#Section 16 Arbitration Act

Bombay HC holds that commercial disputes involving fraud remain arbitrable unless the fraud affects public interest or involves serious criminal offenses. The court set aside the arbitrator's jurisdictional objection, emphasizing that mere allegations of fraud or third-party involvement do not render a dispute non-arbitrable under the Vidya Drolia test.

Bombay High Court reaffirms that commercial disputes involving fraud and third-party rights are arbitrable unless they satisfy the strict non-arbitrability thresholds established in A. Ayyasamy and Vidya Drolia. The Court set aside the arbitrator’s order, restoring arbitration proceedings and reinforcing the pro-arbitration stance under Section 16 of the Arbitration and Conciliation Act 1996.

The Bombay High Court nullified an arbitral award because a new agreement containing an arbitration clause did not automatically govern disputes under a prior, still-active toll collection contract where jurisdiction was expressly reserved for civil courts. This reinforces that arbitration requires clear, specific consent per dispute context-not blanket assumption through contract substitution. Contractors and infrastructure agencies must now draft replacement agreements with explicit jurisdictional carve-outs.