Section 8 AA Reference Rejection Set Aside : Bombay HC Reaffirms Pro-Arbitration Approach
Judgment dated 4.11.2025 of the High Court of Bombay in Arbitration
Appeal No.21 of 2025 of Om Swayambhu Siddhivinayak Vs. Harichandra Dinkar Gaikwad and others
Bombay HC Upholds Arbitrability of Fraud in Development Disputes
Supplemental Agreement is covered by the arbitration clause of the Development Agreement – Bombay HC Clarifies
Section 8 AA Reference Rejection Set Aside : Bombay HC Reaffirms Pro-Arbitration Approach
As per the Development Agreement and Supplement Agreement, the appellant Developer had agreed to provide a specified area of developed property to the respondents – owners of the land. The Development Agreement alone contained arbitration clause.
The respondents – owners filed civil suit in Kalyna court for specific performance of certain saleable area and cancellation of the Supplemental Agreement.
The trial Court rejected section 8 AA application of the Developer to refer the dispute for arbitration since the Supplement Agreement did not contain arbitration agreement and considering the nature of the dispute, the Arbitrator is not competent and empowered to decide the disputes between the parties.
HELD that once it is found that an arbitration agreement exists in respect of the same subject matter as that of the proceedings before section 8 ourt, the correct forum to deal with all matters is the arbitratal forum. If Section 8 Court prima facie finds that the existence itself is in doubt the Court need not refer the dispute to arbitration.
It is well settled that Section 8 Court must only restrict its examination to examining the subject matter of the suit before it and compare it with the subject matter of the arbitration agreement. Once the subject matter commonality is established, if section 8 Court is prima facie is of the view that a valid arbitration agreement exists, it is obliged to refer the parties to arbitration.
Having examined the Development Agreement, Clause 30 is expansive in its terms and all disputes and differences in connection with it would fall within the ambit of arbitrable disputes. Even if the supplemental agreement did not contain a separate arbitration clause, it was integrally linked to the original development agreement and thus, disputes under it were also arbitrable.
Supplement Agreement tied to the original Development Agreement remains subject to the arbitration clause.
It Is now settled law that bilateral disputes of fraud are not necessarily outside the scope of arbitration. The law on arbitral tribunals being empowered to deal with the allegations of fraud has been distilled and articulated in very clear terms.
