-dressed
    trial recorded the finding that the appellant had
    not come into possession through the Company
    but had independent tenancy rights from the
    principal landlord and, therefore, the decree for
    eviction was negatived. Until that finding is duly
    considered by the appellate court after weighing
    47
    the evidence afresh and if it so warranted
    reversed, the findings bind the parties. The
    findings, recorded by the criminal court, stand
    superseded by the findings recorded by the civil
    court. Thereby, the findings of the civil court get
    precedence over the findings recorded by the
    trial court, in particular, in summary trial for
    offences like Section 630. The mere pendency of
    the appeal does not have the effect of
    suspending the operation of the decree of the
    trial court and neither the finding of the civil court
    gets disturbed nor the decree becomes
    inoperative.”
  28. The correctness of the aforesaid judgment in V.M. Shah
    [(1995) 5 SCC 767 : 1995 SCC (Cri) 1077] was doubted by
    this Court and the case was referred to a larger Bench in
    K.G. Premshanker v. Inspector of Police [(2002) 8 SCC 87 :
    2003 SCC (Cri) 223 : AIR 2002 SC 3372] . In the said case,
    the judgment in V.M. Shah [(1995) 5 SCC 767 : 1995 SCC
    (Cri) 1077] was not approved. While deciding the case, this
    Court placed reliance upon the judgment of the Privy Council
    in King Emperor v. Khwaja Nazir Ahmad [(1943-44) 71 IA
    203 : AIR 1945 PC 18] wherein it has been held as under:
    (IA p. 212)
    “… It is conceded that the findings in a civil
    proceeding are not binding in a subsequent
    prosecution founded [upon] the same or similar
    allegations. Moreover, the police investigation
    was stopped, and it cannot be said with certainty
    that no more information could be obtained. But
    even if it were not, it is the duty of a criminal
    court when a prosecution for a crime takes place
    before it to form its own view and not to reach its
    conclusion by reference to any previous decision
    which is not binding [upon] it.”
    (emphasis added)
  29. In P. Swaroopa Rani v. M. Hari Narayana [(2008) 5 SCC
    765 : (2008) 3 SCC (Cri) 79 : AIR 2008 SC 1884] this Court
    has held as under: (SCC pp. 769-71, paras 11, 13 & 18)
    “11. It is, however, well settled that in a given
    case, civil proceedings and criminal proceedings
    can proceed simultaneously. Whether civil
    48
    proceedings or criminal proceedings shall be
    stayed depends upon the facts and
    circumstances of each case. …
    xxx xxx xxx
  30. Filing of an independent criminal proceeding,
    although initiated in terms of some observations
    made by the civil court, is not barred under any
    statute. …
    xxx xxx xxx
  31. It goes without saying that the respondent
    shall be at liberty to take recourse to such a
    remedy which is available to him in law. We have
    interfered with the impugned order only because
    in law simultaneous proceedings of a civil and a
    criminal case are permissible.”
  32. In Iqbal Singh Marwah v. Meenakshi Marwah [(2005) 4
    SCC 370 : 2005 SCC (Cri) 1101] this Court held as under:
    (SCC pp. 389-90, para 32)
    “32. Coming to the last contention that an effort
    should be made to avoid conflict of findings
    between the civil and criminal courts, it is
    necessary to point out that the standard of proof
    required in the two proceedings is entirely
    different. Civil cases are decided on the basis of
    preponderance of evidence while in a criminal
    case the entire burden lies on the prosecution
    and proof beyond reasonable doubt has to be
    given. There is neither any statutory provision
    nor any legal principle that the findings recorded
    in one proceeding may be treated as final or
    binding in the other, as both the cases have to be
    decided on the basis of the evidence adduced
    therein.”
  33. In Syed Askari Hadi Ali Augustine Imam v. State (Delhi
    Admn.) [(2009) 5 SCC 528] this Court considered all the
    earlier judgments on the issue and held that while deciding
    the case in Karam Chand [(1970) 3 SCC 694 : AIR 1971 SC
    1244], this Court failed to take note of the Constitution Bench
    judgment in M.S. Sheriff [AIR 1954 SC 397 : 1954 Cri LJ
    1019] and, therefore, it remains per incuriam and does not
    lay down the correct law. A similar view has been reiterated
    49
    by this Court in Vishnu Dutt Sharma v. Daya Sapra [(2009)
    13 SCC 729 : (2010) 1 SCC (Cri) 1229] , wherein it has been
    held by this Court that the decision in Karam Chand [(1970)
    3 SCC 694 : AIR 1971 SC 1244] stood overruled in K.G.
    Premshanker [(2002) 8 SCC 87 : 2003 SCC (Cri) 223 : AIR
    2002 SC 3372].
  34. Thus, in view of the above, the law on the issue stands
    crystallised to the effect that the findings of fact recorded by
    the civil court do not have any bearing so far as the criminal
    case is concerned and vice versa. Standard of proof is
    different in civil and criminal cases. In civil cases it is
    preponderance of probabilities while in criminal cases it is
    proof beyond reasonable doubt. There is neither any
    statutory nor any legal principle that findings recorded by the
    court either in civil or criminal proceedings shall be binding
    between the same parties while dealing with the same
    subject-matter and both the cases have to be decided on the
    basis of the evidence adduced therein. However, there may
    be cases where the provisions of Sections 41 to 43 of the
    Evidence Act, 1872, dealing with the relevance of previous
    judgments in subsequent cases may be taken into
    consideration. ”
    To complete the review of case law on the subject, we may finally refer
    to Guru Granth Saheb Sthan Meerghat Vanaras v. Ved Prakash,
    (2013) 7 SCC 622, wherein this Court, after referring to the previous
    case law on the subject held as follows:
    “17. In K.G. Premshanker [K.G. Premshanker v. Inspector of
    Police, (2002) 8 SCC 87 : 2003 SCC (Cri) 223] the effect of
    the above provisions (Sections 40 to 43 of the Evidence Act)
    has been broadly noted thus: (SCC p. 97, para 30)
    “30. … (4) if the criminal case and civil
    proceedings are for the same cause, judgment of
    the civil court would be relevant if conditions of
    any of Sections 40 to 43 are satisfied, but it
    cannot be said that the same would be
    conclusive except as provided in Section 41.
    50
    Section 41 provides which judgment would be
    conclusive proof of what is stated therein.”
    Moreover, the judgment, order or decree passed in previous
    civil proceedings, if relevant, as provided under Sections 40
    and 42 or other provisions of the Evidence Act then in each
    case the court has to decide to what extent it is binding or
    conclusive with regard to the matters decided therein. In
    each and every case the first question which would require
    consideration is, whether the judgment, order or decree is
    relevant; if relevant, its effect. This would depend upon the
    facts of each case.
