Tuesday, February 17, 2026

Arbitration and Conciliation Act, 1996 — Section 11 (pre-2015 regime) — Scope of power — Judicial determination of existence and validity of arbitration agreement — Finality under Section 11(7) — Binding effect at Section 34 stage — Reopening impermissible — SBP & Co. followed. Arbitration and Conciliation (Amendment) Act, 2015 — Section 11(6A) — Prospective application — Limited scrutiny confined to “existence” post-amendment — Contrast drawn with pre-amendment regime. Res Judicata vs Precedent — Conceptual distinction — Section 11 order operates as res judicata inter partes, not as precedent in rem — Section 34 Court erred in treating earlier Section 11 order as non-binding. Section 34 — Award set aside on ground of non-existence of arbitration clause — Impermissible where Section 11 court had already appointed arbitrator in pre-amendment regime and order attained finality. Result — High Court and Commercial Court orders set aside — Matters remitted for adjudication on other grounds — Time-bound disposal directed.

Arbitration and Conciliation Act, 1996 — Section 11 (pre-2015 regime) — Scope of power — Judicial determination of existence and validity of arbitration agreement — Finality under Section 11(7) — Binding effect at Section 34 stage — Reopening impermissible — SBP & Co. followed.

Arbitration and Conciliation (Amendment) Act, 2015 — Section 11(6A) — Prospective application — Limited scrutiny confined to “existence” post-amendment — Contrast drawn with pre-amendment regime.

Res Judicata vs Precedent — Conceptual distinction — Section 11 order operates as res judicata inter partes, not as precedent in rem — Section 34 Court erred in treating earlier Section 11 order as non-binding.

Section 34 — Award set aside on ground of non-existence of arbitration clause — Impermissible where Section 11 court had already appointed arbitrator in pre-amendment regime and order attained finality.

Result — High Court and Commercial Court orders set aside — Matters remitted for adjudication on other grounds — Time-bound disposal directed.

CORE ISSUE

Whether, in arbitral proceedings commenced prior to 23.10.2015 (pre-2015 Amendment regime), the Section 34 Court could reopen the question of existence and validity of an arbitration clause after an arbitrator had been appointed under Section 11 and the appointment order had attained finality.

FACTUAL MATRIX (Common Thread in Both Appeals)

Contracts between appellant-contractor and Rajasthan Housing Board.
Clause 23 provided for dispute resolution by an Empowered Standing Committee.
Section 11 applications filed in 2014.
High Court appointed retired High Court Judges as sole arbitrators (pre-2015 Amendment).
Awards passed in 2015–2016.
Section 34 Courts set aside awards holding Clause 23 was not an arbitration clause.
High Court affirmed Section 34 orders.
Appeals before Supreme Court.

LEGAL FRAMEWORK

I. Pre-2015 Legal Position — SBP Regime

The Court relied extensively on:

SBP & Co. v. Patel Engineering Ltd.

Seven-Judge Bench held:

Section 11 power is judicial, not administrative.
Chief Justice/designate must decide:
- Existence of arbitration agreement,
- Validity,
- Jurisdictional aspects,
- Live claim.
Section 11(7) gives finality.
Such determination binds:
- Arbitrator,
- Section 34 Court,
- Appellate Courts,
- Except via appeal under Article 136.

Thus, once an arbitrator was appointed, existence/validity of arbitration clause could not be reopened.

II. Reinforcement by Later Authority

The Court also relied on:

State of West Bengal v. Sarkar & Sarkar

Held:

Arbitrator cannot re-examine validity of arbitration clause when Section 11 order has attained finality.
Jurisdictional findings under Section 11 are binding.

III. Post-2015 Contrast — Limited Inquiry

The Court clarified that had the proceedings commenced after 23.10.2015, the outcome could have differed.

Referred to:

In re: Interplay Between Arbitration Agreements under A&C Act & Stamp Act

Post-amendment position:

Section 11(6A) limits court to examining “existence” only.
Inquiry is prima facie.
Substantive validity left to arbitral tribunal under Section 16.
No finality comparable to SBP regime.

But Section 26 of 2015 Amendment makes amendments prospective.

Since present arbitrations commenced before 23.10.2015, SBP regime governed.

