THE MANAGING DIRECTOR BIHAR STATE FOOD AND CIVIL SUPPLY CORPORATION LIMITED & ANR. versus SANJAY KUMAR

Citation: [2025] 8 S.C.R. 1551 · Decided: 05-08-2025 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Dismissed

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Judgment (excerpt)

[2025] 8 S.C.R. 1551 : 2025 INSC 933
The Managing Director Bihar State 
Food and Civil Supply Corporation Limited & Anr. 
v. 
Sanjay Kumar
(Civil Appeal No. 10116 of 2025)
05 August 2025
[Pamidighantam Sri Narasimha* and Manoj Misra, JJ.]
Issue for Consideration
Whether the dispute between the respondents and the appellant 
arising out of the agreement incorporating the arbitration clause 
has become non-arbitrable in view of the initiation and pendency 
of the criminal cases; whether invocation of the Recovery Act by 
the appellant-Corporation bars initiation of proceedings under the 
Arbitration and Conciliation Act, 1996; whether the application 
u/s.11(6), Arbitration Act is barred by limitation; whether the issue 
relating to legality and validity of invocation of arbitral proceedings 
u/s.11(6) is conclusively decided by the High Court in Sadhna 
Kumari v. Bihar State Food & Civil Supplies Corporation Ltd, 
against which SLP was dismissed; whether the decision in the 
order of Bihar Public Works Contracts Disputes Arbitration Tribunal 
operates as res judicata; whether issues no.1 to 5 should be left 
to the arbitral tribunal to decide in view of sub-section (6A) of s.11, 
Arbitration Act.
Headnotes†
Arbitration and Conciliation Act, 1996 – s.11 – Penal Code, 
1860 – ss.420, 409 – PDS scam in the State of Bihar; 
misappropriation of more than a thousand crores by the 
accused rice-millers, 600 FIRs filed – High Court allowed s.11 
petitions filed by the respondents-rice-millers and appointed 
arbitrators in several cases – As regards the objection of 
non-arbitrability of dispute due to allegations of criminality, 
High Court held that the allegations are simple accusations 
as against serious allegation of forgery or fabrication and as 
such there is no bar – Challenge to – Whether the dispute 
between the respondents and the appellant-Corporation arising 
out of the agreement incorporating the arbitration clause 
* Author
1552
[2025] 8 S.C.R.
Supreme Court Reports
became non-arbitrable in view of the initiation and pendency 
of the criminal cases:
Held: No – Mere fact that criminal proceedings can or have been 
instituted in respect of the same incident(s) would not per se lead to 
the conclusion that the dispute which is otherwise arbitrable ceases 
to be so – There is a distinction between “serious fraud” and “fraud 
simpliciter” to segregate and exclude disputes involving serious 
fraud from arbitrability – Furthermore, Courts exercising jurisdictions 
u/s.11(6) and s.8 must follow the mandate of sub-section (6A) to 
s.11 and their scrutiny must be “confine(d) to the examination of 
the existence of the arbitration agreement” – In the present case, 
there is an arbitration agreement – All the issues raised by the 
appellant are kept open for being raised and contested before the 
arbitral tribunal – Appeals dismissed – Bihar and Orissa Public 
Demands Recovery Act, 1914. [Paras 21, 27-30]
Arbitration and Conciliation Act, 1996 – s.11(6), 8, 11 (6A) – 
Application u/s.11(6), if opposed on grounds of serious fraud – 
Enquiry by referral court – Scope:
Held: Courts exercising jurisdictions u/s.11(6) and s.8 must follow 
the mandate of sub-section (6A) to s.11 and their scrutiny must be 
“confine(d) to the examination of the existence of the arbitration 
agreement”. [Para 27]
Arbitration and Conciliation Act, 1996 – s.11 – Arbitrability in 
cases of serious fraud – Principles governing, stated. [Para 21]
Case Law Cited
Cox and Kings Ltd. v. SAP India Pvt. Ltd., 2023 INSC 1051 : [2023] 
15 SCR 621; Interplay Between Arbitration Agreements under 
Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 [2023] 
15 SCR 1081 : (2024) 6 SCC 1; Bihar v. Divesh Kumar Chaudhry 
(2018) 16 SCC 817; A. Ayyasamy v. A. Paramasivam and Ors. 
[2016] 11 SCR 521 : (2016) 10 SCC 386; Abdul Kadir Shamsuddin 
Bubere v. Madhav Prabhakar Oak [1962] 3 SCR 702 : 1961 SCC 
OnLine SC 138; N. Radhakrishnan v. Maestro Engineers [2009] 
15 SCR 371 : (2010) 1 SCC 72; Swiss Timing Ltd. v. Organising 
Committee, Commonwealth Games [2014] 6 SCR 514 : (2014) 6 
SCC 677; Meguin Gmbh v. Nandan Petrochem Ltd. (2016) 10 SCC 
422; Ameet Lalchand Shah v. Rishabh Enterprises [2018] 6 SCR 
1001 : (2018) 15 SCC 678; Rashid Raza v. Sadaf Akhtar [2019] 
[2025] 8 S.C.R. 
1553
The Managing Director Bihar State Food and Civil  
Supply Corporation Limited & Anr. v. Sanjay Kumar
12 SCR 460 : (2019) 8 SCC 710; Avitel Post Studioz Limited v. 
HSBC PI Holding

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