Mere allegation of fraud does not rule out arbitration

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Allowing an appeal in A Ayyasamy v A Paramasivam & Ors, the Supreme Court recently held that where there are simple allegations of fraud touching upon a party’s internal affairs, and there is no implication on the public domain, an arbitration clause need not be avoided and the parties can be sent to arbitration.

gavel_and_money_on_justice_scaleIn this case, five brothers and their late father had entered into a partnership deed (containing an arbitration clause) to conduct a hotel business in Tamil Nadu. When disputes arose between the parties, the respondents filed a civil suit for a declaration that the partners had the right to participate in the hotel administration.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at [email protected] or [email protected] Readers should not act on the basis of this information without seeking professional legal advice.