The dispute arose between Bentwood Seating System (P) Ltd. (the Appellant) and the Airport Authority of India (AAI) (the Respondents) over a contract for the supply and maintenance of baggage trolleys at various airports

The facts of the given situation are based on case law Bentwood Seating System (P) Ltd. v. Airport Authority of India & Anr decided by High Court of Delhi on 11th March, 2025. In this case the issue for consideration of the Hon'ble Delhi Court was whether the Ld. Sole Arbitrator ought to have permitted the parties to lead evidence and adjudicate the issue of fraud, or is the decision taken by the Ld. Sole Arbitrator that the issue which arises for consideration in this case is non-arbitrable. The Ld. Sole Arbitrator by way of the Impugned Award held that the Appellant had played a fraud on the Respondents in getting the Tender and the extent of fraud is such, that it would be difficult for the Ld. Sole Arbitrator, which is not a Court, to summon witnesses from various governmental authorities and foreign companies. The Arbitrator held that the fraud in the present case cannot be confined to the internal matters/affairs of the parties herein. The allegations of fraud of the documents which pertains to fabrication of documents of foreign companies and governmental authorities cannot be adjudicated upon or examined by the Arbitral Tribunal which does not have the wherewithal of a Court. The Ld. Sole Arbitrator placed reliance on the judgments passed by the Apex Court in Vidya Drolia and Others v. Durga Trading Corporation, (2021) 2 SCC 1, Avitel Post Studioz Limited and Others v. HSBC PI Holdings (Mauritius) Limited, (2021) 4 SCC 713 and A. Ayyasamy v. A. Paramasivam & Ors., (2016) 10 SCC 386 . The Hon'ble High Court said that the Apex Court (in the cases referred) was of the opinion that cases where serious frauds are involved that has to be treated as non-arbitrable and it is only the Civil Court which take such matters. However, where the allegations of fraud simplicitor and such frauds are merely alleged then it is not necessary to nullify the affect of the Arbitration Agreement of the parties and such issues can be determined by the Tribunal. The Hon'ble High Court was of the opinion that the present case is not on the ground of fraud simplicitor. The facts of the case are extremely serious and they do make out a case for criminal offence. The plea of fraud is of such a nature that it permits the entire contract including the agreement to arbitrate as the issue goes to the validity of the entire contract which contains the Arbitration Clause itself.