  35. In light of the above legal position, it may be immediately
    observed that the High Court was not at all justified in
    staying the proceedings in the civil suit till the decision of
    criminal case. Firstly, because even if there is a possibility of
    conflicting decisions in the civil and criminal courts, such an
    eventuality cannot be taken as a relevant consideration.
    Secondly, in the facts of the present case there is no
    likelihood of any embarrassment to the defendants
    (Respondents 1 to 4 herein) as they had already filed the
    written statement in the civil suit and based on the pleadings
    of the parties the issues have been framed. In this view of
    the matter, the outcome and/or findings that may be arrived
    at by the civil court will not at all prejudice the defence(s) of
    Respondents 1 to 4 in the criminal proceedings.”
  36. In the light of the aforesaid judgments, paragraph 27(vi) of Afcons
    (supra) and paragraph 36(i) of Booz Allen (supra), must now be read
    subject to the rider that the same set of facts may lead to civil and
    criminal proceedings and if it is clear that a civil dispute involves
    questions of fraud, misrepresentation, etc. which can be the subject
    matter of such proceeding under section 17 of the Contract Act, and/or
    the tort of deceit, the mere fact that criminal proceedings can or have
    been instituted in respect of the same subject matter would not lead to
    51
    the conclusion that a dispute which is otherwise arbitrable, ceases to be
    so.
  37. Section 17 of the Contract Act defines “fraud” as follows:
    “17. “Fraud” defined.—“Fraud” means and includes any of
    the following acts committed by a party to a contract, or with
    his connivance, or by his agent2
    , with intent to deceive
    another party thereto or his agent, or to induce him to enter
    into the contract—
    (1) the suggestion, as a fact, of that which is not true, by one
    who does not believe it to be true;
    (2) the active concealment of a fact by one having
    knowledge or belief of the fact;
    (3) a promise made without any intention of performing it;
    (4) any other act fitted to deceive;
    (5) any such act or omission as the law specially declares to
    be fraudulent.
    Explanation.—Mere silence as to facts likely to affect
    the willingness of a person to enter into a contract is not
    fraud, unless the circumstances of the case are such that,
    regard being had to them, it is the duty of the person keeping
    silence to speak3
    , or unless his silence is, in itself, equivalent
    to speech.”
    Section 10 of the Contract Act states that all agreements are contracts if
    they are made with the free consent of parties competent to contract, for
    a lawful consideration and with a lawful object, and are not hereby
    expressly declared to be void. Section 14 states that consent is said to
    be free when it is not caused inter alia by fraud as defined in section 17.
    Importantly, the section goes on to say that consent is said to be so
    caused when it would not have been given but for the existence, inter
    2 Cf. S. 238, infra.
    3 See S. 143, infra.
    52
    alia, of such fraud. Where such fraud is proved, and consent to an
    agreement is caused by fraud, the contract is voidable at the option of
    the party whose consent was so caused. This is provided by section 19
    of the Contract Act which reads as follows:
    “19. Voidability of agreements without free consent.—
    When consent to an agreement is caused by coercion, fraud
    or misrepresentation, the agreement is a contract voidable at
    the option of the party whose consent was so caused.
    A party to a contract, whose consent was caused by
    fraud or misrepresentation, may, if he thinks fit, insist that the
    contract shall be performed, and that he shall be put in the
    position in which he would have been if the representation
    made had been true.
    Exception.—If such consent was caused by
    misrepresentation or by silence, fraudulent within the
    meaning of Section 17, the contract, nevertheless, is not
    voidable, if the party whose consent was so caused had the
    means of discovering the truth with ordinary diligence.4
    Explanation.—A fraud or misrepresentation which did
    not cause the consent to a contract of the party of whom
    such fraud was practised, or to whom such
    misrepresentation was made, does not render a contract
    voidable.
    It has been held by the Bombay High Court in Fazal D. Allana v.
    Mangaldas M. Pakvasa, AIR 1922 Bom 303, that section 17 of the
    Contract Act only applies if the contract itself is obtained by fraud or
    4 It is important to note that the exception in section 19 does not apply to fraudulent
    misrepresentation as the words “by silence” alone go with the word “fraudulent”, thus
    not applying to cases of fraudulent misrepresentation. In John Minas Apcar v.
    Louis Caird Malchus, AIR 1939 Cal 473, the concurrent judgments of Derbyshire,
    C.J. and Lort Williams, J. referred to a passage from Sir Frederick Pollock and Sir
    Dinshah Mulla, in their work on the Contract Act, 6th Edition, which said:
    “It will be observed that the exception does not apply to cases of active
    fraud as distinguished from misrepresentation which is not fraudulent”.
    (see pp. 476-477)
    53
    cheating. However, a distinction is made between a contract being
    obtained by fraud and performance of a contract (which is perfectly valid)
    being vitiated by fraud or cheating. The latter would fall outside section
    17 of the Contract Act, in which the remedy for damages would be
    available, but not the remedy for treating the contract itself as being void
    (see pp. 311-312). This is for the reason that the words “with intent to
    deceive another party thereto or his agent” must be read with the words
    “or to induce him to enter into the contract”, both sets of expressions
    speaking in relation to the formation of the contract itself. This is further
    made clear by sections 10, 14 and 19, which have already been referred
    to hereinabove, all of which deal with “fraud” at the stage of entering into
    the contract. Even section 17(5) which speaks of “any such act or
    omission as the law specially deals to be fraudulent” must mean such
    act or omission under such law at the stage of entering into the contract.
    Thus, fraud that is practiced outside of section 17 of the Contract Act,
    i.e., in the performance of the contract, may be governed by the tort of
    deceit, which would lead to damages, but not rescission of the contract
    itself.5
    5 In State of Tripura v. Province of East Bengal, Union of India, 1951 SCR 1, in a
    separate concurring judgment, Mukherjea, J. went into what in English law was
    considered as a tort (see pp. 44-49). The learned Judge concluded as follows:
    “Thus tort is a civil injury other than a breach of contract which is
    capable of sustaining an action for unliquidated damages in a court of
    law. If the appropriate remedy is not a claim for unliquidated damages
    but for injunction or some other relief, it would not rank as a tort
    though all the same it would be an actionable wrong.”
    (at p. 48)
    54
  38. Both kinds of fraud are subsumed within the expression “fraud”
    when it comes to arbitrability of an agreement which contains an
    arbitration clause.
