Holding

An arbitral tribunal has the authority and power to implead non-signatories to the arbitration agreement on its own accord, provided they are found to be bound by the agreement based on principles such as the group of companies doctrine, as the legal basis for such impleadment lies in Sections 2(1)(h) and 7 of the Arbitration and Conciliation Act, 1996.

Summary

The respondent, Shapoorji Pallonji and Company Private Limited (SPCPL), filed counter-claims in an arbitration initiated by Black Canyon SEZ Pvt. Ltd. (BCSPL) against BCSPL and two non-signatory entities, ASF Buildtech Private Limited (ABPL) and ASF Insignia SEZ Pvt. Ltd. (AISPL), invoking the group of companies doctrine. The arbitral tribunal impleaded ABPL and AISPL, rejecting their jurisdictional challenges under Section 16 of the Arbitration and Conciliation Act, 1996. The Delhi High Court upheld the tribunal's orders, and ABPL appealed to the Supreme Court. The Supreme Court examined whether an arbitral tribunal has the power to implead a non-signatory to the arbitration agreement. The Court held that after the decisions in Cox and Kings (I) and subsequent rulings, the arbitral tribunal does possess such authority, as the legal basis for binding non-signatories lies in Sections 2(1)(h) and 7 of the Act, not merely in Sections 8 and 45. The Court also clarified that the scope of Section 11(6A) is limited to prima facie existence of an arbitration agreement, and the question of whether a non-signatory is bound is a fact-intensive inquiry best left to the arbitral tribunal. The Court further held that non-service of a notice under Section 21 does not bar impleadment, as Section 21 is procedural and primarily for limitation purposes. The appeal was dismissed, affirming the impleadment of ABPL.

Issues considered

Whether an arbitral tribunal has the authority or power to implead or join a non-signatory to the arbitration agreement as a party to the arbitration proceedings.
Whether the archaic understanding that an arbitral tribunal is incapable or incompetent to identify and implead a non-signatory to the arbitration agreement on its own accord is the correct position of law.
Whether the question of a non-signatory being bound by the arbitration agreement is inextricably linked to the 'existence' of the arbitration agreement under Section 11(6A) of the Act.
Whether non-service of a notice under Section 21 of the Act precludes the impleadment of a non-signatory in arbitral proceedings.
Whether the arbitral tribunal can implead a non-signatory when the issue was not raised before the referral court under Section 11.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11, s. 11(6A), s. 16, s. 17, s. 19, s. 21, s. 2(1)(h), s. 23, s. 37, s. 45, s. 7, s. 8
Arbitration and Conciliation (Amendment) Act, 2015
Arbitration and Conciliation Bill, 2024
English Arbitration Act, 1996
UNCITRAL Model Law

Headnote

Issue for Consideration Whether an arbitral tribunal has the authority or power to implead or join a non-signatory to the arbitration agreement as a party to the arbitration proceedings. Headnotes† Arbitration and Conciliation Act, 1996 – Whether an arbitral tribunal has to implead or join a non-signatory to the arbitration agreement as a party to the arbitration proceedings: Held: Arbitral Tribunal has the authority and power to implead Non-Signatories to the arbitration agreement on its own accord. [Paras 109-168] Arbitration and Conciliation Act, 1996 –

Subjects

Arbitral TribunalNon-signatoryImpleadmentGroup of Companies DoctrineKompetenz-KompetenzSection 11Section 16Section 21Arbitration AgreementConsentReferral CourtJurisdictionAlter egoComposite transactionNotice of InvocationImplied power

Judgment

[2025] 5 S.C.R. 1565 : 2025 INSC 616

ASF Buildtech Private Limited
v.
Shapoorji Pallonji and Company Private Limited
(Civil Appeal No. 5823 of 2025)
02 May 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]

Issue for Consideration
Whether an arbitral tribunal has the authority or power to implead
or join a non-signatory to the arbitration agreement as a party to
the arbitration proceedings.

Headnotes†
Arbitration and Conciliation Act, 1996 – Whether an arbitral
tribunal has the authority or power to implead or join a
non-signatory to the arbitration agreement as a party to the
arbitration proceedings:
Held: Arbitral Tribunal has the authority and power to implead
Non-Signatories to the arbitration agreement on its own accord.
[Paras 109-168]

Arbitration and Conciliation Act, 1996 – Whether the Arbitral
Tribunal have the power to implead a non-signatory to the
Arbitration Agreement – Contradictory views of different High
Courts on the subject – Significant change after the decision
of a five Judge Bench of this Court in Cox and Kings (I):
Held: Even after the decision of this Court in Chloro Controls
allowing non-signatories to an arbitration agreement to be referred
and enjoined to arbitration on the basis of their conduct, role, and
involvement in the underlying contract, the High Courts consistently
held that such power to refer or implead a non-signatory was only
available to the courts and not to the arbitral tribunals – It is only
after the decision of this Court in Cox and Kings (I), that the position
of law as regards the power of an arbitral tribunal to implead a
non-signatory underwent a significant change, whereby many High
Courts which had earlier refused to recognize such power of the
arbitral tribunal, came around to recognizing it. [Para 28]

* Author
1566 [2025] 5 S.C.R.

Supreme Court Reports

Arbitration and Conciliation Act, 1996 – Evolution of the law on
referral or joinder of Non-Signatories to arbitration proceedings
and the Aversion to the power of Arbitral Tribunals to implead
a Non-Signatory – Discussed. [Paras 29- 40]

Arbitration and Conciliation Act, 1996 – Decision of Cox
and Kings (I) and the Judicial Rectification of the first
misconception by Chloro Controls:
Held: Cox and Kings (I) held that the approach adopted by Chloro
Controls, so far as infusing or reading the doctrine of ‘Group of
Companies’ into the expression “a party to an arbitration agreement
or any person claiming through or under him” is concerned, was
incorrect – Cox and Kings (I) made a significant shift from the
original understanding and legal basis of the doctrine of ‘group of
companies’ and other allied principles of determining mutual consent
in Chloro Controls – It held that the legal basis for the application
of the ‘Group of Companies’ doctrine lies in the very definitions of
“party” and “arbitration agreement” under Section(s) 2(1)(h) and
Section 7, respectively, and not in the expression “claiming through
or under” in Section(s) 8 and 45 of the Act, 1996 – Since both the
aforesaid provisions i.e. Section 2(1)(h) read with Section 7 of the
Act, 1996 are not confined in their scope to either the courts or
the arbitral tribunal, and rather exists ubiquitously on the statute
book and is common or indifferent to both the courts and arbitral
tribunals, there cannot be any gainsaying that even the arbitral
tribunal now after the decision of Cox and Kings (I) could be
said to be clothed with the power to take recourse to the various
principles for determining mutual consent, and thereby implead
a non-signatory to the arbitration, if such person is found to be
bound to the arbitration agreement. [Paras 42, 44, 46]

Arbitration and Conciliation Act, 1996 – Decision of Krish
Spinning and the Judicial Rectification of the second
misconception emanating from SBP & Co.:
Held: The understanding which stemmed from SBP Co. was that
the referral courts were required to conduct mini trials and indulge
in the appreciation of evidence on the aforesaid issues, even
though they were inextricably linked with the substantive merits of
the subject-matter – However, with the subsequent developments,
particularly in light of two key decisions of this Court being In Re:
Interplay Between Arbitration Agreements under the Arbitration and
[2025] 5 S.C.R. 1567

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

Conciliation Act 1996 and the Indian Stamp Act 1899, 2023 INSC
1066 and SBI General Insurance Co. Ltd. v. Krish Spinning, 2024
INSC 532, it is no more res-integra, that the extent of scrutiny of
the referral courts u/s.11 of the Act, 1996 is extremely narrow, and
confined to only one aspect i.e., the prima-facie determination of
the “existence” of the arbitration agreement – Krish Spinning has
categorically held that only those questions which inextricably
attacks or questions the “existence” of the arbitration agreement,
should be looked into by the referral courts, that only for the purpose
of a prima-facie satisfaction, all other questions, particularly mixed
questions of law and fact fall within the exclusive jurisdiction of the
arbitral tribunal, and cannot be looked into by the referral court,
even for a prima-facie determination. [Paras 64 and 66]

Arbitration and Conciliation Act, 1996 – s.11 – Extent of scrutiny
by the Referral Courts and jurisdiction of the Arbitral Tribunal:
Held: In light of two key decisions of this Court being In Re:
Interplay Between Arbitration Agreements under the Arbitration
and Conciliation Act 1996 and the Indian Stamp Act 1899, 2023
INSC 1066 and SBI General Insurance Co. Ltd. v. Krish Spinning,
2024 INSC 532, it is no more res-integra, that the extent of scrutiny
of the referral courts u/s.11 of the Act, 1996 is extremely narrow,
and confined to only one aspect i.e., the prima-facie determination
of the “existence” of the arbitration agreement – Krish Spinning
has categorically held that only those questions which inextricably
attacks or questions the “existence” of the arbitration agreement,
should be looked into by the referral courts, that only for the purpose
of a prima-facie satisfaction, all other questions, particularly mixed
questions of law and fact fall within the exclusive jurisdiction of the
arbitral tribunal, and cannot be looked into by the referral court,
even for a prima-facie determination – Questions which involve
examination of contested question of facts and appreciation of
evidence, should be left to the arbitral tribunals to decide, as it is
equally, if not more capable to decide such questions, as it has the
benefit of going through all the relevant evidence and pleadings
in much more detail than the referral courts. [Para 66]

Arbitration and Conciliation Act, 1996 – Whether the archaic
understanding that an arbitral tribunal is incapable or
incompetent to identify and implead a non-signatory to the
arbitration agreement on its own accord, is the correct position
of law:
1568 [2025] 5 S.C.R.

Supreme Court Reports

Held: The archaic understanding that an arbitral tribunal is
incapable or incompetent to identify and implead a non-signatory
to the arbitration agreement on its own accord, is not the correct
position of law, in view of the decisions of this Court in In Re:
Interplay Between Arbitration Agreements under the Arbitration
and Conciliation Act 1996 and the Indian Stamp Act 1899, 2023
INSC 1066 and SBI General Insurance Co. Ltd. v. Krish Spinning,
2024 INSC 532 – The limited nature and scope of inquiry which
the referral courts are expected to undertake as regards the
“existence” of the arbitration agreement, would as a logical sequitur
obligate the arbitral tribunal also to look into this question – Such
a question, by no stretch, can be regarded as falling within the
exclusive domain or jurisdiction of the referral courts, so as to
render any examination of it by the arbitral tribunal a usurpation
of the referral courts authority and duty. [Paras 67, 68]

Arbitration and Conciliation Act, 1996 – The nature and extent
of the test laid down in Cox and Kings (I) for determining Non-
Signatories who are bound by the arbitration agreements:
Held: Cox and Kings (I) after an exhaustive examination of the
question of existence or applicability of the ‘Group of Companies’
doctrine in a particular case, is fundamentally a fact-intensive
exercise that involves a nuanced determination of the consent of
parties from diverse factual elements and circumstances – The said
doctrine and by extension any other principle for determining mutual
consent, broadly requires ascertaining the intention of the parties
by analysing the factual circumstances surrounding the contractual
arrangements, particularly factors such as the level of involvement
of the non signatory in the negotiation, conclusion (sic execution),
performance or termination of the contract, to what extent such
conduct may be indicative its position as a veritable party to the
arbitration agreement and common intention to be bound by it – Thus,
it was held that the primary test for ascertaining the applicability of
the ‘Group of Companies’ doctrine lies in the determination of the
intention of the parties, which is to be inferred from the surrounding
factual matrix, or in other words, the inquiry or test is, by its very
nature, predominantly factual – Owing to the intrinsic character of
the test—being one that entails a fact intensive inquiry involving a
mixed question of fact and law—and further, given the extensive
standard it demands, requiring a comprehensive and holistic appraisal
of all material facts and attendant circumstances, it may be safely
[2025] 5 S.C.R. 1569

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

concluded that the arbitral tribunal is the more appropriate and
competent forum to adjudicate upon the issue of whether a non-
signatory is bound by the arbitration agreement, as the arbitral as it
has the innate advantage of going through all the relevant evidence
and pleadings in greater depth and detail than the referral court
at the pre-reference stage, and as such is uniquely positioned to
undertake such a nuanced determination. [Paras 73,76]

Arbitration and Conciliation Act, 1996 – Appropriate forum
to adjudicate upon the issue of whether a non-signatory is
bound by the arbitration agreement:
Held: The arbitral tribunal is the more appropriate and competent
forum to adjudicate upon the issue of whether a non-signatory is
bound by the arbitration agreement, as the arbitral as it has the
innate advantage of going through all the relevant evidence and
pleadings in greater depth and detail than the referral court at
the pre-reference stage, and as such is uniquely positioned to
undertake such a nuanced determination. [Para 76]

Arbitration and Conciliation Act, 1996 – Determining the
“existence” viz-à-viz the intention of parties from “express
words” of an Arbitration Agreement:
Held: Once the referral court, identifies an arbitration agreement
that satisfies the formal requirements of Section 7 of the Act, 1996,
either from the record of agreement or the written materials under
sub-section (4), the “existence” of the arbitration agreement is said
to have been established, even though, its binding nature qua the
non-signatory may not be established, as it is entirely possible for
a referral court to arrive at finding that prima-facie there exists an
arbitration agreement in terms of Section 7 of the Act, 1996 without
resolving the question of whether a non-signatory is bound by such
arbitration agreement or not, as it depends on additional factors
beyond mere existence – Once, the “existence” of the arbitration
agreement is said to have been established, the condition stipulated
in terms of Section 11 sub-section (6A) of the Act, 1996, is said to
have been fulfilled, and the referral courts have no option but to refer
the dispute to arbitration, notwithstanding whether the intention of a
non-signatory as a veritable partly to such agreement is established
or not – The question of whether a non-signatory is bound by the
arbitration agreement is entirely separate from the question of its
“existence”– The latter is a relatively straightforward, procedural
1570 [2025] 5 S.C.R.

Supreme Court Reports

determination based on the formal presence of the agreement,
whereas the former involves a substantive and contextual inquiry
into the mutual intent of the parties, which may be examined by
the arbitral tribunal. [Paras 85, 86]

Arbitration and Conciliation Act, 1996 – Decision of Cox and
Kings (II) and Ajay Madhusudan and the scope of Section 11
of the Act, 1996 for joinder of non-signatories to arbitration
proceedings:
Held: This hands-off approach of referral courts in relation to the
question of whether a non-signatory is a veritable party to the
arbitration agreement or not was reiterated in Cox and Kings (II),
observed that once an arbitral tribunal stands constituted, it
becomes automatically open to all parties to raise any preliminary
objections, including preliminary objections touching upon the
jurisdiction of such tribunal, and to seek an early determination
thereof – Consequently, the issue of impleadment of a non-signatory
was deliberately left for the arbitral tribunal to decide, after taking
into consideration the evidence adduced before it by the parties
and the principles enunciated under Cox and Kings (I) – Similarly, in
Ajay Madhusudan it was held that since a detailed examination of
numerous disputed questions of fact was required for determining
whether the non-signatory is a veritable party to the arbitration
agreement, the same cannot be examined in the limited jurisdiction
u/s.11 of the Act, 1996 as it would tantamount to a mini trial – An
additional and equally compelling consideration is that the power
exercised by the referral courts under Section 11 of the Act, 1996
is judicial in nature – Consequently, referral courts must refrain
from embarking upon an intricate evidentiary inquiry or making
final determinations on matters that are within the jurisdiction of
the arbitral tribunal – The better course of action is for referral
courts to refrain altogether from delving, into the issue of whether
a non-signatory is a veritable party to the arbitration agreement,
and to leave such matters for the arbitral tribunal to decide in the
first instance.[Paras 99, 100, 102]

Arbitration and Conciliation Act, 1996 – There is no inhibition in
the scheme of Act, 1996 which precludes the Arbitral Tribunal
from impleading a Non-Signatory on its own accord:
Held: Even in the absence of an express provisions in the Act,
1996 empowering the arbitral tribunal to implead or join a party
[2025] 5 S.C.R. 1571

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

who is otherwise bound by the arbitration agreement, the arbitral
tribunal does possess such power by virtue of the doctrine of
implied powers, as long as the same is in tandem with the scheme
of Act, 1996 i.e., as long as the parties had either expressly or
impliedly consented to the arbitration agreement as held in Cox
and Kings (I). [Para 127]

Arbitration and Conciliation Act, 1996 – Doctrine of Kompetenz-
Kompetenz and the Jurisdictional Reach of an Arbitral Tribunal:
Held: Section 16 of the Act, 1996, which enshrines the principle
of “kompetenz kompetenz” could be said to be one such provision
when seen in light of the object of the Act, 1996, which requires
the courts to adopt a pragmatic and ‘always speaking’ approach
in its interpretation – Section 16 of the Act, 1996 empowers the
arbitral tribunal to rule on its own jurisdiction – The policy rationale
underlying this provision is two-fold: first, to respect and uphold the
intention of the parties to resolve their disputes through arbitration by
empowering the forum they have contractually chosen; and second,
to prevent a fragmentation of proceedings through premature
judicial intervention, which can frustrate the efficacy of arbitration
by causing delays and fostering multiplicity of litigation – The
negative aspect of competence-competence is aimed at restricting
the interference of the courts at the referral stage by preventing
the courts from examining the issues pertaining to the jurisdiction
of the arbitral tribunal before the arbitral tribunal itself has had
the opportunity to entertain them and to also enable the arbitral
tribunal to exercise necessary powers without any dependency
upon the national courts, with the courts taking a back-seat and
being permitted to review the exercise of power of the arbitral
tribunal and its decision at a later stage. [Paras 132, 133, 134]

Arbitration and Conciliation Act, 1996 – Requirement of Notice
of Invocation u/s.21 of the Act, 1996:
Held: The marginal note appended to Section 21 of the Act, 1996
makes it abundantly clear, that the notice to be issued thereunder
is for the purpose of “commencement of arbitration proceedings” –
Section 21 is procedural rather than jurisdictional—it does not
serve to create or validate the arbitration agreement itself, nor is
it a precondition for the existence of the tribunal’s jurisdiction, but
merely operates as a statutory mechanism to ascertain the date
of initiation for reckoning limitation. [Para 145]
1572 [2025] 5 S.C.R.

Supreme Court Reports

Arbitration and Conciliation Bill, 2024 – Ameliorating the
position of law as regards the power of impleadment or joinder
of an arbitral tribunal – Consideration of:
Held: The new Bill has taken no steps whatsoever, for ameliorating
the position of law as regards the power of impleadment or joinder
of an arbitral tribunal – What is expressly missing in the Arbitration
and Conciliation Act, 1996 is still missing in the Arbitration and
Conciliation Bill, 2024, despite a catena of decisions of this
Court as-well as the various High Courts, highlighting the need
for statutory recognition of such power in order to obviate all
possibilities of confusion – As observed in Gayatri Balasamy,
any uncertainty in the law of arbitration would be an anathema to
business and commerce – This Court urges, the Department of
Legal Affairs, Ministry of Law and Justice to take a serious look
at the arbitration regime that is prevailing in India and bring about
necessary changes while the Arbitration and Conciliation Bill, 2024
is still being considered. [Para 170]

Case Law Cited
SBP & Co. v. Patel Engg. Ltd. [2005] Supp. 4 SCR 688 : (2005) 8
SCC 618; Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd.
[2002] 1 SCR 728 : (2002) 2 SCC 388; In Re: Interplay Between
Arbitration Agreements under the Arbitration and Conciliation Act
1996 and the Indian Stamp Act,1899, 2023 INSC 1066 : [2023] 15
SCR 1081; Cox and Kings Ltd. v. SAP India Pvt. Ltd. & Anr. {Cox
and Kings(I)}, 2023 INSC 1051 : [2023] 15 SCR 621 – followed.
Cox & Kings Ltd. v. Sap India Pvt. Ltd. & Anr. {Cox and Kings (II)},
2024 INSC 670 : [2024] 9 SCR 199; SBI General Insurance Co.
Ltd. v. Krish Spinning, 2024 INSC 532 : [2024] 7 SCR 840; Ajay
Madhusudan Patel & Ors. v. Jyotrindra S. Patel & Ors., 2024 INSC
710 : [2024] 9 SCR 894; Adavya Projects Pvt. Ltd. v. M/s Vishal
Strcturals Pvt. Ltd. & Ors., 2025 INSC 507 : [2025] 5 SCR 243;
Gayatri Balasamy v. M/s ISG Novasoft Technologies Ltd., 2025
INSC 605; State of Goa v. Praveen Enterprises [2011] 10 SCR
1026 : (2012) 12 SCC 581; Govind Rubber Ltd. v. Louis Dreyfus
Commodities Asia (P) Ltd. [2014] 12 SCR 488 : (2015) 13 SCC
477 – relied on.
Chloro Controls India Private Limited v. Severn Trent Water
Purification Inc. [2012] 13 SCR 402 : (2013) 1 SCC 641; Shree Ram
Mills Ltd. v. Utility Premises (P) Ltd. [2007] 4 SCR 279 : (2007) 4
[2025] 5 S.C.R. 1573

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

SCC 599; Hema Khattar v. Shiv Khera [2017] 4 SCR 425 : (2017)
7 SCC 716; Duro Felguera, S.A. v. Gangavaram Port Ltd. [2017]
10 SCR 285 : (2017) 9 SCC 729; Uttarakhand Purv Sainik Kalyan
Nigam Ltd. v. Northern Coal Field Ltd. [2019] 14 SCR 999 : (2020)
2 SCC 455; DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd.
[2021] 12 SCR 1 : (2021) 16 SCC 743; BSNL v. Nortel Networks
(India) (P) Ltd. [2021] 2 SCR 644 : (2021) 5 SCC 738; M/s Arif Azim
Co. Ltd. v. M/s Aptech Ltd., 2024 INSC 155 : [2024] 3 SCR 73;
Oil and Natural Gas Corporation Ltd. v. Discovery Enterprises Pvt.
Ltd. [2022] 4 SCR 926 : (2022) 8 SCC 42; Shin-Etsu Chemical
Co Ltd v. Aksh Optifibre Ltd. [2005] Supp. 2 SCR 699 : (2005) 7
SCC 234; Vidya Drolia & Ors v. Durga Trading Corporation [2020]
11 SCR 1001 : (2021) 2 SCC 1; Savitri v. Govind Singh Rawat
[1985] Supp. 3 SCR 615 : (1985) 4 SCC 337; Milkfood Ltd. v.
GMC Ice Cream (P) Ltd. [2004] 3 SCR 854 : (2004) 7 SCC 288;
Pravin Electricals Pvt Ltd v. Galaxy Infra and Engineering Pvt Ltd.
[2021] 1 SCR 1162 : (2021) 5 SCC 671 – referred to.
Oil and Natural Gas Corporation Ltd. v. Jindal Drilling and Industries
Ltd., 2015 SCC OnLine Bom 1707; Balmer Lawrie & Co. Ltd. v.
Saraswathi Chemicals Proprietors Saraswathi Leather, 2017 SCC
OnLine Del 7519; Sudhir Gopi v. Indira Gandhi National Open
University & Anr., 2017 SCC OnLine Del 8345; V.G. Santhosam v.
Shanthi Gnanasekaran, 2020 SCC OnLine Mad 560; Arupri
Logistics Pvt. Ltd. v. Vilas Gupta & Ors., 2023 SCC OnLine
Del 4297; IVRCL Ltd. v. Gujarat State Petroleum Corporation
Ltd., 2015 GUJHC 31651 DB; IMC Ltd. v. Board of Trustees of
Denndayal Port Trust, 2018 SCC OnLine Guj 4972; NOD Bearing
Pvt. Ltd. v. Bhairav Bearing Corporation, 2019 SCC OnLine Bom
366; Vistrat Real Estates Pvt. Ltd. v. Asian Hotels North Ltd., 2022
SCC OnLine Del 1139; Cardinal Energy and Infra Structure Pvt.
Ltd. v. Subramanya Construction and Development Co. Ltd., 2024
SCC OnLine Bom 964; Indraprastha Power Generation Co. Ltd. v.
Hero Solar Energy Pvt. Ltd., 2024 SCC OnLine Del 6080; KKH
Finvest Private Ltd. v. Jonas Haggard & Ors., 2024 SCC OnLine
Del 7254; Alupro Building Systems Pvt Ltd. v. Ozone Overseas Pvt
Ltd., 2017 SCC OnLine Del 7228; Gammon India Ltd. v. NHAI,
2020 SCC OnLine Del 659 – referred to.

Books and Periodicals Cited
Law Commission of India, 246th Report; Redfern and Hunter on
International Arbitration (5th edn, Oxford University Press 2009);
1574 [2025] 5 S.C.R.

Supreme Court Reports

Sir Peter Benson Maxwell, On the Interpretation of Statutes, ed
Frederick Stroud (Sweet and Maxwell, 5th ed, 1912); Gary Born
in his seminal work; International Commercial Arbitration, Vol 2
(3rd edn, Kluwer Law International 2021).

List of Acts
Arbitration and Conciliation Act, 1996; Arbitration and Conciliation
(Amendment) Act, 2015; UNCITRAL Model Law; UNCITRAL
Arbitration Rules; English Arbitration Act, 1996; Arbitration and
Conciliation Bill, 2024.

List of Keywords
Referral courts; Arbitral Tribunal; Implead or join a non-signatory to
the arbitration agreement as a party to the arbitration proceedings;
Determination of the “existence” of the arbitration agreement;
Jurisdiction of the arbitral tribunal; Test to determine whether a
non-signatory is bound by an arbitration agreement; Section 11
sub-section (6A) of the Act, 1996; Doctrine of ‘group of companies’;
Alter ego; Composite transaction; Doctrine of Kompetenz-
Kompetenz; Requirement of Notice of Invocation; Contemporanea
expositio est optima et fortissima in lege; Ubi aliquid conceditur,
conceditur et id sine quo res ipsa esse non potest; Doctrine of
competence-competence; Doctrine of implied power; Principle of
composite performance; Principles of contract and commercial law;
Principles of mutual consent; Principle of Natural Justice; Principle
of consensus ad idem.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5823 of 2025
From the Judgment and Order dated 04.07.2024 of the High Court
of Delhi at New Delhi in ARB.A. (COMM.) No. 4 of 2024

Appearances for Parties
Advs. for the Appellant:
Devadatt Kamat, Sr. Adv., Dr. Amit George, Ms. Anindita Mitra,
Harsh Pandey, Hruday Bajentri.
Advs. for the Respondent:
Jayant Mehta, Sr. Adv., Ms. Aakanksha Kaul, Saurav Agrawal,
Salvador Santosh Rebello, Aman Sahani, Anshuman Chowdhary,
[2025] 5 S.C.R. 1575

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

Ms. Rhea Borkotoky, Akash Saxena, Ms. Kritika, Ms. Ashima
Chopra, Ms. Prachi Dubey, Ms. Pooja Gill, S. S. Shroff, Ms. Shruti
Sabharwal, Ms. Avlokita Rajvi, Lakshya Khanna, Vikramaditya
Sanghi, Ms. Sanskriti Sinha, Sanyat Lodha, Ms. Sanjana Saddy.

Judgment / Order of the Supreme Court

Judgment

J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided in the
following parts: -

INDEX*

A. FACTUAL MATRIX ....................................................................... 3
B. SUBMISSIONS OF THE PARTIES ............................................... 7
i. Submissions on behalf of the Appellant ............................ 7
ii. Submissions on behalf of the Respondent No. 1 ............. 7
C. ANALYSIS ..................................................................................... 15
i. Whether the Arbitral Tribunal has the power to Implead/
Join Non-Signatories to the Arbitration Agreement? ....... 15
a. Contradictory Views of different High Courts on the
subject ................................................................................. 16
I. Decisions holding that the Arbitral Tribunal does not
have the power to Implead a non-signatory to the
Arbitration Agreement ............................................... 16
II. Decisions holding that the Arbitral Tribunal has the
power to Implead a non-signatory to the Arbitration
Agreement ................................................................. 41
b. Evolution of the law on referral or joinder of Non-Signatories
to arbitration proceedings and the Aversion to the power
of Arbitral Tribunals to implead a Non-Signatory ............. 62
I. Decision of Chloro Controls and the Arbitration and
Conciliation (Amendment) Act, 2015 ........................ 62
II. Decision of Cox and Kings (I) and the Judicial
Rectification of the first misconception by Chloro
Controls ..................................................................... 77

* Ed. Note: Pagination as per the original Judgment.
1576 [2025] 5 S.C.R.

Supreme Court Reports

III. Decision of Krish Spinning and the Judicial Rectification
of the second misconception emanating from SBP &
Co .............................................................................. 89
c. How Cox and Kings (I) contemplates determination
of mutual intention of Non-Signatories to arbitration
agreements ...................................................................... 108
I. The nature and extent of the test laid down in Cox
and Kings (I) for determining Non-Signatories who
are bound by the arbitration agreements ................. 110
II. Determining the “existence” viz-à-viz the intention
of parties from “express words” of an Arbitration
Agreement ................................................................. 116
III. Decision of Cox and Kings (II) and Ajay Madhusudan
and the scope of Section 11 of the Act, 1996 for joinder
of non-signatories to arbitration proceedings ............ 131
ii. Arbitral Tribunal has the authority and power to implead
Non-Signatories to the arbitration agreement on its own
accord ..................................................................................... 141
a. No inhibition in the scheme of Act, 1996 which precludes
the Arbitral Tribunal from impleading a Non-Signatory
on its own accord ........................................................ 141
b. Doctrine of Kompetenz-Kompetenz and the Jurisdictional
Reach of an Arbitral Tribunal ........................................... 156
c. Requirement of Notice of Invocation under Section 21 ... 163
D. CONCLUSION ............................................................................... 188

1. Leave Granted.
2. This appeal arises from the judgment and order passed by the
High court of Delhi dated 4th July, 2024 in Arb. A. (Comm.) No.
4/2024 & I.As. 2124/2024- 25/2024, Arb. A. (Comm.) No. 5/2024 &
I.A. 2197/2024 and O.M.P. (T)(Comm.) 4/2024 by which the High
Court dismissed the appeals filed by the appellant herein under
Section 37 of the Arbitration and Conciliation Act, 1996 (for short, the
“Act, 1996”) and thereby affirmed the order passed by the Arbitral
Tribunal rejecting the challenge made by the appellant herein to its
jurisdiction on the ground that the appellant being a non-signatory
[2025] 5 S.C.R. 1577

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

to the arbitration agreement could not have been impleaded in the
array of parties and join the arbitration proceedings.
3. It appears that the High Court decided two appeals filed under
Section 37(2) of the 1996 Act. The present appeal arises from the
order passed by the High Court in Arb. A. (Comm.) No. 4 of 2024.

