Fraud Matters Now Can Be Arbitrable

The Bombay High Court in the case of Nilesh Shejwal v Agrowon Agrotech Industries, has held that "fraud is not arbitrable" is an archaic view. Such a view has now become obsolete and deserves to be discarded.

Brief Facts:

The Petitioner was appointed as the CEO of the Respondent Company on 23 August 2019. An Employment Agreement was also executed on the same day. Clause 19 of the said Agreement provided that any disputes arising therefrom will be resolved and settled by a sole arbitrator. On 22 October 2021, the Petitioner was restrained and was not allowed to attend the office on the pretext that some irregularities were found in the functioning of the Company. The Respondent Company alleged that an audit report found the Petitioner guilty of misappropriation of funds, wrongful use of company brand and breach of trust/contract. Accordingly, notice of termination of contract dated 27 December 2021 was issued to the Petitioner and he was relieved from the employment