  39. Now, as to the measure of damages for fraudulent
    misrepresentation by which a party to the contract is induced to enter
    into the contract. In Smith New Court Securities Ltd. v. Scrimgeour
    Vickers (Asset Management) Ltd., [1996] 4 All ER 769, the appellant,
    Smith New Court [“SMC”] purchased shares in a company, Ferranti
    International Signal Inc. [“F. Inc.”], which had been pledged to a bank as
    security for a loan made by the bank to a client. SMC was given the
    impression that it was in competition with two other bidders for the
    Likewise, in Ellerman & Bucknall Steamship Co. Ltd. v. Sha Misrimal Bherajee,
    [1966] Supp SCR 92, the Court referred to the tort of deceit as follows:
    “Deceit is a false statement of a fact made by a person knowingly or
    recklessly with the intent that it shall be acted upon by another who
    does act upon it and thereby suffers damage”; see A Textbook of the
    Law of Tort by Winfield, 5th Edn., at p. 379.”
    (at p. 99)
    On the facts, it was then concluded:
    “Now let us look at the relevant facts of the present case. It was one of
    the terms of the contract between the seller and the buyer that the
    goods should be packed in new fibre drums. The standard of good
    order and condition of the packages was agreed upon by the parties
    to the contract. The shipowners knew that condition as the Mate’s
    receipt disclosed the same. If the drums had been mentioned as old in
    the bill of lading, the said bill would not have been a clean bill. Though
    the apparent condition of the drums was old, the shipowners made an
    assertion that they were not old drums, i.e., they gave a clean bill. This
    representation was obviously intended, in collusion with the seller, to
    enable him to operate upon the credit with the Bank. This collusion is
    also apparent from the indemnity bond they took from the seller to
    guard themselves against the consequences of the said
    representation. All the elements of deceit are present.”
    (at p. 102)
    55
    shares and, therefore, bid a very high price for the shares. When the
    share price collapsed as a result of a major fraud, SMC investigated the
    circumstances of its purchase and discovered that the two other bidders
    were not there at the time of the sale. SMC then brought proceedings
    against the first defendant, Scrimgeour Vickers (Asset Management)
    Ltd., and the bank, claiming damages for fraudulent misrepresentation.
    The House of Lords referred to the leading judgment in Doyle v. Olby
    (Ironmongers) Ltd., [1969] 2 All ER 119 (Queen’s Bench) [“Doyle”],
    and held:
    “Doyle v. Olby (Ironmongers) Ltd. establishes four points.
    First, that the measure of damages where a contract has
    been induced by fraudulent misrepresentation is reparation
    for all the actual damage directly flowing from (i.e. caused
    by) entering into the transaction. Second, that in assessing
    such damages it is not an inflexible rule that the plaintiff must
    bring into account the value as at the transaction date of the
    asset acquired: although the point is not adverted to in the
    judgments, the basis on which the damages were computed
    shows that there can be circumstances in which it is proper
    to require a defendant only to bring into account the actual
    proceeds of the asset provided that he has acted reasonably
    in retaining it. Third, damages for deceit are not limited to
    those which were reasonably foreseeable. Fourth, the
    damages recoverable can include consequential loss
    suffered by reason of having acquired the asset.”
    (at p. 777)
    In this judgment of Lord Browne-Wilkinson, a useful summary of the
    principles that apply in assessing the damages payable where the
    plaintiff has been induced to enter into a contract by a fraudulent
    misrepresentation, are stated as follows:
    56
    “In sum, in my judgment the following principles apply in
    assessing the damages payable where the plaintiff has been
    induced by a fraudulent misrepresentation to buy property:
    (1) the defendant is bound to make reparation for all the
    damage directly flowing from the transaction;
    (2) although such damage need not have been foreseeable,
    it must have been directly caused by the transaction;
    (3) in assessing such damage, the plaintiff is entitled to
    recover by way of damages the full price paid by him, but he
    must give credit for any benefits which he has received as a
    result of the transaction;
    (4) as a general rule, the benefits received by him include
    the market value of the property acquired as at the date of
    acquisition; but such general rule is not to be inflexibly
    applied where to do so would prevent him obtaining full
    compensation for the wrong suffered;
    (5) although the circumstances in which the general rule
    should not apply cannot be comprehensively stated, it will
    normally not apply where either (a) the misrepresentation
    has continued to operate after the date of the acquisition of
    the asset so as to induce the plaintiff to retain the asset or
    (b) the circumstances of the case are such that the plaintiff
    is, by reason of the fraud, locked into the property.
    (6) In addition, the plaintiff is entitled to recover
    consequential losses caused by the transaction;
    (7) the plaintiff must take all reasonable steps to mitigate his
    loss once he has discovered the fraud.”
    (at pp. 778-779)
    Likewise, in the same judgment Lord Steyn, after referring to the seminal
    judgment in Doyle [supra] stated the law thus:-
    “The logic of the decision in Doyle v. Olby (Ironmongers)
    Ltd. justifies the following propositions.
    (1) The plaintiff in an action for deceit is not entitled to be
    compensated in accordance with the contractual measure of
    damage, i.e. the benefit of the bargain measure. He is not
    entitled to be protected in respect of his positive interest in
    the bargain.
    57
    (2) The plaintiff in an action for deceit is, however, entitled to
    be compensated in respect of his negative interest. The aim
    is to put the plaintiff into the position he would have been in if
    no false representation had been made.
    (3) The practical difference between the two measures was
    lucidly explained in a contemporary case note on Doyle v.
    Olby (Ironmongers) Ltd.: G. H. Treitel, “Damages for Deceit”
    (1969) 32 M.L.R. 556, 558–559. The author said:
    “If the plaintiff’s bargain would have been a bad
    one, even on the assumption that the
    representation was true, he will do best under the
    tortious measure. If, on the assumption that the
    representation was true, his bargain would have
    been a good one, he will do best under the first
    contractual measure (under which he may
    recover something even if the actual value of
    what he has recovered is greater than the price).”
    (4) Concentrating on the tort measure, the remoteness test
    whether the loss was reasonably foreseeable had been
    authoritatively laid down in The Wagon Mound in respect of
    the tort of negligence a few years before Doyle v. Olby
    (Ironmongers) Ltd. was decided: Overseas Tankship (U.K.)
    Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon
    Mound) [1961] A.C. 388. Doyle v. Olby (Ironmongers)
    Ltd. settled that a wider test applies in an action for deceit.
    (5) The dicta in all three judgments, as well as the actual
    calculation of damages in Doyle v. Olby (Ironmongers) Ltd. ,
    make clear that the victim of the fraud is entitled to
    compensation for all the actual loss directly flowing from the
    transaction induced by the wrongdoer. That includes heads
    of consequential loss.