A. FACTUAL MATRIX
4. The Respondent No. 1, Shapoorji Pallonji & Co. Pvt. Ltd. (“SPCPL”)
is the Respondent No.1/counter claimant before the Arbitrator. The
Respondent No. 3 (Black Canyon SEZ Pvt. Ltd. or “BCSPL”) initiated
arbitration against SPCPL in relation to Settlement Agreement dated
24.07.2020.
5. SPCPL filed its Counter-Claim against BCSPL as well as the appellant
herein (ASF Buildtech Pvt. Ltd or “ABPL”) and Respondent No.2
(ASF Insignia SEZ Pvt. Ltd or “AISPL”), which constituted and formed
part of the ‘ASF Group’. SPCPL has pleaded before the Arbitrator
that BCSPL, ASIPL and ABPL being a part of the ASF Group are
bound by the Arbitration Agreement contained in the Works Contract
dated 21.11.2016 on the basis of the Group of Companies Doctrine.
6. BCSPL, ABPL, and AISPL respectively filed separate Section 16
Applications before the Arbitrator seeking rejection of SPCPL’s
counter claim to the extent it is against AISPL and ABPL. By the
Arbitrator’s Orders dated 23.05.2023 and 17.10.2023 respectively
(“Tribunal’s First Order”and ‘Tribunal’s Second Order’ respectively),
the Arbitrator dismissed the said Applications, inter alia holding that,
in order to decide whether or not the inclusion of AISPL and ABPL
amongst the party-Respondents on basis of such doctrine is correct
on basis of facts narrated by SPCPL, some crucial aspects as regards
the role and conduct of AISPL and ABPL, would need adjudication
as questions mixed of facts and law, which cannot be holistically
determined without first arraying them as parties.
7. In such circumstances referred to above, the matter was taken to
the High Court. The High Court, after an exhaustive consideration
of all the relevant aspects of the matter, disposed of the appeal in
the following terms: -
“96. In the present case, a perusal of the impugned orders
shows that the Ld. Sole Arbitrator has conflated the issue
1578 [2025] 5 S.C.R.

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of the applicability of the Group of Companies doctrine &
alter ego doctrine, and thus has resorted to piercing the
corporate veil. All three could not have been combined
in the manner in which the Ld. Sole Arbitrator has done.
However, there are certain facts which are relevant:
i) That the ASF Group is one cohesive group in which
AISPL, ABPL and BCSPL are part of the group. There
is no distinct management dealing with the activities
of these three companies. The correspondence on
record shows that whether in respect of demobilization
or other performances under the contracts, AISPL
is backing BCSPL, ASF Group is also standing as
guarantee for BCSPL. The Comfort Letter given by
ASPL is evidence of this. Thus, in effect, though
there are three distinct incorporated legal entities,
the group is functioning as one unit. The initial work
order was with AISPL. Claims raised relate to periods
even prior to the Novation Agreement where AISPL
would be a necessary and a relevant party.
ii) Non-payment of dues is also another claim of SPCPL
qua which AISPL gave a Comfort Letter.
iii) ABPL is the holding company and is part of the ASF
Group. The order dated 22nd July, 2022 uses the
expression ASF which includes ABPL as its part of
ASF. Thus, the Ld. Sole Arbitrator ought to have simply
applied GoCD as enshrined in the Cox and Kings
(supra) to entertain the claims filed by the SPCPL.
97. In the overall scheme of things, therefore, the
delineation of Case No.1 and Case No.2 was wholly
unnecessary. The impleadment of AISPL and ABPL is in
accordance with law, though the Ld. Sole Arbitrator used
different reasons for dismissing the Section 16 applications.
In effect, the Ld. Sole Arbitrator has held that claims can
be maintained against AISPL and ABPL. In these facts and
circumstances, the Court disposes of the three petitions
in the following terms:
i) AISPL and ABPL are impleaded as Respondent Nos.
2 and 3 in the arbitral proceedings.
[2025] 5 S.C.R. 1579

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

ii) The SoC filed by SPCL is treated as counterclaim
against BCSPL, AISPL and ABPL.
iii) The delineation of Case No. 1 and Case No.2 was
wholly unnecessary and is set aside.
iv) For all practical purposes, the case pending before
the Ld. Sole Arbitrator shall be treated as one case
arising out of reference order dated 22nd July, 2022.
v) There is no legal incapacity in the Ld. Sole Arbitrator
to deal with the claims and counterclaims and the
mandate of the Ld. Arbitrator does not deserves to
be terminated.
vi) The Ld. Sole Arbitrator was correct in his observation
that, for reasons of financial and strategic convenience,
BCSPL’s attempt was to restrict the counterclaim only
to BCSPL and not to AISPL & ABPL. Considering that
AISPL and the ASF Group had assumed responsibility
for payments to be made to SPCPL and for the
implementation of the project, as evidenced by the
Comfort Letter and various emails exchanged, their
impleadment was necessary for a comprehensive
adjudication of the matter.
vii) In view of the fact that SPCPL has no objection to its
claim petition being treated as a counterclaim to the
BCSPL’s claim, it is ordered that both cases shall be
treated as a single reference and a single dispute.
The claims of BCSPL and the counterclaim of SPCPL
shall be adjudicated by the Ld. Sole Arbitrator after
framing issues. No bifurcation would be permissible.
viii) Evidence shall be led first by BCSPL, AISPL and
ABPL and thereafter SPCPL in their respective claims
and counterclaims.
98. Let the present order be communicated to the Ld. Sole
Arbitrator by the Registry. The above two appeals and the
Section 14 petition are disposed of in the above terms. All
pending applications are disposed of.”
8. In such circumstances referred to above, the appellant is here before
this Court with the present appeal.
1580 [2025] 5 S.C.R.

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B. SUBMISSIONS OF THE PARTIES

i. Submissions on behalf of the Appellant
9. In the written submissions filed on behalf of the appellant herein, it
is submitted as under: -
“A. Introductory Submissions:
2 At the outset, it is respectfully submitted that there is
not even a shred of material to show any involvement
whatsoever, much less prima facie, regarding the
involvement of ABPL in the negotiation, performance
or termination of the subject agreements which are the
subject matter of the arbitral proceedings. Accordingly,
the tests laid down by this Hon’ble Court in Para 71 of
Ajay Madhusudan Patel & Ors. v. Jyotrindra S. Patel
& Ors., 2024 SCC OnLine SC 2597, for making ABPL a
‘veritable party’ is not at all fulfilled. As a matter of fact,
the Arbitral Tribunal and the High Court have sought to
rope in ABPL on three counts, namely:
(i) that ABPL is the holding company of Black Canyon SEZ
Private Limited (“BCSPL” / “Respondent No. 2”) and ASF
Insignia SEZ Pvt. Ltd. (“AISPL” / “Respondent No. 3”);
(ii) there is common management between ABPL and
BCSPL (Impugned Judgment at Pg. 47-48 of the Petition,
and
(iii) the branding / logo used by BCSPL is the common
logo of ‘ASF Group’ (Impugned Judgment at Pg. 67-68
of the Petition.
3. It is submitted that none of the aforesaid three aspects
relied upon the Arbitral Tribunal and the High Court can
be the ground for arraying a non-signatory as a ‘veritable
party’. If such contention is accepted, every holding
company will have to be necessarily arrayed as a ‘veritable
party’ which is completely against the dictum of Oil and
Natural Gas Corporation Ltd v. Discovery Enterprises
Pvt. Ltd., (2022) 8 SCC 42; Cox and Kings Ltd. v. SAP
India Pvt. Ltd. & Anr., 2023 SCC Online SC 1634 and
Ajay Madhusudan Patel (supra).
[2025] 5 S.C.R. 1581

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

B. Essential Questions of Law
4. The important questions of law falling for kind
consideration of this Hon’ble Court in the present Special
Leave Petition are:
a. Whether the Petitioner, who is not a signatory to the
arbitration agreement, could be joined as a party Respondent
by the Counter Claimant (“SPCPL”/ “Respondent No. 1”)
in its ‘Separate Statement of Claim’, without the referral
court under section 11 of the Arbitration and Conciliation
Act, 1996 (“Act”) directing as such, and without any leave
of the Ld. Arbitral Tribunal being sought in this regard?
b. If so, could the same be done by directly issuing notice
for filing of statement of defense to the Counter Claim
(wrongly styled as ‘Separate Statement of Claim’) without a
prior opportunity being granted to the Petitioner to contest
such joinder as a party Respondent?
c. Whether such joinder as a party Respondent could be
carried out in contravention of the principles laid down in
Oil and Natural Gas Corporation (supra); Cox and Kings
(supra) and Ajay Madhusudan Patel (supra) as regards
the parameters for invocation of group of companies
doctrine?
d. Whether merely because the Petitioner is stated to be
the holding company for BCSPL and AISPL; all group
companies have the same domain name/website and
the email signature states ‘ASF Group’, the same would
suffice to satisfy the tests for invocation of the group of
companies doctrine for joinder of the Petitioner to the
array of respondents?

C. ABPL not a party to the dispute
5. ABPL was not a party or had any involvement in the
following:
(i) Negotiations for executing Work Contract dated
21 November 2016; (ii) Works Contract dated 21 November
2016; (iii) Supplementary Works Contract dated 9 February
2018; (iv) Novation Agreement on 17 April 2018; (v) Letter
1582 [2025] 5 S.C.R.

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of Comfort dated 17 April 2018; (vi) Addendum No. 1 dated
27 February 2019 to the Works Contract; (vii) Settlement
Agreement dated 24 July 2020; (viii) Notice invoking
arbitration dated 24 January 2022;
(ix) Reply to Notice invoking arbitration dated 4 March
2022, where SPCPL itself did not make ABPL a party
in this reply; (x) Section 11 proceedings before the High
Court of Delhi; and (xi) BCSPL’s statement of claim
dated 31 October 2022. A table on stages of disputes
and involvement of parties therein is annexed herewith
as Schedule A. The same leads to an inescapable
conclusion that the involvement of the Petitioner herein
in the negotiation or performance of the contract was
neither positive, nor direct and substantial, in fact it was
not even incidental.
6 It is for the first time that ABPL was made a party to
the proceedings by direct joinder as a respondent to the
SPCPL’s counter claim or ‘statement of claim’ dated 14
February 2023, without obtaining any leave from the Arbitral
Tribunal in this regard and merely on account of being a
holding company of BCSPL.

D. No material whatsoever to show ABPL’s direct
involvement
7. There is not even a single correspondence or
transactional document to show the involvement of ABPL
qua the negotiation towards, execution of or discussions
towards Works Contract, the Novation Agreement, the
Letter of Comfort and the Settlement Agreement in
question.
8. Even SPCPL, in the Reply, had only limited its contention
for inclusion of a non-signatory to AISPL and not to ABPL.
9. Further, even the order of the High Court of Delhi in the
Section 11 Application under the Act records that SPCPL
had only insisted on making AISPL as a party and there is
not even a whisper about ABPL. Further, the reference to
ASF in the said order is clearly a reference to AISPL who
was the original contracting party and not to ASG Group.
[2025] 5 S.C.R. 1583

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

10. As per the law laid down by this Hon’ble Court in
Ajay Madhusudan Patel & Ors. v. Jyotrindra S. Patel &
Ors., 2024 SCC OnLine SC 2597 (Para 71), this Hon’ble
Court has held that: “71. It is evident that the intention
of the parties to be bound by an arbitration agreement
can be gauged from the circumstances that surround the
participation of the non-signatory party in the negotiation,
performance, and termination of the underlying contract
containing such an agreement. Further, when the conduct
of the non-signatory is in harmony with the conduct of the
others, it might lead the other party or parties to legitimately
believe that the non-signatory was a veritable party to the
contract containing the arbitration agreement. However,
in order to infer consent of the non-signatory party,
their involvement in the negotiation or performance of
the contract must be positive, direct and substantial
and not be merely incidental. Thus, the conduct of
the non-signatory party along with the other attending
circumstances may lead the referral court to draw a
legitimate inference that it is a veritable party to the
arbitration agreement.”
(emphasis supplied)

11. It is most humbly submitted that in the facts and
circumstances of the present case, which have been
altogether ignored by the Ld. Arbitral Tribunal and the
High Court, there is neither any finding nor any material
to support the inference that that the involvement of the
Petitioner herein in the negotiation or performance of the
contract was either positive, direct and substantial, in fact,
it was not even incidental.
12. It is prima facie evident that ABPL is not a party to the
Agreements and a mini trial is not required to determine
the same. Additionally, the arbitral tribunal while directly
issuing a notice to ABPL for filing of statement of defence
to the ‘statement of claim’ filed by SPCPL had not gone into
such questions in depth, thus indicating that no evidence
was taken into consideration to implead ABPL without the
leave of the arbitral tribunal in this regard; and by way
1584 [2025] 5 S.C.R.

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of a procedure unknown to arbitration law inasmuch as
a separate statement of claim was entertained by the
arbitral tribunal, contrary to established procedure that
there can only be a counter claim by respondent, i.e.,
SPCPL.

E. Patent errors in the Impugned Judgment
13. The analysis by the High Court in the Impugned
Judgment begins at Page 43 of the Petition wherein the
High Court notices the: (a) Works Contract; (b) Novation
Agreement; (c) Settlement agreement; (d) Letter of
Comfort. Notably, in any of the aforesaid paragraphs,
ABPL is neither involved nor mentioned.
14. In Para 66, the High Court notes that there is common
management between ABPL and BCSPL, and in Para 70,
an email dated 9 December 2020 is noted to conclude
that because one of the personnel of BCSPL had used the
same domain name, and there was a logo of ASF Group/
ASF Insignia, therefore, ABPL being part of the ASF group
and the holding company of BCSPL and AISPL was to be
included as a party to the arbitration proceedings.
15. The five factors laid down by this Hon’ble Court in
Oil and Natural Gas Corporation (supra), are thereafter
discussed in Para 91-94. It is relevant to note that none of
the said paragraphs show any direct involvement of ABPL,
in so far as the transaction in question is concerned.
16 The only reason due to which ABPL has been allowed
to be continued as a party to the arbitration proceedings
is because ABPL is a holding company of BCSPL, which
is completely contrary to the law laid down by this Hon’ble
Court in Cox and Kings (supra) and Oil and Natural Gas
Corporation (supra).
17. Merely because a company is a holding company,
it cannot, by itself, be a ground to implead the holding
company in an arbitration proceeding. To do so would
result in disastrous consequences, where the mere factum
of the company being a holding company would expose
the holding company to litigations initiated against its
[2025] 5 S.C.R. 1585

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

subsidiary. This would completely militate against and
obliterate the fundamental principle of separate corporate
personality.
18. It is submitted that none of the five ingredients laid
down by this Hon’ble Court in Oil and Natural Gas
Corporation (supra) and affirmed, in Cox and Kings
(supra) (Para 170) are prima facie satisfied, in the facts
of the present case.
19. Further, the High Court in Para 97(viii) of the Impugned
Judgment has further patently erred in exceeding the
jurisdiction under Section 37 of the Act and suo motu
directing that evidence shall be inter alia led by ABPL prior
to SPCPL in whose counter- claim ABPL has been arrayed
as a party Respondent. Pertinently, the said aspect was
neither a submission nor in issue before the High Court.”
10. In such circumstances referred to above, Mr. Devadatt Kamat, the
learned senior counsel appearing on behalf of the appellant herein
submitted that there being merit in his appeal, the same may be
allowed and the impugned order passed by the High Court may be
set aside.

ii. Submissions on behalf of the Respondent No. 1
11. In the written submissions filed on behalf of the respondent No. 1
herein, it is submitted as under: -

“II. Questions of law involved
5. The present SLP broadly gives rise to three questions
of law for the kind consideration of the Hon’ble Court:
a. Whether the Arbitrator could have issued notice to parties
(AISPL and ABPL) arrayed in SPCPL’s Counter Claim?
b. Whether AISPL and ABPL ought to be removed from
the array of parties at the threshold stage before the
complete pleadings or evidence are before the Arbitrator?
c. Whether the Arbitrator’s Orders rejecting ABPL’s Section
16 Applications without finally deciding the legal or factual
role and liability of ABPL ought to be interfered with before
the final Arbitral Award is rendered?
1586 [2025] 5 S.C.R.

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6. It is submitted that the three issues are not distinct and
rather inter-linked inasmuch as the underlying premise
pertains to the Arbitrator’s power to adjudicate on matters
in respect of non- signatories, both procedurally and
substantively. It is SPCPL’s case that all three issues have
already been answered in SPCPL’s favour by the Hon’ble
Supreme Court in in Cox and Kings Ltd. v. SAP India
Pvt. Ltd. & Anr. and Ajay Madhusudhan Patel & Ors. v.
Jyotrindra S. Patel & Ors.

III. The present SLP is ABPL’s fourth bite at the cherry
7. SPCPL has succeeded on the issues presently agitated
on three prior occasions–
a) First, in BCSPL’s Section 16 Application dated
03.03.2023 seeking removal of AISPL and ABPL from the
array of parties, which was rejected by the Tribunal’s First
Order dated 23.05.2023 with detailed reasoning.
b) Second, in AISPL and ABPL’s Section 16 Applications
dated 03.07.2023 seeking their own removal from the array
of parties, which was rejected by the Tribunal’s Second
Order dated 17.10.2023 with detailed reasoning;
c) Third, before the High Court, where BCSPL filed a
Petition u/s 14 seeking removal of the Arbitrator, while
ABPL and AISPL preferred Appeals u/s 37, culminating
in the common Impugned Judgement dated 04.07.2024
(‘Impugned Judgement’) rejecting the said challenge with
detailed reasoning.
Only ABPL remains aggrieved and has sought to challenge
the Impugned Judgement by way of the present SLP.
13. ABPL has sought to mis-categorize SPCPL’s case
against ABPL as merely being against the holding
company of AISPL and BCSPL. However, this is ex-facie
misconceived and contrary to the record, inasmuch as
SPCPL has specifically pleaded that the entire negotiation,
performance and termination of the Works Contract dated
21.11.2024 was with the ASF Group, though in the name
of its SPV, AISPL to develop the SEZ. It was represented
[2025] 5 S.C.R. 1587

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

and assured to SPCPL throughout that AISPL had the
entire support, backing and strength of the ASF Group
of Companies.
14. This representation and assurance to SPCPL was
backed by, rather than being premised (as sought to be
alleged by ABPL), the fact that the BCSPL, AISPL and
ABPL represented themselves to the world at large as the
‘ASF Group’, functioning with the same staff & officials,
using common website 13 (www.asfinfrastructure.com)
and domain email IDs (@asfinfrastructure.com). ABPL,
as also AISPL and BCSPL, is part of the ASF Group.
Even behind the scenes, ABPL is the holding company of
BCSPL and AISPL, with 81.01% and 100% shareholding,
respectively. All the three ASF Group companies have
common directors and also share a common registered
address. It is SPCPL’s case that the commonality of
resources of the ASF Group (i.e., the promoters, the
directors, the shareholding, the officials, the financial
and commercial backing, technical and IT systems etc)
is not a coincidence or a by-product and rather is by
design.
15. At all times, in the ASF Group’s dealing with SPCPL,
BCSPL/AISPL/ABPL were acting as single economic
unit and were together directly, substantially and actively
involved in the negotiation and performance of the subject
Works Contract and Settlement Agreement. It is further
SPCPL’s case that BCSPL/AISPL/ABPL and/or ASF Group
are inextricably linked and the ASF Group as a whole
maintained operational control over the performance of
the Works Contract and Settlement Agreement between
the parties.
16. There was no distinction between ABPL, AISPL and
BCSPL insofar as the negotiation and performance of
the Subject Contracts was concerned. For instance, the
Novation Agreement dated 17.04.2018 was executed
on behalf of the Petitioner by one ASF official Sh. Vinod
Kumar Bhartiya. The same ASF official had earlier attended
the pre-bid meeting held on 30.01.2016 in relation to the
Works Contract in the stated capacity of AVP (Commercial)
1588 [2025] 5 S.C.R.

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of the ‘ASF Group’. Item 2.1 of the Minutes states ‘ASF
Project Team’ and bidders were introduced. The same
ASF official had thereafter also attended the Meeting held
on 02.06.2016 for LOI Civil Works of Building B1 awarded
to SPCPL on behalf of ‘AISPL’.
17. Similarly, Minutes of Meeting dated 25.10.2016 i.e., after
the Meeting held on 02.06.2016 recording Mr. Bhartiya to
have attended on behalf of AISPL, reflects his attendance
on behalf of the ‘ASF Group’. Agenda items 1 & 2 of the
aforementioned Minutes of Meeting also show ‘ASF’ as
having agreed to the change requested by SPCPL.
18. The Comfort Letter issued to SPCPL dated
17.04.2018 (on the same day as the Novation Agreement)
acknowledges that ‘AISPL and BCSPL are the group
companies of ASF group and both companies are
under the management & control of the same set of
management/owners.’ and that AISPL had ‘nominated/
appointed its associate company Black Canyon SEZ Pvt.
Ltd. (“BCSPL”) as a Co-Developer with regard to Black
Canyon Private Campus Land, Black Canyon Building and
its allied structure...”. Subsequently, in a clear admission
of all liabilities being jointly and severally shared between
BCSPL, AISPL and ABPL, Sh. Anil Sharma, Vice President
(Projects), ASF Group vide his email dated 02.06.2021
conveyed the commitment of ‘ASF management’ to
release outstanding dues to SPCPL.
19. Even Clause 5 of the Settlement Agreement dated
24.07.2020 (‘the Settlement Agreement’) expressly records
that the cost of materials ‘taken over by ASF’ from SPCPL,
as mutually determined, would form part of the outstanding
dues of SPCPL. Even the Statement of Accounts annexed
to the Settlement Agreement, on the basis of which monies
were to be disbursed to SPCPL records TDS value debited
by ‘ASF’, not by BCSPL or AISPL.
20. In the Section 16 application filed by ABPL 21 ,
ABPL admitted that “ABPL is a part of the ASF group of
companies, and Respondents No.1 [BCSPL] and 2 [AISPL]
are associate companies of ABPL.”
[2025] 5 S.C.R. 1589

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

12. In such circumstances referred to above, Ms. Aakanksha Kaul, the
learned counsel prayed that there being no merit in this appeal, the
same may be dismissed.

C. ANALYSIS
13. Having heard the learned counsel appearing for the parties and having
gone through the materials on record, the only question that falls for
our consideration is whether an arbitral tribunal has the authority or
power to implead or join a non-signatory to the arbitration agreement
as a party to the arbitration proceedings?

i. Whether the Arbitral Tribunal has the power to Implead /
Join Non- Signatories to the Arbitration Agreement?
14. One of the principle contentions raised by the appellants herein for
the purpose of assailing the Impugned Judgment is that the petitioner
company being a non-signatory to the arbitration agreement was
never made a party to the proceedings before the referral court
under Section 11 of the Act, 1996 by virtue of which the arbitral
tribunal came to be constituted. No notice of invocation was issued
either to the appellant company herein. In such circumstances, it
was submitted that the appellant company; a non-signatory to the
arbitration agreement could not have been joined as a party after
the referral stage i.e., after the constitution of the arbitral tribunal
solely on the basis of the averments made in the counter-claim /
statement of claim of the respondent no. 1 herein. In other words,
it was contended that after the culmination of the referral stage in
terms of Section 11 of the Act, 1996, the arbitral tribunal has no
power whatsoever to implead or join a non-signatory to the arbitration
agreement and that such power vests only with the referral court
that too prior to the arbitral tribunal coming into existence.

a. Contradictory Views of different High Courts on the subject.
15. Before we proceed to answer the aforesaid contention canvassed
on behalf of the appellant, it would be appropriate to first refer to
the decisions of various High Courts and the cleavage of opinion
that have been expressed as regards the scope and power of an
arbitral tribunal to implead or join a non-signatory to an arbitration
agreement.
1590 [2025] 5 S.C.R.

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I. Decisions holding that the Arbitral Tribunal does not have
the power to Implead a non-signatory to the Arbitration
Agreement.
16. The question whether an arbitral tribunal can implead a non-signatory
to an arbitration agreement or not came to be examined for the first
time by the Bombay High Court in Oil and Natural Gas Corporation
Ltd. v. Jindal Drilling and Industries Ltd. reported in (2015) SCC
OnLine Bom 1707, wherein the petitioners therein had entered into
separate and independent contracts with the respondents therein
as-well as one ‘DEPL’; an off-shoot company of the respondents
therein. When the respondents therein demanded payment of its
dues under its own contract, the petitioners refused payment on the
ground that DEPL previously owed them a certain sum of money,
and since it was an off-shoot of the respondents, the amount owed
to the respondents had been adjusted against DEPL’s liability. The
dispute came to be referred to arbitration and award was passed
against the petitioners directing them to repay the outstanding dues
to the respondents. The award came to be challenged before the
Bombay High Court, wherein it was contended by the petitioners
that the arbitral tribunal ought to have lifted the corporate veil to
find out whether DEPL formed part of the respondent companies or
not. The Bombay High Court inter-alia held that an arbitral tribunal
does not have the power to lift the corporate veil and that only the
courts have such power. In such circumstances, it held that since
DEPL was not a party to the arbitration proceedings between the
petitioner and the respondents, and the tribunal having no power
to pierce the corporate veil, the High Court upheld the award. The
relevant observations read as under: -
“47. The petitioners had canvassed before the arbitral
tribunal that the arbitral tribunal shall lift the corporate
veil to find out that the said DEPL and the respondents
herein were forming part of the said Jindal Group and
were one and the same entity and thus the respondents
were liable for the liabilities of the said DEPL. In my view,
the arbitral tribunal has no power to lift the corporate veil.
Only a Court can lift the corporate veil of a company if the
strongest case is made out. In my view, the prayer of the
petitioners for lifting the corporate veil of the said DEPL
was itself not maintainable in the arbitration proceedings.
[2025] 5 S.C.R. 1591

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

The said DEPL was not a party to these proceedings.
Be that as it may, a perusal of the arbitral award clearly
indicates that the arbitral tribunal has refused to lift the
corporate veil after considering the evidence produced by
both the parties and has rendered finding of fact that no
such case was made out by the petitioners for lifting the
corporate veil which are not perverse and thus cannot
be interfered with by this Court under Section 34 of the
Arbitration Act.”
(Emphasis supplied)

17. In Balmer Lawrie & Co. Ltd. v. Saraswathi Chemicals Proprietors
Saraswathi Leather reported in (2017) SCC OnLine Del 7519, the
Delhi High Court was inter-alia dealing with the question whether an
arbitral award can be enforced against non-parties to the arbitration.
The awardee therein sought amendment of the execution petition in
order to implead the directors of the judgment-debtor on the ground
that they had siphoned off the assets and hence ought to be held
responsible to satisfy the arbitral award. In this context, the Delhi High
Court observed that an arbitral award cannot be enforced against non-
parties to the arbitration. This in its opinion was because, an arbitral
tribunal draws its jurisdiction only from the arbitration agreement,
and an arbitral tribunal cannot proceed against persons who are not
a party to such agreement, and as such any award rendered by it
would not be binding upon non-parties to the arbitration agreement.
It further observed that although in exceptional circumstances, non-
signatories who are otherwise bound by the arbitration agreement may
be compelled to arbitrate and thereby be liable for any award passed
therein, yet such a course can only be adopted by the courts and
an arbitral tribunal cannot lift the corporate veil and proceed against
non- parties, as arbitration is always consensual and confined to the
arbitration agreement and as such an arbitral tribunal cannot enlarger
its jurisdiction to non-parties. The relevant observations read as under: -
“13. In the first instance, it is doubtful whether this Court
could enforce the arbitral award against non parties to the
arbitration agreement. It is trite law that an arbitral tribunal
draws its jurisdiction from the agreement between the parties
and persons who are not party to the arbitration agreement
1592 [2025] 5 S.C.R.

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cannot be proceeded against by an arbitral tribunal. Thus,
an arbitral award made by an arbitral tribunal against any
person who is not a party to the arbitration agreement
would be wholly without jurisdiction and unenforceable.
There may be exceptional cases where a court may
compel persons who are not signatories to an arbitration
agreement to arbitrate provided it is established that the
non-signatory(ies) are either claiming through signatory(ies)
or there was clear intention to be bound as parties (see :
Chloro Controls India Private Limited v. Severn Trent Water
Purification Inc : (2013) 1 SCC 641). However an arbitrator
cannot lift the corporate veil and proceed against non parties.
An arbitration is consensual. It is based on the agreement
between parties. The arbitrator derives his jurisdiction to
adjudicate disputes from the consent of parties, therefore,
he is not in a position to enlarge the scope of his influence
and extend his jurisdiction to non-parties by exercise of his
limited jurisdiction based on the consent of parties.
14. Though a court can lift the corporate veil, the same
can be done only in extraordinary circumstances and by
due adjudicatory process. It is trite law that an executing
court cannot go behind thedecree; it must be enforced
as it is. Thus, it is not open for a petitioner to claim that
although the decree is against one entity it must be enforced
against another. However, there may be cases where it is
found that the assets of the judgement debtor have been
secreted, siphoned off, or by a fraudulent device ostensibly
placed outside the control of the judgement debtor, in an
endeavour to frustrate the enforcement of the decree. In
such cases, the court is not powerless to extend its reach
to third parties to enforce the decree; however this is limited
for recovering the assets of the judgement debtor. In the
event a corporate facade is used to perpetuate such fraud,
the corporate veil may be lifted.”
(Emphasis supplied)

18. In yet another decision of the Delhi High Court in Sudhir Gopi v.
Indira Gandhi National Open University & Anr. reported in (2017)
[2025] 5 S.C.R. 1593

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

SCC OnLine Del 8345, placing reliance on Oil and Natural Gas
Corporation (supra) and Balmer Lawrie (supra) it was held that
an arbitral tribunal does not have the jurisdiction to lift the corporate
veil and pass an award against non-signatories to an arbitration
agreement. It observed that consent of parties is the cornerstone of
arbitration and it is from such arbitration agreement that the arbitral
tribunal derives its jurisdiction to render an award. It further held
that in exceptional cases, the non-signatories can be compelled to
arbitrate, but that it is only the courts who are empowered to refer
them to arbitrate and that the arbitral tribunals have no power or
jurisdiction to do so as its jurisdiction is confined by the arbitration
agreement. The relevant observations read as under: -
“11. “Like consummated romance, arbitration rests on
consent”. The agreement between parties to resolve their
disputes by arbitration is the cornerstone of arbitration. The
arbitral tribunal derives its jurisdiction from the consent of
parties (other than statutory arbitrations). In absence of
such consent, the arbitral tribunal would have no jurisdiction
to make an award and the award so rendered would,
plainly, be of no value. [...]

xxx xxx xxx
16. There may be cases where courts can compel non
signatory (ies) to arbitrate. These may be on grounds
of (a) implied consent and/or (b) disregard of corporate
personality. In cases of implied consent, the consent of
non signatory (ies) to arbitrate is inferred from the conduct
and intention of the parties. Thus, in cases where it is
apparent that the non-signatory (ies) intended to be bound
by the arbitration agreements, the courts have referred
such non- signatories to arbitration.

xxx xxx xxx
20. The courts would, undoubtedly, have the power to
determine whether in a given case the corporate veil should
be pierced and the persons behind the corporate façade
be held accountable for the obligations of the corporate
entity. However as stated earlier, an arbitral tribunal, has
no jurisdiction to lift the corporate veil; its jurisdiction is
1594 [2025] 5 S.C.R.