RES JUDICATA vs PRECEDENT — KEY CLARIFICATION

The Commercial Court reasoned that Section 11 order had no “precedential value”.

The Supreme Court held this was a fundamental conceptual error.

Distinction:

Precedent	Res Judicata
Operates in rem	Operates in personam
Binds future cases generally	Binds same parties
Concerned with legal principle	Concerned with finality between parties

Relied on:

State of Rajasthan v. Nemi Chand Mahela

Canara Bank v. N.G. Subbaraya Setty

Holding:

Section 11 order operates as res judicata inter partes.
Correctness of decision irrelevant unless jurisdictional nullity.
Commercial Court wrongly treated issue as precedent question instead of finality issue.

SUPREME COURT’S CONCLUSION

Section 11 order (2014) impliedly held Clause 23 to be an arbitration clause.
Respondents did not challenge appointment.
Order attained finality.
Under SBP regime:
- Existence and validity stood conclusively decided.
Section 34 Court had no jurisdiction to reopen that issue.
High Court erred in affirming Section 34 Court.

OPERATIVE DIRECTIONS

High Court judgments dated 20.02.2020 set aside.
Matters remitted to Commercial Court, Jaipur.
Section 34 applications to be heard on other grounds only.
Disposal directed within three months.
Parties to bear own costs.

RATIO DECIDENDI

In arbitral proceedings commenced prior to the 2015 Amendment, an order appointing an arbitrator under Section 11 necessarily entails a judicial determination of the existence and validity of the arbitration agreement. Such determination attains finality under Section 11(7) and operates as res judicata inter partes. The issue cannot be reopened at the Section 34 stage.

SIGNIFICANCE OF THE JUDGMENT

This decision:

Reinforces doctrinal clarity between SBP regime and post-2015 regime.
Reasserts binding effect of pre-amendment Section 11 determinations.
Clarifies difference between precedent and res judicata in arbitration jurisprudence.
Protects finality of Section 11 orders in legacy arbitrations.

Part-time contractual instructors appointed under the RTE framework and continuously engaged for over a decade, performing full-time duties and prohibited from alternative employment, cannot be subjected to stagnant honorarium fixed under an initial short-term contract. Honorarium must be periodically revised by the competent authority (PAB), and once enhanced cannot be unilaterally reduced. Payment of meagre and stagnant honorarium in such circumstances amounts to economic coercion inconsistent with Article 23 of the Constitution. The State bears primary liability to ensure payment and may recover its share from the Union.

Right of Children to Free and Compulsory Education Act, 2009 — Sections 7, 24, 27 — Rule 20(3) of 2010 Rules — Part-time contractual instructors in Upper Primary Schools — Honorarium fixed at ₹7,000 p.m. since 2013 — Whether revisable — Held, Yes — Honorarium cannot remain stagnant; periodic revision mandatory — PAB sole authority to sanction budget and fix honorarium (Paras 57–66, 70).

Samagra Shiksha Scheme / Sarva Shiksha Abhiyan — Project Approval Board (PAB) — Financial powers — Decision of PAB binding — No authority competent to reduce honorarium once fixed by PAB (Paras 61–65, 70(iv)–(v)).

Service Jurisprudence — Contractual / Part-time label — Continuous engagement for over 10 years — Prohibition on taking other employment — Deemed substantive posts — Nature of employment not truly part-time or contractual (Paras 39–46, 70(i)–(iii)).

Article 23, Constitution of India — Begar / Forced labour — Payment below minimum wages coupled with bar on alternative employment — Economic coercion — Honorarium of ₹7,000 p.m. held violative of constitutional spirit (Paras 54–56, 70(viii)).

Alternative Remedy — Section 24(3), RTE Act — Not bar to writ jurisdiction — Rule of prudence, not compulsion (Paras 27–30).

Financial Responsibility — Section 7(5), RTE Act — Primary liability on State Government — Principle of ‘Pay and Recover’ applicable where Centre fails to release share (Paras 68–69, 70(vi)).

Operative Directions — Honorarium fixed at ₹17,000 p.m. w.e.f. 2017–18 till revised by PAB — Arrears payable within six months — Periodic revision at least once in three years (Paras 67, 72).