    (6) Significantly in the present context the rule in the
    previous paragraph is not tied to any process of valuation at
    the date of the transaction. It is squarely based on the
    overriding compensatory principle, widened in view of the
    fraud to cover all direct consequences. The legal measure is
    to compare the position of the plaintiff as it was before the
    fraudulent statement was made to him with his position as it
    became as a result of his reliance on the fraudulent
    statement.”
    (at p. 792)
    58
    In an important passage titled “the date of transaction rule”, Lord Steyn
    emphasised that in cases of fraudulent misrepresentation, there is only
    one and not two alternative measures of damages, namely, the loss truly
    suffered by the party affected who must be put back in the same place
    as if he had never entered into the transaction. In an action for deceit,
    the price paid less the valuation at the transaction date is simply a
    method of measuring such a loss, but is not a substitute for the basic
    rule. This was felicitously stated as follows:
    “The date of transaction rule
    That brings me to the perceived difficulty caused by the date
    of transaction rule. The Court of Appeal [1994] 1 W.L.R.
    1271, 1283G, referred to the rigidity of “the rule in Waddell v.
    Blockey (1879) 4 Q.B.D. 678, which requires the damages to
    be calculated as at the date of sale.” No doubt this view was
    influenced by the shape of arguments before the Court of
    Appeal which treated the central issue as being in reality a
    valuation exercise. It is right that the normal method of
    calculating the loss caused by the deceit is the price paid
    less the real value of the subject matter of the sale. To the
    extent that this method is adopted, the selection of a date of
    valuation is necessary. And generally the date of the
    transaction would be a practical and just date to adopt. But it
    is not always so. It is only prima facie the right date. It may
    be appropriate to select a later date. That follows from the
    fact that the valuation method is only a means of trying to
    give effect to the overriding compensatory rule: Potts v.
    Miller , 64 C.L.R. 282, 299, per Dixon J. and County
    Personnel (Employment Agency) Ltd. v. Alan R. Pulver &
    Co. [1987] 1 W.L.R. 916, 925–926, per Bingham L.J.
    Moreover, and more importantly, the date of transaction rule
    is simply a second order rule applicable only where the
    valuation method is employed. If that method is inapposite,
    the court is entitled simply to assess the loss flowing directly
    59
    from the transaction without any reference to the date of
    transaction or indeed any particular date. Such a course will
    be appropriate whenever the overriding compensatory rule
    requires it. An example of such a case is to be found
    in Cemp Properties (U.K.) Ltd. v. Dentsply Research &
    Development Corporation [1991] 2 E.G.L.R. 197,
    201, per Bingham L.J. There is in truth only one legal
    measure of assessing damages in an action for deceit: the
    plaintiff is entitled to recover as damages a sum representing
    the financial loss flowing directly from his alteration of
    position under the inducement of the fraudulent
    representations of the defendants. The analogy of the
    assessment of damages in a contractual claim on the basis
    of cost of cure or difference in value springs to mind.
    In Ruxley Electronics and Construction Ltd. v. Forsyth [1996]
    A.C. 344, 360G, Lord Mustill said: “There are not two
    alternative measures of damages, as opposite poles, but
    only one; namely, the loss truly suffered by the promisee.” In
    an action for deceit the price paid less the valuation at the
    transaction date is simply a method of measuring loss which
    will satisfactorily solve many cases. It is not a substitute for
    the single legal measure: it is an application of it.”
    (at pp. 793-794)
  40. At this stage, in order to discover whether there is a strong prima
    facie case made out in favour of HSBC in the present section 9
    proceedings, it is necessary to refer to the Foreign Final Award dated
    27.09.2014. The Foreign Final Award in this case, after setting out the
    case of HSBC (the Claimant before the Arbitral Tribunal) and the case of
    Avitel India and the Jain family (the Respondents before the Arbitral
    Tribunal), set out the issues for determination thus:
    “ISSUES
    Issues for Determination
    60
    4.8 Against this background, the Tribunal considers that the
    issues for determination are as follows:
    i. have any of the Respondents made representations and/or
    warranties to the Claimant before the Claimant’s investment
    in Avitel India and if so, what were these representations
    and/or warranties;
    ii. if so, did the Respondents make the representations
    and/or warranties in order to induce the Claimant to invest in
    Avitel India;
    iii. if so, was the Claimant so induced and did it rely on the
    Respondents’ representations and/or warranties;
    iv. if so, were any of these representations and/or warranties
    untrue;
    v. if so, have any of the Respondents made such
    representations and/or warranties knowing that these were
    false and/or without belief in their truth, or recklessly and
    without caring whether these representations and/or
    warranties were true or false;
    vi. if so, are any of the Respondents liable to the Claimant in
    tort for deceit;
    vii. if so, are any of the Respondents liable to the Claimant
    for fraudulent misrepresentation pursuant to the relevant
    provisions of the Contract Act;
    viii. if so, is the Claimant entitled to damages for fraudulent
    misrepresentation pursuant to the relevant provisions of the
    Contract Act;
    ix. If so, are any of the Respondents liable to the Claimant
    for breach of warranty;
    x. If so, are any of the Respondents to indemnify the
    Claimant in respect of any of the Claimant’s claims;
    xi. if the Claimant is entitled to claim damages, what is the
    amount of damages the Claimant is entitled to;
    xii. if so, is the Claimant entitled to interest and if so, at what
    rate;
    xiii. is the Claimant entitled to the reliefs sought;
    xiv. costs;
    xv. are the Claimant’s shares in Avitel India to be cancelled
    and if so, on what basis?”
    61
    In answering these issues, the Arbitral Tribunal found:
    “7.14 The Tribunal additionally accepts the Claimant’s
    submission and finds that the Claimant was induced by and
    did rely on the Respondents’ further representations that,
    inter alia, the Avitel Group had immediate business with a
    value of approximately USD 1 billion with independent and
    legitimate customers as well as good relationships with
    independent and legitimate suppliers and service providers
    (see paragraphs 5.2(i)(l), 5.17(a.xv) and 5.17(a.xvi) above).
    7.15 The Tribunal rejects the Respondents’ submission and
    finds that Clause 6.3 of the SSA unequivocally establishes
    that the Claimant did rely on the representations and
    warranties in making its investment in Avitel India.”