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confined by the arbitration agreement - which includes
the parties to arbitration - and it would not be permissible
for the arbitral tribunal to expand or extend the same to
other persons.

xxx xxx xxx
35. Arbitration agreement can be extended to non-
signatories in limited circumstances; first, where the
Court comes to the conclusion that there is an implied
consent and second, where there are reasons to disregard
the corporate personality of a party, thus, making the
shareholder(s) answerable for the obligations of the
company. In the present case, the arbitral tribunal has
proceeded to disregard the corporate personality of UEIT.
The arbitral tribunal has lifted the corporate veil only for
the reason that UEIT’s business was being conducted
by Mr. Sudhir Gopi who was also the beneficiary of
its business being the absolute shareholder (barring a
single share held by Mr. Fikri) of UEIT. This is clearly
impermissible and militates against the law settled
since the nineteenth century. Any party dealing with the
limited liability company is fully aware of the limitations
of corporate liability. Business are organised on the
fundamental premise that a company is an independent
juristic entity notwithstanding that its shareholders and
directors exercise the ultimate control on the affairs of
the company. In law, the corporate personality cannot be
disregarded. Undisputedly, there are exceptions to this
rule and the question is whether this case falls within the
scope of any exceptions.
36. A corporate veil can be pierced only in rare cases
where the Court comes to the conclusion that the conduct
of the shareholder is abusive and the corporate façade is
used for an improper purpose, for perpetuating a fraud,
or for circumventing a statute.”
(Emphasis supplied)

19. The Madras High Court in V.G. Santhosam v. Shanthi Gnanasekaran
reported in 2020 SCC OnLine Mad 560, was called upon to examine
[2025] 5 S.C.R. 1595

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

whether an arbitral tribunal has the jurisdiction to pass an order
impleading a non- signatory to an arbitration agreement, with a
view to enable such non- signatory to participate in the arbitration
proceedings. In the said case, there was a dispute amongst the
partners of a firm which came to be referred to arbitration. In the
arbitration proceedings the respondent therein filed an application
for her impleadment on the ground that she is the legal heir of one
of the erstwhile partners and thus entitled to his share into the firm.
The arbitral tribunal allowed the application and impleaded the
respondent by taking recourse to the powers provided under Order I
Rule 10 of the Code of Civil Procedure, 1908 (for short, the “CPC”).
In appeal, the Madras High Court held as follows: -
(i) First, that there is no express provision under the Act, 1996
that allows for impleadment of a third-party, and as such any
order of impleadment by an arbitral tribunal can at best be
considered to be an interim measure in terms of Section 17 of
the Act, 1996. However, since Section 17 contemplates exercise
of only those powers provided within the scope of the arbitral
proceedings and by extension within the ambit of Act, 1996,
the order of the arbitral tribunal in impleading a third-person
unconnected with the dispute between the parties of arbitration
was impermissible and in violation of the scheme of the Act,
1996. Placing reliance on Section 2(h) and 7 of the Act, 1996
respectively, the High Court held that since “party” has been
defined to mean only a party to the “arbitration agreement”,
the arbitral tribunal in exercise of its powers under Section 17
could not have impleaded the respondent therein, who was not
a party to the arbitration agreement. The relevant observations
read as under: -
“60. Section 17 of the Arbitration and Conciliation
Act, 1996, provides interim measures ordered by the
Arbitral Tribunal. The impleading petition is entertained
under Section 17(1)(ii)(e), which states that “such
other interim measure of protection as may appear
to the arbitral tribunal to be just and convenient”. By
invoking the said provision of Law, the Tribunal can
pass any order regarding interim measures. There is
no express provision for impleadment in the Act. In the
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absence of any such express provision, the Arbitrator
impliedly could entertain the impleading petition
only under Section 17(1)(ii)(e) of the Arbitration and
Conciliation Act, 1996. However, the said provision
indicates that the power is to be exercised within
the ambit of the Act and cannot be extended so as
to exercise an inherent power by invoking the Code
of Civil Procedure. Thus, the very findings of the
Arbitrator by exercising wide powers under Order I,
Rule 10 of the Code of Civil Procedure, he entertained
the impleading petition is absolutely untenable and
beyond the scope of the arbitral proceedings as well
as the Act itself. Any interim measure is to be granted
within the scope of the arbitral proceedings and not
beyond the dispute raised between the parties for
arbitration. Therefore, the very exercise of power to
implead a third person who is unconnected with the
Partnership Deed is improper and in violation of the
very Scheme of the Act itself.
61. It is pertinent to note that Section 2(h) of the
Arbitration Act defines “Party means a party to an
Arbitration Agreement”. When the definition for the
word ‘Party’ is provided under the Act, then no other
party other than the party to the “Arbitration Agreement”
is entitled to participate in the arbitral proceedings. The
term ‘Arbitration Agreement’ is defined under Section
2(b) as an agreement referred to in Section 7 of the
Act. Section 7(1) of the Act, stipulates that Arbitration
Agreement means “an agreement by the parties to
submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect
of a defined legal relationship, whether contractual
or not.” Thus, the Arbitrator has committed an error
in interpreting the scope of the Act and allowed the
impleading petition in violation of the very Scheme
and the provisions of the Act.
63. Section 2(1)(b) of the Act defines ‘Arbitration
Agreement’ as an agreement referred to in Section 7
and Section 7 provides that an Arbitration Agreement
[2025] 5 S.C.R. 1597

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

is an agreement between the parties to submit all or
any of the disputes to be adjudicated by an Arbitrator
in respect of their definite legal relationship whether
contractual or not. Section 7 contemplates that
the agreement should be in writing and signed by
the parties. Therefore, a non- signatory or a third
party could not be subjected to arbitration. Only in
exceptional cases like the case whether the rights
of the parties are flowing under the Arbitration
Agreement, third parties could be subjected to
arbitration. The Court is required to examine the
exceptions from the touchstone of direct relationship
of the party signatories to the contract.”
(Emphasis supplied)

(ii) Secondly, that Section 16 of the Act, 1996 cannot be interpreted
in such a manner to allow any third-party to the arbitration
agreement to have itself impleaded and get its rights or dispute
adjudicated. It held that Section 16 contemplates the competence
of the Arbitral Tribunal to only rule on its jurisdiction as regards
the existence or validity of the arbitration agreement, and cannot
enter upon adjudication on the civil rights of the parties.
“78. The sole object of the Arbitration Act is to resolve
the disputes as expeditiously as possible with the
minimum intervention of the Court of Law. The scope
of Alternative Dispute Resolution (ADR) cannot be
expanded so as to usurp the inherent powers of
Civil Courts. Section 16 cannot be interpreted so
as to entertain an application from any person, who
is a third party to the Arbitration Agreement for the
purpose of arbitral adjudications and competence of
the Arbitral Tribunal to Rule of its Jurisdiction would
indicate that the Arbitral Tribunal may rule on its own
jurisdiction, including ruling on any objections with
respect to the existence or validity of the Arbitration
Agreement and for that purpose, the Tribunal may
consider the facts and the terms and conditions of
the agreement. Section 16(2) states that “a plea
that the Arbitral Tribunal does not have jurisdiction
1598 [2025] 5 S.C.R.

Supreme Court Reports

shall be raised not later than the submission of the
statement of defence”.
80. This Court is of the considered opinion that
even such a right is traceable in favour of the first
respondent, then the only possible course would
be to approach the Competent Court of Law and
establish her legal right, if any, available based on
the documents or the evidences. Civil rights are to
be established independently before the Competent
Civil Court by the parties. However, such civil rights
cannot be adjudicated or enforced by the Arbitrator
in the contracted arbitration proceedings under the
provisions of the Act. If an Arbitrator is allowed to
adjudicate the civil rights of the parties or the rights
regarding inheritance of properties, then it would
result in submerger of the very Arbitration Agreement.
84. Even after impleadment, the possible disputes
to be raised by the first respondent in the arbitration
proceedings are that she is the legal heir of late
Mr. V.G. Panneerdas and therefore, she is entitled to
be a partner in the partnership firm in her capacity
as a legal heir. This Court is doubtful, whether
such a dispute affecting the rights of all other legal
heirs shall be adjudicated by the Arbitrator in the
arbitration proceedings. Considering the scope of
the arbitration proceedings and taking note of the
rights of the legal heirs of late Mr. V.G. Panneerdas
and the terms and conditions of the Partnership
Deed as well as the disputes raised under the
Arbitration Act, it is highly improper on the part of
the learned Arbitrator to adjudicate the civil rights
of the parties under the General Laws. In such an
event, the Arbitrator would be travelling beyond the
scope of the Arbitration Act and such a power is not
vested with an Arbitrator under the provisions of the
Arbitration Act, 1996.
85. Therefore, the civil rights of the parties are to be
established before the Competent Court of Law. The
[2025] 5 S.C.R. 1599

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

disputes raised under the Arbitration Act alone can be
adjudicated by the Arbitrator by exercising the powers
conferred under the Act. The Arbitrator cannot be
equated with the Court of Law and this proposition
is well settled as the Arbitrator is a creator of the
Statute and has no inherent power, which exists in
the Civil Court and the Arbitrator cannot exercise the
inherent power and has to exercise the powers strictly
within the ambit of the Arbitration Act and certainly
not beyond the scope of the arbitration proceedings.
105. [...] However, such Alternative Dispute Resolution
processes would not confer any power to the Arbitrator
to decide the civil rights of a third person, who is
not a party to the Arbitration Agreement. Alternative
Dispute Resolution mechanism would not provide any
competency to exercise the inherent power conferred
to the competent Civil Court of Law. The Alternative
Dispute Resolution processes with reference to the
Statute is to be exercised within the ambit of the
provisions and not to decide the civil rights of the
citizen. In such an event, we are converting the
Alternative Dispute Resolution System as the Court
of Law and such a practice would be dangerous as
the Arbitrators are appointed based on contract basis
and by consent of the parties and the remuneration
to the Arbitrator is also paid by the parties to the
Arbitration Agreement. When the Arbitrators are
receiving their remuneration from the parties to the
Arbitration Agreement, which is contractual in nature,
they are bound to act as a neutral person between
the parties to the agreement and resolve the disputes
raised between those parties. In the event of allowing
the Arbitrator to exercise the powers beyond the scope
of the Arbitration Act, then the Arbitrator would be
exercising the inherent powers of the Court, so as
to grant the relief to a person, who is not a party to
the Arbitration Agreement and the very nature of the
arbitration proceedings do not permit such a situation.
(Emphasis supplied)
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Supreme Court Reports

(iii) Lastly, that an arbitrator is a statutory creature of the Act,
1996 and its scope, powers and jurisdiction is confined all but
to the statutory provisions of the said Act. An arbitrator cannot
travel beyond the statute and the arbitration agreement in
such a manner so as to usurp the jurisdiction of civil courts. As
such an arbitral tribunal cannot exercise the inherent powers
conferred upon national courts such as under Order I Rule 10
of the CPC, and is bound to function only within the scope of
the Act, 1996 and adjudicate disputes between parties to the
“arbitration agreement” in terms of the said Act. A power which
is not contemplated under the Act, 1996 cannot be exercised
by an arbitral tribunal. It observed that if such concept of power
to impleadment is provided to the arbitrator then not only would
it lead to widening the scope of arbitration proceeding but
also would defeat the very purpose of the Act, 1996 i.e., the
adjudication between the consenting parties to the arbitration
agreement with a defined contractual legal relationship. The
relevant observations read as under: -
“77. The above proposition of law laid down by
the Courts would reveal that the Arbitrator cannot
exercise an inherent power conferred to the Civil
Courts under the Code of Civil Procedure. The
Arbitrator is bound to function within the scope and
ambit of the Act and resolve the disputes between
the contracted parties to the Arbitration Agreement as
defined under the Act. Travelling beyond the scope
of the Act is impermissible and if such an exercise
is made, then the same would result in exercise of
excess jurisdiction and finally the Arbitrator would be
functioning as a Civil Court, which is not intended
under the provisions of the Arbitration and Conciliation
Act, 1996. When the Arbitrator is appointed under the
Statute, scope, powers and jurisdiction shall be within
the provisions of the said Statute. The Arbitrator is
not empowered to travel beyond the scope of such
powers and in the event of such an exercise, the same
would cause prejudice to either of the parties to the
Arbitration Agreement and this apart, certain common
civil rights cannot be decided by the Arbitrator.
[2025] 5 S.C.R. 1601

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

81. The Arbitrator is a person appointed in order to
resolve the dispute between the parties under certain
terms and conditions in the Arbitration Agreement.
The disputes between the parties are definite and
existence of Arbitration Agreement is an essential
one, while-so, the Arbitrator cannot invoke the
powers contemplated under Order 1, Rule 10 of
the Code of Civil Procedure, wherein wide powers
are granted, so as to implead a person, which is
otherwise unconnected with the partnership or in the
Arbitration Agreement. If such a concept of power to
impleadment is provided to the Arbitrator, then the
scope of arbitration proceedings will be, not only
widened but, the purpose and the object of the Act,
would be defeated. Thus, the Arbitrator is empowered
to adjudicate the disputes strictly with reference to
the Arbitration Agreement and with the consent of
the parties to the Arbitration Agreement.
Contrary to the contractual agreement between the
parties, the Arbitrator cannot exercise any powers
so as to implead a third party to the Arbitration
Agreement for the purpose of adjudicating the right
of any such third party.
83. However, the Arbitrator usurped the wide powers
conferred under Order 1, Rule 10 of the Code of
Civil Procedure and impleaded the first respondent
for the purpose of adjudicating the disputes aroused
through an Arbitration Agreement. It violates the very
contractual obligation between the Arbitrator as well
as the parties to the Arbitration Agreement under
the provisions of the Arbitration and Conciliation Act,
1996. The Arbitrator in the event of exercising such
wide powers under the Code of Civil Procedure, the
same would infringe the rights of other parties, which
cannot be adjudicated in the arbitration proceedings.
85. Therefore, the civil rights of the parties are to be
established before the Competent Court of Law. The
disputes raised under the Arbitration Act alone can be
1602 [2025] 5 S.C.R.

Supreme Court Reports

adjudicated by the Arbitrator by exercising the powers
conferred under the Act. The Arbitrator cannot be
equated with the Court of Law and this proposition
is well settled as the Arbitrator is a creator of the
Statute and has no inherent power, which exists in
the Civil Court and the Arbitrator cannot exercise the
inherent power and has to exercise the powers strictly
within the ambit of the Arbitration Act and certainly
not beyond the scope of the arbitration proceedings.
99. The spirit of the order passed by the Arbitrator with
reference to the Arbitration Act is to be considered
by this Court. The above findings would reveal
that the Arbitrator has made an initiation to decide
the legal rights of the parties, including the rights
of the first respondent. The Arbitrator in express
terms held that the impleadment of party, provisions
contained in the Code of Civil Procedure through
Order 1, Rule 10 gives a wide power to a Court and
in our context, the same must apply to an Arbitral
Tribunal. Such a conclusion arrived by the Arbitral
Tribunal is undoubtedly an exercise of inherent power,
which is impermissible in law. The power which is
not contemplated under the Arbitration Act, cannot
be exercised by the Arbitral Tribunal. The power
being statutory in character, the inherent power is
not vested. While-so, the Arbitrator cannot invoke
the provisions of the Code of Civil Procedure for
the purpose of impleading a third person into the
arbitral proceedings and he is bound to be strict with
reference to the contracted Arbitration Agreement as
well as the parties to the Arbitration Agreement and
the adjudication must be within the parameters of the
disputes raised between the parties to the Arbitration
Agreement.
102. In the order impugned, the Arbitrator arrived
a conclusion that the impleadment of the first
respondent will help to secure a comprehensive
adjudication of the extent to which the heirs of the
parents, who were partners during the respective
[2025] 5 S.C.R. 1603

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

lifetime could claim right or not. Such a broad exercise
of power invoked by the Arbitrator for the purpose
of determining the civil rights of a person is beyond
the scope of the provisions of the Arbitration Act. If
the Arbitrator is appointed under the Arbitration Act
is allowed to decide the civil rights of a person, who
is otherwise not a party to the Arbitration Agreement,
then the Arbitrator would be exercising the inherent
power conferred to the Civil Court, which is not
contemplated.”
(Emphasis supplied)

20. In Arupri Logistics Pvt. Ltd. v. Vilas Gupta & Ors. reported in
(2023) SCC OnLine Del 4297 a family arrangement had been drawn
between the respondents therein whereby their business holdings
and properties were bifurcated into two distinct groups. Sometime
thereafter, dispute cropped up between the two respondent groups as
regards a parcel of land alleged to have been sold to the appellants
therein in violation of the terms of the family arrangement and without
proper authorization. Since, the family arrangement contained an
arbitration clause, a sole arbitrator was appointed by the referral
court to resolve the said dispute between the respondent groups
therein. The appellants therein were never arrayed as parties in
the proceedings before the referral court, and it was only when one
of the respondents therein moved an application before the arbitral
tribunal for seeking impleadment of the appellants therein, that
they were arrayed in the arbitration proceeding. The Sole arbitrator
allowed the said application and impleaded the appellants therein. In
appeal, the Delhi High Court held that the arbitral tribunal’s power to
implead does not flow from the provisions of the Act and that it being
a creature of the Act, 1996 and the arbitration agreement cannot
assume powers other than those conferred upon it. It can neither
join or delete parties that were never referred to arbitration by the
referral court. The said decision is in four- parts: -
(i) First, although Section 19 of the Act, 1996 permits the arbitral
tribunal to formulate the procedure to be followed in accordance
with the CPC yet it does not mean that all powers that are
ordinarily vested in a national court by the CPC could also be
said to have been conferred upon the arbitration tribunal which
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Supreme Court Reports

have otherwise not been provided by the statute. The power to
implead has been explicitly conferred upon a court in terms of
Order I Rule 10, and in the absence of any such provision in
the Act, 1996, the power to conduct proceedings under Section
19 sub-section (3) of the Act, 1996 can neither be construed
as a source of power of the arbitral tribunal to join parties nor
can such power be readily inferred due to its nature of militating
against the very consensual scheme of arbitration. The relevant
observations read as under: -
“58. As this Court reads Section 19(1), it finds that
all that the said provision purports to achieve is
to unfetter an AT from the rigors of procedure as
embodied in the two statutes noticed above. While
it may still be open for the AT to seek guidance and
regulate its procedure bearing in mind the underlying
principles flowing through the provisions of the CPC
or the Evidence Act, that would not be liable to be
read as either conferring additional powers upon an
AT or arming it with the plethora of powers that may
be otherwise specifically conferred upon courts in
terms of those statutes.
59. The power to implead stands conferred upon a
court specifically in terms of Order I Rule 10 of the
CPC. The aforesaid power is introduced in the CPC
to enable the court to either strike out the name of
parties or join parties whose presence in its opinion
is necessary in order to enable it to effectively
adjudicate upon and settle all questions involved.
What needs to be remembered is that the power to
implead stands vested in a court under the CPC by
virtue of an express conferral of power in terms of
Order I Rule 10(2). The power to implead and join
has not been understood to exist in Section 151 of
the CPC and which deals with inherent powers.
60. The position which emerges from the aforesaid
discussion is that the power to implead is one which
stands specifically conferred by virtue of a provision
duly incorporated in the CPC. The power stands
[2025] 5 S.C.R. 1605

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

placed in the hands of a court in order to enable it
to effectively resolve disputes and arrive at a just
settlement of questions that stand raised before it.
However, and contrary to the above, the Act fails to
incorporate a power to implead insofar as the AT
is concerned. The power to conduct proceedings
in a manner considered appropriate and which is
recognised by Section 19(3) also cannot possibly be
stretched to be read as a source of the authority of
an AT to join parties.
61. It is relevant to note that the discretion conferred
on an AT to formulate the procedure to be followed in
proceedings which it proposes to initiate cannot be
extended to contemplate joinder of persons who are
not signatories to an arbitration agreement. This more
so since the joinder of parties which may otherwise
not be signatories to an arbitration agreement raises
substantive issues. The impleadment of a party
in arbitral proceedings results in that individual or
entity becoming bound by an award, interim or
final, that may be rendered by the AT even though
it may have never consented to seek resolution of
questions by that tribunal. The impleadment of a party
unilaterally by the AT thus results in a non-signatory
being subjected to the authority of that tribunal and
accepting its right to adjudicate upon disputes even
though it may have never consented to subject itself
to the authority of the said AT. This would clearly
militate against the principle of “party consent” which
forms the very foundation of arbitration.”
(Emphasis supplied)

(ii) Secondly, an arbitral tribunal owes its existence to the arbitration
agreement and is essentially a designated private forum for
resolving the disputes between the parties to such agreement
and as such is detached from the hierarchy of ‘courts’. Its genesis
flows from the arbitration agreement and upon its constitution,
the arbitral tribunal is governed by such agreement and the
contours of the Act, 1996 only. The idea of vesting of inherent
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powers have been recognized only for adjudicatory institutions
such as national court’s whose genesis and by extension their
powers flows from their right to act as a matter of justice and
hence, the vesting of such powers to meet the ends of justice.
However, an arbitration tribunal cannot be equated to a national
court since it derives its power to adjudicate from an express and
private conferral of authority by parties through an agreement,
and thus, there can be no vesting of an inherent power. Any
authority that has been conferred upon the arbitral tribunal by
the parties can only be exercised within the confines of the Act,
1996. The relevant observations read as under: -
“63. [...] an AT owes its genesis to parties resolving
to confer authority on a person or an institution to
render an award and adjudicate upon disputes that
may arise. While the courts may intervene by virtue
of the provisions of Section 11 of the Act, they do
so only in cases where parties are unable to agree
upon the constitution of an AT. However, even where
the courts do constitute an AT by virtue of Section
11, the person or institution so designated remains a
private forum which springs into existence principally
in light of the agreement of parties and their resolve
to have their disputes decided by that tribunal.
64. An AT constituted either upon consensus of
parties or consequent to intervention by courts
remains a forum outside the ordinary hierarchy of
legal institutions on which the justice dispensation
system of our nation rests. It owes its genesis to
the agreement between the parties and upon its
constitution comes to be governed by the provisions
of the Act. It is thus not an adjudicatory institution
which can claim to be vested with inherent powers.
65. Inherent powers are those which have been
recognised to inhere in courts forming part of the
formal hierarchy of legal institutions and which may
be compendiously referred to as national courts. AT’s
thus constitute forums outside the circuit of national
courts and remain to be institutions which owe their
[2025] 5 S.C.R. 1607

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

existence principally to the agreement between
parties. [...]
66. [...] An AT remains an institution which comes to be
constituted merely on the basis of a private agreement
between parties. It must also be remembered that
the inherent power recognised to exist in courts flows
from their right to act ex debito justitiae. The power
to do so has always been recognised to exist in
national courts with Section 151 of the CPC merely
recognizing and reaffirming that power inhering in
courts. [...]
67. What the Court seeks to highlight is the superior
powers which are recognised to exist in national courts
as opposed to ATs’ generally. Statutes while according
recognition to the inherent powers recognised to exist
in national courts accept such a supervening power
inhering in those courts and which enables them to
pass such orders as would subserve the ends of
justice. AT’s on the other hand derive the power to
adjudicate based on an express conferral of authority
by parties to an agreement. Even where parties confer
a power on the AT to arbitrate, that conferral must be
within the contours of the applicable law. [...]”
(Emphasis supplied)

(iii) Thirdly, it held that the power to implead a party could also
not be said to flow from either Section(s) 16 or 17 of the Act,
1996 respectively. The doctrine of kompetenz-kompetenz
enshrined in Section 16 that enables the arbitral tribunal to
rule on any jurisdictional objection such as the existence or
validity of the arbitration agreement is confined or limited only
to the objections raised by the parties before it by virtue of the
arbitration agreement. It cannot be regarded as a source of
power to implead parties. Similarly, the power to pass interim
measures under Section 17 of the Act, 1996 cannot possibly
encompass the power to implead or join a third-party to the
arbitration proceedings, as such impleadment or joinder are
not interim or interlocutory in nature, since the exercise of such
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power in essence also makes the third-party to be bound by
all other subsequent findings and the ultimate award of the
tribunal that may be rendered apart from the ‘interim order’.
The relevant observations read as under: -
“68. We also find ourselves unable to recognize
the power to implead as flowing from Sections 16
or 17 of the Act. Section 16 as is manifest from
its plain language empowers the AT to rule on its
own jurisdiction. It is in essence an adoption of the
kompetenz-kompetenz principle as recognized to
inhere in AT’s. The power to rule on jurisdiction or
on objections with respect to the existence or validity
of the arbitration agreement cannot possibly be
recognized as a source of power to implead parties.
It is essentially concerned with the right of the AT to
rule on any jurisdictional objection that may be raised
by parties before it. The authority to render a decision
on a jurisdictional question or challenge that may be
raised cannot be stretched to infer a power to join
parties to the arbitration proceedings.
69. Insofar as Section 17 is concerned, none of the
interim measures of protections which are spelt out
in clauses (a) to (e) of Section 17(1)(ii) deal with or
confer authority upon the AT to join non-signatories. At
least none of those clauses explicitly speak of a power
to implead. The power to frame an interim measure
which may be considered to be “just and convenient”
and which is spoken of in clause (e) also cannot be
justifiably extended as embodying a power to implead.
This since Section 17 fundamentally deals with “interim
measures”. The impleadment or the joinder of a party
to arbitral proceedings cannot be construed to be
an order which may be termed as either interim or
interlocutory. This since the moment a party is joined
in the proceedings, it becomes bound by the award
which may be ultimately rendered by the AT.
70. This Court also finds itself unable to recognize a
power to implead being liable to be read in Section
17 merely because post its amendment by Act 3 of
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

2016 the AT now stands empowered to grant interim
measures at par with the power which stands vested
in courts in terms of Section 9 of the Act. The clear
intent underlying the amendment to Section 17 is
to enable AT’s to frame interim measures from a
position of equivalence with courts. The amendment
to Section 17 appears to have been motivated solely
by the felt need to save courts from being deluged
with applications for interim relief. However, one must
not lose sight of the fact that both Section 17 as well
as Section 9 continue to deal with interim measures.
The power to join a party and thus subject it to the
ultimate decision and award that may be rendered
by the AT cannot be conceived to be a component
of the power to frame interim orders under Section
17. The Court in this respect concurs with the view
expressed by the Madras High Court and reflected
in Paras 127-134 of Abhibus as well as the legal
position as enunciated and explained in Paras 81
and 99 of V.G. Santhosam.
(Emphasis supplied)

(iv) Lastly, it observed that although various principles such as
‘alter ego’ or ‘group of companies’ have been recognized to
compel a third-party to partake in the arbitration proceedings,
yet such principles have been invoked only in the context of
Section(s) 8 or 45 of the Act, 1996 respectively which empowers
a judicial authority to make a reference to arbitration. Since
both these provisions uses the phrase “a party to the arbitration
agreement or any person claiming through or under him” unlike
Section 2(1)(h) that defines “party” to include only “a party to
an arbitration agreement”, it necessarily meant that it is only
the courts that have the power to refer even a non-signatory
to arbitration by resorting to such principles. However, an
arbitral tribunal is only limited to adjudicate between parties to
an arbitration agreement in terms of Section 2(1)(h) of the Act,
1996. The relevant observations read as under: -
“72. Although that Report was submitted in August
2014 and various amendments have been introduced
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in the Act thereafter, Section 2(1)(h) has remained
unchanged. The meaning to be ascribed to the
word “party” as appearing in the Act at different
places has come to be expanded only in Section
8 which in terms of the Arbitration and Conciliation
(Amendment) Act, 2015 incorporates the phrase “a
party to the arbitration agreement or any person
claiming through or under him”. The only other
provision in which the word “parties” was further
extended is Section 45 which too incorporates the
phrase “or any person claiming through or under
him”. However, and significantly, both Sections 8
and 45 deal with powers conferred on a “judicial
authority” as opposed to an AT. Insofar as the AT is
concerned therefore, it would be the provisions of
Section 2(1)(h) alone which would apply.
91. However, and while the decision of the larger
Bench is still awaited, this Court finds that the various
decisions rendered on the subject and as were noticed
in Cox & Kings essentially related to cases where
courts were called upon to invoke those theories and
hold parties, who even though may not have been
signatories to the arbitration agreement, to be bound
by the same. In fact, some of the decisions which
were noticed in Cox & Kings had been rendered
in the context of Section 45 which, as was noticed
above, specifically employs the expression “any
person claiming through or under him”. The more
fundamental question which remains to be answered
by the Court is whether an AT would be justified in
invoking those doctrines. This Court is of the firm
opinion for reasons which are set out hereinafter
that such a power cannot be recognised to inhere
in an AT.”
(Emphasis supplied)

