A three-judge Bench of the Supreme Court in Rashid Raza v Sadaf Akhtar (2019: SC) had the occasion to clarify the law relating to arbitrability of fraud. The Supreme Court also reiterated and re-stated the law in the two-judge Bench decision in Ayyasamy v. Paramasivam, (2016) 10 SCC 386. The re-stated test as per the three-judge Bench is as follows:
"Two working tests laid down in paragraph 25 are: "(1) does this plea [of fraud] permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (2) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain."
Note the use of "or" for these two tests, conveying the meaning that one has to establish either of the grounds to enable the court hold the dispute to be non-arbitrable. The focus of the second aspect of the "working tests" suggests that the court has not considered correct the previous position that arbitral tribunals are incapable of handling complicated facts involving collecting evidence. This is a subtle but significant shift in position. Without overruling Ayyasamy insofar the position of law that the "dispute may require voluminous evidence on the part of both the parties to come to a finding which can be only properly undertaken by a civil court of competent jurisdiction”, the court in effect abandoned this position. Now, the two working tests are the only tests for deciding whether a dispute involving allegation of fraud is arbitrable.