ANALYSIS OF FACTS

The appeals concerned part-time contractual instructors appointed in Upper Primary Schools (Classes VI–VIII) in Uttar Pradesh under the Sarva Shiksha Abhiyan (now subsumed into Samagra Shiksha).

Key factual matrix:

Appointment in 2013 pursuant to Government Order dated 31.01.2013.
Fixed honorarium: ₹7,000 per month.
Contract period: 11 months, renewable.
Condition: No other employment (full-time or part-time).
Honorarium marginally revised to ₹8,470 (2016–17).
PAB approved ₹17,000 (2017–18).
Executive Committee reduced to ₹9,800.
Actual payment remained ₹8,470.
From 2019–20, honorarium reverted to ₹7,000.

The Single Judge directed ₹17,000 from March 2017. The Division Bench restricted benefit to 2017–18 only. Appeals were filed by teachers (seeking full benefit) and by the State (challenging liability).

The principal question:
Whether honorarium fixed in 2013 could remain static for years or was legally required to be revised.

ANALYSIS OF LAW

I. Maintainability of Writ Petitions

The State argued availability of alternative remedy under Section 24(3) RTE Act.

The Court rejected this objection:

Section 24 pertains to disciplinary grievances.
Writ jurisdiction is discretionary.
Alternative remedy is not an absolute bar.
Reliance placed on Rajasthan SEB v. Union of India and Harbanslal Sahnia v. IOC.

Thus, writ petitions were maintainable.

II. Nature of Employment — Contractual or Substantive?

The Court undertook a structural analysis:

Contract expired after 2017–18; no renewal in writing.
Continuous engagement for over 10 years.
Mandatory appointment: one instructor per 100 students.
Prohibition on taking other employment.
Identical qualifications as regular teachers.
Similar workload (up to eight periods per day).

Conclusion:

Not truly part-time.
Not purely contractual.
Posts deemed substantively created due to permanence of work.
Label “part-time contractual” described as deceptive nomenclature.

The Court observed that such appointments, made through due selection process under a statutory scheme, are substantive in character.

III. Authority to Fix Honorarium — Role of PAB

Under the Samagra Shiksha Scheme:

PAB is the sole body with financial sanctioning power.
State-level bodies lack budgetary authority.
Once PAB approves honorarium, it is binding.

PAB had:

Approved ₹8,470 (2016–17).
Fixed ₹9,800 (2017–18).
Approved ₹17,000 (2017–18).

The State had no authority to reduce or ignore PAB’s decision.

IV. Article 23 — Begar and Economic Coercion

The Court invoked Article 23 (prohibition of begar).

Relying on People’s Union for Democratic Rights v. Union of India:

Forced labour includes economic compulsion.
Payment below minimum wages constitutes coercion.
Contractual consent does not negate unequal bargaining power.

The Court held:

₹7,000 per month was below minimum wages.
Teachers were barred from other employment.
This created economic coercion.
Fixing such honorarium permanently amounts to begar.

This is a significant constitutional holding extending Article 23 to honorarium stagnation in education employment.

V. Revision of Honorarium

The Court held:

Honorarium cannot remain stagnant indefinitely.
Must be periodically revised.
Once enhanced, cannot be reduced arbitrarily.
Withdrawal of enhanced pay without natural justice impermissible.

VI. Financial Responsibility — Section 7 RTE Act

Under Section 7(5):

State Government bears primary responsibility.
Even if Centre fails to release funds, State must pay.
State may recover from Union under “pay and recover” principle.

Thus, teachers cannot suffer due to inter-governmental financial disputes.

RATIO DECIDENDI

Part-time contractual instructors appointed under the RTE framework and continuously engaged for over a decade, performing full-time duties and prohibited from alternative employment, cannot be subjected to stagnant honorarium fixed under an initial short-term contract. Honorarium must be periodically revised by the competent authority (PAB), and once enhanced cannot be unilaterally reduced. Payment of meagre and stagnant honorarium in such circumstances amounts to economic coercion inconsistent with Article 23 of the Constitution. The State bears primary liability to ensure payment and may recover its share from the Union.