    It further found that the siphoning off of a large part of the amount of
    USD 60 million into companies owned or controlled by the Jain family
    was made out as follows:
    “8.20 The Claimant relies in support, inter alia, on the
    witness evidence of Mr. van Schalkwyk, HSBC Middle East
    Limited’s Regional Head of Fraud Risk, who conducted an
    investigation into the banking activities of the Jain Family in
    the United Arab Emirates. This investigation established the
    flow of funds following the Claimant’s investment [Witness
    Statement of Mr. van Schalkwyk, at para.9] in summary as
    follows:
    (i) on 10 May 2011,an amount of USD 60,000,000.00 was
    received by Avitel Dubai (Emirates NDB account number
    744859021001) (“the Avitel Dubai Account”) from Avitel
    Mauritius. This represented the Claimant’s initial investment [
    Witness Statement of Mr. van Schalkwyk, at para.17(a)]. Mr.
    van Schalkwyk was able to ascertain this information from a
    statement of the Avitel Dubai Account for the period between
    1 May 2011 to 23 September 2011 which statement was
    provided to him by Mr. Derek Wylde of HSBC [A copy of this
    statement is exhibited to the Witness Statement of Mr. van
    Schalkwyk, at RVS-I pp. 2 to 3];
    62
    (ii) a series of payments was then made by Avitel Dubai as
    follows:
    a. on 15 May 2011 the Avitel Dubai Account was
    debited in the amount of USD 6 million and which
    amount was credited to an Emirates NBD
    account held in the name of Highend. This was
    followed by multiple small transfers out of
    Highend’s bank account to a number of
    miscellaneous accounts [Witness Statement of
    Mr. van Schalkwyk, at para. 17(b)(i)] ;
    b. on 23 May 2011, the Avitel Dubai Account was
    debited in the amount of USD 12.22 million and
    which amount was credited to the same Emirates
    NBD account held in the name of Highend. This
    amount was in turn transferred to an entity
    identified as Avitel Limited on 30 May 2011
    whose full beneficial ownership Mr. van
    Schalkwyk has not been able to confirm [Witness
    Statement of Mr. van Schalkwyk, at para. 17(b)
    (ii)];
    c. on 9 June 2011 the Avitel Dubai Account was
    debited in the amount of USD 10 million which
    amount was then credited to a different Emirates
    NBD bank account which is also held in the
    name of Highend. On 27 July 2011 this amount
    was transferred to a further Emirates NBD
    account in the name of Digital Fusion. This sum
    was thereafter transferred to Cralton Capital
    Commercial Broker Services LLC (“Cralton”)
    which appears to be a broking and investment
    company [Witness Statement of Mr. van
    Schalkwyk, at para.17(b) (iii)] in respect of which
    company Mr. Boban Idiculla is the sole signatory
    to its bank account with Emirates NDB [Witness
    Statement of Mr. van Schalkwyk, at fn. 9];
    d. on 13 June 2011 and 14 June 2011, the Avitel
    Dubai Account was debited in the amounts of
    USD 10 million and USD 5 million respectively
    which amounts were credited to an Emirates
    NBD account held in the name of Digital Fusion.
    On 19 July 2011 and 26 July 2011, Digital
    Fusion’s account was debited in the amounts
    63
    USD 5 million and USD 10 million respectively
    which amounts were credited to an Emirates
    NBD account held in the name of Cralton. The
    account records of Cralton held with Emirates
    NBD show that the transfers in July 2011 totalling
    USD 25 million were used to make various
    transfers, fixed term deposits and investments
    between Cralton, Highend, Digital Fusion and
    SPAC [Witness Statement of Mr. van Schalkwyk,
    at para.17(b)(iv)];
    e. on 23 February 2012, the Avitel Dubai Account
    was debited in the amount of USD 8 million
    which amount was credited to the Emirates NBD
    account held in the name of Highend. On 28
    February 2012, this account was debited in the
    amount of USD 7.48 million which was credited
    to a different Emirates NBD account held in the
    name of SPAC. A further debit in the amount of
    USD 500,000 occurred on 28 February 2012
    which sum was routed through two different
    Emirates NBD accounts, one held in the name of
    DejaVu FZ-LLC and one in the name of Al Jalore
    Trading FZE, before this sum was finally credited
    to a Dubai Multi Commodities Centre entity,
    namely Emerald DMCC [Witness Statement of
    Mr. van Schalkwyk, at para.17(b)(v)];
    f. Mr. van Schalkwyk understands that between
    18 April 2012 and 29 April 2012, there was a
    further transfer from the Avitel Dubai Account of
    USD 8.5 million. However, he has been unable to
    ascertain to which account(s) these funds have
    been transferred to [Witness Statement of Mr.
    van Schalkwyk, at para.18].”
    It then found that the following admitted facts would show that most of
    the representations made by the Avitel Group and the Jain family to
    HSBC were false in that:
    “8.70 The Tribunal notes that the Respondents have not
    denied the accuracy of the following:
    64
    a. the Avitel Group did not have a direct
    relationship with the BBC and was not
    close to signing the BBC Contract;
    b. Avitel Dubai’s offices had been closed for
    a period of time;
    c. Mr. Siddhartha Jain was a forty nine
    percent shareholder in Highend as well as
    in Digital Fusion at the material time;
    d. Mr. Siddhartha Jain is the sole signatory
    of and therefore controls Highend’s and
    Digital Fusion’s bank accounts with
    Emirates NBD;
    e. Mr. Siddhartha Jain was co-signatory
    (together with one Mr. Ankit Garg) of
    SPAC’s bank accounts with Emirates NDB;
    f. Kinden was not in existence between 12
    October 2010 and 26 October 2011;
    g. Mr. Boban Idiculla who is the sole
    shareholder and director of Kinden, is also
    the sole signatory of and therefore controls
    Cralton’s bank accounts with Emirates
    NDB;
    h. Purple Passion, which was wholly owned
    by Mr. Siddhartha Jain, was dissolved on
    23 November 2010;
    i. In total, USD 59.72 million of the
    Claimant’s USD 60 million investment have
    been transferred out of Avitel Dubai’s bank
    accounts and into bank accounts the
    majority of which are controlled by the Jain
    Family;
    j. the domain names for Kinden, SPAC,
    Highend and Digital Fusion had been
    registered by Mr. Hrishi Jain;
    k. on 28 January 2012, the websites for
    Kinden, SPAC, Highend and Digital Fusion
    had been transferred from the hosting site
    “rediffinalpro.com ” to “rirev.com”, the same
    hosting site which had been utilized by
    Avitel Dubai since 28 June 2011. Each
    65
    website was thereafter re-registered
    employing a proxy service called “Domains
    By Proxy, LLC”, which provides anonymity
    to the owners of websites on the internet.”