Accordingly, the Delhi High Court concluded that since an
arbitral tribunal owes its origin to the arbitration agreement
providing for resolution of disputes between the parties to such
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

agreement in a private forum outside the ordinary hierarchy of
judicial authorities, the arbitration agreement alone, along with
the intended applicable statutory laws constitute the body of
laws within which the arbitral tribunal may exercise its powers.
The arbitral tribunal cannot arrogate to itself powers which are
neither conferred by the statute or the rules which govern the
arbitration nor can it take recourse to inherent powers that
ordinarily vests within a judicial authority. Even in exceptional
cases where the scope of arbitration may be expanded to
include even non-signatories, any such power to do so has
been expressly conferred by the legislature only upon courts
within the Act, 1996 by appropriate legislative insertions to the
term “party”. The relevant observations read as under: -
“92. As was held hereinbefore, the AT owes its origin
principally to well recognised and identifiable sources.
The principal source would be the agreement in
terms of which parties may have resolved for all
disputes being referred to an AT and thus choose
a forum falling outside the circuit of national courts
and the ordinary hierarchy of judicial authorities.
The other would be rules framed by a body where
the agreement contemplates institutional arbitration.
Last but not the least would be the statutory laws
framed by countries which are intended to govern
and regulate ATs’. The agreement, institutional rules
or national statutes would thus constitute the code or
the body of laws specifying the powers that may be
available to be exercised by the AT. As was pertinently
observed by Redfern and Hunter, parties cannot
by agreement invest powers upon an AT which are
otherwise reserved to be exercised by courts and
judicial institutions created by the State.
93. What needs to be emphasised is that an AT cannot
arrogate to itself powers which are neither conferred
by the statute or the rules which govern the arbitration
nor can it take recourse to inherent powers, which
as has been found hereinabove, are acknowledged
to inhere in courts and judicial authorities only. The
AT, cannot, therefore, expropriate for itself powers
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which are vested solely in judicial institutions. It
remains bound by the provisions of the statutes
which prevail and which in this case undisputedly is
the Act. In the absence of a power of impleadment
having been conferred upon the AT in terms thereof,
it would have no authority or jurisdiction to join or
implead parties to the proceedings. The Court has
already found that the power to implead cannot be
sustained or traced to Sections 16 or 17 or 19 of the
Act. In fact, the Act incorporates no provision which
could be even remotely considered as being liable
to be read as being the repository of the power of
the AT to implead.
94. The Act, wherever it was intended to expand the
meaning to be ascribed to the word “party” has done
so by introducing specific provisions in that respect.
Even where such recourse was taken, the power has
come to be conferred upon a judicial authority. If the
AT were recognised to have the authority to invoke
the alter ego or group of companies principles, it
would undoubtedly result in the Court recognising a
power vesting in the AT to compel the presence of
a party who had never, at least ostensibly, agreed
or conceded to its jurisdiction or authority to decide.
Such a party would necessarily be one who had not
even made party to the proceedings by the referral
court. This would clearly result in the AT seeking to
exercise authority over a party and compelling it to
join the proceedings even though it may have never
been ad idem on disputes being resolved by way
of arbitration. This would not only result in the AT
travelling far beyond the contours of the arbitration
agreement but negate against the fundamental tenet
of arbitration which is founded on consensus and
agreement. The Court for all the aforesaid reasons,
thus, finds itself unable to countenance the position
as taken by the Sole Arbitrator in the present case.
95. Quite apart from the Court having found for
reasons aforenoted that the AT stands conferred with
[2025] 5 S.C.R. 1613

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

no authority to implead or join parties, a reading of
the impugned order would clearly appear to indicate
that the Sole Arbitrator has proceeded to join the
appellants on considerations which are recognized
to constitute the basis for the exercise of power
under Order I Rule 10 of the CPC. However, the
Sole Arbitrator has failed to bear in mind that the
Act confers no authority upon an AT to wield powers
akin to Order I Rule 10 of the CPC as specifically
conferred on national courts. We have also found
for reasons aforenoted that Section 19(2) cannot
be read as enabling the AT to adopt Order I Rule
10 of the CPC.”
(Emphasis supplied)

II. Decisions holding that the Arbitral Tribunal has the power
to Implead a non-signatory to the Arbitration Agreement.
21. While on one hand the Delhi High Court along with the Bombay
High Court and the Madras High Court have taken the view that it
is only the courts who have the power to implead a non-signatory to
partake in arbitration and that such power is not vested in an arbitral
tribunal, the High Court of Gujarat on the other hand, speaking
through Akhil Kureshi J. (as he then was) in IVRCL Ltd. v. Gujarat
State Petroleum Corporation Ltd. reported in 2015 GUJHC 31651
DB observed albeit in the context of scope of Section 9 of the Act,
1996, more particularly whether an injunction would be maintainable
against a non-signatory, that it is no longer res-integra that even a
non-signatory to an arbitral agreement can be subjected to arbitration
proceedings. Placing reliance on the decision of this Court in Chloro
Controls (supra), it was held that the courts have recognized various
instances where even a non-signatory to an arbitration agreement
can be allowed to be joined in the arbitration proceedings by way
of principle of alter-ego, apparent authority, agency or group of
companies etc. It observed that such instances are premised on the
‘implied consent’ of the third-party to the arbitration agreement and
thus, it would be futile to say that a non-signatory to an arbitration
agreement can be compelled to submit to the jurisdiction of the arbitral
tribunal so validly constituted. In the last, it observed that whether a
particular case is a fit one for enjoining a third-party on the aforesaid
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principles would be for the arbitral tribunal to determine, being the
appropriate forum by examining the facts of each case, an exercise
which is neither possible nor proper for the courts to embark upon.
The relevant observations read as under: -
“13. It is no longer res integra that in given set of
circumstances, even a non-signatory to an arbitral
agreement can be subjected to arbitration proceedings.
Such instances may be rare and may arise in special facts
of the case and would ordinarily provide an exception
to the normal rule, that only a signatory to the arbitral
proceedings can be compelled to submit to the jurisdiction
of the arbitral tribunal. Nevertheless, instances have been
recognized by Courts where either on the ground of
piercing corporate veil as one entity found to be the alter
ego of the other or some such similar ground, even a
non-signatory entity to an arbitration agreement is allowed
to be joined in the arbitration proceedings. As noted, in
case of Chloro Controls (I) P. Ltd. (supra), the law on
the point was discussed at length by 3 Judge Bench of
the Supreme Court and it was concluded that various
legal basis may be applied to bind a non-signatory to an
arbitration agreement. Such instances would be of that
of implied consent, third party beneficiaries, guarantors,
assignment and other transfer mechanisms of contractual
rights. Such theory relies on the discernible intentions of
the parties and to a large extent, on good faith principle.
The second stream of cases would be included in the legal
doctrines of agent-principal relations, apparent authority,
piercing of veil, joint venture relations, succession and
estoppel. It was observed that this principle does not rely
on the parties’ intention but rather on the force of the
applicable law. It would therefore be futile to argue that in
no case, a non-signatory to an arbitration agreement can
be compelled to submit to the jurisdiction of the arbitral
tribunal so validly constituted. Whether in the present case,
facts are such that any of the principles cited above or
any other recognized by judicial precedent would apply or
not is neither possible nor proper on our part to comment
upon. Entire issue is pending before the appropriate forum.
[2025] 5 S.C.R. 1615

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

We would therefore not be justified in allowing the appeal
and vacating the injunction only on this ground.”
(Emphasis supplied)

22. Similarly in IMC Ltd. v. Board of Trustees of Denndayal Port Trust
reported in (2018) SCC OnLine Guj 4972, the Gujrat High Court
placing reliance on IVRCL Ltd (supra) held that there is nothing in
the Act, 1996 which precludes or prohibits an arbitral tribunal from
lifting the corporate-veil and pursuant thereto impleading even a
non-signatory to arbitration proceedings. Expressing its disagreement
with the views of the Bombay High Court and the Delhi High Court
in Sudhir Gopi (supra) and Oil and Natural Gas Corporation Ltd
(supra) respectively, it held that except for a limited sphere of fields
involving disputes which are non-arbitrable, the arbitral tribunal is
well-empowered to take up all other disputes and issues thereto which
would necessarily also include the issue of lifting the corporate veil
to enjoin a non- signatory to the arbitration. Whether a case is made
out for impleading a third- party (sic non-signatory) or not would be a
matter for the arbitral tribunal being the proper designated forum for
adjudication of disputes, keeping in mind the facts of each case and
the position of law. It further observed that both the recognition of
such power of an arbitral tribunal AND the non- issuance of a notice
of invocation in terms of Section 21 of the Act, 1996 to the third-party
sought to be impleaded will hardly occasion any prejudice, as it is
always open to such a third-party to challenge its impleadment by
way of an application under Section 16 of the Act, 1996. The relevant
observations read as under: -
“23. Reverting to the facts of the case on hand, it is to
be noticed that the order passed by the learned Arbitral
Tribunal clearly records that opinion expressed is prima-
facie and subject to objections and remedies available
under the Arbitration Act to the impleaded respondent, i.e.
the appellant herein. If the appellant claims that it is not a
party to the agreement, as such it cannot be impleaded
as party respondent in the arbitration proceedings, it is
always open for it to move an application under Section
16 of the Arbitration Act to rule on its jurisdiction. In view
of such remedy and further remedies available under
the law, by ordering impleadment, we are of the opinion
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that no prejudice is caused to the appellant. Whether
notice is required to be issued to a party before ordering
impleadment, or not, is a matter which depends on facts
and circumstances of each case. If a strong case is made
out for impleadment, it is always open for the Courts and
Tribunals to order impleadment and to give an opportunity
before deciding the main claim. In that view of the matter
and having gone through the case law on the subject
as referred above, we are of the view that the order of
the learned Arbitral Tribunal cannot be said to be not in
conformity with law merely on the ground that appellant
was not issued notice before passing the order of its
impleadment. Even the learned Single Judge has also
rightly rejected the plea of the appellant for quashing the
order of the learned Arbitral Tribunal on the aforesaid
ground.

xxx xxx xxx
45. On hearing the response on the said issues by the
learned Senior Counsel Shri Mihir Thakore and keeping in
view of the provisions of the Arbitration Act, 1996, as also
the judgment of the Hon’ble Supreme Court in the case
of A. Ayyasamy v. A. Paramasivam reported in (2016) 10
SCC 386, we are not in agreement with the view taken by
the learned Single Judges in the aforesaid judgments in
Sudhir Gopi v. Indira Gandhi National Open University
reported in 2017 SCC OnLine Del 8345 and Oil and Natural
Gas Corporation Ltd. v. Jindal Drilling and Industries Limited
reported in 2015 SCC OnLine Bom 1707. There is nothing
in law which prohibits an Arbitral Tribunal from lifting the
corporate veil on the basis of doctrine of alter ego. The
Arbitral Tribunal has a right to take up all disputes which
a Court can undertake, except certain disputes generally
treated as non- arbitrable, viz. (i) patent, trade marks and
copyright, (ii) anti- trust/competition laws, (iii) insolvency/
winding up, (iv) bribery/corruption, (v) fraud, (vi) criminal
matters. The Arbitration and Conciliation Act, 1996, does
not make any provision excluding any category of disputes
treating them as non- arbitratble but the Courts have
held that certain kinds of disputes may not be capable of
[2025] 5 S.C.R. 1617

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

adjudication through means of arbitration. This issue is
elaborately considered by the Hon’ble Supreme Court in
the case of A. Ayyasamy v. A. Paramasivam reported in
(2016) 10 SCC 386. [...]

xxx xxx xxx
47. Further, in the case of IVRCL Limited v. Gujarat State
Petroleum Corporation Limited - First Appeal No. 1714 of
2015 and other allied appeals, decided on 08-13/10/2015,
a Division Bench of this Court held that it is no longer
res-integra that in a given set of circumstances, even a
non-signatory to an arbitral agreement can be subjected
to arbitration proceedings. It is further observed that
instances have been recognized by Courts where on
the ground of piercing corporate veil, as one entity being
found to be an alter ego of the other or on similar grounds,
even a non-signatory entity to an arbitration agreement is
allowed to be joined in the arbitration proceedings. The
Division Bench has disapproved the argument that, in no
case, a non-signatory to the arbitration agreement can
be compelled to submit to the jurisdiction of the Arbitral
Tribunal validly constituted.
48. In view of the aforesaid judgments of the Hon’ble
Supreme Court and Division Bench of this Court, we are
not in agreement with the submission made by Shri S.N.
Soparkar, learned Senior Counsel for the appellant, that
the learned Arbitral Tribunal has no jurisdiction to examine
the issue by lifting the corporate veil and further, on facts,
no case is also made out to examine the claim of alter
ego by lifting the corporate veil. Whether a case is made
out for impleading a third party by applying the doctrine of
lifting of corporate veil, is a matter which is to be examined
having regard to facts of each case and keeping in mind
the concept of group Companies. [...]”
(Emphasis supplied)

23. In NOD Bearing Pvt. Ltd. v. Bhairav Bearing Corporation reported
in (2019) SCC OnLine Bom 366 the facts germane for our discussion
are that an agreement for supply of ball bearings was entered into
1618 [2025] 5 S.C.R.

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between the petitioner therein and one KBIL group. For facilitation
of distribution of these goods, the petitioner therein entered into a
dealership agreement with the respondent therein, pursuant to which
a certificate of distribution came to be issued to the respondent therein
by KBIL. Due to various issues as regards the fulfilment of supply of
goods, the KBIL and the petitioner therein terminated the certificate
of distribution and the dealership agreement, respectively with the
respondent therein. Aggrieved by the aforesaid, the respondent
therein initiated arbitration against the petitioner therein inter-alia for
the purpose of challenging the aforesaid termination and claiming
damages therefrom. Before the arbitral tribunal one of the key issues
canvassed by the petitioner therein was that the arbitration suffers
from a mis-joinder or non-joinder of parties inasmuch as KBIL had not
been impleaded. It contended that the dealership agreement entered
into by it with the respondent therein was only in the capacity of an
agent of the KBIL, and thus any claims arising out of the same must
be made against the principal alone i.e., KBIL, who has not been
made a party to the arbitration proceedings. The aforesaid contention
came to be rejected by the arbitral tribunal and ultimately an award
was passed against the petitioner therein. In appeal, the Bombay
High Court upholding the decision of the sole arbitrator held that
construction and determination of the scope of agreement so as to
determine which parties are necessary to the proceedings is a matter
strictly within the jurisdiction of the arbitrator. It further observed that
as long as the interpretation of the agreement by the arbitrator is
reasonable, the courts would refrain from interfering with the same
merely because another view is possible. Although the Bombay
High Court did not make any observations as regards the power of
tribunal to implead or join a non-signatory, yet its observations as
to the scope of jurisdiction of the arbitral tribunal, more particularly
for determining whether there exists any principal-agent relationship
nevertheless is of significance, which we shall discuss in more detail
in the latter parts of this judgment. The relevant observations read
as under: -
“4. Learned Counsel for the Petitioner submits that
dealership agreement, which gave rise to the Respondent’s
claim, was entered into by the Petitioner as an agent of
KBIL. Learned Counsel submits that the Petitioner having
disclosed in the dealership agreement its principal and
[2025] 5 S.C.R. 1619

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

its express authority to name a dealer whilst acting for
the principal, namely, KBIL, the Respondent’s dealership
is not a sub-agency of the Petitioner, but an agency of
the principal itself, namely, KBIL. Learned Counsel relies
on Section 194 read with Section 230 of the Contract
Act in this behalf. Based on this contention, it is further
submitted that the claim being in respect of a contract of
agency as between the Respondent and KBIL, the latter
was a necessary party for any adjudication concerning
the agreement. [...]

xxx xxx xxx
5. The learned arbitrator rejected the Petitioner’s
submissions on the ground that the dealership agreement
between the Petitioner and the Respondent was on
a principal to principal basis; though this agreement
was in pursuance of its entitlement to appoint dealers
under its main contract of distributorship with KBIL and
this agreement conferred upon KBIL certain rights, in
essence, it was an agreement between the Petitioner
and the Respondent. The arbitrator considered various
circumstances to arrive at this conclusion. The arbitrator
inter alia observed that under the dealership agreement,
the Respondent was required to place a purchase order
on, and purchase bearings from, the Petitioner and prices
were required to be separately agreed between the
Respondent and the Petitioner from time to time. After
considering various clauses of the dealership agreement
(in particular, clauses 3(b), 5(a) to (c), 6(a), 7(a), (d), 10,
11(f) and 13 thereof), the arbitrator held that a holistic
reading of the agreement did not show that the Petitioner
was merely acting as an agent of KBIL, whilst entering
into the dealership agreement with the Respondent. The
arbitrator relied on the case of Coats Viyella India Ltd. v.
India Cement Ltd. in this behalf. In Coats Viyella India Ltd.,
the Supreme Court, after considering the agreement as
a whole, had held that under the agreement, a privity of
contract of the appellant was only with the respondent and
there was no liability on the other party, who was claimed
to be the principal, to make payment to the appellant; the
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agreement was on a principal to principal basis between
the appellant and the respondent, the rights and liabilities
of the appellant arising only under the agreement. Based
on the material placed before the learned arbitrator and a
reasonable interpretation of the dealership agreement and
application of law, the arbitrator came to his conclusion that
the Petitioner did not act merely as an agent on behalf of
KBIL in entering into the dealership agreement and since
the Respondent’s case was that the Petitioner’s acts had
directly resulted in the Respondent suffering losses, the
proceedings did not suffer from any mis-joinder or non-
joinder of necessary party so as to vitiate the proceedings.
This conclusion is clearly a possible view based on the
material placed before the learned arbitrator. Construction
of a contract is a matter strictly within the jurisdiction of
the arbitrator, and so long as the arbitrator construes it on
a reasonable interpretation and his construction denotes
a possible view, there is nothing for the challenge court
to interfere with under Section 34 of the Arbitration and
Conciliation Act, 1996 (“Act”).
6. There is no denial of the proposition of law laid down
by the Supreme Court or our court in the cases cited by
learned Counsel for the Petitioner. Prem Nath Motors
Limited’s case (supra) basically considers the effect
of Section 230 of the Contract Act. In that case, it was
held that the agent had acted on behalf of a disclosed
principal and there was no contract to the contrary placed
before the court so as to make the agent liable for the
act of the disclosed principal. Even in Vivek Automobiles
Limited (supra), the court applied the same principle.
The principle of law enunciated by the Supreme Court
in these cases merely implies that an agent is not
responsible for the acts of a disclosed principal except
in case of a contract to the contrary. The real question
in the present case is whether, in so far as the agency
agreement between the Petitioner and the Respondent
is concerned, the Petitioner could be said to be merely
acting as an agent of a disclosed principal, namely, KBIL,
or was the agreement entered into by the Petitioner
acting in its own rights as a principal. On a reasonable
[2025] 5 S.C.R. 1621

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

construction of the agreement, the arbitrator found that
it was the latter case and not the former. The arbitrator
held that the relevant clauses of the agreement indicated
that the agreement of dealership was entered into by the
Petitioner not as an agent of KBIL, but in its individual
capacity on a principal to principal basis. That conclusion,
as I have noted above, is a possible view based on a
reasonable interpretation of the agreement.”
(Emphasis supplied)

24. A similar view was taken by the Delhi High Court in Vistrat Real
Estates Pvt. Ltd. v. Asian Hotels North Ltd. reported in (2022) SCC
OnLine Del 1139 wherein the issue before the court was whether
the petitioner therein was entitled to initiate arbitration against a third-
party who was not a signatory to the arbitration agreement. The Delhi
High Court placing reliance on Chloro Controls (supra), held that
in exceptional cases pertaining to either the principle of ‘composite
performance’ or ‘implied authority’. even a third party who is not a
signatory to the arbitration agreement can be joined in arbitration. It
further held that at the stage of appointment of an arbitrator in terms
of Section 11 of the Act, 1996, the courts are required only to make
a prima-facie determination as regards the validity or existence of
the arbitration agreement only. Once it is found that there is a valid
arbitration agreement in existence, all other issues including whether
any relief can be claimed against a third- party or the necessity for
impleading such third party would be a matter to be looked into only
by the arbitral tribunal by virtue of the powers devolved upon it by
the principle of ‘kompetenz-kompetenz’. The relevant observations
read as under: -
“11. Hon’ble Supreme Court in the decision reported as
(2013) 1 SCC 641 Chrolo Controls India Private Ltd. v.
Severn Trent Water Purification Inc. though dealing with
an international arbitration under Section 45 of the Act,
held that even third parties who are not signatories to the
arbitration agreement can be joined in arbitration. It laid
down categories where the third parties can be impleaded
to the arbitration and held that the expression ‘claiming
through them’ should be construed strictly. [...]
1622 [2025] 5 S.C.R.

Supreme Court Reports

12. The decision in Chrolo Controls (supra) clearly
holds that in exceptional cases applying the principle of
“composite performance” or implied authority, even a third
party who is not a signatory to the arbitration agreement
can be joined in arbitration.
13. Hon’ble Supreme Court in Vidya Drolia (supra)
further considering the issue as to who would decide the
non-arbitrability of the claim held that there cannot be a
straightforward universal answer. Reiterating the law laid
down in Shin Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.,
(2005) 7 SCC 234, it was held that the correct approach to
the review of the arbitration agreement is restricted to prima
facie finding that there exists an arbitration agreement
that is not null and void, inoperative or incapable of being
performed. The key rationale for holding that the courts’
review of the arbitration agreement should be limited to
a prima facie standard is the principle of competence-
competence. Further, if the courts are empowered to fully
scrutinise the arbitration agreement, an arbitral proceeding
would have to be stayed until such time that the court
seized of the matter renders a decision on the arbitration
agreement. This would defeat the credo and ethos of
the Arbitration and Conciliation Act which is to enable
expeditious arbitration without avoidable intervention by
the judicial authorities. The rule of priority in favour of
the arbitrators is counterbalanced by the courts’ power
to review the existence and validity of the arbitration
agreement at the end of the arbitral process. It was further
held that if on a bare perusal of the agreement it is found
that a particular dispute is not relatable to the arbitration
agreement, then, perhaps the court may decide the relief
sought for by a party in a Section 11 petition. However,
if there is a contestation with regard to the issue as to
whether the dispute falls within the realm of the arbitration
agreement, then the best course would be to allow the
arbitrator to form a view in the matter.
14. Therefore, once a valid arbitration agreement exists
between the parties, the issue whether the petitioner is
entitled to any relief in the absence of a third party to the
[2025] 5 S.C.R. 1623

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

agreement or that third party is required to be impleaded in
the proceedings, is covered by the Doctrine of Competence-
Competence and it will be for the Arbitrator to decide the
said issue. Thus, the issue whether in the absence of a
third party, the petitioner can claim the refundable security
deposit would be for the learned Arbitrator to determine.”
(Emphasis supplied)

25. In Cardinal Energy and Infra Structure Pvt. Ltd. v. Subramanya
Construction and Development Co. Ltd. reported in (2024)
SCC OnLine Bom 964, the Bombay High Court diverging from
the views expressed in its earlier decision of Oil and Natural Gas
Corporation Ltd. (supra) and the decision of the Madras High
Court in V.G. Santhosam (supra), held that the arbitral tribunal
does have the power or authority to implead a non-signatory even if
such impleadment was never sought at the referral stage. The said
decision is in three-parts: -
(i) First, placing reliance on the decision of this Court in Cox
and Kings (I) (supra), it held that the question whether a non-
signatory is bound by the arbitration agreement or not, is for
the arbitral tribunal to decide and not the referral court. Thus,
even if the non-signatory was not impleaded at the time of
filing of application under Section 11 of the Act, 1996, it would
be incorrect to say that the same would exclude the arbitral
tribunal from impleading such party by applying the ‘group of
companies’ doctrine on its own accord. The relevant observations
read as under: -
“40. The Sole Arbitrator has referred to the decision
of the Supreme Court in Cox and Kings (Supra)
where the Supreme Court has enunciated the
‘Group of Companies’ doctrine and in particular the
impleadment of a non- signatory to an Arbitration
Agreement in arbitral proceedings based on such
doctrine. The Supreme Court in the said decision
has considered a case where an Application was
made to the Referral Court to join a non- signatory
to the Arbitration Agreement and it was in such
scenario that the Supreme Court held that, the
1624 [2025] 5 S.C.R.

Supreme Court Reports

Referral Court is required to prima facie rule on the
existence of the Arbitration Agreement and whether
the nonsignatories is a veritable party to the Arbitration
Agreement. The Supreme Court has held that in
view of the complexity of such a determination, the
Referral Court should leave it for the Arbitrator to
decide, whether the non-signatory party is indeed a
party to the Arbitration Agreement on the basis of the
factual evidence and application of legal doctrine. It
is necessary to reproduce paragraphs 171 and 172
of the said decision [...]
41. Thus from the conclusions of the Supreme
Court, it is clear that the Supreme Court has held
that where at a referral stage impleadment of a non-
signatory to the Arbitration Agreement is raised, the
Referral Court should leave it for the Arbitral Tribunal
to decide whether the non- signatory is bound by
the Arbitration Agreement. Thus, it is clear that the
Arbitral Tribunal has the power to decide whether the
non-signatory is bound by the Arbitration Agreement
and to implead the non-signatory if answered in the
affirmative.
42. I do not find from a reading of the decision of the
Supreme Court in Cox and Kings Ltd. (Supra) that
merely by there being no prayer for impleadment of
a non- signatory in the Section 11 Application, the
applicability of the doctrine of ‘group of companies’
by the Sole Arbitrator is excluded. [...]”
(Emphasis supplied)

(ii) The arbitral tribunal being the appropriate forum to determine
the issue as to joinder of a non-signatory to an arbitration
agreement, would undoubtedly have the power to implead such
non-signatory. Although, at the referral stage the court is bound
to decide whether there is an arbitration agreement and whether
the parties before it are bound by such agreement or not, yet
this does not preclude the arbitral tribunal from deciding these
issues after the proceedings have commenced on its own accord,
[2025] 5 S.C.R. 1625

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

particularly when such issues were not conclusively decided
by the courts in the first instance. The relevant observations
read as under: -
“42. [...] The Arbitrator does have the power/authority
to implead the non-signatory if such non-signatory is
otherwise liable to be impleaded on the basis of the
‘group of companies’ doctrine. Thus, the Supreme
Court has infact considered that the Arbitral Tribunal
is the appropriate forum to determine the issue
as to joinder of a non- signatory to an Arbitration
Agreement. I thus find no merit in the submission of
Mr. Rustomjee that in the event the issue of joinder
of a non-signatory to an Arbitration Agreement is
not raised before the Referral Court, the Arbitral
Tribunal on its own accord does not have the power
to determine this issue and/or allow the impleadment
of a non-signatory to an Arbitration Agreement. I
do not find there to be any estoppel on the Arbitral
Tribunal determining this issue.

xxx xxx xxx
44. There have been submissions made by Mr.
Rustomjee on the power of the Referral Court to
determine whether the Arbitration Agreement exists
and/or validity of the Arbitration Agreement and which
would include whether the Arbitration Agreement is
applicable to non-signatories to the Agreement. The
Supreme Court in National Insurance Company Ltd.
(Supra) at paragraph 22 has referred to the issues
which the Chief Justice or his designate is bound
to decide and which includes whether there is an
Arbitration Agreement and whether the party who has
applied under Section 11 of the Act is a party to such
agreement. However, this will not preclude the Arbitral
Tribunal from deciding the issue of impleadment of a
non-signatory to an Arbitration Agreement, particularly
when this issue was not before the Referral Court.
Thus, in my view, the Sole Arbitrator in the present
case was perfectly justified in determining the issue
1626 [2025] 5 S.C.R.

Supreme Court Reports

of whether the Petitioners as non-signatories to the
Arbitration Agreement could be impleaded as parties
to the arbitration.
(Emphasis supplied)

(iii) Thirdly, it observed that although the power of impleadment
cannot be traced to any provision of the Act, 1996, yet such
power has been recognized to exist with the arbitral tribunal
by virtue of the law expounded by Cox and Kings (I) (supra).
It then held that such power to implead can be traced to the
arbitral tribunal’s power to determine its own jurisdiction under
Section 16 of the Act, 1996, which includes the power to
determine whether the arbitral tribunal has jurisdiction over non-
signatories to the arbitration agreement in question. Moreover,
under the scheme of Act, 1996, it is always open to the parties
to challenge such impleadment by leading evidence on these
issues before the arbitrator and thereafter before the courts by
taking recourse to Section 34 of the Act, 1996 after the award
is passed. The relevant observations read as under: -
“43. I further find much substance in the argument
of Mr. Sarda on behalf of the Respondent Nos. 1
and 2 that the Arbitral Tribunal is obliged to follow
the law laid down by the Supreme Court and/or
judge made law. This would be the case despite
the Arbitral Tribunal not having specific power to
consider an application for impleadment and/or the
power of the Civil Court under Order I Rule 10 of
the CPC. The Delhi High Court in Abhibus Services
India Private Ltd. (Supra), paragraph 136 has the
recognized concept of judge made law. However,
it has been held that in the absence of any trace
of such power in the entire scheme of the Act, the
power of impleadment cannot be said to be conferred
upon the Tribunal on the basis of judge made law.
This decision of the Delhi High Court was prior to
the decision of the Supreme Court in Cox and Kings
(Supra) which in my view has changed the law with
regard to impleadment of non-signatories to the
Arbitration Agreement on the ‘group of companies’
[2025] 5 S.C.R. 1627

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

doctrine and has left it to the Arbitral Tribunal to
determine this issue.

xxx xxx xxx
45. The aforementioned findings are on the premise
that the impugned Order is an interim award. However,
one cannot lose sight of the fact that the Arbitrator
under Section 16 of the Arbitration Act has the power
to determine issues of jurisdiction which in my view
would include whether the Arbitrator has jurisdiction
over nonsignatories to an Arbitration Agreement. Any
such decision taken by the Arbitrator can always be
the subject matter of a challenge by the Petitioners
in a Petition filed under Section 34 of the Arbitration
Act after the final Award is passed. Further, I do not
find merit in the submission of Mr. Rustomojee that
the aforesaid points for determination namely, issue
Nos. (ii), (iii) and (v) which have been extracted above
have been finally determined. It is always open for
the Petitioners to lead evidence on these issues and
invite final adjudication by the learned Sole Arbitrator
on these issues. The decisions of the Delhi High
Court in National Highway Authority of India (Supra)
and Goyal MG Gases Pvt. Ltd. (Supra) are apposite.”
(Emphasis supplied)

26. Similarly, the Delhi High Court in Indraprastha Power Generation
Co. Ltd. v. Hero Solar Energy Pvt. Ltd. reported in (2024) SCC
OnLine Del 6080 held that although Arupri Logistics (supra) when
it was rendered was correct in holding that an arbitral tribunal cannot
join or delete parties, or proceed on principles akin to Order I Rule
10 of the CPC, and that such power vests only with the courts, yet
after the decisions of this Court in Cox and Kings (I) (supra) and
Cox and Kings (II) (supra), it is crystal clear that arbitral tribunals
do indeed have the power to implead a non-signatory. It observed
that since, Cox and Kings (II) (supra) has held that the question
whether a non-signatory is bound by the arbitration agreement or
not should be left to the arbitral tribunals to decide, the obvious
corollary to the aforesaid would be that if the arbitral tribunal were
1628 [2025] 5 S.C.R.