OPERATIVE DIRECTIONS

Honorarium fixed at ₹17,000 per month w.e.f. 2017–18.
Payable till further revision by PAB.
Effective payment from 01.04.2026.
Arrears to be cleared within six months.
PAB to revise honorarium periodically (at least once in three years).
State may recover Central share separately.

Appeals by teachers allowed.
Appeals by State dismissed.

ADVOCATEMMMOHAN: Where a prosecutrix is a legally married woman awa...Where a prosecutrix is a legally married woman aware of the subsistence of her marriage, and the alleged promise of marriage is legally incapable of performance, consensual sexual relations between adults cannot be retrospectively characterised as rape on the ground of false promise of marriage. In absence of material showing that the promise was false from inception and intended solely to obtain consent, the offence under Section 376(2)(n) IPC is not made out. Criminal proceedings in such circumstances are liable to be quashed under the principles laid down in Bhajan Lal.

ADVOCATEMMMOHAN: Where a prosecutrix is a legally married woman awa...: advocatemmmohan Indian Penal Code, 1860 — Sections 375, 376(2)(n) — Rape on false promise of marriage — Married prosecutrix — Promise legall...

Indian Penal Code, 1860 — Sections 375, 376(2)(n) — Rape on false promise of marriage — Married prosecutrix — Promise legally incapable of performance — Whether consent vitiated by misconception of fact — Held, No — Where prosecutrix was aware of subsisting marriage and legal impediment to remarriage, allegation of false promise cannot sustain offence — Consensual relationship turned acrimonious — FIR and chargesheet quashed (Paras 19–24, 27–28).

Consent — Section 90 IPC — Misconception of fact — Distinction between false promise and breach of promise — Promise must be false from inception with intent to deceive — Mere failure to marry insufficient — Reiterated (Paras 17–18, 23).

Section 376(2)(n) IPC — “Repeatedly” — Requires multiple distinct acts of sexual assault — Not attracted to long-standing consensual relationship absent coercion or deception from inception (Paras 15–16, 22).

Hindu Marriage Act, 1955 — Section 5(i) — Subsisting marriage — Legal bar to second marriage — Promise to marry during subsistence of first marriage legally unenforceable — Relevance in determining quality of consent (Paras 19–20).

Criminal Proceedings — Quashing — Article 226 / Inherent jurisdiction — Application of Bhajan Lal principles — Where allegations even if taken at face value do not disclose offence — Continuation of proceedings amounts to abuse of process (Paras 26–28).

Broken relationship — Criminalisation — Caution — Courts must distinguish genuine sexual exploitation from consensual relationships turning sour — Misuse of rape provision deprecated (Paras 21–25).

Result — Impugned High Court order set aside — FIR No. 213/2025, Chargesheet No. 269/2025 and Sessions Case No. 89/2025 quashed (Para 28).

ANALYSIS OF FACTS

The appeal arose from the refusal of the High Court of Chhattisgarh to quash FIR No. 213/2025 registered under Section 376(2)(n) IPC.

The complainant, a 33-year-old married advocate with a child, had matrimonial disputes with her husband; divorce proceedings were pending but no decree had been granted. She met the accused, also an advocate, in September 2022. A relationship developed.

The FIR alleged that the accused induced her into sexual relations on a false promise of marriage, repeatedly engaged in intercourse, impregnated her, forced abortion, and later refused marriage.

The accused contended that:

The relationship was consensual.

The complainant was fully aware of her marital status and the legal impediment to remarriage.

The allegations arose after personal discord.

The High Court granted anticipatory bail but refused to quash the FIR, observing that the question of “misconception of fact” required investigation.

The chargesheet was subsequently filed and Sessions Case instituted.

The Supreme Court examined whether, even taking the FIR at face value, ingredients of Section 376(2)(n) IPC were disclosed.

ANALYSIS OF LAW

I. Scope of Section 376(2)(n) IPC

Section 376(2)(n) IPC deals with repeated commission of rape on the same woman. The Court clarified that “repeatedly” implies multiple distinct acts of sexual assault, not a continuous consensual relationship.

In genuine cases under this provision, there is usually an initial assault followed by repeated acts under coercion, fear, or deception rendering the victim vulnerable.