    As a result thereof, issue (iv) was answered stating:
    “8.72 In these circumstances and also for the reasons set
    out below, the Tribunal accepts the Claimant’s submissions
    and finds that the following representations and/or
    warranties made by the Respondents were false and/or
    misleading:
    a. the Avitel Group had been in advanced
    negotiations with the BBC and a BBC Contract
    had been close to execution. This is because the
    Respondents do not deny that the Avitel Group
    never had a direct relationship with the BBC and
    was not about to sign the BBC Contract;
    b. at the Completion Date, the Avitel Group had
    the benefit of the Material Contracts with Kinden,
    SPAC and Purple Passion in total valued at
    approximately USD 658 million. This is because
    in effect, Kinden and Purple Passion had not
    been in existence at the time of the Claimant’s
    investment;
    c. at the Completion Date, the Avitel Group’s key
    customers Kinden, SPAC and Purple Passion as
    well as Avitel Dubai’s key supplier, Highend, and
    key service provider, Digital Fusion, were all
    independent and legitimate companies. This is
    because in effect, Kinden and Purple Passion
    had not been in existence at the time of the
    Claimant’s investment and Mr. Siddhartha Jain
    was the shareholder and/or sole signatory to
    Highend’s and Digital Fusion’s bank accounts
    with Emirates NDB and was also co-signatory to
    SPAC’s bank accounts with Emirates NDB.
    Further, in light of the complex web of
    transactions to, from and between Highend’s,
    Digital Fusion’s, SPAC’s and Cralton’s various
    bank accounts with Emirates NDB (see
    66
    paragraph 8.20 above), the Tribunal accepts the
    Claimant’s submission that none of these entities
    were independent and legitimate companies. As
    for Mr. van Schalkwyk’s evidence, as there is no
    evidence adduced which would challenge the
    veracity and reliability of Mr. van Schalkwyk’s
    evidence, the Tribunal sees no reason to
    disregard his evidence. In the Tribunal’s view he
    is a credible witness;
    d. the Claimant’s investment was required and
    was to be utilized for purchasing equipment in
    order to enable Avitel Dubai to service the BBC
    Contract. In light of the circumstances referred to
    in paragraph 8.68 above, the Tribunal accepts
    the Claimant’s submission that its investment has
    been siphoned off by the Respondents;
    e. the representations and/or warranties
    contained in Clause 6.2.1 of the SSA because
    the information provided to the Claimant prior to
    and during the negotiations and the preparations
    of the SSA had not been provided by the
    Respondents and its/or their representatives and
    advisors in good faith and had been untrue,
    inaccurate and misleading for the reasons set out
    in paragraphs 8.72 (a) to (d) above;
    f. the representations and/or warranties
    contained in Clause 6.2.2 of the SSA because
    the representations and warranties made by the
    Respondents in the SSA read in conjunction with
    Clause 7 of Schedule 3 as well as Annexure C to
    the Disclosure Letter did contain untrue
    statements of material facts as the Avitel Group
    did not have immediate business worth close to
    USD 1 billion with independent and legitimate
    customers including the purported relationship
    with the BBC;
    g. the representations and/or warranties
    contained in Clause 6.2.3 of the SSA because
    there had been facts or circumstances relating to
    the affairs of Avitel India or any Subsidiary which
    had not been disclosed to the Claimant and
    which could have had an impact on the decision
    67
    of the Claimant to invest in Avitel India. In the
    Tribunal’s view, the fact that Kinden and Purple
    Passion did not exist at the material time and that
    Highend’s, Digital Fusion’s and SPAC’s bank
    accounts with Emirates NDB are controlled by
    Mr. Siddhartha Jain, would have had an impact
    on the Claimant’s decision to invest in Avitel
    India;
    h. the representations and/or warranties
    contained in Clauses 7.1 and 7.3 of Schedule 3
    of the SSA read in conjunction with the
    Disclosure Letter as Kinden and Purple Passion
    did not exist at the Completion Date such that the
    Material Contracts with these entities could not
    have existed either;
    i. the representations and/or warranties
    contained in Clause 7.5 of Schedule 3 of the SSA
    because Mr. Siddhartha Jain was at the
    Completion Date a forty nine percent shareholder
    of Highend and Digital Fusion so any
    transactions with these entities were Related
    Party Transactions which were not permitted
    pursuant to Clause 7.5 of Schedule 3 of the SSA
    and which, in any event, had not been concluded
    on an arm’s length basis;
    j. the representations and/or warranties
    contained in Clause 10 of Schedule 3 of the SSA
    because Avitel India’s and the Subsidiaries’
    accounts could not have given a true and fair
    view of the assets, liabilities and state of affairs
    of Avitel India and the Subsidiaries at the
    Accounts Date and of the profits or losses for the
    period concerned. For example, the Material
    Contracts with Kinden and Purple Passion did
    not exist at the Completion Date;
    k. the representations and warranties contained
    in Clause 8 of Schedule 3 of the SSA because if
    the accounts did not give a true and fair view of
    the assets, liabilities and state of affairs of Avitel
    India and the Subsidiaries, all Tax Returns
    relating to Avitel India and the Subsidiaries or the
    Business or the assets of Avitel India and each of
    68
    the Subsidiaries could not have been correct in
    all material respects;
    l. the representations and warranties contained in
    Clause 11 of Schedule 3 of the SSA because the
    Respondents falsely represented and warranted
    that Avitel India and each of the Subsidiaries
    were in material compliance with all applicable
    laws which in light of the Tribunal’s findings in
    paragraphs 8.72(a) to (j) above, could not have
    been the case;
    m. the representations and warranties contained
    in Clause 6.1 of the SSA because in light of the
    Tribunal’s findings in paragraphs 8.72(a) to (k)
    above, not every representation and warranty
    made in the SSA and in Schedule 3 of the SSA
    was true, complete, accurate and not misleading
    at the Completion Date.”
    As a result, in paragraph 20, a summary of findings was given as
    follows:
    “20. SUMMARY
    20.1 The Respondents chose not to attend the November
    2013 Oral Hearing and the Tribunal is not satisfied that they
    were unable to attend or prevented from doing so. The dates
    for the November 2013 Oral Hearing had been fixed some
    nine months before the hearing itself. It was only on 19 April
    2013 that the First Respondent vide Mr. Yogesh Garodia’s
    Request applied for these dates to be rescheduled to dates
    later than 9 November 2013 but without any indication as to
    the exact dates it sought. The Second, Third and Fourth
    Respondent did not seek a re-scheduling of the November
    2013 Oral Hearing until 29 July 2013 giving also no
    indication of alternative hearing dates asserting that the
    Respondents following the issue of the EOW Final Report,
    required additional time to file their witness statements and
    to prepare for the oral hearing. The Tribunal did not find this
    to be persuasive as there was still time. In subsequent
    correspondence on 15 October 2013, the Respondents
    further asserted that the November 2013 Oral Hearing fell
    69
    over a holiday period in India, namely the Diwali Festival.