Supreme Court Reports

to arrive at a finding that such non-signatory is indeed bound by
the arbitration agreement, it would necessarily have to include (sic
implead) such party to the arbitration proceedings. Accordingly, it held
that the arbitral tribunal would possess the jurisdiction to implead
non-signatories who may be bound by the outcome of the arbitral
proceedings, if there exists some kind of connection or positive act
or conduct by the non-signatory that would indicate its connection to
the contractual duties of the signatories. The relevant observations
read as under: -
“20. In Arupri Logistics, as Mr. Ghose correctly points out,
a coordinate Bench of this Court has clearly held that an
Arbitral Tribunal cannot join or delete parties, or proceed
on principles akin to Order I Rule 10 of the Code of Civil
Procedure 1908. The power to join or delete parties in a
proceeding, it is held, vests only in Court. As such, it is
only the Referral Court which, at the stage of referring the
dispute to arbitration, can join non- signatories to the arbitral
proceedings. The Arbitral Tribunal is bound to decide the
issue inter se the parties who are before it and cannot
carry out any addition or deletion thereto.
Arupri Logistics thus, holds that an Arbitral Tribunal cannot
add parties to the proceedings before it, and that the
jurisdiction to do so vests only in the referral Court.
After the decision was rendered by the Coordinate Bench
in Arupri Logistics, however, the Constitution Bench of
the Supreme Court has rendered its decision in Cox and
Kings-II on 6 December 2023, and the issue of whether
an Arbitral Tribunal can join parties may once again be
debatable after the said decision. [...]

xxx xxx xxx
24. These passages indicate that the Section 11 Court
should leave, to the Arbitral Tribunal, the decision as to
whether a non- signatory to the arbitration agreement
should be bound by it. The corollary would obviously be
that if the Arbitral Tribunal were to find that a nonsignatory
is bound by arbitration agreement, it would necessarily
have to include such non-signatory in the arbitration
[2025] 5 S.C.R. 1629

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

proceedings. Following Cox and Kings-II, therefore, it
may be possible to argue that an Arbitral Tribunal does
possess the jurisdiction to implead non-signatories who
may be bound by the outcome of the arbitral proceedings.
26. The impugned order of the Arbitral Tribunal has
observed that, in the above passages from Cox and
Kings-I as endorsed in Cox and Kings-II, a non-signatory
could be impleaded in arbitral proceedings only if there
is some kind of connection or positive act by the conduct
of the non-signatory subsequent to the execution of the
contract, or participation by the non-signatory in the
negotiation, performance or termination of the contract
indicating a connection in the contractual duties of the
parties. [ ]”
27. In yet another decision of the Delhi High Court in KKH Finvest
Private Ltd. v. Jonas Haggard & Ors. reported in (2024) SCC
OnLine Del 7254 although the issue primarily entailed whether the
non-signatories therein could be regarded as a ‘veritable party’ to the
arbitration agreement and thus, be referred to arbitration or not, yet the
observations therein could be said to be a trail blazer on the issue of
whether the arbitral tribunal has the power to implead a non-signatory
or not. It observed that as per the decision of this Court in Ajay
Madhusudan Patel (supra), at the stage of deciding an application
under Section 11 of the Act, 1996, the referral courts are only required
to prima-facie determine if the non-signatories are a veritable party
to the arbitration clause or not. It held that as per Cox and Kings (I)
(supra) the definition of “party” under Section 2(1)(h) of the Act,
1996 is inclusive of both signatories and non-signatories, provided
that such non-signatory actively participates in the performance of
a contract, and its actions align with those of the other members of
the group. Furthermore, the court, taking note of the contradictory
views expressed by two coordinate benches in Arupri Logistics
(supra) and Indraprastha Power Generation Co. Ltd. (supra),
observed that since the findings of a referral court is only limited to
a bird’s eye view of whether a non-signatory is a veritable party or
not, the issue of whether such party can be impleaded and made
part of the arbitration proceedings or not ought to be decided by the
arbitral tribunal based on the pleadings and arguments. The relevant
observations read as under: -
1630 [2025] 5 S.C.R.

Supreme Court Reports

“75. Hence, at this stage, this Court being a referral court
is only required to take a prima facie view on whether
there exists an arbitration agreement and whether the
respondents who are non- signatories to the MoS are
veritable parties to the arbitration agreement.

xxx xxx xxx
78. In cases where impleadment of non-signatories
to arbitration proceedings is necessary, courts have
delineated various approaches. It can be achieved via :
a) consent-based theories, which emphasize identifying
the mutual intent of the parties and include concepts like
agency, implied consent, and the assignment or transfer
of contractual rights; and b) non-consensual theories,
which are rooted in equity and encompass doctrines
such as alter ego/piercing the corporate veil, estoppel,
succession, and apparent authority [refer to Cox & Kings
(supra), para 192]. At this stage and as a referral court,
as per Ajay Madhusudan Patel (supra), the test is whether
prima facie the respondents are veritable parties to the
MoS containing the arbitration clause. This has been dealt
with in detail in Issue I.
79. It is settled position of law that the definition of parties
under the 1996 Act [as envisaged under Section 2(1)(h)]
is inclusive of both signatories and non-signatories. The
Hon’ble Supreme Court in Cox & Kings Ltd. v. SAP India
(P) Ltd., (2024) 4 SCC 1 observed that if a nonsignatory
party actively participates in the performance of a contract,
and its actions align with those of the other members of
the group, it gives the impression that the non- signatory
is a “veritable” party to the contract which contains the
arbitration agreement. Based on this impression, the other
party may reasonably assume that the non-signatory is
indeed a veritable party to the contract and bind it to the
arbitration agreement. [...]
80. Thus, the assessment required to be undertaken by
this Court - to give prima facie observations on whether
the respondents are veritable parties or not - is primarily an
assessment regarding the conduct, role, and involvement
[2025] 5 S.C.R. 1631

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

of the non-signatory in the underlying contract i.e. the
MoS. At the outset, it is to be noted that the term “veritable
parties” applies to both persons and entities [refer to Cox
& Kings (supra), para 96]. In order to assess the same,
this Court is required to consider factors such as mutual
intent, relationship between the signatories and non-
signatories, commonality of subject matter, composite
nature of transactions and performance of the contract.
81. The intention of the parties to be bound by an arbitration
agreement is to be gathered from the circumstances
surrounding the involvement of a non-signatory party in the
negotiation, performance, and termination of the underlying
contract containing the agreement. If the non-signatory’s
actions align with those of the signatories, it could
reasonably lead the signatories to believe that the non-
signatory was a veritable party to the contract containing the
arbitration clause. To infer the non- signatory’s consent, its
participation/involvement in the negotiation or performance
of the contract must be positive, direct, and substantial,
rather than merely incidental. The burden of proof to
establish the same lies on the party seeking to implead
the non-signatories to the arbitration proceedings, in this
case, the petitioners.

xxx xxx xxx
101. Two coordinate benches of this Court have taken
contrary views on whether the arbitral tribunal is vested
with the power to implead parties in arbitration proceedings.
While Arupri Logistics (P) Ltd. v. Vilas Gupta, 2023 SCC
OnLine Del 4297 holds that the arbitral tribunal lacks the
jurisdiction to implead, Indraprastha Power Generation
Co. Ltd. v. Hero Solar Energy (P) Ltd., 2024 SCC OnLine
Del 6080 holds that following Cox and Kings (supra), such
jurisdiction may be conferred upon the arbitral tribunal.
Since I have referred respondent Nos. 2 to 5 to arbitration,
the only issue that remains to be adjudicated is whether
respondent Nos. 2 to 5 are, in fact, proper and necessary
parties. The same shall be decided by the arbitrator in
accordance with law. The finding of the referral court
1632 [2025] 5 S.C.R.

Supreme Court Reports

which takes a bird’s eye view and does not go into minute
details is only for the purpose of referring the parties to
arbitration. The respondents will be at liberty to agitate this
issue before the arbitrator, who shall take an independent
view based on the pleadings and arguments of the parties.”
(Emphasis supplied)

28. What is discernible from the aforesaid is that despite the wide
recognition of the doctrinal principles of ‘group of companies’, ‘alter-
ego’, agency, implied consent, assignment or transfer of contractual
rights, estoppel, ‘apparent authority’ etc. to law of arbitration, the
High Courts throughout the country remained averse to accepting
the application of these principles by the arbitral tribunals. Even after
the decision of this Court in Chloro Controls (supra) allowing non-
signatories to an arbitration agreement to be referred and enjoined
to arbitration on the basis of their conduct, role, and involvement in
the underlying contract, the High Courts consistently held that such
power to refer or implead a non-signatory was only available to the
courts and not to the arbitral tribunals. It is only after the decision of
this Court in in Cox and Kings (I) (supra), that the position of law as
regards the power of an arbitral tribunal to implead a non-signatory
underwent a significant change, whereby many High Courts which
had earlier refused to recognize such power of the arbitral tribunal,
came around to recognizing it.

b. Evolution of the law on referral or joinder of Non-Signatories
to arbitration proceedings and the Aversion to the power
of Arbitral Tribunals to implead a Non-Signatory.
29. For a better exposition, it would be apposite to first understand the
evolution of the law pertaining to the referral or joinder of even non-
signatories to an arbitration agreement as a party to the arbitration
proceedings. In other words, to better cull out the reasons for why
there existed a divergence of views among various High Courts and
the general reluctance to recognise the arbitral tribunal’s power — as
opposed to that of a court — in impleading such non- signatories to
arbitration proceedings.

I. Decision of Chloro Controls and the Arbitration and
Conciliation (Amendment) Act, 2015.
[2025] 5 S.C.R. 1633

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

30. It all started with the three-Judge Bench decision of this Court
in Chloro Controls (supra) when this Court was called upon to
determine an arbitral reference in case of multi-party agreements
where performance of the ancillary agreements was substantially
dependent upon effective execution of the principal agreement. This
Court held that in exceptional cases involving composite transactions
with multi-party agreements, a non-signatory could be subjected to
arbitration by virtue of the ‘group of companies’ doctrine, provided
there was a clear intention of the parties to bind both the signatory as
well as non-signatory parties to the arbitration agreement. It observed
that although the scope of am arbitration agreement is limited to the
parties who entered into it, yet the doctrine of ‘group of companies’
has found favour albeit in a limited sense both under the English
Law which was the original genesis of the Act, 1996 and under the
international commercial arbitration landscape, particularly in the
United States and French jurisdictions. The relevant observations
read as under: -
“71. Though the scope of an arbitration agreement is limited
to the parties who entered into it and those claiming under
or through them, the courts under the English law have,
in certain cases, also applied the “group of companies
doctrine”. This doctrine has developed in the international
context, whereby an arbitration agreement entered into by
a company, being one within a group of companies, can
bind its non-signatory affiliates or sister or parent concerns,
if the circumstances demonstrate that the mutual intention
of all the parties was to bind both the signatories and the
non-signatory affiliates. This theory has been applied in
a number of arbitrations so as to justify a tribunal taking
jurisdiction over a party who is not a signatory to the
contract containing the arbitration agreement. [Russell on
Arbitration (23rd Edn.)]
72. This evolves the principle that a non-signatory
party could be subjected to arbitration provided these
transactions were with group of companies and there
was a clear intention of the parties to bind both, the
signatory as well as the non-signatory parties. In other
words, “intention of the parties” is a very significant
feature which must be established before the scope of
1634 [2025] 5 S.C.R.

Supreme Court Reports

arbitration can be said to include the signatory as well
as the non-signatory parties.
73. A non-signatory or third party could be subjected to
arbitration without their prior consent, but this would only
be in exceptional cases. The court will examine these
exceptions from the touchstone of direct relationship to
the party signatory to the arbitration agreement, direct
commonality of the subject-matter and the agreement
between the parties being a composite transaction.
The transaction should be of a composite nature where
performance of the mother agreement may not be
feasible without aid, execution and performance of the
supplementary or ancillary agreements, for achieving the
common object and collectively having bearing on the
dispute. Besides all this, the court would have to examine
whether a composite reference of such parties would
serve the ends of justice. Once this exercise is completed
and the court answers the same in the affirmative, the
reference of even non-signatory parties would fall within
the exception afore-discussed.”
31. The aversion or misconception that loomed before the various High
Courts as regards the inhibition of an arbitral tribunal to resort to
the principles of ‘group of companies’, ‘alter-ego’, agency etc. or
to put it more simply, to implead a non-signatory to the arbitration
proceedings on its own accord can be deftly traced to two pertinent
observations that were made in Chloro Controls (supra).
32. Apart from the aforesaid reasons of economic reality and judicial
comity justifying the recognition of ‘group of companies’ in the
modern regime of the law of arbitration including that of India, Chloro
Controls (supra) further reinforced the genesis of recognizing this
doctrine within the scheme of Act, 1996 by tracing it to Section 45
of the Act, more particularly the expression “parties or any person
claiming through or under him” used therein. It held that the aforesaid
language of Section 45 reflects a legislative intent of enlarging
the scope beyond “parties” who are signatories to the arbitration
agreement to include non-signatories. It observed that Section 8
of the Act, 1996 does not import the same expression; “parties or
any person claiming through or under him” which can be found in
[2025] 5 S.C.R. 1635

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

Section 45 and simpliciter uses the expression “parties” without any
extension, even though Section 8 is a contemporary counter-part
of Section 45 for the purpose of domestic arbitrations under Part I.
This clearly indicates that the legislature consciously and deliberately
opted to incorporate the aforesaid expression to give the provision
a wider import to encourage arbitration and bring it in tune with the
prevalent best international practices. Thus, this very ostensible
legislative intent cannot be ignored by the courts and must be given
due weightage. The relevant observations read as under: -
“69. We have already noticed that the language of Section
45 is at a substantial variance to the language of Section 8
in this regard. In Section 45, the expression “any person”
clearly refers to the legislative intent of enlarging the scope
of the words beyond “the parties” who are signatory to the
arbitration agreement. Of course, such applicant should
claim through or under the signatory party. Once this link
is established, then the court shall refer them to arbitration.
The use of the word “shall” would have to be given its
proper meaning and cannot be equated with the word
“may”, as liberally understood in its common parlance. The
expression “shall” in the language of Section 45 is intended
to require the court to necessarily make a reference to
arbitration, if the conditions of this provision are satisfied.
To that extent, we find merit in the submission that there
is a greater obligation upon the judicial authority to make
such reference, than it was in comparison to the 1940 Act.
However, the right to reference cannot be construed strictly
as an indefeasible right. One can claim the reference only
upon satisfaction of the prerequisites stated under Sections
44 and 45 read with Schedule I of the 1996 Act. Thus, it
is a legal right which has its own contours and is not an
absolute right, free of any obligations/limitations.

xxx xxx xxx
93. As noticed above, the legislative intent and essence of
the 1996 Act was to bring domestic as well as international
commercial arbitration in consonance with the Uncitral
Model Rules, the New York Convention and the Geneva
Convention. The New York Convention was physically
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before the legislature and available for its consideration
when it enacted the 1996 Act. Article II of the Convention
provides that each contracting State shall recognise an
agreement and submit to arbitration all or any differences
which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual
or not concerning a subject-matter capable of settlement
by arbitration. Once the agreement is there and the court
is seized of an action in relation to such subject-matter,
then on the request of one of the parties, it would refer
the parties to arbitration unless the agreement is null and
void, inoperative or incapable of performance.
94. Still, the legislature opted to word Section 45 somewhat
dissimilarly. Section 8 of the 1996 Act also uses the
expression “parties” simpliciter without any extension.
In significant contradistinction, Section 45 uses the
expression “one of the parties or any person claiming
through or under him” and “refer the parties to arbitration”,
whereas the rest of the language of Section 45 is similar to
that of Article II(3) of the New York Contention. The court
cannot ignore this aspect and has to give due weightage
to the legislative intent. It is a settled rule of interpretation
that every word used by the legislature in a provision
should be given its due meaning. To us, it appears that
the legislature intended to give a liberal meaning to this
expression.
95. The language of Section 45 has wider import. It refers
to the request of a party and then refers to an Arbitral
Tribunal, while under Section 8(3) it is upon the application
of one of the parties that the court may refer the parties
to arbitration. There is some element of similarity in the
language of Section 8 and Section 45 read with Article
II(3). The language and expressions used in Section 45,
“any person claiming through or under him” including in
legal proceedings may seek reference of all parties to
arbitration. Once the words used by the legislature are
of wider connotation or the very language of the section
is structured with liberal protection then such provision
should normally be construed liberally.
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ASF Buildtech Private Limited v.
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96. Examined from the point of view of the legislative
object and the intent of the framers of the statute i.e. the
necessity to encourage arbitration, the court is required
to exercise its jurisdiction in a pending action, to hold the
parties to the arbitration clause and not to permit them to
avoid their bargain of arbitration by bringing civil action
involving multifarious causes of action, parties and prayers.”
(Emphasis supplied)

33. However, this rudimentary understanding of the expression “parties”
and “parties or any person claiming through or under him” in Section(s)
8 and 45 of the Act, 1996 respectively by Chloro Controls (supra)
for the import of the doctrine of ‘group of companies’ into the Act,
1996 was one of the two-fold reasons that eventually convoluted the
position of law as regards impleadment of non-signatories, which
we shall further discuss.
34. After having established the foundational basis of the doctrine of
‘group of companies’ in the Act, 1996, Chloro Controls (supra)
then proceeded to explain the manner in which the aforesaid
doctrine is to be applied. Since any application under Section 45
of the Act, 1996 for appointment of an arbitrator would be governed
by Section 11 sub-section (6) of the Act, it as a natural corollary
would necessarily entail the adjudication and disposal of objections
contemplated thereunder, more particularly the validity or existence
of the arbitration agreement, the application not satisfying the
ingredients of Section 11(6) of the 1996 Act and claims being barred
by time, etc as mandated by sub-section (7) of Section 11 of the Act.
For the aforesaid proposition, reliance was placed on the seven-
Judge Bench decision of this Court in SBP & Co. v. Patel Engg.
Ltd. reported in (2005) 8 SCC 618 and the subsequent decision
of Shree Ram Mills Ltd. v. Utility Premises (P) Ltd. reported in
(2007) 4 SCC 599 which held that the primarily it is for the courts to
decide all preliminary issues at the referral stage under Section 11(6)
of the Act, and the principle of kompetenz-kompetenz enshrined
in Section 16 empowering the arbitral tribunal to rule on its own
jurisdiction, applies only when the parties go before the tribunal
without having taken recourse to Section(s) 8 or 11 respectively
of the Act, 1996 or where these issues are explicitly left open to
the arbitral tribunal to decide by the referral court. Accordingly,
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Chloro Controls (supra) held that Section 45 of the Act, 1996
which envisages the same test as Section(s) 8 and 11 of the Act,
insofar as the preliminary determination for making a reference to
an arbitral tribunal is concerned, would as a natural corollary to
the ratio of SBP & Co. (supra) contemplate the determination of
all fundamental issues for making such reference by the courts,
including the issue whether a non-signatory could be said to be
bound by the arbitration agreement. In the last, it further observed
that even the legislative intent behind Section 45 of the Act, 1996,
without any ambiguity contemplates determination of these issues
in the very first instance by the judicial forum, evident from the
absence of any provision analogous to Section 16 of the Act, 1996
in Part II of the Act. The relevant observations read as under: -
“118. An application for appointment of the Arbitral
Tribunal under Section 45 of the 1996 Act would also be
governed by the provisions of Section 11(6) of the Act.
This question is no more res integra and has been settled
by decision of a Constitution Bench of seven Judges of
this Court in SBP & Co. v. Patel Engg. Ltd., wherein this
Court held that power exercised by the Chief Justice is
not an administrative power. It is a judicial power. It is a
settled principle that the Chief Justice or his designate
Judge will decide preliminary aspects which would attain
finality unless otherwise directed to be decided by the
Arbitral Tribunal.
119. [...]This aspect of the arbitration law was explained by
a two- Judge Bench of this Court in Shree Ram Mills Ltd.
v. Utility Premises (P) Ltd. wherein, while referring to the
judgment in SBP & Co. particularly the above paragraph
(para 39) of SBP case21, this Court held that the scope
of order under Section 11 of the 1996 Act would take in
its ambit the issue regarding territorial jurisdiction and the
existence of the arbitration agreement. The Court noticed
that if these issues are not decided by the Chief Justice or
his designate, there would be no question of proceeding
with the arbitration. [...] Thus, the Bench while explaining
the judgment of this Court in SBP & Co. has stated that
the Chief Justice may not decide certain issues finally and
upon recording satisfaction that prima facie the issue has
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ASF Buildtech Private Limited v.
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not become dead even leave it for the Arbitral Tribunal
to decide.

xxx xxx xxx
121. [...] The expressions “Chief Justice does not in strict
sense decide the issue” or “is prima facie satisfied”, will
have to be construed in the facts and circumstances of
a given case. Where the Chief Justice or his designate
actually decides the issue, then it can no longer be prima
facie, but would be a decision binding in law. On such
an issue, the Arbitral Tribunal will have no jurisdiction to
redetermine the issue. In Shree Ram Mills, the Court held
that the Chief Justice could record a finding where the
issue between the parties was still alive or was dead by
lapse of time. Where it prima facie found the issue to be
alive, the Court could leave the question of limitation and
also open to be decided by the Arbitral Tribunal.
122. The above expressions are mere observations of
the Court and do not fit into the contours of the principle
of ratio decidendi of the judgment. The issues in regard
to validity or existence of the arbitration agreement, the
application not satisfying the ingredients of Section 11(6)
of the 1996 Act and claims being barred by time, etc.
are the matters which can be adjudicated by the Chief
Justice or his designate. Once the parties are heard on
such issues and the matter is determined in accordance
with law, then such a finding can only be disturbed by the
court of competent jurisdiction and cannot be reopened
before the Arbitral Tribunal. [...]

xxx xxx xxx
128. [ ] However, as already noticed, the Court clearly
took the view that the findings returned by the Chief
Justice while exercising his judicial powers under Section
11 relatable to Section 8 are final and not open to be
questioned by the Arbitral Tribunal. Sections 8 and 45 of
the 1996 Act are provisions independent of each other.
But for the purposes of reference to arbitration, in both
cases, the applicant has to pray for a reference before
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the Chief Justice or his designate in terms of Section 11
of the 1996 Act. [...] We are conscious of the fact that
the above dictum of the Court in SBP case is in relation
to the scope and application of Section 11 of the 1996
Act. It has been held in various judgments of this Court
but more particularly in SBP which is binding on us that
before making a reference, the Court has to dispose of
the objections as contemplated under Section 8 or Section
45, as the case may be, and wherever needed upon filing
of affidavits. Thus, to an extent, the law laid down by this
Court on Section 11 shall be attracted to an international
arbitration which takes place in India as well as domestic
arbitration. This, of course, would be applicable at pre-
award stage. Thus, there exists a direct legal link, limited
to that extent.

xxx xxx xxx
130. [ ] The more important aspect as far as Chapter I
of Part II of the 1996 Act is concerned, is the absence of
any provision like Section 16 appearing in Part I of the
same Act. Section 16 contemplates that the arbitrator may
determine its own jurisdiction. Absence of such a provision
in Part II Chapter I is suggestive of the requirement for the
court to determine the ingredients of Section 45, at the
threshold itself. It is expected of the court to answer the
question of validity of the arbitration agreement, if a plea is
raised that the agreement containing the arbitration clause
or the arbitration clause itself is null and void, inoperative
or incapable of being performed. Such determination by
the court in accordance with law would certainly attain
finality and would not be open to question by the Arbitral
Tribunal, even as per the principle of prudence. It will
prevent multiplicity to litigation and reagitating of same
issues over and over again. The underlining (sic underlying)
principle of finality in Section 11(7) would be applicable
with equal force while dealing with the interpretation of
Sections 8 and 45. Further, it may be noted that even
the judgment of this Court in SBP & Co. takes a view in
favour of finality of determination by the Court despite the
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

language of Section 16 in Part I of the 1996 Act. Thus,
there could hardly be any possibility for the Court to take
any other view in relation to an application under Section
45 of the 1996 Act. Since, the categorisation referred to
by this Court in National Insurance Co. Ltd. is founded
on the decision by the larger Bench of the Court in SBP
& Co., we see no reason to express any different view.
The categorisation falling under para 22.1 of National
Insurance Co. case would certainly be answered by the
Court before it makes a reference while under para 22.2
of that case, the Court may exercise its discretion and
decide the dispute itself or refer the dispute to the Arbitral
Tribunal. Still, under the cases falling under para 22.3,
the Court is expected to leave the determination of such
dispute upon the Arbitral Tribunal itself. But wherever the
Court decides in terms of categories mentioned in paras
22.1 and 22.2, the decision of the Court is unreviewable
by the Arbitral Tribunal.

xxx xxx xxx
131.2. The issue of jurisdiction normally is a mixed question
of law and facts. Occasionally, it may also be a question of
law alone. It will be appropriate to decide such questions
at the beginning of the proceedings itself and they should
have finality.

xxx xxx xxx
131.4. Applying the analogy thereof will fortify the view
that determination of fundamental issues as contemplated
under Section 45 of the 1996 Act at the very first instance
by the judicial forum is not only appropriate but is also
the legislative intent. Even the language of Section 45 of
the 1996 Act suggests that unless the court finds that an
agreement is null and void, inoperative and incapable of
being performed, it shall refer the parties to arbitration.
(Emphasis supplied)

35. This rudimentary understanding and legislative position of the extent
of judicial scrutiny and determination at the referral stage in terms of
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Section 11 of the Act, 1996, could be said to be the second reason
why arbitral tribunals were not found to be empowered to identify
and implead a non-signatory to the arbitration agreement.
36. In the aftermath of Chloro Controls (supra), the Law Commission
of India in its 246th Report observed that a party to an arbitration
agreement does not necessarily mean only the signatory to such
agreement, and that internationally it has been widely accepted that
even non-signatories may be parties to the arbitration agreement.
It further took note of the decision of Chloro Controls (supra),
more particularly how this Court has recognized this concept in
the phrase “claiming through or under” in Section 45 of the Act,
1996. However, noticing the absence of the same expression in the
corresponding provision of Section 8 and other relevant provisions
where the context requires recognition of non-signatories, the Law
Commission suggested that Section 2(1)(h) of the Act, 1996 which
defines “party” be amended and the phrase “person claiming through
or under such party” be inserted to cure this anomaly. The relevant
observations read as under: -
“62. However, a party does not necessarily mean only the
“signatory” to the arbitration agreement. In appropriate
contexts, a “party” means not just a signatory, but also
persons “claiming through or under” such signatory – for
instance, successors-of- interest of such parties, alter-ego’s
of such parties etc. This is particularly true in the case of
unincorporated entities, where the issue of “personality”
is usually a difficult legal question and raises a host of
other issues. This principle is recognized by the New York
Convention, 1985 which in article II (1) recognizes an
agreement between parties “in respect of a defined legal
relationship, whether contractual or not.”
63. The Arbitration and Conciliation Act, 1996 under section
7 borrows the definition of the “arbitration agreement” from
the corresponding provision at article 7 of the UNCITRAL
Model Law which in turn borrows this from article II of
the New York Convention. However, the definition of the
word “party” in section 2(1)(h) refers to a “party” to mean
“a party to an arbitration agreement.” This cannot be read
restrictively to imply a mere “signatory” to an arbitration
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ASF Buildtech Private Limited v.
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agreement, since there are many situations and contexts
where even a “non-signatory” can be said to be a “party”
to an arbitration agreement. This was recognized by the
Hon’ble Supreme Court in Chloro Controls v. Severn
Trent Water Purification, (2013) 1 SCC 641, where the
Hon’ble Supreme Court was dealing with the scope and
interpretation of section 45 of the Act and, in that context,
discussed the scope of the relevant doctrines on the basis
of which “non-signatories” could be said to be bound by the
arbitration agreement, including in cases of inter-related
contracts, group of companies doctrine etc.
64. This interpretation given by the Hon’ble Supreme
Court follows from the wording of section 45 of the Act
which recognizes the right of a “person claiming through
or under [a party]” to apply to a judicial authority to refer
the parties to arbitration. The same language is also to be
found in section 54 of the Act. This language is however,
absent in the corresponding provision of section 8 of the
Act. It is similarly absent in the other relevant provisions,
where the context would demand that a party includes also
a “person claiming through or under such party”. To cure
this anomaly, the Commission proposes an amendment
to the definition of “party” under section 2 (h) of the Act.”
(Emphasis supplied)

37. Based on the suggestions made by the Law Commission, the
legislature promptly introduced the Arbitration and Conciliation
(Amendment) Act, 2015 whereby inter-alia although Section 8
sub-section (1) of the Act, 1996 was amended and the phrase “a
party to an arbitration agreement or any person claiming through or
under him” was inserted yet for reasons unknown, the suggestion
for amending Section 2(1)(h) of the Act by the Law Commission did
not see the light of day.
38. At this juncture it would be apposite to briefly explain the object of
Section(s) 8 and 45 of the Act, 1996 respectively and the nature of
the said provisions. Section(s) 8 and 45 of the Act, 1996 empowers
the parties who have approached the courts with a subject-matter
which is covered by an arbitration agreement to refer such dispute
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to an arbitral tribunal, with the only difference between the two
being that the former pertains to domestic arbitrations whereas
the latter deals with international arbitrations in terms of the New
York Convention. In essence, it entitles any party that is before a
court or judicial forum to seek a reference to arbitration subject to
the conditions laid down in the subsequent sub-sections. As held
in Hema Khattar v. Shiv Khera reported in (2017) 7 SCC 716,
Section(s) 8 and 45 of the Act, 1996 are peremptory in nature that
obligates the courts to refer the parties to arbitration where there
is an arbitration agreement.
39. Since Chloro Controls (supra) recognized the applicability of the
principles of ‘group of companies’, (sic) ‘alter-ego’, agency etc. for
enjoining a non- signatory to the arbitration proceedings only from
an interpretation of the phrase “a party to an arbitration agreement
or any person claiming through or under him” which by virtue of the
Arbitration and Conciliation (Amendment) Act, 2015, found place
only in Section(s) 8 and 45 of the Act, 1996, which as discussed
above deals with only the power of the courts or judicial authorities
to make a reference to arbitration, and no such phrase was inserted
in the substantive definition of “party” in Section 2(1)(h), the net
effect of the decision of Chloro Controls (supra) and the Arbitration
and Conciliation (Amendment) Act, 2015 was that only the courts
by virtue of Section(s) 8 and 45 of the Act, 1996 were empowered
to implead a non- signatory to the arbitration proceedings, and not
the arbitral tribunals. The omission of amending Section 2(1)(h) of
the Act, 1996 further fortified the notion that the exercise of authority
and power by the arbitral tribunal would continue to be confined to
the ordinary substantive definition of “party” under the said provision
and not by the enlarged understanding of the term “party … or any
person claiming through or under him” as used for the courts under
Section(s) 8 and 45 of the Act, 1996, except where an arbitral tribunal
has been constituted specifically by the courts. This along with the
standard of scrutiny that was expected by the referral courts under
Section 11 of the Act, 1996 in terms of SBP & Co. (supra) meant
that, unless a non-signatory is referred to arbitration by a court
after a thorough application of mind and after a final determination
by such referral courts as to whether the non-signatory is said to
bound by the arbitration agreement or not, no non-signatory can be
subjected to arbitration.
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ASF Buildtech Private Limited v.
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40. Thus, due to the aforesaid, a misconception plagued the position of
law that an arbitral tribunal does not have the authority or power to
implead a non- signatory to the arbitration proceedings, and that only
the courts are empowered to do so. It was largely in this backdrop
that the decisions of Oil and Natural Gas Corporation Ltd. (supra),
Balmer Lawrie & Co. Ltd. (supra), Sudhir Gopi (supra), V.G.
Santhosam (supra) and other decisions of various different High
Courts came to be rendered.