The Court found no such pattern here.

II. False Promise of Marriage and Consent

The Court reiterated settled principles:

A distinction exists between a false promise and breach of promise.

A false promise must be made from inception with no intention to marry, solely to obtain consent.

Consent under Section 90 IPC is vitiated only when based on such initial fraudulent intention.

Reliance was placed on:

Naim Ahamed v. State (NCT of Delhi), (2023) 15 SCC 385

Mahesh Damu Khare v. State of Maharashtra, (2024) 11 SCC 398

The Court emphasised that not every failed relationship amounts to rape.

III. Legal Impossibility of Marriage

A crucial factor was that the complainant’s marriage subsisted throughout the alleged period of sexual relationship.

Section 5(i) of the Hindu Marriage Act, 1955 prohibits marriage if either party has a living spouse.

Thus, even assuming there was a promise, such promise was legally incapable of performance at the relevant time.

The Court reasoned that:

The complainant, being an advocate, was presumed aware of the legal position.

Both parties knew of her subsisting marriage.

Therefore, it was implausible that she was induced into sexual relations under a legally enforceable expectation of marriage.

This rendered the allegation of misconception untenable.

IV. Nature of Relationship

The Court characterised the case as:

A consensual relationship between adults.

Relationship turning sour.

Personal dispute given criminal colour.

The Court cautioned against the “disquieting tendency” of converting failed relationships into rape prosecutions.

The offence of rape, being grave, must be confined to cases involving genuine absence of free consent.

V. Application of Bhajan Lal Principles

The Court applied categories laid down in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335.

It held that:

Even if allegations are accepted at face value, no offence under Section 376(2)(n) is made out.

Continuation of proceedings would amount to abuse of process.

Thus, the case fell within categories warranting quashing.

RATIO DECIDENDI

Where a prosecutrix is a legally married woman aware of the subsistence of her marriage, and the alleged promise of marriage is legally incapable of performance, consensual sexual relations between adults cannot be retrospectively characterised as rape on the ground of false promise of marriage. In absence of material showing that the promise was false from inception and intended solely to obtain consent, the offence under Section 376(2)(n) IPC is not made out. Criminal proceedings in such circumstances are liable to be quashed under the principles laid down in Bhajan Lal.

OPERATIVE DIRECTIONS

The impugned order of the High Court dated 03.03.2025 was set aside.

FIR No. 213/2025 dated 06.02.2025 registered at Sarkanda Police Station, District Bilaspur,

Chargesheet No. 269/2025, and

Sessions Case No. 89/2025

were quashed.

The appeal was allowed.

spectrum, being a natural resource held by the Union in public trust under Section 4 of the Telegraph Act, does not vest ownership rights in Telecom Service Providers. The licence confers only a limited, conditional and revocable right to use. Mere accounting treatment as an intangible asset does not create proprietary interest. Since the Insolvency and Bankruptcy Code applies only to assets over which the corporate debtor has ownership rights, spectrum and spectrum usage rights cannot be included in the insolvency estate. Consequently, spectrum cannot be subjected to insolvency or liquidation proceedings, nor can insolvency resolution plans restructure or extinguish statutory dues arising from telecom law. The regulatory regime governing spectrum prevails, and IBC cannot be invoked to override sovereign control or public trust obligations.

Natural Resources – Spectrum – Public Trust Doctrine – Ownership and Control – Spectrum held by Union of India as trustee for the people – License confers only limited right to use – No proprietary or ownership interest created in favour of Telecom Service Providers (TSPs) – Spectrum remains material resource of the community within Article 39(b) – Paras 13–17, 20, 33–36, 69(A).

Telegraph Act, 1885 – Section 4 – Exclusive privilege of Union – Grant of licence is sovereign/statutory in character though contractual in form – License conditions govern use, transfer, revocation – Clearance of dues mandatory prior to trading – Regulatory supremacy preserved – Paras 18, 32–36, 26–30.

Spectrum Trading Guidelines, 2015 – Transfer conditional upon prior clearance of dues and approval of Licensor – Insolvency proceedings cannot bypass statutory regulatory conditions – Dues cannot be wiped out under Resolution Plan – Paras 26–30.

