Arbitration and Conciliation Act, 1996 – s. 9 – Contract Act,1872 – ss. 17 and 18 – A Share Subscription Agreement (SSA) andShareholders’ Agreement (SHA) was entered into between theclaimant and the appellants – Both SSA and SHA contained anidentical arbitration clause – It was alleged that the appellants madea representation that they were at a very advanced stage of finalisinga contract with the British Broadcasting Corporation (BBC) toconvert the BBC’s film library from 2D to 3D – This contract wasexpected to generate a revenue of USD 300 million in first phase,and ultimately over USD 1 billion – Pursuant thereto, the claimantmade an investment in the equity capital of the appellants for aconsideration of USD 60 million in order to acquire 7.8% of itspaid up capital – The claimant discovered that the purported BBCcontract was non-existent and was set up by the appellants to inducethe claimants into investing the aforesaid money of USD 60 millionin the shares of Appellants – It was also alleged that the entireinvestment proceeds of USD 60 million was siphoned off toCompanies in which the appellants had a stake – As dispute arosebetween the parties, the notices of arbitration were issued by theclaimant to the Singapore International Arbitration Centre tocommence arbitral proceedings – The Emergency Arbitrator passedtwo interim awards in favour of the claimant – The claimant filedapplication u/s. 9 of the 1996 Act – The Single Judge of the HighCourt directed appellants to deposit any shortfall in their accountso as to maintain a balance of USD 60 million – The Division Benchof the High Court, however, directed appellants to deposit half ofUSD 60 million i.e. at USD 30 million – By a final award, the ArbitralTribunal held that the claimant was entitled to damages in the totalamount of USD 60 million plus interest and costs – The Foreignaward was challenged by the appellants u/s. 34 before the HighCourt – The petition u/s. 34 was dismissed by the High Court – Anappeal u/s. 37 of the 1996 Act was also dismissed – Meanwhile, theclaimant moved the High Court for the enforcement of the ForeignFinal award – Before the Supreme Court, the appellant contendedthat if the transaction entered into between the parties involve seriouscriminal offences such as forgery and impersonation, then it is clearthat under Indian Law, such dispute would not be arbitrable – Theclaimant countered that issues were predominantly civil law issuesto be decided inter parties – After hearing the parties, the Courtformulated question: Whether there is a strong prima facie casemade out in favour of the claimant in the s. 9 proceedings – Whetherbalance of convenience tilts in favour of the claimant – Held: On aconspectus of facts and following Supreme Court judgments, theissues raised and answered in the Foreign Final award wouldindicate that there is no such fraud as would vitiate the arbitrationclause in the SSA entered into between the parties as it is clear thatthis clause has to be read as an independent clause – Further, anyfinding that the contract itself is either null and void or voidable asa result of fraud or misrepresentation does not entail the invalidityof the arbitration clause – Further, the impersonation, falserepresentation made and diversion of funds are all inter parties,having no ‘public flavour’ and attract the ‘fraud exception’ – Areading of the Foreign Final award would show that a strong primafacie case was made out as the award holds the BBC transaction asa basis on which the contract was entered into and the USD 60million paid by the claimant, which would fall within fraudulentinducement to enter into contract u/s. 17 of the Contract Act – Theorder passed by the Single Judge of the High Court to keep asideUSD 60 million was fair – However, the reduction of USD 60 millionto USD 30 million by the Division Bench of the High Court was notjustified – The claimant has made out a strong prima facie casenecessitating that USD 60 million, being the principal amountawarded to them, is kept apart in the manner indicated by the SingleJudge of the High Court – The balance of convenience is also in itsfavour.