II. Decision of Cox and Kings (I) and the Judicial Rectification
of the first misconception by Chloro Controls.
41. In Cox and Kings (I) (supra) a five-Judge Bench of this Court
wherein one of us (J.B. Pardiwala J.) was part of the Bench were
called upon to determine the validity and applicability of the ‘Group
of Companies’ doctrine in the jurisprudence of Indian arbitration. This
Court after an extensive examination of the international practices
and the scheme of Act, 1996 held that the ‘Group of Companies’
doctrine was invariably a part of the larger arbitration framework
that has been developing across the world and was in tune with
the avowed object of the Act, 1996 which aims to make the Indian
arbitration law more responsive to the contemporary requirements.
The relevant observations read as under: -
“128. [...] This approach ensures that a dogmatic emphasis
on express consent is eschewed in favour of a modern
approach to consent which focuses on the factual analysis,
complexity of commercial projects, and thereby increases
the relevance of arbitration in multi-party disputes.
Moreover, it is also keeping in line with the objectives of
the Arbitration Act which aims to make the Indian arbitration
law more responsive to the contemporary requirements.
148. [...] The group of companies doctrine has important
utility in determining the mutual intention of the parties
in the context of complex transactions involving multiple
parties and multiple agreements. Moreover, the doctrine
has been substantively entrenched in the Indian arbitration
jurisprudence. We are aware of the fact that the group of
companies doctrine has not found favor in some other
jurisdictions, including in English law. However, we deem
it appropriate to retain the doctrine which has held the
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field in Indian jurisprudence though by firmly establishing it
within the realm of the mutual consent or the mutual intent
of the parties to a commercial bargain. This will ensure on
the one hand that Indian arbitration law retains a sense of
dynamism so as to respond to contemporary challenges.
At the same time, structuring the doctrine in the manner
suggested so as to ground it in settled principles governing
the elucidation of mutual intent is necessary. This will
ensure that the doctrine has a jurisprudential foundation
in party autonomy and consent to arbitrate.”
42. Cox and Kings (I) (supra) further held that the approach adopted
by Chloro Controls (supra), so far as infusing or reading the
doctrine of ‘Group of Companies’ into the expression “a party to an
arbitration agreement or any person claiming through or under him”
is concerned, was incorrect. It held that the words “any person” in
Section 45 of the Act, 1996 by itself does not connote a wider import
to the term “party”. The aforesaid phrase cannot be singled out and
construed devoid of the context provided in the subsequent phrase
“claiming through or under”. It held that the entire expression only
refers and includes persons / parties acting in a derivative capacity
such as in the instances of successors in interest or assignees of
any such interest that have been devolved upon them by the original
signatories / parties. The import of the expression “a party to an
arbitration agreement or any person claiming through or under him”
only refers to that persons which it is deriving its claim or right by
virtue of it standing in the shoes of the original signatory party. The
expression “claiming through or under” can only bind those third
parties who irrespective of being a non-signatory to the arbitration
agreement are nevertheless bound by it, by virtue of them substituting
the signatory party in their derivative capacity. However, the ‘Group
of Companies’ doctrine functions on a completely different tangent
whereby, a non-signatory is held bound by the arbitration agreement
in its own individual capacity AND in addition to the signatories on
the basis of mutual consent, regardless of whether they may have
derived any rights or benefits from the signatories and independent of
the identity of the signatories. It observed that since consent forms the
cornerstone of arbitration, merely because any party shares certain
interests or benefits from a contract, they would not be covered
under the expression “claiming through or under” just because they
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

happen to share a legal or commercial relationship. Thus, Chloro
Controls (supra) to the extent that it traced the group of companies
doctrine to the phrase “claiming through or under” was held to be
erroneous and against the well-established principles of contract and
commercial law. The relevant observations read as under: -
“137. The word “claim” is of very extensive significance
embracing every species of legal demand. In the ordinary
sense, it means to demand as one’s own or as one’s
right.114 A “claim” also means assertion of a cause of
action.115 The expression “through” connotes “by means
of, in consequence of, by reason of.”116 The term “under”
is used with reference to an inferior or subordinate position.
P Ramanatha Aiyar’s Law Lexicon defines “claiming under”
or “claiming under him” to denote a person putting forward
a claim under derived rights.117 When the above definitions
are read harmoniously, it gives rise to an inference that
a person “claiming through or under” is asserting their
legal demand or cause of action in an intermediate or
derivative capacity. We can also conclude that a person
“claiming through or under” has inferior or subordinate
rights in comparison to the party from which it is deriving
its claim or right. Therefore, a person “claiming through
or under” cannot be a “party” to an arbitration agreement
on its own terms because it only stands in the shoes of
the original signatory party.
144. The first proposition of law relies on the construction of
the expression “any person” to conclude that the language
of Section 45 has wider import. However, the expression
“any person” cannot be singled out and construed devoid
of its context. The context, in terms of Section 8 and 45,
is provided by the subsequent phrase – “claiming through
or under”. Therefore, such “any persons” are acting only
in a derivative capacity. Since an arbitration agreement
excludes the jurisdiction of national courts, it is essential
that the parties consent, either expressly or impliedly, to
submit their dispute to the arbitral tribunal.
145. The second and third proposition of law states
that a non- signatory party may claim through or under
a signatory party by virtue of its legal or commercial
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relationship with the latter. However, this proposition is
contrary to the common law position as evidenced in
Sancheti (supra) and Tanning Research Laboratories
(supra) according to which a mere legal or commercial
connection is not sufficient to allow a non-signatory
to claim through or under a party to the arbitration
agreement. [...] Therefore, even though a subsidiary
derives interests or benefits from a contract entered
into by the company within a group, they would not be
covered under the expression “claiming through or under”
merely on the basis that it shares a legal or commercial
relationship with the parties.
146. [...] The group of companies doctrine is founded
on the mutual intention of the parties to determine if the
non-signatory entity within a group could be made a
party to the arbitration agreement in its own right. Such
non-signatory entity is not “claiming through or under” a
signatory party. As mentioned above, the phrase “claiming
through or under” is used in the context of successors in
interest that act in a derivative capacity and substitute
the signatory party to the arbitration agreement. To the
contrary, the group of companies doctrine is used to bind
the non-signatory to the arbitration agreement so that it
can agitate the benefits and be subject to the burdens that
it derived or is conferred in the course of the performance
of the contract. The doctrine can be used to bind a non-
signatory party to the arbitration agreement regardless of
the phrase “claiming through or under” as appearing in
Sections 8 and 45 of the Arbitration Act.
147. In Chloro Controls (supra), this Court joined the non-
signatory entities as parties to the arbitration agreement in
their own rights on the basis that they were signatories to
ancillary agreements which were closely interlinked with
the performance of the principal agreement containing
the arbitration agreement. This Court in Chloro Controls
(supra) reasoned that the non signatory entities, being
part of the same corporate group as the signatory parties,
were subsidiaries in interest or subsidiary companies, and
therefore were “claiming through or under” the signatory
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Shapoorji Pallonji and Company Private Limited

parties. As held above, the phrase “claiming through or
under” only applies to entities acting in a derivative capacity
and not with respect to joinder of parties in their own right.
Therefore, we hold that the approach of this Court in Chloro
Controls (supra) to the extent that it traced the group
of companies doctrine to the phrase “claiming through
or under” is erroneous and against the well-established
principles of contract and commercial law. As observed
above, the existence of the group of companies doctrine
is intrinsically found on the principle of the mutual intent
of parties to a commercial bargain.”
(Emphasis supplied)

43. Cox and Kings (I) (supra) observed that the correct legal basis
for the application of the doctrine of ‘group of companies’ (sic and
other allied principles of mutual consent) can be found in the Act,
1996 from a conjoint reading of the provisions of Section(s) 2(1)(h)
and 7, respectively. The aforesaid may be understood as under: -
(i) First, it observed that Section 7 of the Act, 1996 which defines
an “Arbitration Agreement” lays down in sub-section (4) the
various circumstances where a legal relationship is said to
exist of such nature as if there is an agreement in writing
for arbitration. Section 7 more particularly sub-section (4)(b)
provides the circumstances where the existence of an arbitration
agreement can be inferred from various documents that indicate
a manifestation of consent of persons or entities through their
actions of exchanging documents, even if there is no formal
agreement executed between such persons in the conventional
sense. Similarly, Section 7 sub-section (4)(c) which provides
that if there is an assertion of the existence of an arbitration
agreement by one party which was never denied or disputed
by the other, then such agreement would be considered a
valid arbitration agreement, is one another provision that lays
down the circumstances when the existence of an arbitration
agreement may be assumed based on the conduct of a person
or entity. The relevant observations read as under: -
“70. Section 2(h) of the Arbitration Act defines a
“party” to mean a party to an arbitration agreement.
Section 7 defines an arbitration agreement to mean
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an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which
may arise between them in respect of a “defined
legal relationship.” Section 7 requires that an
arbitration agreement has to be in writing. Section 7
indicates the circumstances in which it is regarded
as an agreement in writing. Such an agreement
may be embodied in a document, an exchange of
communications, including in the electronic form, or
in a statement of claim which is not traversed in the
defence. In Vidya Drolia v. Durga Trading Corporation,
this Court observed that a legal relationship means
a relationship which gives rise to legal obligations
and duties, and confers a right. Such a right may
be contractual or non-contractual. In case of a non-
contractual legal relationship, the cause of action
arises in tort, restitution, breach of statutory duty, or
some other non-contractual cause of action. Thus,
the legislative intent underlying Section 7 suggests
that any legal relationship, including relationships
where there is no contract between the persons or
entities, but whose actions or conduct has given rise
to a relationship, could form a subject matter of an
arbitration agreement under Section 7. [...]
72. Section 7(4)(b) provides the second circumstance,
according to which an arbitration agreement is in
writing if it is contained in an exchange of letters,
telex, telegrams or other means of telecommunication
including communication through electronic means
which provide a record of the agreement. According
to this provision, the existence of an arbitration
agreement can be inferred from various documents
duly approved by the parties.60 Section 7(4)
(b) dispenses with the conventional sense of an
agreement as a document with signatories. Rather,
it emphasizes on the manifestation of the consent of
persons or entities through their actions of exchanging
documents. However, the important aspect of the said
provision lies in the fact that the parties should be
[2025] 5 S.C.R. 1651

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

able to record their agreement through a documentary
record of evidence. In Great Offshore Ltd. v. Iranian
Offshore Engineering and Construction Company,
this Court observed that Section 7(4)(b) requires
the court to ask whether a record of agreement is
found in the exchange of letters, telex, telegrams,
or other means of telecommunication.61 Thus, the
act of agreeing by the persons or entities has to be
inferred or derived by the courts or tribunals from the
relevant documents and communication, neither of
which can be equated with a conventional contract.
73. The third circumstance is provided under Section
7(4)(c), according to which an arbitration agreement
is in writing if it is contained in an exchange of
statements of claim and defence in which the
existence of the agreement is alleged by one party
and not denied by the other. A two- Judge Bench
of this Court clarified in S N Prasad v. Monnet
Finance Limited62 that there will be an “exchange of
statements of claim and defence” for the purposes of
Section 7(4)(c) if there is an assertion of the existence
of an arbitration agreement in any suit, petition or
application filed before any court or tribunal, and if
there is no denial of it in the defence, counter, or
written statement. Thus, in the third circumstance the
court proceeds on the assumption that the conduct
of the person or entity in not denying the existence
of an arbitration agreement leads to the conclusive
proof of its existence. [...]”
(ii) Secondly, it found that Section 7 of the Act, 1996 is unique
in nature inasmuch as it has two distinct features; (I) that
sub-section (1) provides that for there to be a valid arbitration
agreement, there must exists a defined legal relationship to
arbitration, and (II) that sub-section (4) goes one step beyond
the traditional understanding of legal relationship, by laying
down circumstances where mutual intention of creating such
legal relationship to arbitrate may be assumed or gathered from
the conduct of the parties. The relevant observations read as
under: -
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“73. [...] All the three circumstances contained in
Section 7(4) are geared towards determining the
mutual intention of the parties to be bound by the
arbitration agreement.
74. Section 7 of the Arbitration Act contains two
aspects: a substantive aspect and a formal aspect. The
substantive aspect is contained is Section 7(1) which
allows parties to submit disputes arising between them
in respect of a defined legal relationship to arbitration.
The legal relationships between and among parties
could either be contractual or non-contractual. For
legal relations to be contractual in nature, they ought
to meet the requirements of the Indian contract law
as contained in the Contract Act. It has been shown
in the preceding paragraphs that a contract can either
be express or implied, which is inferred on the basis
of action or conduct of the parties. Thus, it is not
necessary for the persons or entities to be signatories
to a contract to enter into a legal relationship – the
only important aspect to be determined is whether
they intended or consented to enter into the legal
relationship by the dint of their action or conduct.”
(iii) Thirdly, it observed that Section 7 sub-section (3) of the Act,
1996 stipulates that where there is a record of agreement to
arbitrate, then there would be no requirement for having a
written arbitration agreement. Furthermore, Section 2(h) read
with Section 7 of the Act, 1996 also places no requirement that
the “party” to an arbitration agreement must be a signatory to
such agreement. The natural corollary to the aforesaid would
be that an arbitration agreement may be entered into in any
form, for example orally or tacitly, as long as the content of
the agreement is recorded. It eliminates the requirement of
the signature of parties or an exchange of messages between
the parties. Thus what emanates is that even non-signatories
can be regarded as a “party” to an arbitration agreement. The
relevant observations read as under: -
“75. The second aspect is contained in Section
7(3) which stipulates the requirement of a written
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

arbitration agreement. A written arbitration agreement
need not be signed by the parties if there is a record
of agreement.63 The mandatory requirement of a
written arbitration agreement is merely to ensure that
there is a clearly established record of the consent
of the parties to refer their disputes to arbitration to
the exclusion of the domestic courts.
76. Section 2(h) read with Section 7 does not
expressly require the “party” to be a signatory to
an arbitration agreement or the underlying contract
containing the arbitration agreement. [...] The above
provision states that an arbitration agreement may be
entered into in any form, for example orally or tacitly,
as long as the content of the agreement is recorded. It
eliminates the requirement of the signature of parties
or an exchange of messages between the parties.”
44. Accordingly, Cox and Kings (I) (supra) made a significant shift
from the original understanding and legal basis of the doctrine
of ‘group of companies’ and other allied principles of determining
mutual consent in Chloro Controls (supra). It held that the legal
basis for the application of the ‘Group of Companies’ doctrine lies
in the very definitions of “party” and “arbitration agreement” under
Section(s) 2(1)(h) and Section 7, respectively, and not in the
expression “claiming through or under” in Section(s) 8 and 45 of the
Act, 1996. The relevant observations read as under: -
“78. Reading Section 7 of the Arbitration Act in view of the
above discussion gives rise to the following conclusions:
first, arbitration agreements arise out of a legal relationship
between or among persons or entities which may be
contractual or otherwise; second, in situations where the
legal relationship is contractual in nature, the nature of
relationship can be determined on the basis of general
contract law principles; third, it is not necessary for the
persons or entities to be signatories to the arbitration
agreement to be bound by it; fourth, in case of non-
signatory parties, the important determination for the courts
is whether the persons or entities intended or consented
to be bound by the arbitration agreement or the underlying
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contract containing the arbitration agreement through
their acts or conduct; fifth, the requirement of a written
arbitration agreement has to be adhered to strictly, but the
form in which such agreement is recorded is irrelevant;
sixth, the requirement of a written arbitration agreement
does not exclude the possibility of binding non signatory
parties if there is a defined legal relationship between the
signatory and non-signatory parties; and seventh, once
the validity of an arbitration agreement is established, the
court or tribunal can determine the issue of which parties
are bound by such agreement.
79. It is presumed that the formal signatories to an
arbitration agreement are parties who will be bound by
it. However, in exceptional cases persons or entities who
have not signed or formally assented to a written arbitration
agreement or the underlying contract containing the
arbitration agreement may be held to be bound by such
agreement. As mentioned in the preceding paragraphs,
the doctrine of privity limits the imposition of rights and
liabilities on third parties to a contract. Generally, only the
parties to an arbitration agreement can be subject to the
full effects of the agreement in terms of the reliefs and
remedies because they consented to be bound by the
arbitration agreement. Therefore, the decisive question
before the courts or tribunals is whether a non-signatory
consented to be bound by the arbitration agreement.
To determine whether a non-signatory is bound by an
arbitration agreement, the courts and tribunals apply
typical principles of contract law and corporate law. The
legal doctrines provide a framework for evaluating the
specific contractual language and the factual settings to
determine the intentions of the parties to be bound by the
arbitration agreement.

xxx xxx xxx
153. The group of companies doctrine is based on
determining the mutual intention to join the non-signatory
as a “veritable” party to the arbitration agreement. Once a
tribunal comes to the determination that a non-signatory
[2025] 5 S.C.R. 1655

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

is a party to the arbitration agreement, such non-signatory
party can apply for interim measures under Section 9 of
the Arbitration Act. Establishing the legal basis for the
application of the group of companies doctrine in the
definition of “party” under Section 2(1)(h) read with Section
7 of the Arbitration Act resolves the anomality pointed out
by Chief Justice Ramana.”
45. The net effect of the aforesaid is that at the time when the decision
of Chloro Controls (supra) occupied the field, the applicability of
various principles of determining mutual consent was confined only
to Section(s) 8 and 45 of the Act, 1996, which empowered only
the courts to make a reference to arbitration. In the same manner,
since the definition of “party” in Section 2(1)(h) of the Act, 1996 was
understood to be at significant variance from Section(s) 8 and 45 of
the Act, 1996, more particularly the expression “any person claiming
through or under” with the former being construed to be much
narrow in scope and include only the signatories to the arbitration
agreement, there was misconceived assumption, that the authority
and jurisdiction of an arbitral tribunal was only limited to this narrowly
misconstrued definition of “party”, unlike that of the courts who had
been endowed with the power and jurisdictional reach to even non-
signatories by virtue of the enlarged meaning of “party”, couched in
the very language of Section(s) 8 and 45 of the Act, 1996. Thus, it
was assumed and rather wrongly, that an arbitral tribunal does not
itself have the power to lift the corporate veil or apply the doctrine of
‘Group of Companies’ and by extension to implead a non-signatory
to partake in arbitration by taking recourse to these principles of
implied mutual consent.
46. However, as discussed, the decision of Cox and Kings (I) (supra)
has made it abundantly clear that the legal basis for the application
of the ‘Group of Companies’ doctrine or any other principle for
determining mutual consent is in the definition of “party” under
Section 2(1)(h) read with the meaning of “arbitration agreement”
under Section 7 of the Act, 1996. Since both the aforesaid provisions
are not confined in their scope to either the courts or the arbitral
tribunal, and rather exists ubiquitously on the statute book and
is common or indifferent to both the courts and arbitral tribunals,
there cannot be any gainsaying that even the arbitral tribunal now
after the decision of Cox and Kings (I) (supra) could be said to be
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clothed with the power to take recourse to the various principles for
determining mutual consent, and thereby implead a non-signatory to
the arbitration, if such person is found to be bound to the arbitration
agreement.

III. Decision of Krish Spinning and the Judicial Rectification
of the second misconception emanating from SBP & Co.
47. As discussed in the foregoing paragraphs, the second reason why
the various High Courts were hesitant from recognizing the arbitral
tribunal’s power to implead a non-signatory on its own accord,
stemmed from the understanding and position of law that existed
then as regards the scope and extent of judicial scrutiny of the courts
which was required at the referral stage under Section 11 of the Act,
1996, before the subject matter could be referred to arbitration and
an arbitral tribunal be constituted.
48. In Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd.
reported in (2002) 2 SCC 388, a five-Judge Bench of this Court
observed that the power exercised by the referral court under
Section 11 of the Act, 1996 is an administrative power and thus the
Chief Justice or his designate do not have to decide any preliminary
issue at that stage. Any issue pertaining to non-arbitrability, validity
and existence of the arbitration agreement ought to be decided by
the arbitrator.
49. The aforesaid view occupied the field till the seven-Judge Bench
decision of this Court in SBP & Co. (supra) which held that the power
conferred upon the Chief Justice or his designate under Section 11
of the Act, 1996 is a judicial power and not merely an administrative
power. It held that being a judicial power, the Chief Justice or his
designate had the right to decide all preliminary issues at the referral
stage under Section 11(6) of the Act, 1996, and that the power of the
arbitral tribunal to rule on its own jurisdiction under Section 16 would
come into the picture only when the parties go before the arbitral
tribunal without recourse to the courts either under Sections 8 or 11
respectively of the Act, 1996.
50. The ultimate effect of the ratio of SBP & Co. (supra) was that the
scope for interference available to the referral courts when acting
under Section 11 of the Act, 1996 was substantially expanded, and
the referral courts were not only empowered but also expected to
[2025] 5 S.C.R. 1657

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

conduct mini trials and indulge in the appreciation of evidence on
various issues concerned with the subject matter of arbitration.
51. Overtime, the decision of SBP & Co. (supra) insofar as the extent
of judicial scrutiny that was required under Section 11 of the Act,
1996 was concerned, proved to be counter serving as the enlarged
scope of judicial interference at the referral stage induced significant
delays in the process of appointment of arbitrators and constitution of
arbitral tribunals, thereby rendering the very framework of arbitration
in India, ineffective, unviable and cumbersome.
52. The Law Commission of India in its 246th Report taking note of the
aforesaid problem inter-alia suggested that the scope of interference
under Section(s) 8 and 11 respectively of the Act, 1996 should be
restricted to a prima-facie satisfaction of the existence and validity
of the arbitration agreement. It further opined that except in cases
where the court finds that no arbitration agreement exists or is null
and void, the ordinary approach of the courts under Section 11 of
the Act, 1996 should be to appoint an arbitrator and refer the parties
to arbitration, leaving all issues including those which it has prima-
facie determined for final adjudication by the arbitral tribunals. The
relevant observations read as under: -
“33. It is in this context, the Commission has recommended
amendments to sections 8 and 11 of the Arbitration
and Conciliation Act, 1996. The scope of the judicial
intervention is only restricted to situations where the Court/
Judicial Authority finds that the arbitration agreement
does not exist or is null and void. In so far as the nature
of intervention is concerned, it is recommended that
in the event the Court/Judicial Authority is prima facie
satisfied against the argument challenging the arbitration
agreement, it shall appoint the arbitrator and/or refer the
parties to arbitration, as the case may be. The amendment
envisages that the judicial authority shall not refer the
parties to arbitration only if it finds that there does not
exist an arbitration agreement or that it is null and void.
If the judicial authority is of the opinion that prima facie
the arbitration agreement exists, then it shall refer the
dispute to arbitration, and leave the existence of the
arbitration agreement to be finally determined by the
arbitral tribunal. However, if the judicial authority concludes
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that the agreement does not exist, then the conclusion
will be final and not prima facie. [...]”
53. The aforesaid recommendations of the Commission were taken
note of by the Parliament and accordingly Section 11 sub-section
(6A) came to be inserted in the Act, 1996 by way of the Arbitration
and Conciliation (Amendment) Act, 2015. As per the said provision,
the referral courts in exercise of their jurisdiction under Section 11
were now required to only look into one aspect — the existence of
an arbitration agreement — nothing more, nothing less. All other
issues were now to be invariably left for the final determination by
the arbitral tribunal. [See: Duro Felguera, S.A. v. Gangavaram Port
Ltd. reported in (2017) 9 SCC 729]
54. A two-Judge Bench of this Court in Uttarakhand Purv Sainik Kalyan
Nigam Ltd. v. Northern Coal Field Ltd. reported in (2020) 2 SCC
455 held that the issue of limitation being a mixed question of law
and fact should be best left to the tribunal to decide and that the
referral court should restrict its examination only to the existence of
an arbitration agreement between the parties.
55. Then came the decision of this Court in Vidya Drolia & Ors v.
Durga Trading Corporation reported in (2021) 2 SCC 1, which
inter-alia held that although Section(s) 8 and 11 of the Act, 1996 are
at some variance inasmuch as the former requires the referral courts
to determine the “validity” of an arbitration agreement whereas the
latter requires determining only the “existence”, yet since both the
provisions are complementary to each other insofar as they both deal
with the power of courts to refer the parties to arbitration, the aspect
of “existence” as specified under Section 11 should be seen construed
along with the aspect of “validity” as specified under Section 8. It
held that both the provisions insofar as the standard of scrutiny by
the referral courts is concerned, ought to be compositely construed,
irrespective of whether the jurisdiction is being exercised by the
courts under Section 8 or 11 of the Act, 1996. Accordingly, it held
that the exercise of power of prima facie judicial review to examine
the existence of arbitration agreement also includes going into the
validity of the arbitration agreement and even objections as to the
arbitrability of the subject-matter. It also held that the referral court,
while exercising its powers under Section(s) 8 and 11 respectively
of the Act, 1996 is empowered, to enter scrutiny for determining and
ultimately knocking down ex facie meritless, frivolous and dishonest
[2025] 5 S.C.R. 1659

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

litigation so as to ensure expeditious and efficient disposal at the
referral stage and prevent unnecessary subjugation to arbitration.
The relevant observations read as under: -
“147.4. Most jurisdictions accept and require prima facie
review by the court on non-arbitrability aspects at the
referral stage.
147.5. Sections 8 and 11 of the Arbitration Act are
complementary provisions as was held in Patel Engg. Ltd.
[SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] The
object and purpose behind the two provisions is identical
to compel and force parties to abide by their contractual
understanding. This being so, the two provisions should
be read as laying down similar standard and not as laying
down different and separate parameters. Section 11 does
not prescribe any standard of judicial review by the court
for determining whether an arbitration agreement is in
existence. Section 8 states that the judicial review at the
stage of reference is prima facie and not final. Prima
facie standard equally applies when the power of judicial
review is exercised by the court under Section 11 of the
Arbitration Act. Therefore, we can read the mandate of
valid arbitration agreement in Section 8 into mandate of
Section 11, that is, “existence of an arbitration agreement”.
147.6. Exercise of power of prima facie judicial review
of existence as including validity is justified as a court
is the first forum that examines and decides the request
for the referral. Absolute “hands off” approach would be
counterproductive and harm arbitration, as an alternative
dispute resolution mechanism. Limited, yet effective
intervention is acceptable as it does not obstruct but
effectuates arbitration.

xxx xxx xxx
147.11. The interpretation appropriately balances the
allocation of the decision-making authority between the
court at the referral stage and the arbitrators’ primary
jurisdiction to decide disputes on merits. The court as
the judicial forum of the first instance can exercise prima
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facie test jurisdiction to screen and knock down ex facie
meritless, frivolous and dishonest litigation. Limited
jurisdiction of the courts ensures expeditious, alacritous
and efficient disposal when required at the referral stage.”
“148. Section 43(1) of the Arbitration Act states that the
Limitation Act, 1963 shall apply to arbitrations as it applies
to court proceedings. Sub-section (2) states that for the
purposes of the Arbitration Act and Limitation Act, arbitration
shall be deemed to have commenced on the date referred
to in Section 21. Limitation law is procedural and normally
disputes, being factual, would be for the arbitrator to
decide guided by the facts found and the law applicable.
The court at the referral stage can interfere only when it
is manifest that the claims are ex facie time-barred and
dead, or there is no subsisting dispute. All other cases
should be referred to the Arbitral Tribunal for decision on
merits. Similar would be the position in case of disputed
“no-claim certificate” or defence on the plea of novation
and “accord and satisfaction”. [...]
(Emphasis supplied)

56. The final conclusion of this Court in Vidya Drolia (supra) read as
under: -
“154.1. Ratio of the decision in Patel Engg. Ltd. [SBP &
Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] on the scope
of judicial review by the court while deciding an application
under Sections 8 or 11 of the Arbitration Act, post the
amendments by Act 3 of 2016 (with retrospective effect from
23-10-2015) and even post the amendments vide Act 33 of
2019 (with effect from 9-8-2019), is no longer applicable.
154.2. Scope of judicial review and jurisdiction of the court
under Sections 8 and 11 of the Arbitration Act is identical
but extremely limited and restricted.
154.3. The general rule and principle, in view of the
legislative mandate clear from Act 3 of 2016 and Act 33
of 2019, and the principle of severability and competence
competence, is that the Arbitral Tribunal is the preferred
first authority to determine and decide all questions of
[2025] 5 S.C.R. 1661

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

non arbitrability. The court has been conferred power
of “second look” on aspects of non-arbitrability post the
award in terms of sub-clauses (i), (ii) or (iv) of Section
34(2)(a) or sub-clause (i) of Section 34(2)(b) of the
Arbitration Act.
154.4. Rarely as a demurrer the court may interfere at
Section 8 or 11 stage when it is manifestly and ex facie
certain that the arbitration agreement is non-existent, invalid
or the disputes are non-arbitrable, though the nature and
facet of non-arbitrability would, to some extent, determine
the level and nature of judicial scrutiny. The restricted and
limited review is to check and protect parties from being
forced to arbitrate when the matter is demonstrably “non
arbitrable” and to cut off the deadwood. The court by
default would refer the matter when contentions relating to
non arbitrability are plainly arguable; when consideration
in summary proceedings would be insufficient and
inconclusive; when facts are contested; when the party
opposing arbitration adopts delaying tactics or impairs
conduct of arbitration proceedings. This is not the stage
for the court to enter into a mini trial or elaborate review
so as to usurp the jurisdiction of the Arbitral Tribunal but
to affirm and uphold integrity and efficacy of arbitration as
an alternative dispute resolution mechanism.”
(Emphasis supplied)