Insolvency and Bankruptcy Code, 2016 – Sections 18 and 36 – Insolvency estate includes only assets over which corporate debtor has ownership rights – Assets held under contractual arrangements without transfer of title excluded – Mere accounting recognition as intangible asset insufficient – Paras 59–63.

Accounting Standards – AS 26 / Ind AS 38 – Recognition of intangible asset based on control and future economic benefits – Ownership not necessary for accounting recognition – Accounting treatment not determinative of legal ownership – Paras 46–58.

Conflict of Statutes – Harmonious Construction – IBC cannot override special statutory regime governing telecom sector – Telegraph Act and TRAI Act constitute complete code for spectrum – Insolvency framework cannot re-write sovereign and regulatory control over natural resources – Paras 64–68.

IBC – Objective of revival and value maximisation – Cannot be invoked to restructure ownership/control of natural resources – Moratorium does not create new rights – Public law functions of State remain unaffected – Paras 40–42, 65–68.

Held – Spectrum allocated to TSPs cannot be subjected to insolvency/liquidation proceedings under IBC – Appeals by financial creditors and resolution professionals dismissed – Appeal by Union of India partly allowed – Para 69.

ANALYSIS OF FACTS

The controversy arose from insolvency proceedings initiated against telecom companies of the Aircel Group. These entities had acquired spectrum through auction conducted by the Department of Telecommunications (DoT) and had also borrowed substantial sums from financial institutions, including the State Bank of India.

Upon default in payment of licence fees and spectrum usage charges, the corporate debtors invoked voluntary Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016. The Resolution Plans treated DoT as an operational creditor and proposed settlement of its dues under the statutory waterfall mechanism.

In parallel, this Court in earlier AGR litigation had determined that licence dues were payable as calculated by DoT. When recovery proceedings were sought to be enforced, TSPs contended that moratorium under Section 14 of IBC barred such recovery.

Given the magnitude of dues and the broader implications for spectrum ownership, this Court referred multiple fundamental questions to the National Company Law Appellate Tribunal (NCLAT). The NCLAT delivered a mixed verdict, holding spectrum to be a natural resource yet also an intangible asset of the corporate debtor, capable of insolvency treatment, though subject to payment of dues.

Appeals were filed by financial creditors, resolution professionals, and the Union of India challenging different portions of the NCLAT judgment. The central question before the Supreme Court was whether spectrum could be treated as an asset of the corporate debtor amenable to insolvency proceedings.

ANALYSIS OF LAW

The Court began by reaffirming the constitutional position declared in earlier decisions including Centre for Public Interest Litigation v. Union of India and Natural Resources Allocation, In re, that spectrum is a scarce and finite natural resource held by the State in public trust. Ownership vests in the people, with the Union acting as trustee.

Section 4 of the Telegraph Act vests exclusive privilege in the Central Government to establish and operate telecommunication systems. The licence issued thereunder, though contractual in form, emanates from sovereign authority. As explained in Bharti Airtel Ltd. v. Union of India, such licence is a form of State largesse and does not confer proprietary title.

The Court examined the Spectrum Trading Guidelines, 2015 and held that transfer of spectrum is conditional upon clearance of dues and prior governmental approval. These regulatory conditions are mandatory and cannot be bypassed by insolvency mechanisms.

A significant portion of the judgment addressed the argument that spectrum appears as an “intangible asset” in the balance sheet of TSPs under Accounting Standards. The Court carefully distinguished accounting recognition from legal ownership. AS 26 and Ind AS 38 recognise assets based on control over economic benefits, not ownership. Therefore, inclusion in the balance sheet does not establish proprietary rights.

Turning to IBC, Sections 18 and 36 were analysed. The insolvency estate includes only assets over which the corporate debtor has ownership rights. Assets held under contractual arrangements without transfer of title are expressly excluded. Since spectrum remains vested in the Union and only a conditional right to use is granted, it cannot form part of the insolvency estate.

The Court applied principles of harmonious construction between special statutes. The Telegraph Act and TRAI Act constitute a complete and special regime governing telecom. The IBC, though special in insolvency matters, cannot override sovereign control over natural resources. The Court held that applying IBC to spectrum would amount to permitting a general insolvency framework to rewrite a constitutional and statutory public trust regime.

