In Brief
Bihar State Food and Civil Supplies Corporation entered into milling agreements with rice millers containing arbitration clauses. When millers allegedly misappropriated rice worth over one thousand crores, the corporation initiated criminal proceedings (1200+ FIRs) and recovery proceedings. The millers sought arbitration. The High Court allowed their Section 11 applications for appointment of arbitrators. The Supreme Court upheld the High Court, holding that under Section 11(6A) of the Arbitration Act, the referral court must confine its examination solely to the existence of an arbitration agreement. Questions about non-arbitrability due to alleged serious fraud and criminal proceedings are to be raised before the arbitral tribunal itself as preliminary issues, not resolved by courts at the referral stage.
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