57. As is clear from the aforesaid extract, Vidya Drolia (supra) held that
although the arbitral tribunal is the preferred first authority to determine
the questions pertaining to non-arbitrability, yet the referral court may
exercise its limited jurisdiction to refuse reference to arbitration in
cases which are ex-facie frivolous and where it is certain that the
disputes are non-arbitrable.
58. What can be discerned from the aforesaid is that while the
enlarged scope and extent of judicial intervention at the referral
stage as held in SBP & Co. (supra) was legislatively overruled by
the insertion of Section 11 sub-section (6A) in the Act, 1996, the
avowed legislative intent of minimal judicial intervention was still
far from being achieved, partly due to the misconception created
in the position of law as regards ambit of scrutiny under Section 11
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of the Act, 1996 by Vidya Drolia (supra). Although, Vidya Drolia
(supra) predominantly found favour with the principal of minimal
interference at the stage of Section 11 sub-section (6) petitions by
referral courts in light of the introduction of Section 11sub-section
(6A) to the Act, 1996, yet it still proceeded in a somewhat wrong
direction on two counts; first, by conflating the scope and standard
of scrutiny by the referral courts under Section 8 with that under
Section 11 and secondly, by carving out an exceptional category
of cases in which interference by the referral court was permissible,
that being disputes where it is manifestly and ex-facie certain that
the arbitration agreement is non-existent, invalid or the dispute is
meritless or non-arbitrable.
59. The precarious situation that was created by Vidya Drolia (supra) is
evident from the subsequent decisions of this Court in DLF Home
Developers Ltd. v. Rajapura Homes (P) Ltd. reported in (2021) 16
SCC 743 and BSNL v. Nortel Networks (India) (P) Ltd., reported
in (2021) 5 SCC 738 and a catena of other decisions wherein it was
held that while undertaking a prima facie review under Section 11 of
the Act, 1996, the interference of the courts in certain aspects and
merits of the subject-matter may be warranted in exceptional cases,
to weed out any frivolous or vexatious claims and prevent wastage
of public and private resources.
60. The next chapter in the saga of scope and ambit of Section 11 of
the Act, 1996 came in the form of the seven-Judge Bench decision
of this Court in In Re: Interplay Between Arbitration Agreements
under the Arbitration and Conciliation Act 1996 and the Indian
Stamp Act 1899 reported in 2023 INSC 1066 wherein one of us
(J.B. Pardiwala J.) as part of the Bench, undertook a comprehensive
analysis of Section(s) 8 and 11 respectively of the Act, 1996 and,
inter alia, made poignant observations about the nature of the
power vested in the Courts insofar as the aspect of appointment of
arbitrator is concerned. It held that the referral court, be it the High
Court or the Supreme Court under Section 11 of the Act, 1996 shall
examine only the existence of a prima facie arbitration agreement
and not any other issues. The relevant observations read as under: -
“185. The corollary of the doctrine of competence-
competence is that courts may only examine whether
an arbitration agreement exists on the basis of the prima
[2025] 5 S.C.R. 1663

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

facie standard of review. The nature of objections to the
jurisdiction of an arbitral tribunal on the basis that stamp-
duty has not been paid or is inadequate is such as cannot
be decided on a prima facie basis. Objections of this
kind will require a detailed consideration of evidence and
submissions and a finding as to the law as well as the
facts. Obligating the court to decide issues of stamping at
the Section 8 or Section 11 stage will defeat the legislative
intent underlying the Arbitration Act.
186. The purpose of vesting courts with certain powers
under Sections 8 and 11 of the Arbitration Act is to facilitate
and enable arbitration as well as to ensure that parties
comply with arbitration agreements. The disputes which
have arisen between them remain the domain of the arbitral
tribunal (subject to the scope of its jurisdiction as defined
by the arbitration clause). [...]
209. The above extract indicates that the Supreme Court
or High Court at the stage of the appointment of an
arbitrator shall “examine the existence of a prima facie
arbitration only pertain to the validity of the arbitration
agreement, but also include any other issues which
are a consequence of unnecessary judicial interference
in the arbitration proceedings. Accordingly, the “other
issues” also include examination and impounding of an
unstamped instrument by the referral court at the Section
8 or Section 11 stage. The process of examination,
impounding, and dealing with an unstamped instrument
under the Stamp Act is not a timebound process, and
therefore does not align with the stated goal of the
Arbitration Act to ensure expeditious and time-bound
appointment of arbitrators. [...]”
(Emphasis supplied)

61. In SBI General Insurance Co. Ltd. v. Krish Spinning, reported
in 2024 INSC 532 one of us (J.B. Pardiwala J.) taking note of the
state of flux surrounding the legal position on the scope and extent
of judicial scrutiny permissible under Section 11 of the Act, 1996,
held that the courts at the referral stage should not venture into
contested questions involving complex facts. It was held that the
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observations made in Vidya Drolia (supra) insofar as it allowed the
referral courts under Section 11 of the Act, 1996 to intervene and
refuse appointment of an arbitrator in matters that were ex-facie
meritless, frivolous, vexatious or deadwood, no longer could be said
to hold field in view of the observations made in the subsequent
and larger bench decision of In Re: Interplay (supra). The relevant
observations read as under: -
“98. What follows from the negative facet of arbitral
autonomy when applied in the context of Section 16 is
that the national courts are prohibited from interfering in
matters pertaining to the jurisdiction of the arbitral tribunal,
as exclusive jurisdiction on those aspects vests with the
arbitral tribunal. The legislative mandate of prima facie
determination at the stage of Sections 8 and 11 respectively
ensures that the referral courts do not end up venturing
into what is intended by the legislature to be the exclusive
domain of the arbitral tribunal.

xxx xxx xxx
113. Referring to the Statement of Objects and Reasons
of the Arbitration and Conciliation (Amendment) Act, 2015,
it was observed in In Re: Interplay (supra) that the High
Court and the Supreme Court at the stage of appointment
of arbitrator shall examine the existence of a prima facie
arbitration agreement and not any other issues. [...]
114. In view of the observations made by this Court in In Re:
Interplay (supra), it is clear that the scope of enquiry at the
stage of appointment of arbitrator is limited to the scrutiny
of prima facie existence of the arbitration agreement, and
nothing else. For this reason, we find it difficult to hold
that the observations made in Vidya Drolia (supra) and
adopted in NTPC v. SPML (supra) that the jurisdiction of
the referral court when dealing with the issue of “accord
and satisfaction” under Section 11 extends to weeding
out ex-facie non-arbitrable and frivolous disputes would
continue to apply despite the subsequent decision in In
Re: Interplay (supra).

xxx xxx xxx
[2025] 5 S.C.R. 1665

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

125. We are also of the view that ex-facie frivolity and
dishonesty in litigation is an aspect which the arbitral
tribunal is equally, if not more, capable to decide upon
the appreciation of the evidence adduced by the parties.
We say so because the arbitral tribunal has the benefit
of going through all the relevant evidence and pleadings
in much more detail than the referral court. If the referral
court is able to see the frivolity in the litigation on the basis
of bare minimum pleadings, then it would be incorrect
to doubt that the arbitral tribunal would not be able to
arrive at the same inference, most likely in the first few
hearings itself, with the benefit of extensive pleadings and
evidentiary material.”
62. Krish Spinning (supra) further held that, the scope of Section 8 is
markedly different from the scope of Section 11 of the Act, 1996 as
although, both provisions deal with the power of the courts to refer
the parties to arbitration, yet the reason why Section 8 envisages
a more stricter test of determining the “validity” of the arbitration
agreement as opposed to mere “existence” under Section 11 is owed
to the fact that, Section 8 specifically enables the commencement
or continuation of arbitration during the pendency of an application
under the said provision, thus, there is no inherent danger or harm to
subjecting the substantive rights of the parties to arbitrate in a state
of limbo or worse, remediless, if the courts themselves decide to
proceed in determining the validity of the arbitration agreement while
the arbitral tribunal simultaneously continues with the substantive
claims. However, Section 11 on the other hand, is the very first
step in commencement of arbitration proceedings, no arbitration
proceedings can commence or continue unless the application under
the said provision is decided. Furthermore, the determination by a
judicial authority under Section 8 of the Act, 1996 can be assailed by
way of an appeal under Section 37, however, a determination under
Section 11 of the Act, 1996 is not appealable, thus, the approach
which the courts are expected to undertake under Section 8 viz-à-
viz Section 11, must be reflective of these nuanced differences in
the scope of these provisions. Thus, it held that the observations of
Vidya Drolia (supra) in conflating the nature of the test envisaged
under Section 8 of the Act, 1996 with that under Section 11, cannot
be said to be a good law. The relevant observations read as under: -
1666 [2025] 5 S.C.R.

Supreme Court Reports

“108. Section 11 of the Act, 1996 is provided to give effect
to the mutual intention of the parties to settle their disputes
by arbitration in situations where the parties fail to appoint
an arbitrator(s). The parameters of judicial review laid down
for Section 8 differ from those prescribed for Section 11.
The view taken in SBP & Co. (supra) and affirmed in Vidya
Drolia (supra) that Sections 8 and 11 respectively of the
Act, 1996 are complementary in nature was legislatively
overruled by the introduction of Section 11(6-A) in 2015.
Thus, although both these provisions intend to compel
parties to abide by their mutual intention to arbitrate, yet
the scope of powers conferred upon the courts under both
the sections are different.
109. The difference between Sections 8 and 11 respectively
of the Act, 1996 is also evident from the scope of these
provisions. Some of these differences are:
i. While Section 8 empowers any ‘judicial authority’ to
refer the parties to arbitration, under Section 11, the
power to refer has been exclusively conferred upon
the High Court and the Supreme Court.
ii. Under Section 37, an appeal lies against the refusal of
the judicial authority to refer the parties to arbitration,
whereas no such provision for appeal exists for a
refusal under Section 11.
iii. The standard of scrutiny provided under Section 8
is that of prima facie examination of the validity and
existence of an arbitration agreement. Whereas, the
standard of scrutiny under Section 11 is confined to
the examination of the existence of the arbitration
agreement.
iv. During the pendency of an application under
Section 8, arbitration may commence or continue
and an award can be passed. On the other hand,
under Section 11, once there is failure on the part
of the parties in appointing the arbitrator as per the
agreed procedure and an application is preferred, no
arbitration proceedings can commence or continue.
[2025] 5 S.C.R. 1667

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

110. The scope of examination under Section 11(6-A) is
confined to the existence of an arbitration agreement on
the basis of Section 7. The examination of validity of the
arbitration agreement is also limited to the requirement of
formal validity such as the requirement that the agreement
should be in writing.

xxx xxx xxx
123. The power available to the referral courts has to be
construed in the light of the fact that no right to appeal is
available against any order passed by the referral court
under Section 11 for either appointing or refusing to
appoint an arbitrator. Thus, by delving into the domain of
the arbitral tribunal at the nascent stage of Section 11, the
referral courts also run the risk of leaving the claimant in a
situation wherein it does not have any forum to approach
for the adjudication of its claims, if it Section 11 application
is rejected.
124. Section 11 also envisages a time-bound and
expeditious disposal of the application for appointment of
arbitrator. One of the reasons for this is also the fact that
unlike Section 8, once an application under Section 11 is
filed, arbitration cannot commence until the arbitral tribunal
is constituted by the referral court. This Court, on various
occasions, has given directions to the High Courts for
expeditious disposal of pending Section 11 applications. It
has also directed the litigating parties to refrain from filing
bulky pleadings in matters pertaining to Section 11. [...]”
63. Accordingly, Krish Spinning (supra) held that the scope of enquiry
at the referral stage under Section 11 of the Act, 1996 is confined
to a prima facie determination of the existence of the arbitration
agreement, and does not permit a contested or laborious enquiry
into all other issues including the conclusive existence of such
arbitration agreement, which is for the arbitral tribunal alone to ‘rule’
under Section 16. Under Section 11, the referall court’s enquiry is
limited to examining whether the application under the said provision
is filed before the correct court or not, the said application is within
limitation or not in light of the decision of M/s Arif Azim Co. Ltd. v.
1668 [2025] 5 S.C.R.

Supreme Court Reports

M/s Aptech Ltd. reported in 2024 INSC 155, and to the prima-facie
existence of an arbitration agreement. Such an approach gives true
meaning to the legislative intent underlying Section 11 sub-section
(6A) of the Act, 1996 and also to the view taken in In Re: Interplay
(supra). The relevant ovservations read as under: -
“111. The use of the term ‘examination’ under Section
11(6-A) as distinguished from the use of the term ‘rule’
under Section 16 implies that the scope of enquiry under
section 11(6-A) is limited to a prima facie scrutiny of the
existence of the arbitration agreement, and does not
include a contested or laborious enquiry, which is left for
the arbitral tribunal to ‘rule’ under Section 16. The prima
facie view on existence of the arbitration agreement taken
by the referral court does not bind either the arbitral tribunal
or the court enforcing the arbitral award.

xxx xxx xxx
133. Thus, we clarify that while determining the issue of
limitation in exercise of the powers under Section 11(6) of
the Act, 1996, the referral court should limit its enquiry to
examining whether Section 11(6) application has been filed
within the period of limitation of three years or not. The
date of commencement of limitation period for this purpose
shall have to be construed as per the decision in Arif Azim
(supra). As a natural corollary, it is further clarified that the
referral courts, at the stage of deciding an application for
appointment of arbitrator, must not conduct an intricate
evidentiary enquiry into the question whether the claims
raised by the applicant are time barred and should leave
that question for determination by the arbitrator. Such an
approach gives true meaning to the legislative intention
underlying Section 11(6-A) of the Act, and also to the view
taken in In Re: Interplay (supra).
64. When the decision of this Court in Chloro Controls (supra) came,
the position of law as regards the standard of scrutiny expected by
the referral courts was governed by the decision of SBP Co. (supra),
which as already discussed, was premised on the rudimentary
understanding that the arbitral tribunals are not empowered to
determine issues as regards the validity and existence of the
[2025] 5 S.C.R. 1669

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

arbitration agreement and whether the claims are time-barred or
vexatious due to the non-applicability of Section 16 in instances
of court referred arbitrations. The understanding which stemmed
from SBP Co. (supra) was that the referral courts were required to
conduct mini trials and indulge in the appreciation of evidence on
the aforesaid issues, even though they were inextricably linked with
the substantive merits of the subject-matter.
65. Accordingly, when Chloro Controls (supra) held that a non-signatory
to the arbitration agreement may be bound by the arbitration
agreement by the doctrine of ‘Group of Companies’, the test which it
laid down for applying the said doctrine had been evolved, squarely
keeping in mind the decision of SBP Co. (supra). Which is why,
Chloro Controls (supra) held that before a non- signatory can be
held to be bound by the arbitration agreement, the referral courts
would have to make a determination of all issues fundamental to
making a reference to arbitration including the issue whether a non-
signatory could be said to be bound by the arbitration agreement.
The net effect of the aforesaid was that, arbitral tribunals were
deemed to be incompetent to identify and implead a non-signatory
to the arbitration agreement on its own accord, as it was understood
from SBP Co. (supra), that such duty had been cast only upon the
referral courts to determine.
66. However, with the subsequent developments, particularly in light
of two key decisions of this Court being In Re: Interplay (supra)
and Krish Spinning (supra), it is no more res-integra, that the
extent of scrutiny of the referralcourts under Section 11 of the Act,
1996 is extremely narrow, and confined to only one aspect i.e.,
the prima-facie determination of the “existence” of the arbitration
agreement. Krish Spinning (supra) has categorically held that
only those questions which inextricably attacks or questions the
“existence” of the arbitration agreement, should be looked into
by the referral courts, that only for the purpose of a prima-facie
satisfaction, all other questions, particularly mixed questions of law
and fact fall within the exclusive jurisdiction of the arbitral tribunal,
and cannot be looked into by the referral court, even for a prima-facie
determination. Questions which involve examination of contested
question of facts and appreciation of evidence, should be left to the
arbitral tribunals to decide, as it is equally, if not more capable to
decide such questions, as it has the benefit of going through all the
1670 [2025] 5 S.C.R.

Supreme Court Reports

relevant evidence and pleadings in much more detail than the referral
courts. Although the aforesaid observations were in the context
of “accord and satisfaction” yet, the principles laid therein, would,
nevertheless apply with equal force to all other issues entrenching
upon the exercise of jurisdiction under Section 11 of the Act, 1996.
The relevant observations read as under: -
“115. The dispute pertaining to the “accord and satisfaction”
of claims is not one which attacks or questions the
existence of the arbitration agreement in any way. As
held by us in the preceding parts of this judgment, the
arbitration agreement, being separate and independent
from the underlying substantive contract in which it is
contained, continues to remain in existence even after
the original contract stands discharged by “accord and
satisfaction”.
116. The question of “accord and satisfaction”, being a
mixed question of law and fact, comes within the exclusive
jurisdiction of the arbitral tribunal, if not otherwise agreed
upon between the parties. Thus, the negative effect of
competence-competence would require that the matter
falling within the exclusive domain of the arbitral tribunal,
should not be looked into by the referral court, even for a
prima facie determination, before the arbitral tribunal first
has had the opportunity of looking into it.

xxx xxx xxx
125. We are also of the view that ex-facie frivolity and
dishonesty in litigation is an aspect which the arbitral
tribunal is equally, if not more, capable to decide upon
the appreciation of the evidence adduced by the parties.
We say so because the arbitral tribunal has the benefit
of going through all the relevant evidence and pleadings
in much more detail than the referral court. If the referral
court is able to see the frivolity in the litigation on the basis
of bare minimum pleadings, then it would be incorrect
to doubt that the arbitral tribunal would not be able to
arrive at the same inference, most likely in the first few
hearings itself, with the benefit of extensive pleadings and
evidentiary material.”
[2025] 5 S.C.R. 1671

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

67. Thus, the archaic understanding that an arbitral tribunal is incapable or
incompetent to identify and implead a non-signatory to the arbitration
agreement on its own accord, is not the correct position of law, in
view of the decisions of this Court in In Re: Interplay (supra) and
Krish Spinning (supra). We find, that the limited nature and scope
of inquiry which the referral courts are expected to undertake as
regards the “existence” of the arbitration agreement, would as a logical
sequitur obligate the arbitral tribunal also to look into this question.
Such a question, by no stretch, can be regarded as falling within
the exclusive domain or jurisdiction of the referral courts, so as to
render any examination of it by the arbitral tribunal a usurpation of
the referral courts authority and duty.

c. How Cox and Kings (I) contemplates determination
of mutual intention of Non-Signatories to arbitration
agreements.
68. However, even though an arbitral tribunal undoubtedly would be
empowered to identify and implead a non-signatory to the arbitration
agreement on its own, yet the question still remains, if the arbitral
tribunal could be considered to be the appropriate forum for deciding
this issue? In other words, whether, the issue that a non-signatory is
bound by the arbitration agreement could be termed to be a question
which inextricably attacks or questions the “existence” of the arbitration
agreement, and thus, should be looked into by the referral courts?
69. The seminal importance of the aforesaid question lies in the
contention that has been vehemently put forward before us by the
appellants herein. It has been contended that when the application
under Section 11 of the Act, 1996 was filed by the respondent no.
1 herein, the appellant herein was never made a party. In fact,
in the entire application under Section 11, the respondent no. 1
never imputed any allegations or put forth any claims against the
appellants herein, which would suggest its intention to implead the
appellant herein in the arbitration proceedings, or that it is bound by
the arbitration agreement. In such circumstances, it was contended
by the appellant herein, that in the absence of the appellant herein
being a party to the application under Section 11 and in the absence
of the referral court directing or leaving the question of impleadment
of the appellant for the arbitral tribunal to decide, the appellant herein
1672 [2025] 5 S.C.R.

Supreme Court Reports

could not have been impleaded to the arbitration proceedings by
the arbitral tribunal.
70. To put it simply, the argument of the appellant herein is that, where the
non- signatory is a party to the application under Section 11 of the Act,
1996, the referral court must first make a prima-facie determination as
to whether such non-signatory is bound by the arbitration agreement
or not, before leaving the conclusive determination of such question
to the arbitral tribunal. Conversely, where the non-signatory sought
to be enjoined in arbitration is not a party to the application under
Section 11, the referral court must give leave or direct the arbitral
tribunal to examine whether such non-signatory is bound by the
arbitration agreement or not, before it can be impleaded by the
arbitral tribunal on its own accord.
71. In other words, the question that has been canvassed before us
for our consideration is whether, the question that a non-signatory
is bound by the arbitration agreement could be termed to be a
question which inextricably attacks or questions the “existence” of the
arbitration agreement, such that in the absence of any examination
or application of mind by the referral court to such question would
render the very arbitration proceedings that has been commenced
pursuant to the application under Section 11 of the Act, 1996 to be
non-est, insofar as such non-signatory is concerned.

I. The nature and extent of the test laid down in Cox and
Kings (I) for determining Non-Signatories who are bound
by the arbitration agreements.
72. In order to answer the aforesaid question, we must once again
look into the decision of this Court in Cox and Kings (I) (supra),
to ascertain the nature of the question whether a non-signatory is
bound by the arbitration agreement or not, and the manner in which
the referral courts and the arbitral tribunal are expected to tackle
such a question.
73. Cox and Kings (I) (supra) after an exhaustive examination of the
question of existence or applicability of the ‘Group of Companies’
doctrine in a particular case, is fundamentally a fact-intensive exercise
that involves a nuanced determination of the consent of parties from
diverse factual elements and circumstances. The said doctrine and by
extension any other principle for determining mutual consent, broadly
[2025] 5 S.C.R. 1673

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

requires ascertaining the intention of the parties by analysing the factual
circumstances surrounding the contractual arrangements, particularly
factors such as the level of involvement of the non- signatory in the
negotiation, conclusion (sic execution), performance or termination
of the contract, to what extent such conduct may be indicative its
position as a veritable party to the arbitration agreement and common
intention to be bound by it. Thus, it was held that the primary test for
ascertaining the applicability of the ‘Group of Companies’ doctrine
lies in the determination of the intention of the parties, which is to
be inferred from the surrounding factual matrix, or in other words,
the inquiry or test is, by its very nature, predominantly factual. The
relevant observations read as under: -
96. [...] The level of the non-signatory party’s involvement
was to the extent of making the other party believe that it
was a veritable party to the contract, and the arbitration
agreement contained under it. Therefore, the group of
companies doctrine is applied to ascertain the intentions
of the parties by analysing the factual circumstances
surrounding the contractual arrangements.
101. [...] Rather, the courts need to determine: first, the
existence of a group of companies; and second, the
conduct of the signatory and non-signatory parties which
indicate their common intention to make the non-signatory
a party to the arbitration agreement.95 Thus, the group
of companies doctrine is similar to other consent based
doctrines such as agency, assignment, assumption, and
guarantee to the extent that it is ordinarily applied as a
means of identifying the common intention of the parties
to bind the non- signatory to the arbitration agreement.
102. [...] Thus, the existence of a group, of companies is
a factual element that the court or tribunal has to consider
when analysing the consent of the parties. It inevitably
adds an extra layer of criteria to an exercise which at its
core is preponderant on determining the consent of the
parties in case of complex transactions involving multiple
parties and agreements.
105. In multi-party agreements, the courts or tribunals
will have to examine the corporate structure to determine
1674 [2025] 5 S.C.R.

Supreme Court Reports

whether both the signatory and non signatory parties belong
to the same group. This evaluation is fact specific and must
be carried out in accordance with the appropriate principles
of company law. Once the existence of the corporate group
is established, the next step is the determination of whether
there was a mutual intention of all the parties to bind the
non-signatory to the arbitration agreement.
109. [...] The primary test to apply the group of companies
doctrine is by determining the intention of the parties on
the basis of the underlying factual circumstances. The
application of the group of companies doctrine will serve
to stymie satellite litigation by non-signatory members of
the corporate group, thereby ensuring the efficacy of the
agreement between the parties.
74. From above, it is manifest that the test for determining the applicability
of the ‘Group of Companies’ doctrine is intrinsically factual in nature,
necessitating a close and context-specific inquiry. However, Cox and
Kings (I) (supra) did not merely stop at just establishing the factual
nature of such an exercise, but further proceeded to expound, the
extent and depth in which the aforementioned factual factors must be
determined in the course of such exercise by laying down the threshold
standards for determining the applicability of the said doctrine. Placing
reliance on one another decision of this Court in Oil and Natural
Gas Corporation Ltd. v. Discovery Enterprises Pvt. Ltd. reported
in (2022) 8 SCC 42, it held that the test for determining applicability
of the ‘Group of Companies’ doctrine envisages a cumulative and
holistic determination of the factual aspects such as the relationship
between and among the legal entities within the corporate group
structure, their underlying contractual obligations, the commonality
of the subject matter and the composite nature of the transactions
undertaken, and their overall participation in the project / subject-
matter for achieving a common purpose. The relevant observations
read as under: -
“110. In Discovery Enterprises (supra), this Court refined
and clarified the cumulative factors that the courts and
tribunals should consider in deciding whether a company
within a group of companies is bound by the arbitration
agreement:
[2025] 5 S.C.R. 1675

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

“40. In deciding whether a company within a
group of companies which is not a signatory
to arbitration agreement would nonetheless
be bound by it, the law considers the following
factors:
(i) The mutual intent of the parties;
(ii) The relationship of a non-signatory to a
party which is a signatory to the agreement;
(iii) The commonality of the subject-matter;
(iv) The composite nature of the transactions;
and
(v) The performance of the contract.”
75. Cox and Kings (I) (supra) observed that doctrines such as ‘Group of
Companies’ being a consent-based theory, as a necessary implication
requires that the inquiry must not be superficial or perfunctory but
must instead involve a comprehensive and holistic assessment of the
composite relationship among the entities concerned, the underlying
transactions, and the attendant circumstances evincing mutual
intention to be bound by the arbitration agreement. Endorsing the view
taken in Discovery Enterprises (supra), it held that mere incidental
involvement in the negotiation or performance of the contract is not
sufficient to infer the consent of the non-signatory to be bound by the
underlying contract or its arbitration agreement. The evaluation must
be indicative that the involvement of the non-signatory was of such
manner which was sufficient to lead the other parties to legitimately
believe that the non-signatory was a veritable party to the contract.
The relevant observations read as under: -
“111. Since the group of companies doctrine is a consent
based theory, its application depends upon the consideration
of a variety of factual elements to establish the mutual
intention of all the parties involved. In other words, the
group of companies doctrine is a means to infer the mutual
intentions of both the signatory and non-signatory parties
to be bound by the arbitration agreement. The relationship
between and among the legal entities within the corporate
group structure and the involvement of the parties in the
performance of the underlying contractual obligations
1676 [2025] 5 S.C.R.

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are indicators to determine the mutual intentions of the
parties. The other factors such as the commonality of the
subject matter, composite nature of the transactions, and
the performance of the contract ought to be cumulatively
considered and analysed by courts and tribunals to identify
the intention of the parties to bind the non-signatory party
to the arbitration agreement. [...]
112. [...] However, we clarify that mere presence of a
commercial relationship between the signatory and non-
signatory parties is not sufficient to infer “legal relationship”
between and among the parties. If this factor is applied
solely, any related entity or company may be impleaded
even when it does not have any rights or obligations
under the underlying contract and did not take part in the
performance of the contract. The group of companies
doctrine cannot be applied to abrogate party consent
and autonomy. The doctrine, properly conceptualised and
applied, gives effect to mutual intent and autonomy.
121. Evaluating the involvement of the non-signatory
party in the negotiation, performance, or termination of a
contract is an important factor for a number of reasons.
First, by being actively involved in the performance of
a contract, a non-signatory may create an appearance
that it is a veritable party to the contract containing the
arbitration agreement; second, the conduct of the non
signatory may be in harmony with the conduct of the
other members of the group, leading the other party to
legitimately believe that the non-signatory was a veritable
party to the contract; and third, the other party has
legitimate reasons to rely on the appearance created by
the non-signatory party so as to bind it to the arbitration
agreement.
122. [...] Rather, the courts or tribunals should closely
evaluate the overall conduct and involvement of the non-
signatory party in the performance of the contract. The
nature or standard of involvement of the non-signatory
in the performance of the contract should be such that
the non-signatory has actively assumed obligations or
[2025] 5 S.C.R. 1677

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

performance upon itself under the contract. In other
words, the test is to determine whether the non- signatory
has a positive, direct, and substantial involvement in
the negotiation, performance, or termination of the
contract. Mere incidental involvement in the negotiation
or performance of the contract is not sufficient to infer the
consent of the non signatory to be bound by the underlying
contract or its arbitration agreement.
127. We are of the opinion that there is a need to seek
a balance between the consensual nature of arbitration
and the modern commercial reality where a non-signatory
becomes implicated in a commercial transaction in
a number of different ways. Such a balance can be
adequately achieved if the factors laid down under
Discovery Enterprises (supra) are applied holistically.
For instance, the involvement of the non-signatory in the
performance of the underlying contract in a manner that
suggests that it intended to be bound by the contract
containing the arbitration agreement is an important aspect.
Other factors such as the composite nature of transaction
and commonality of subject matter would suggest that
the claims against the non-signatory were strongly inter-
linked with the subject matter of the tribunal’s jurisdiction.
Looking at the factors holistically, it could be inferred that
the non-signatories, by virtue of their relationship with the
signatory parties and active involvement in the performance
of commercial obligations which are intricately linked to the
subject matter, are not actually strangers to the dispute
between the signatory parties.
128. We hold that all the cumulative factors laid down in
Discovery Enterprises (supra) must be considered while
determining the applicability of the group of companies
doctrine. However, the application of the above factors has
to be fact- specific, and this Court cannot tie the hands of
the courts or tribunals by laying down how much weightage
they ought to give to the above factors. This approach
ensures that a dogmatic emphasis on express consent is
eschewed in favour of a modern approach to consent which
focuses on the factual analysis, complexity of commercial
1678 [2025] 5 S.C.R.

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projects, and thereby increases the relevance of arbitration
in multi-party disputes. [...]
(Emphasis supplied)

76. Owing to the intrinsic character of the test — being one that entails
a fact- intensive inquiry involving a mixed question of fact and law —
and further, given the extensive standard it demands, requiring
a comprehensive and holistic appraisal of all material facts and
attendant circumstances, it may be safely concluded that the arbitral
tribunal is the more appropriate and competent forum to adjudicate
upon the issue of whether a non-signatory is bound by the arbitration
agreement, as the arbitral as it has the innate advantage of going
through all the relevant evidence and pleadings in greater depth and
detail than the referral court at the pre-reference stage, and as such
is uniquely positioned to undertake such a nuanced determination.