The Court relied upon its reasoning in Embassy Property Developments Pvt. Ltd. v. State of Karnataka to reiterate that insolvency tribunals cannot adjudicate matters falling within sovereign and public law domains.

RATIO DECIDENDI

The decisive principle laid down is that spectrum, being a natural resource held by the Union in public trust under Section 4 of the Telegraph Act, does not vest ownership rights in Telecom Service Providers. The licence confers only a limited, conditional and revocable right to use. Mere accounting treatment as an intangible asset does not create proprietary interest.

Since the Insolvency and Bankruptcy Code applies only to assets over which the corporate debtor has ownership rights, spectrum and spectrum usage rights cannot be included in the insolvency estate. Consequently, spectrum cannot be subjected to insolvency or liquidation proceedings, nor can insolvency resolution plans restructure or extinguish statutory dues arising from telecom law.

The regulatory regime governing spectrum prevails, and IBC cannot be invoked to override sovereign control or public trust obligations.

Where the existence of the arbitration agreement itself is seriously disputed on credible allegations of forgery and fabrication, and substantial material casts grave doubt on its genuineness, the dispute is non-arbitrable at the threshold. Courts cannot refer the matter to arbitration under Section 8 nor appoint an arbitrator under Section 11 in such circumstances.

Arbitration and Conciliation Act, 1996 — Sections 8 and 11 — Reference to arbitration — Disputed existence of arbitration agreement

(Paras 2, 11, 16–24)

Where the very existence and execution of the document containing the arbitration clause is seriously disputed on allegations of forgery and fabrication, and substantial material casts grave doubt on its genuineness, the dispute is non-arbitrable at the threshold stage. Appointment of an arbitrator under Section 11 or reference under Section 8 would be legally impermissible.

Impact of fraud on arbitrability — Fraud going to root of arbitration clause

(Paras 12–15)

Mere allegation of fraud simpliciter does not render disputes non-arbitrable. However, where the allegation of fraud permeates the entire contract and, above all, the arbitration agreement itself, such that the very existence of the arbitration agreement is in serious doubt, the matter falls within the category of non-arbitrable disputes.

Section 8(2) — Requirement of production of original or certified copy of arbitration agreement

(Paras 6, 21)

Failure to produce the original arbitration agreement or a certified copy thereof, as mandated under Section 8(2) of the Act, coupled with serious allegations of forgery, justifies rejection of the application seeking reference to arbitration.

Article 227 of the Constitution — Scope of supervisory jurisdiction

(Para 22)

Supervisory jurisdiction under Article 227 is not appellate in nature and does not permit reappreciation of evidence or interference with concurrent findings of fact, particularly where such findings are grounded in material on record and statutory requirements.

ANALYSIS OF FACTS

The dispute arose out of a partnership firm “M/s RDDHI Gold” constituted in 2005. Respondent Rajia Begum claimed induction into the firm by virtue of a Deed of Admission and Retirement dated 17.04.2007 (“Admission Deed”), allegedly executed pursuant to a power of attorney granted by two original partners.

Barnali Mukherjee denied execution of the Admission Deed and asserted that it was a forged and fabricated document. The respondent claimed majority stake (50.33%) in 2016, nearly nine years after the alleged execution.

Proceedings unfolded in three parallel tracks:

Section 9 application — High Court (04.05.2018) refused interim protection, holding that existence of the Admission Deed was doubtful. The Supreme Court dismissed the SLP, thereby lending finality to that prima facie finding.
Section 8 application — In a civil suit seeking declaration that the Admission Deed was forged, the respondent sought reference to arbitration. The Trial Court and First Appellate Court rejected the application, citing serious allegations of fraud and failure to produce the original document. However, the High Court under Article 227 set aside those orders and referred the matter to arbitration.
Section 11 application — Respondent sought appointment of arbitrator. The High Court declined, holding that existence of arbitration agreement was in serious doubt.

Thus, the High Court rendered contradictory conclusions: refusing appointment under Section 11 but directing arbitration under Section 8.

ANALYSIS OF LAW

The Court examined settled jurisprudence on fraud and arbitrability.