    While the Tribunal accepts this, this hearing which was
    scheduled for and to be held in Singapore together with the
    substantial delay in seeking a postponement of the
    November 2013 Oral Hearing was not satisfactorily
    explained. The Respondents also sought an adjournment on
    the grounds, inter alia, of their inability to engage counsel.
    However, it appears to the Tribunal that during this period
    (i.e. from the time when they sought an adjournment up to
    the date of the November 2013 Oral Hearing), they were
    able to. The Tribunal also points out that although the
    Respondents at various stages ceased to be represented by
    lawyers, the letters written and signed by Mr. Yogesh
    Garodia either on behalf of the First Respondent or on behalf
    of all Respondents or the letters signed by the First
    Respondent (through Mr. Yogesh Garodia) Second, Third
    and Fourth Respondents, during this period were written in
    legal terminology including the employment of legal Latin
    maxims. The Respondents’ applications for re-scheduling
    the hearing dates in the Tribunal’s view must be viewed
    against the background of the failure of the Respondents to
    comply with the orders of the Emergency Arbitrator in
    proceedings in Singapore in which the Respondents had
    been represented by both Indian and Singapore counsel and
    provided evidence. All of the above are suggestive to the
    Tribunal of an attempt to delay these proceedings.
    20.2 The Respondents provided no witness statements and
    did not adduce any oral evidence before this Tribunal
    although the Tribunal accepts that they did so in the
    proceedings before the Emergency Arbitrator, namely in Mr.
    Yogesh Garodia’s Witness Statement. In reaching its
    findings and its decisions, this Tribunal has considered fully
    the Respondents’ numerous submissions and Mr. Yogesh
    Garodia’s Witness Statement as well as the documentary
    evidence. The Claimant provided evidence from a number of
    witnesses and also documentary evidence. As the
    Respondents did not attend the November 2013 Oral
    Hearing, the Tribunal tested the evidence of the Claimant’s
    witnesses by asking a number of questions. The Tribunal
    finds each of the Claimant’s witnesses to be credible and it
    accepts their evidence part of which is corroborated by the
    documentary evidence submitted by the Claimant Including
    an email from Ms. Sarah Jones, General Counsel at the
    70
    BBC, dated 4 May 2012 confirming, inter alia, that the BBC
    had not entered into a contract with Avitel India, that Mr.
    John Linwood had not attended a meeting on 19 April 2011
    with Mr. Anthony Bernbaum but at the same time was in an
    internal meeting with BBC staff.
    20.3 In summary, the Tribunal finds that the Jain Family
    (namely the Second, Third and Fourth Respondents)
    engaged in a deliberate and dishonest scheme to induce the
    Claimant (part of HSBC) to invest in Avitel India (namely the
    First Respondent). The Claimant placed the investment
    because it had been advised by the Jain Family (making the
    representations also on behalf of Avitel India), verbally, in
    writing and in the SSA itself, that Avitel India was about to
    and from 2 August 2011 had signed a contract with the BBC,
    for the BBC to use the services of Avitel India. This was
    false. Not only had a contract not been negotiated, let alone
    signed with the BBC, but the BBC had no knowledge of it.
    20.4 The misrepresentations and deception of the
    Respondents included the arrangement of a meeting
    between a representative of HSBC and a person who was
    falsely held out by the Respondents and purported to be the
    Chief Technical Officer of the BBC and who falsely purported
    to corroborate the Respondents’ misrepresentations. The
    representations were made prior to the conclusion of the
    SSA and in the SSA itself. They were made knowingly to be
    untrue and were fraudulent.”
    As a result thereof, it was found that HSBC, in respect of its claim for
    fraudulent misrepresentation, and its claim in tort for deceit, is entitled to
    damages in the total amount of USD 60 million plus interest and costs as
    awarded. The final declaration made in the Award then reads:
    “21.21 [The tribunal] Declares and Orders that upon the
    Respondents paying in full and unconditionally the sums
    awarded to the Claimant in paragraphs 21.15, 21.16, 21.18,
    21.19 hereinabove and all costs arising out of and incidental
    to the cancellation of the Claimant’s Preference Subscription
    Shares and Equity Subscription Shares (as defined in the
    SSA) in Avitel India, that the said shares be cancelled and
    71
    that in this regard, the Parties take the requisite steps to
    effect the said cancellation within 30 days of receipt of such
    payment.”
  41. There can be no doubt whatsoever after reading the issues and
    some of the material findings in the Foreign Final Award that the issues
    raised and answered are the subject matter of civil as opposed to
    criminal proceedings. The fact that a separate criminal proceeding was
    sought to be started and may have failed is of no consequence
    whatsoever. We, therefore, hold on a conspectus of these facts, and
    following our judgments, that the issues raised and answered in the
    Foreign Final Award would indicate:
    (i) That there is no such fraud as would vitiate the arbitration clause in
    the SSA entered into between the parties as it is clear that this clause
    has to be read as an independent clause. Further, any finding that the
    contract itself is either null and void or voidable as a result of fraud or
    misrepresentation does not entail the invalidity of the arbitration clause
    which is extremely wide, reading as follows:
    “Any dispute, controversy or claim arising out of or in
    connection with this Agreement, including any question
    regarding its existence, validity, interpretation, breach or
    termination ……”
    (emphasis supplied)
    72
    (ii) That the impersonation, false representations made, and diversion
    of funds are all inter parties, having no “public flavour” as explained in
    paragraph 14 so as to attract the “fraud exception”.
  42. Thus, a reading of the Foreign Final Award in this case would show
    that a strong prima facie case has indeed been made out as the Award
    holds the BBC transaction as a basis on which the contract was entered
    into and the USD 60 million paid by HSBC, which would clearly fall within
    fraudulent inducement to enter into a contract under section 17 of the
    Contract Act. Such a contract would be voidable at the instance of
    HSBC. Also, the findings on the siphoning off of monies that were meant
    to be allocated for the performance of the BBC contract would attract the
    tort of deceit. The measure of damages for such fraudulent
    misrepresentation is not the difference between the value of the shares
    on the date of making the contract and the value HSBC would have
    received, if it had resold those shares in the market, after the purchase.
    As has been held in the judgments stated hereinabove, the measure of
    such damages would be to put HSBC in the same position as if the
    contract had never been entered into, which is, the entitlement to
    recover the price paid for the shares and all consequential losses. This
    being the case, it is difficult to accede to the Division Bench’s finding as
    to the measure of damages in such cases.
