Fraud, Forgery, and the Fork in the Road: Why the Bombay High Court Referred a "Forged" Agreement to Arbitration and Clarified that Filing a Civil Suit Doesn't Always Mean Waiving Your Right to Arbitrate.

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Case: SHASHISUMEET PRODUCTION PVT.LTD AND 2 ORS v. KURESH R KUSHESH @ DHIREN
Court: Bombay High Court
Date: 09-06-2026
Law: Arbitration and Conciliation Act, Indian Contract Act, Code of Civil Procedure, Constitution of India.

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In the complex world of commercial transactions, the discovery of a disputed signature or an allegation of forgery often feels like a "get out of jail free" card for parties seeking to avoid arbitration. The conventional wisdom suggests that if the very existence of a contract is tainted by fraud, a court must step in to adjudicate the mess. However, a recent judgment by the Bombay High Court in the case of Shashisumeet Production Pvt. Ltd. v. Kuresh R. Kushesh provides a masterclass in the evolution of Indian pro-arbitration jurisprudence, dismantling several common myths about fraud and the waiver of legal rights.

The Myth of the 'Fraud Exception'

For years, the shadow of the N. Radhakrishnan precedent loomed large, suggesting that serious allegations of fraud were best left to the expertise of civil courts rather than private arbitrators. The Bombay High Court has now reinforced the modern shift away from this stance. The court clarified that in bilateral disputes—those that are inter partes and do not affect the public at large—allegations of fraud, even those involving forgery or fabrication of the underlying contract, are eminently arbitrable.

The court noted that the legal landscape has moved from viewing fraud as a jurisdictional bar to seeing it as a civil wrong that an arbitral tribunal is fully equipped to handle. As long as the fraud alleged is not "against society at large", the arbitrator remains the master of the dispute.

"If the subject-matter of an agreement between the parties falls within Section 17 of the Contract Act, 1872, or involves fraud in the performance of the contract... which would amount to deceit, being a civil wrong, the subject-matter of such agreement would certainly be arbitrable."

Technical Flaws vs. Substantive Intent

One of the most relatable aspects of this case involved the Plaintiffs' claim that the agreement was a product of forgery because one of the signatories was out of the country on the date embossed on the document. Furthermore, they argued that not every page of the agreement bore their signatures. To a layperson, this might seem like a "smoking gun" for invalidity.

However, the court applied a "commercial lens" to these objections. It observed that in the fast-paced world of business—especially in sectors like film production—documents are often signed in counterparts or at different times. A discrepancy in a date or a missing signature on an intermediate page does not automatically cast a "cloud over the agreement" sufficient to oust an arbitrator's jurisdiction. These are matters of evidence to be weighed during the trial, not threshold barriers to arbitration.

The 'Point of No Return' in Civil Suits

Perhaps the most counter-intuitive takeaway involves the concept of "abandonment". The Plaintiffs argued that because the Defendant had filed his own civil suit (the 2021 Suit) regarding the same dispute, he had effectively abandoned his right to seek arbitration. It seems logical: if you ask a court for help, you surely cannot later insist on a private arbitrator.

The court disagreed, drawing a fine line between "invoking" court jurisdiction and "persisting" in it. Since the Defendant had filed his Section 8 application (seeking arbitration) first and only filed the suit later as a protective measure while the application remained in limbo, his actions did not amount to a waiver. The court held that as long as a party has clearly chosen to persist with their demand for arbitration, the mere filing of a secondary suit does not kill the arbitration clause.

"An arbitration clause, it is well settled does not bar/prohibit filing of a civil suit. The contesting party always has option to continue with the civil proceedings and give up the right to enforce the arbitration clause. If the contesting party files an application under Sections 8... the parties are relegated to arbitration."

The Primacy of the Arbitral Tribunal

Ultimately, this judgment serves as a reminder that Indian courts are increasingly reluctant to act as gatekeepers for the merits of a dispute. By referring the parties to arbitration despite allegations of forgery and the existence of a parallel suit, the court has signaled that the "competence-competence" principle is alive and well. The arbitrator, not the judge, is the appropriate authority to determine whether a signature was forged or whether a contract was obtained by deceit.

For commercial entities, the message is clear: an arbitration clause is a robust commitment. It cannot be easily evaded by labeling a dispute as "fraudulent" or by attempting to complicate the procedural history with multiple filings. The road to resolution, once paved with an arbitration agreement, almost always leads to the tribunal.