The principles in A. Ayyasamy, Avitel Post Studioz Ltd., and subsequent decisions were reiterated:

Fraud simpliciter is arbitrable.
However, fraud that permeates the entire contract and especially the arbitration clause itself renders the dispute non-arbitrable.

Two tests were emphasized:

First, whether the arbitration agreement itself cannot be said to exist in a clear case.
Second, whether the allegations extend into public law domain or affect third-party rights.

The Court found that the case satisfied the first test. The arbitration clause was embedded in the Admission Deed, whose execution was seriously disputed. The material circumstances included:

Inconsistent admissions regarding continuation of partners after 2007.
Nine-year silence regarding the Admission Deed.
Contemporaneous banking documents showing respondent’s role only as guarantor, not partner.
Failure to produce the original or certified copy under Section 8(2).

The Court held that arbitration is founded on consent. Where consent itself is in serious doubt, arbitral jurisdiction cannot be invoked.

The prior prima facie finding in Section 9 proceedings, which attained finality, was a relevant consideration. Though Section 9 findings are prima facie, once final, they cannot be ignored in subsequent proceedings involving identical foundational issues.

On Article 227, the Court held that the High Court exceeded supervisory jurisdiction by overturning concurrent factual findings and directing arbitration despite serious jurisdictional doubts.

Conversely, the High Court’s refusal to appoint an arbitrator under Section 11 was upheld as correct.

RATIO DECIDENDI

Where the existence of the arbitration agreement itself is seriously disputed on credible allegations of forgery and fabrication, and substantial material casts grave doubt on its genuineness, the dispute is non-arbitrable at the threshold. Courts cannot refer the matter to arbitration under Section 8 nor appoint an arbitrator under Section 11 in such circumstances.

RESULT

The appeal challenging the Section 11 rejection was dismissed.
The appeal challenging the Section 8 reference was allowed.

The High Court’s order directing arbitration under Article 227 was quashed.

No order as to costs.

LawforAll

advocatemmmohan

Just for legal information but not form as legal opinion

Tuesday, February 17, 2026

CORE ISSUE

FACTUAL MATRIX (Common Thread in Both Appeals)

LEGAL FRAMEWORK

I. Pre-2015 Legal Position — SBP Regime

SBP & Co. v. Patel Engineering Ltd.

II. Reinforcement by Later Authority

State of West Bengal v. Sarkar & Sarkar

III. Post-2015 Contrast — Limited Inquiry

In re: Interplay Between Arbitration Agreements under A&C Act & Stamp Act

RES JUDICATA vs PRECEDENT — KEY CLARIFICATION

State of Rajasthan v. Nemi Chand Mahela

Canara Bank v. N.G. Subbaraya Setty

SUPREME COURT’S CONCLUSION

OPERATIVE DIRECTIONS

RATIO DECIDENDI

SIGNIFICANCE OF THE JUDGMENT

ANALYSIS OF FACTS

ANALYSIS OF LAW

I. Maintainability of Writ Petitions

II. Nature of Employment — Contractual or Substantive?

III. Authority to Fix Honorarium — Role of PAB

IV. Article 23 — Begar and Economic Coercion

V. Revision of Honorarium

VI. Financial Responsibility — Section 7 RTE Act

RATIO DECIDENDI

OPERATIVE DIRECTIONS

ANALYSIS OF FACTS

ANALYSIS OF LAW

I. Scope of Section 376(2)(n) IPC

II. False Promise of Marriage and Consent

III. Legal Impossibility of Marriage

IV. Nature of Relationship

V. Application of Bhajan Lal Principles

RATIO DECIDENDI

OPERATIVE DIRECTIONS

ANALYSIS OF FACTS

ANALYSIS OF LAW

RATIO DECIDENDI

Arbitration and Conciliation Act, 1996 — Sections 8 and 11 — Reference to arbitration — Disputed existence of arbitration agreement

Impact of fraud on arbitrability — Fraud going to root of arbitration clause

Section 8(2) — Requirement of production of original or certified copy of arbitration agreement

Article 227 of the Constitution — Scope of supervisory jurisdiction

ANALYSIS OF FACTS

ANALYSIS OF LAW

RATIO DECIDENDI

RESULT