    73
  43. So far as the other points raised by M/s. Mukul Rohatgi and
    Saurabh Kirpal are concerned, we wish to say nothing, as any finding on
    these points even prima facie would prejudice the section 48
    proceedings pending in the Bombay High Court. So far as the appeal of
    HSBC is concerned, we are of the view that it has substance in that the
    USD 60 million that was to be kept aside vide the Single Judge’s order,
    was fair and just in the facts of the case in that it is only the principal
    amount without any interest or costs that is ordered to be kept aside.
    Further, the reduction of USD 60 million to USD 30 million by the
    Division Bench is not justified given our finding on the measure of
    damages in the facts of this case.
  44. It is clarified that any finding made on facts in this judgment is only
    prima facie for the purpose of deciding the section 9 petition. We have
    held that HSBC has made out a strong prima facie case necessitating
    that USD 60 million, being the principal amount awarded to them, is kept
    apart in the manner indicated by the learned Single Judge of the
    Bombay High Court. The balance of convenience is also in its favour. It
    is clear that in case HSBC was to enforce the Foreign Final Award in
    India in accordance with section 48 of the 1996 Act, irreparable loss
    would be caused to it unless at least the principal sum were kept aside
    for purposes of enforcement of the award in India. Accordingly, we
    74
    dismiss Civil Appeal No.5145 of 2016 filed by Avitel India and the Jain
    family, and allow Civil Appeal No.5158 of 2016 filed by HSBC.
    Civil Appeal No. 9820 of 2016
  45. In this case, the Appellant is an angel investor in the shares of
    Avitel India. By a letter dated 04.07.2016, the Appellant herein
    expressed his concern on the observations and the freezing of the
    company’s bank account by the Bombay High Court vide orders dated
    22.01.2014 and 31.07.2014. The Appellant attended a meeting of the
    Board of Directors of Avitel India on 11.07.2016, in which the Chairman
    of the company, i.e., Mr. Pradeep Jain, explained to the Appellant in
    some detail as to the proceedings filed by HSBC against the company
    and the orders passed by the Arbitrators and Courts therein. The
    Chairman expressed a view that, ultimately, they were likely to succeed
    in this litigation. The Appellant stated that he was not satisfied with this
    point of view and asked for the return of the money invested along with
    interest at the rate of 12% per annum. The Chairman stated that the
    amounts invested by the Appellant were in equity shares, which were the
    fixed capital of the company, and any return of such investment is not
    permissible in law. The Appellant then stated the following, which is
    recorded in the Minutes of the Board Meeting dated 11.07.2016:
    75
    “Mr. Savla stated that he would like to peruse the documents
    in detail and would not rest content till full justification is
    made available, if need so arises for redressal of issues
    involved. He requested that the disputes be decided by an
    Arbitrator. The Board unanimously consented that any
    disputes raised by Mr. Ravindra Savla, so long as they are
    arbitrable under law, shall be referred to arbitration in
    accordance with Indian law. Mr. Ravindra Savla stated that
    he would examine the papers provided to him and determine
    his further course of action.
    Mr. Ravindra Savla further requested that a copy of the
    Minutes of this Meeting of the Board of Directors be made
    available to him. The Chairman accepted the said request.”
  46. Almost immediately, the Appellant filed a section 9 petition under
    the 1996 Act before the learned ADJ, Mohali, which was decided by a
    judgment dated 03.08.2016, in which the learned ADJ held that the
    Board Resolution dated 11.07.2016 only showed that any disputes
    raised by the Appellant shall be referred to arbitration in accordance with
    Indian law, provided they are arbitrable disputes. It was then held that as
    serious allegations of fraud were raised by HSBC in the dispute between
    HSBC and the Avitel Group/Jain family, such dispute would not be
    arbitrable as per Indian law. Even otherwise, according to the learned
    ADJ, this dispute (i.e., the dispute between HSBC and the Avitel
    Group/Jain family) is pending adjudication before the Supreme Court of
    India, and any decision made by that Court shall have a direct bearing
    on the dispute between the parties in this case also. It was, therefore,
    held:
    76
    “11. In view of the detailed discussion made above, this
    court can safely conclude that the petitioner is a shareholder
    and has no specific separate arbitration agreement, so no
    arbitrable dispute arises, as per Indian law, which may be
    referred to arbitration or for which, provisions of section 9 of
    Arbitration and Conciliation Act can be involved for protection
    of his interest qua the shares purchased by him. Therefore, I
    do not find that any prima-facie case is made out in favour of
    applicant. Even balance of convenience is not in favour of
    the applicant and no irreparable loss will be caused to the
    applicant, if this application is not allowed. Thus no ground is
    made out for grant of relief under section 9 of the Act and
    section 151 of CPC and the application stands dismissed
    accordingly. File be consigned to the record room.”
  47. An appeal was filed against this judgment to the Punjab and
    Haryana High Court. A learned Single Judge of the High Court, by the
    impugned judgment dated 02.09.2016, held that the final relief sought for
    is the return of an invested amount with interest together with
    cancellation of the shares. Such disputes would be governed by the
    Companies Act, 2013. Therefore, following some of the judgments of the
    Supreme Court, the remedy for arbitration sought by the Appellant would
    be barred by implication in view of the provisions of the Companies Act,
  48. After discussing the “fraud exception” in some detail and stating
    that serious allegations of fraud and impersonation are not arbitrable, the
    High Court concluded:
    “For the foregoing reasons, I am of the view that primarily,
    the appellant is trying to make out a case of parity with the
    case of HSBC, which is already a matter sub-judice before
    the Competent Court, but as per the facts narrated above, I
    am of the view that the prima facie allegation of fraud, as
    77
    already noticed above, would not fall in the realm of
    arbitrable dispute and therefore, rightly so, the court below
    has declined to grant the interim relief as sought. I do not
    intend to differ with the order under challenge. No ground for
    interference is made out.
    The appeal is dismissed.”
  49. In view of the judgment in Civil Appeal No.5145 of 2016 and Civil
    Appeal No.5158 of 2016, we set aside the judgments of the learned ADJ
    and the learned Single Judge that are impugned in this appeal, and
    remand the matter for adjudication afresh by the ADJ, Mohali. This civil
    appeal is, accordingly, allowed, the judgments dated 03.08.2016 and
    02.09.2016 are set aside, and the matter is remanded to the ADJ, Mohali
    for fresh disposal in accordance with law.
    …………..………………J.
    (R. F. Nariman)
    ……..……………………J.
    (Navin Sinha)
    New Delhi
    August 19, 2020.
    78