Case Title: The Managing Director Bihar State Food and Civil Supply Corporation Limited & Anr. Vs. Sanjay Kumar
Citation: 2025 INSC 933
Hon’ble Bench: Justice Pamidighantam Sri Narasimha, Justice Manoj Misra
Date: 5th August, 2025
In this recent judgment, the Hon’ble Supreme Court held that under Section 11(6) of the Arbitration & Conciliation Act, if the arbitration agreement’s existence is proved prima facie, then all the other substantive objections including the mere allegations of fraud should be presented before the arbitral tribunal. The Hon’ble Supreme Court dealt with the series of appeals arising from the Hon’ble Patna High Court order appointing arbitrators under Section 11 of the Arbitration & Conciliation Act, 1996, in the disputes between the Bihar State Food and Civil Supplies Corporation (BSFCSC) and multiple rice millers accused of fraud and misappropriation in custom milling of paddy. BSFCSC alleged that the rice millers had diverted rice worth over Rs. 1,000 crores and nearly 1200 FIR’s had been filled.
The BSFCSC argued that due to serious allegations of fraud and exclusive remedy under the Bihar, Orissa Public Demands Recovery Act, 1914 the dispute is non arbitrable. However, the Hon’ble Supreme Court reiterated the law laid down in A.Ayyasamy v. A. Paramasivam and Ors., of distinguishing between “fraud simpliciter” which is arbitrable and “serious fraud” which is non arbitrable. The Hon’ble Court held that serious fraud is said to be done in situations when it affects the existence of the arbitration agreement. The Hon’ble Court upheld the existence of arbitration agreement, allowing the arbitration to proceed and dismissed the appeals1.
- https://www.sci.gov.in/view-pdf/?diary_no=173342020&type=j&order_date=2025-08-05&from=latest_judgements_order ↩︎