II. Determining the “existence” viz-à-viz the intention of parties
from “express words” of an Arbitration Agreement.
77. In order to resolve the question whether the issue of a non-signatory
being bound by an arbitration agreement could be said to be
inextricably intertwined with the determination of the “existence” of
the arbitration agreement, it is apposite to once again advert to Cox
and Kings (I) (supra), more particularly, as to the manner in which it
envisages the identification and determination of the binding effect of
an arbitration agreement upon a non-signatory, based on the factual
aspects delineated by it, as mentioned in the foregoing paragraphs.
78. Cox and Kings (I) (supra) observed that the “legal relationship of
a non- signatory to a party which is a signatory to the agreement”
must be analyzed in the context of the underlying substantive contract
which contains the arbitration agreement. This may be ascertained
either from the duty or relationship attributed to the non-signatory
within the underlying contract or may be inferred from its conduct with
respect to such contract. If the underlying contract forms basis for a
subject-matter common to both the signatory and the non-signatory
or any composite transaction by them, then it would be a positive
indicum for inferring the consent of the non-signatory to arbitrate
with respect to the subject-matter. Transactions by a non-signatory
which are interlinked with the underlying contract in such manner,
[2025] 5 S.C.R. 1679

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

in the absence of which the performance of the contract may not be
feasible, is one another instance for inferring this consent. Placing
reliance on Chloro Controls (supra) it observed that factors such
as “commonality of the subject- matter” or “composite transaction”
would have to be gathered from the conjoint reading of the principal
and supplementary agreements on the one hand, and the intention
of the parties and their conduct on the other. Amongst these, the
participation of the non-signatory in the performance of the underlying
contract is the most crucial factor to discern the intention of the parties.
“112. Section 7 of the Arbitration Act broadly talks about
an agreement by the parties in respect of a defined legal
relationship, whether contractual or not. Such a legal
relationship must give rise to legal obligations and duties.
In a corporate group, a company may have various related
companies. The legal relationship must be analysed in the
context of the underlying contract containing the arbitration
agreement. The nature of the contractual relationship can
either be formally encrusted in the underlying contract, or
it can also be inferred from the conduct of the signatory
and non-signatory parties with respect to such contract. [...]
115. In case of multiple parties, the necessity of a common
subject- matter and composite transaction is an important
factual indicator. An arbitration agreement arises out
of a defined legal relationship between the parties with
respect to a particular subject matter. Commonality of
the subject matter indicates that the conduct of the non-
signatory party must be related to the subject matter of
the arbitration agreement. For instance, if the subject
matter of the contract underlying the arbitration agreement
pertains to distribution of healthcare goods, the conduct
of the non-signatory party should also be connected or in
pursuance of the contractual duties and obligations, that
is, pertaining to the distribution of healthcare goods. The
determination of this factor is important to demonstrate
that the non-signatory party consented to arbitrate with
respect to the particular subject matter.
116. In case of a composite transaction involving
multiple agreements, it would be incumbent for the
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courts and tribunals to assess whether the agreements
are consequential or in the nature of a follow-up to the
principal agreement. This Court in Canara Bank (supra)
observed that a composite transaction refers to a situation
where the transaction is interlinked in nature or where
the performance of the principal agreement may not be
feasible without the aid, execution, and performance of
the supplementary or ancillary agreements.
117. The general position of law is that parties will be
referred to arbitration under the principal agreement if there
is a situation where there are disputes and differences “in
connection with” the main agreement and also disputes
“connected with” the subject- matter of the principal
agreement In Chloro Controls (supra), this Court clarified
that the principle of “composite performance” would have
to be gathered from the conjoint reading of the principal
and supplementary agreements on the one hand, and the
explicit intention of the parties and attendant circumstances
on the other. The common participation in the commercial
project by the signatory and non signatory parties for the
purposes of achieving a common purpose could be an
indicator of the fact that all the parties intended the non-
signatory party to be bound by the arbitration agreement.
[...]”
118. The participation of the non-signatory in the
performance of the underlying contract is the most
important factor to be considered by the courts and
tribunals. The conduct of the non- signatory parties is an
indicator of the intention of the non- signatory to be bound
by the arbitration agreement. The intention of the parties
to be bound by an arbitration agreement can be gauged
from the circumstances that surround the participation of
the non signatory party in the negotiation, performance,
and termination of the underlying contract containing
such agreement. The UNIDROIT Principle of International
Commercial Contract, 201698 provides that the subjective
intention of the parties could be ascertained by having
regard to the following circumstances:
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

(a) preliminary negotiations between the parties;
(b) practices which the parties have established between
themselves;
(c) the conduct of the parties subsequent to the
conclusion of the contract;
(d) the nature and purpose of the contract;
(e) the meaning commonly given to terms and expressions
in the trade concerned; and
(f) usages.
(Emphasis supplied)

79. What can be discerned from the above is that, the entire exercise
of determining whether a non-signatory is bound by an arbitration
agreement, in contradistinction to the narrow question of the
“existence” of the arbitration agreement, necessitates a far more
expansive inquiry. This inquiry transcends the limited question of
the mere “existence” as it entails an interpretation of the scope
and contours of the principal agreement, an assessment of the
commercial understanding between the parties, examination of
the nature and purpose underlying the principal contract, and the
character of the transactions and conduct of the parties viz-à-viz the
object and wisdom of the parties underlying contractual arrangement.
Such an exercise mandates a detailed and comparative evaluation
of the substantive provisions of both the principal and supplementary
agreements, and not merely of the arbitration agreement or clause
in isolation.
80. The determination of the “existence” of an arbitration agreement, by
contrast, is confined to examining the formal validity of the arbitration
agreement or the arbitration clause itself, where only the arbitration
agreement or clause, as the case may be has to be looked into. It
does not require delving into the broader legal relationships emerging
from the underlying contractual framework. Cox and Kings (I)
(supra) specifically mandates a holistic appraisal of the principal
and supplementary agreements in tandem with the parties’ intention
and conduct, thereby demanding an inquiry far more extensive than
that required for the mere establishment of the existence of the
arbitration agreement.
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81. Thus, by no stretch of imagination can the issue of whether a non-
signatory is bound by the arbitration agreement be characterized as
one that is either significant or sine qua non to the determination of
the arbitration agreement’s “existence”. The former necessitates a
substantive examination of the entire contractual relationship, whereas
the latter is a limited exercise directed only at confirming the formal
validity of the arbitration agreement itself. Such a question is not one
of “existence” of the arbitration agreement, but one of interpretation
and scope of the principle agreement.
82. In this regard, reliance may be placed on the concurring opinion of
P.S. Narasimha J. in Cox and Kings (I) (supra), who observed that
the existence of an arbitration agreement qua a non-signatory is a
matter of interpretation and construction of the written material in
terms of Section 7(4)(b) from which a non-signatory’s consent and
intention can be deciphered. For ascertaining the true meaning of the
express words, the court or tribunal may look into the surrounding
circumstances such as nature and object of the contract and the
conduct of the parties during the formation, performance, and
discharge of the contract. The relevant observations read as under: -
“52. [...] An arbitration agreement, being a contract, must
necessarily be in writing, as against an oral agreement, but
need not be signed by the parties. The written arbitration
agreement can be in the form of a document signed by
the parties, or be evidenced in the record of agreement.
Section 7(4)(b) prescribes the written material from which
a non-signatory’s consent and intention can be deciphered
by a court or arbitral tribunal.
53. The existence of an arbitration agreement with a non
signatory is a matter of interpretation and construction. The
express words employed by the parties enable the court to
ascertain the intention of the parties and their agreement
to resolve disputes through arbitration. For ascertaining the
true meaning of the express words, the court or tribunal may
look into the surrounding circumstances such as nature
and object of the contract and the conduct of the parties
during the formation, performance, and discharge of the
contract. While interpreting and constructing the contract,
courts or tribunals may adopt well established principles,
[2025] 5 S.C.R. 1683

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

which aid and assist proper adjudication and determination.
The Group of Companies doctrine is one such principle.
It may be adopted by courts or arbitral tribunals while
interpreting the record of agreement to determine whether
the non signatory company is a party to it.
54. Although the application of the Group of Companies
doctrine in India has until now been independent of
Section 7, its juxtaposition with Section 7(4)(b) case-
law shows that the inquiry under both is premised on
determining the mutual intention of parties to submit to
arbitration. The mutual intention of the parties is discernible
from their conduct in the performance of the contract and
this inquiry is common to Section 7(4)(b) jurisprudence and
the Group of Companies doctrine. Even the precedents on
the doctrine, national and international, look to additional
factors beyond the non-signatory being in the same group
of companies, such as commonality of subject-matter,
composite nature of transaction, and interdependence of the
performance of the contracts to determine mutual intent.”
83. The subsequent observations of P.S. Narasimha J. in his concurring
opinion in Cox and Kings (I) (supra) are of significance, and read
as under: -
“55. Since the fundamental issue before the court or
tribunal under Section 7(4)(b) and the Group of Companies
doctrine is the same, the doctrine can be subsumed
within Section 7(4)(b). Consequently, the record of
agreement that evidences conduct of the non-signatory
in the formation, performance, and termination of the
contract and surrounding circumstances such as its direct
relationship with the signatory parties, commonality of
subject matter, and composite nature of transaction, must
be comprehensively used to ascertain the existence of the
arbitration agreement with the non-signatory. In this inquiry,
the fact of a no signatory being a part of the same group
of companies will strengthen its conclusion. In this light,
there is no difficulty in applying the Group of Companies
doctrine as it would be statutorily anchored in Section 7
of the Act.”
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84. From the above exposition of law, it can be seen that this Court
in Cox and Kings (I) (supra) recognized that there exists a fine
but pertinent distinction between determining the “existence” of an
arbitration agreement and determining the intention of the parties
from the “express words” used in the arbitration agreement, when
dealing with the question whether a non- signatory is bound by the
arbitration agreement or not. The former only deals with determining
whether an arbitration agreement exists and is present in the record
of agreement or the written materials as delineated under Section 7
sub- section (4)(b) of the Act, 1996. The latter, in contrast, involves
construction and interpretation of the “express words” that has been
used in such material from the surrounding circumstances such as
nature and object of the contract and the conduct of the parties
during the formation, performance, and discharge of the contract,
and how the arbitration agreement fits within the broader contractual
framework.
85. Once the referral court, identifies an arbitration agreement that
satisfies the formal requirements of Section 7 of the Act, 1996,
either from the record of agreement or the written materials under
sub-section (4), the “existence” of the arbitration agreement is said
to have been established, even though, its binding nature qua the
non-signatory may not be established, as it is entirely possible for
a referral court to arrive at finding that prima-facie there exists an
arbitration agreement in terms of Section 7 of the Act, 1996 without
resolving the question of whether a non-signatory is bound by such
arbitration agreement or not, as it depends on additional factors
beyond mere existence.
86. Once, the “existence” of the arbitration agreement is said to have
been established, the condition stipulated in terms of Section 11 sub-
section (6A) of the Act, 1996, is said to have been fulfilled, and the
referral courts have no option but to refer the dispute to arbitration,
notwithstanding whether the intention of a non-signatory as a veritable
partly to such agreement is established or not. Apart from the pre-
condition of examining the “existence” of an arbitration agreement,
Section 11 of the Act, 1996 does not either contemplate or require
determination of the “defined legal relationship” in terms of Section 7,
nor does it mandate an assessment of the futuro intention of the
parties, whether signatories or non-signatories, from the “express
words” of the arbitration agreement. This limited inquiry does not
[2025] 5 S.C.R. 1685

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

extend to the substantive legal consequences or implications of
such arbitration agreement. The question of whether a non-signatory
is bound by the arbitration agreement is entirely separate from the
question of its “existence.” The latter is a relatively straightforward,
procedural determination based on the formal presence of the
agreement, whereas the former involves a substantive and contextual
inquiry into the mutual intent of the parties, which may be examined
by the arbitral tribunal.
87. What follows from this is that, the question whether a non-signatory
is bound by the arbitration agreement is completely independent of
the question concerning the “existence” of an arbitration agreement.
The two inquiries — while related — are distinct in nature and
function. The “existence” of an arbitration agreement pertains solely
to its formal presence in the contractual documentation, as per the
requirements under the Act, 1996 and once established, it obligates
the referral of the dispute to arbitration. By contrast, the question
of whether a non-signatory is bound by the arbitration agreement
involves a more nuanced determination of the parties’ intentions,
contractual relationships, and the broader context of the agreement,
which is not confined to the formal text of the arbitration clause alone.
88. Thus, even in the absence of the non-signatory being made a party
to the proceedings before the referral court, and where the question
of its impleadment has neither been raised nor addressed or left
open to the arbitral tribunal by the referral court, the arbitral tribunal
would be full empowered to examine this issue in the first instance
and determine whether any non- signatory is bound by the arbitration
agreement based on the factual circumstances of the case, and if
necessary, implead such non-signatory to the arbitration proceedings.
89. P.S. Narasimha J. in his concurring opinion in Cox and Kings
(I) (supra), observed that the exercise of determining the binding
nature of an arbitration agreement qua a non-signatory is an inquiry
pertaining to the interpretation and construction of the agreement
for determining the mutual intention, and not the existence of such
agreement. We are conscious of the fact that, at paragraph 55, P.S.
Narasimha J. observed that the inquiry is to “ascertain the existence
of the arbitration agreement with the non-signatory” Semantically, the
exercise may well be said to be one for determining the “existence”
of an arbitration agreement with the non-signatory, however, the
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aforesaid observations cannot be singled out and construed devoid
of its context. It must be seen in light of the observations made in
the majority opinion at paragraphs 102 and 103, wherein this issue
of “existence of the arbitration agreement with the non-signatory” or
to put it simply, whether the non-signatory is a veritable party to the
arbitration agreement or not, was described as an “extra layer of
criteria” and that such an exercise is only to “discern the true “party”
in interest”. The relevant observations read as under: -
“102. [...] Thus, the existence of a group of companies is
a factual element that the court or tribunal has to consider
when analysing the consent of the parties. It inevitably
adds an extra layer of criteria to an exercise which at its
core is preponderant on determining the consent of the
parties in case of complex transactions involving multiple
parties and agreements.
103. [...] the group of companies doctrine helps in decoding
the layered structure of commercial arrangements to
unravel the true intention of the parties to bind someone
who is not formally a signatory to the contract, but has
“assumed” the obligation to be bound by the actions of a
signatory. This court explained the purport of the doctrine
to discern the “true” party in interest [...]”
(Emphasis supplied)

90. This is further fortified from the fact that, Cox and Kings (I) (supra)
in its subsequent paragraphs, more particularly paragraph no. 164,
while discussing the scope of Section 11 of the Act, 1996, distinctively
refers to and treats the criterion of “existence of arbitration agreement”
and “veritable party to the arbitration agreement”, as two separate and
independent inquiries, thereby underscoring that the determination
of the existence of an arbitration agreement stands apart from the
assessment of whether a non-signatory can be bound to it.
91. In Ajay Madhusudan Patel & Ors. v. Jyotrindra S. Patel & Ors.
reported in 2024 INSC 710, this Court comprising one of us, (J.B.
Pardiwala J.) further brought this distinction into perspective by
observing that the issue concerning the “existence of the arbitration
agreement qua the non-signatory” is, in substance an issue of
“consent”, as it involves determining the manifestation of consent of
[2025] 5 S.C.R. 1687

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

parties or entities through their actions and conduct of exchange of
documents (sic or otherwise) in terms of Section 7 sub-section (4)
of the Act, 1996, and not one of “existence of arbitration agreement”
simpliciter, as such an issue inter-alia requires examination and
thorough consideration of the underlying contract in addition to the
arbitration agreement. The relevant observations read as under: -
“66. It is well settled that an arbitration agreement, in
order to qualify as a valid agreement, has to satisfy the
requirements stipulated under Section 7 of the Act, 1996
along with the principles of law under the Indian Contract
Act, 1872. Having regard to the submissions of both the
Respondent Groups i.e., JRS and SRG, it can be said
that they have raised manifold objections to the present
petition, however, none of those objections question or
deny the existence of the arbitration agreement under
which the arbitration has been invoked by the Petitioner
AMP Group. In fact, the JRS Group has no objection
to resolve the disputes with the AMP Group by way of
arbitration. Their primary objection is only that the SRG
Group cannot be a part of the arbitration proceedings.
Therefore, the requirement of prima facie existence of an
arbitration agreement, as stated under Section 11 of the
Act, 1996 is satisfied.
67. However, the core issue that falls for our consideration
is whether the SRG Group, being a non-signatory to the
FAA can also be referred to arbitration and whether they
are “veritable” parties to the arbitration agreement.
68. [...] Persons or entities who have not formally signed the
arbitration agreement or the underlying contract containing
the arbitration agreement may also intend to be bound
by the terms of the agreement. Further, the requirement
of a written agreement under Section 7 of the Act, 1996
does not exclude the possibility of binding non-signatory
parties if there is a defined legal relationship between
the signatory and non-signatory parties. Therefore, the
issue as to who is a “party” to an arbitration agreement
is primarily an issue of consent. Actions or conduct could
be an indicator of the consent of a party to be bound by
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the arbitration agreement. This aspect is also evident
from a reading of Section 7(4)(b) which emphasises on
the manifestation of the consent of persons or entities
through actions of exchanging documents.”
(Emphasis supplied)

92. Thus, what has been conveyed in so many words by Ajay
Madhusudan Patel (supra) is that the inquiry into whether a non-
signatory is bound by an arbitration agreement is not, in its essence,
an inquiry into the formal or juridical existence of the arbitration
agreement itself. It is an exercise of determining the functional
concept of consent within the existing arbitration agreement rather
than the existence of the arbitration agreement itself. It is to cull out
and discern the intention of various parties — whether signatories
or otherwise — in relation to their willingness to be bound by the
arbitration mechanism embedded in the contract.
93. Put differently, although notionally the exercise of determining
‘existence of the arbitration agreement qua the non-signatory’, may,
on the surface appear to be concerned with the arbitration agreement
or clause in question, yet one must be mindful that the actual focus
of such exercise lies in determining the existence of consent of
the parties through fact patterns to such arbitration agreement or
clause and not vice-versa. It is the existence of mutual consent to
arbitrate — not the formal existence of the arbitration agreement —
that is the heart of this inquiry.
94. There runs no umbilical cord between the exercise of determining the
“existence of the arbitration agreement” and determining its “existence
qua the non-signatory”. The latter is an independent and substantive
determination that falls outside the narrow and circumscribed domain
of the referral court’s singular obligation under Section 11 sub-section
(6A) of the Act, 1996 and as such cannot be conflated to be one
pertaining to or attacking the “existence” of an arbitration.
95. Even if it is assumed for a moment that the referral court in its
jurisdiction under Section 11 of the Act, 1996 has the discretion to
determine whether a non-signatory is a veritable party to the arbitration
agreement or not, by virtue of Cox and Kings (I) (supra), the referral
court should only refrain but rather loathe the exercise of such
discretion. Any discretion which is conferred upon any authority, be
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

it referral courts must be exercised reasonably and in a fair manner.
Fairness in this context does not just extend to a non-signatory’s
rights and its apprehension of prejudice, fairness also demands
that the arbitration proceedings is given due time to gestate so that
the entire dispute is holistically decided. Any determination even
if prima-facie by a referral court on such aspects would entail an
inherent risk of frustrating the very purpose of resolution of dispute,
if the referral courts opine that a non-signatory in question is not a
veritable party. On the other hand, the apprehensions of prejudice
can be properly mitigated by leaving such question for the arbitral
tribunal to decide, as such party can always take recourse to Section
16 of the Act, 1996 and thereafter in appeal under Section 37, and
where it is found that such party was put through the rigmarole of
arbitration proceedings vexatiously, both the tribunal and the courts,
as the case may be, should not only require that all costs of arbitration
insofar as such non- signatory is concerned be borne by the party
who vexatiously impleaded it, but the arbitral tribunal would be well
within its powers to also impose costs.

III. Decision of Cox and Kings (II) and Ajay Madhusudan and
the scope of Section 11 of the Act, 1996 for joinder of non-
signatories to arbitration proceedings.
96. The aforesaid may be looked at from one another angle. This Court
in Cox and Kings (I) (supra) also discussed the role and scope
of jurisdiction of the referral courts and arbitral tribunals under
Section(s) 11 and 16 of the Act, 1996, particularly in the context of
binding a non-signatory to the arbitration agreement. It reiterated
that under Section 11, the referral court only has to determine the
prima-facie existence of an arbitration agreement. Whereas, the
issue of determining parties to an arbitration agreement is quite
distinct from “existence” of the arbitration agreement, as such issue
goes to the very root of the jurisdiction competence of the arbitral
tribunal, and thus, empowered to decide the same under Section
16. Placing reliance on the decision of this Court in Shin-Etsu
Chemical Co Ltd v. Aksh Optifibre Ltd. reported in, (2005) 7 SCC
234, it held that the referral court should not unnecessarily interfere
with arbitration proceedings, and rather allow the arbitral tribunal to
exercise its primary jurisdiction for deciding such issues. The relevant
observations read as under: -
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“157. When deciding the referral issue, the scope of
reference under both Sections 8 and 11 is limited. Where
Section 8 requires the referral court to look into the prima
facie existence of a valid arbitration agreement, Section
11 confines the court’s jurisdiction to the existence of the
examination of an arbitration agreement.
158. Section 16 of the Arbitration Act enshrines the principle
of competence competence in Indian arbitration law. The
provision empowers the arbitral tribunal to rule on its own
jurisdiction, including any ruling on any objections with
respect to the existence or validity of arbitration agreement.
Section 16 is an inclusive provision which comprehends
all preliminary issues touching upon the jurisdiction of the
arbitral tribunal. The doctrine of competence competence
is intended to minimize judicial intervention at the threshold
stage. The issue of determining parties to an arbitration
agreement goes to the very root of the jurisdictional
competence of the arbitral tribunal.
161. The above position of law leads us to the inevitable
conclusion that at the referral stage, the court only has
to determine the prima facie existence of an arbitration
agreement. If the referral court cannot decide the issue,
it should leave it to be decided by the arbitration tribunal.
unnecessarily interfere with arbitration proceedings, and
rather allow the arbitral tribunal to exercise its primary
jurisdiction. In Shin-Etsu Chemical Co Ltd v. Aksh Optifibre
Ltd,125 this Court observed that there are distinct
advantages to leaving the final determination on matters
pertaining to the validity of an arbitration agreement to
the tribunal [...]”
(Emphasis supplied)

97. Cox and Kings (I) (supra) further observed that in case of joinder
of non- signatory parties to an arbitration agreement, the referral
court will be required to prima-facie rule on the existence of the
arbitration agreement and whether the non-signatory is a veritable
party to the arbitration. However, it further clarified that, due to the
inherent complexity in determining whether the non- signatory is
indeed a veritable party, the referral court should leave this question
[2025] 5 S.C.R. 1691

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

for the arbitral tribunal to decide as it can delve into the factual and
circumstantial evidence along with its legal aspects for deciding such
an issue. The relevant observations read as under: -
“163. [...] Thus, when a non-signatory person or entity is
arrayed as a party at Section 8 or Section 11 stage, the
referral court should prima facie determine the validity or
existence of the arbitration agreement, as the case may
be, and leave it for the arbitral tribunal to decide whether
the non signatory is bound by the arbitration agreement.
164. In case of joinder of non-signatory parties to an
arbitration agreement, the following two scenarios will
prominently emerge: first, where a signatory party to an
arbitration agreement seeks joinder of a non-signatory
party to the arbitration agreement; and second, where a
non-signatory party itself seeks invocation of an arbitration
agreement. In both the scenarios, the referral court will
be required to prima facie rule on the existence of the
arbitration agreement and whether the non-signatory is
a veritable party to the arbitration agreement. In view
of the complexity of such a determination, the referral
court should leave it for the arbitral tribunal to decide
whether the non signatory party is indeed a party to the
arbitration agreement on the basis of the factual evidence
and application of legal doctrine. The tribunal can delve
into the factual, circumstantial, and legal aspects of the
matter to decide whether its jurisdiction extends to the
non-signatory party. In the process, the tribunal should
comply with the requirements of principles of natural justice
such as giving opportunity to the non-signatory to raise
objections with regard to the jurisdiction of the arbitral
tribunal. This interpretation also gives true effect to the
doctrine of competence- competence by leaving the issue
of determination of true parties to an arbitration agreement
to be decided by arbitral tribunal under Section 16.”
(Emphasis supplied)

98. Thus, even if it is assumed for a moment, that the question whether
a non- signatory is a veritable party to the arbitration agreement is
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intrinsically connected with the issue of “existence” of arbitration
agreement, the referral courts should still nevertheless, leave such
questions for the determination of the arbitral tribunal to decide, as
such an interpretation gives true effect to the doctrine of competence-
competence enshrined under Section 16 of the Act, 1996.
99. This hands-off approach of referral courts in relation to the question
of whether a non-signatory is a veritable party to the arbitration
agreement or not was reiterated in Cox and Kings (II), wherein one
of us, (J.B. Pardiwala J.), observed that once an arbitral tribunal
stands constituted, it becomes automatically open to all parties to
raise any preliminary objections, including preliminary objections
touching upon the jurisdiction of such tribunal, and to seek an early
determination thereof. Consequently, the issue of impleadment of a
non-signatory was deliberately left for the arbitral tribunal to decide,
after taking into consideration the evidence adduced before it by
the parties and the principles enunciated under Cox and Kings (I)
(supra).
100. Similarly, in Ajay Madhusudan (supra) it was held that since a
detailed examination of numerous disputed questions of fact was
required for determining whether the non-signatory is a veritable
party to the arbitration agreement, the same cannot be examined in
the limited jurisdiction under Section 11 of the Act, 1996 as it would
tantamount to a mini trial. Accordingly, the arbitral tribunal was found
to be the appropriate forum for deciding the said issue on the basis
of the evidence that may be adduced by the parties.
101. This approach is necessitated by the inherent complexity involved
in determining whether a non-signatory qualifies as a veritable party
to the arbitration agreement, a determination that hinges upon a
multiplicity of factual aspects and demands a high threshold of
satisfaction based on a cumulative and holistic evaluation of the
entire factual matrix. Such an intricate and evidence-driven exercise
makes the arbitral tribunal the most appropriate forum to adjudicate
the matter, as it possesses the institutional advantage of conducting
a comprehensive scrutiny of all evidences and materials adduced
by the parties.
102. Furthermore, the legislative intent underlying Section 11 of the Act,
1996 — particularly sub-section (6A) — is to ensure the expeditious
disposal of applications for the appointment of arbitrators. This
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

legislative objective militates against referral courts undertaking any
elaborate or detailed factual inquiry, which would inevitably delay
proceedings. Prudence thus dictates that the referral courts confine
themselves to a prima-facie examination of the existence of the
arbitration agreement and leave substantive determinations, such
as the binding nature of non-signatories, to the arbitral tribunal. An
additional and equally compelling consideration is that the power
exercised by the referral courts under Section 11 of the Act, 1996
is judicial in nature. Consequently, referral courts must refrain from
embarking upon an intricate evidentiary inquiry or making final
determinations on matters that are within the jurisdiction of the arbitral
tribunal. Any premature adjudication or opinion by the referral court
would not only usurp the tribunal’s role as the forum of first instance
for dispute resolution but could also cause irremediable prejudice.
In particular, if the referral court were to refuse impleadment of a
non-signatory, there would be no statutory right of appeal available
to challenge such a refusal. In contrast, determinations made
by the arbitral tribunal — including on issues of jurisdiction and
impleadment — are amenable to challenge under Section 16 of the
Act, 1996 and, thereafter, under Section 37. Accordingly, the better
course of action is for referral courts to refrain altogether from delving,
into the issue of whether a non-signatory is a veritable party to the
arbitration agreement, and to leave such matters for the arbitral
tribunal to decide in the first instance.
103. At this juncture, it would be apposite to refer to the three-judge Bench
decision of this Court in Pravin Electricals Pvt Ltd v. Galaxy Infra
and Engineering Pvt Ltd. reported in (2021) 5 SCC 671. In the said
decision, this Court was called upon to determine the existence of
an arbitration agreement on the basis of the documentary evidence
produced by the parties. Although, this Court prima-facie opined that
there was no conclusive evidence to infer the existence of a valid
arbitration agreement between the parties, yet it referred the dispute
along with the issue of existence of the arbitration agreement to the
arbitral tribunal to decide after conducting a detailed examination of
documentary evidence and cross-examination of witnesses. Thus,
even where the referrals courts either find that there is no arbitration
agreement in “existence” or as a logical sequitur never embarked
upon determining such “existence”, for whatever reasons, the matter
should still nevertheless be referred to arbitration.
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104. It is not difficult to comprehend why the above approach, endorsed
in Pravin Electricals (supra) ought to be adopted and followed. The
rationale behind this, as explained in Krish Spinning (supra), is that
there exists no right to appeal under the Act, 1996 against an order
passed by the referral court under Section 11 for either appointing
or refusing to appoint an arbitrator. Any refusal for appointment runs
the risk of leaving the claimant in a situation wherein it does not have
any forum to approach for the adjudication of its claims, if it Section
11 application is rejected. However, on the contrary, appointment
of an arbitrator causes no prejudice, as all these issues can again
be espoused by leading cogent evidence and material before the
arbitral tribunal under Section 16 of the Act, 1996 and thereafter, in
appeal under Section 37.
105. Cox and Kings (I) (supra) at paragraph 164, observes that in case
of joinder of non-signatory parties to an arbitration agreement, two
scenarios will prominently emerge; first, where a signatory party
to an arbitration agreement seeks joinder of a non-signatory party
and second, where a non-signatory party itself seeks invocation of
an arbitration agreement. It then holds that in both scenarios the
referral court (emphasis) will be required to prima facie rule on the
existence of the arbitration agreement and whether the non-signatory
is a veritable party.
106. However, this by no stretch means that all issues or instances
of joinder or impleadment of a non-signatory will have to be first
brought before the referral court, who in turn may leave it for the
arbitral tribunal to decide. It by no stretch precludes a scenario
where the issue of joinder of a non-signatory although never brought
before the referral court, yet is later raised for the first time before
the arbitral tribunal. We say so, because the aforesaid decision of
Pravin Electricals (supra) where this Court referred the matter
to the arbitral tribunal despite prima-facie opining that there is no
existence of arbitration agreement was approvingly referred to by
Cox and Kings (I) (supra) to hold that “If the referral court cannot
decide the issue, it should leave it to be decided by the arbitration
tribunal”. The natural corollary to the aforesaid is that, where the
referral court is either unable to decide the issue as to whether, the
non-signatory is a veritable party to the arbitration agreement, or
finds in its opinion that such non-signatory is not a veritable party,
or in the extreme alternative, had no occasion to decide such an
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ASF Buildtech Private Limited v.
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issue, still it would be open for the arbitral tribunal to look into the
issue and decide the same.
107. The only thing the arbitral tribunal needs to be mindful of when
deciding such an issue is that it adheres to the principles of natural
justice by affording the non-signatory a fair opportunity to raise
objections with regard to the jurisdiction of the arbitral tribunal,
earnestly makes an endeavour to determine this issue at the earliest
possible stage to prevent any grave prejudice being occasioned to
such non-signatory, makes all possible efforts — whether by way
of imposition of costs or through other appropriate measures —to
mitigate and deter the possibility of any abuse by the signatories who
might seek to coerce or arm twist the non-signatory by frivolously
or vexatiously subjecting it to arbitration, and lastly, that its decision
is grounded in the factors and threshold requirements laid down in
Cox and Kings (I) (supra) as explained by us.
108. Moreover, one must not lose sight of the fact that, the provision of
Section 11 of the Act, 1996 only comes into the picture where there
has been a failure in appointment of an arbitrator. Could it be said
that where, the signatories have consensually appointed an arbitrator
in terms of the arbitration agreement, then in such cases, the arbitral
tribunal that has been so constituted, would not be empowered to
implead a non-signatory as-well, merely because, the referral court
did not either determine the ‘existence of the arbitration agreement
qua the non-signatory’ or did not leave such question for determination
of the arbitral tribunal, even though no such occasion had arisen for
the referral court to do so? The answer to the aforesaid, must be an
emphatic “no”. Arguendo even if one were to proceed on a stretch
and rather strained construction of the law, that where a notice of
invocation is served by a party to both the signatories and the non-
signatories, pursuant to which an arbitral tribunal has been constituted
consensually by the signatories, yet there would still be a failure in
appointment of an arbitrator inasmuch as the non- signatory has not
agreed to appoint and arbitrator, and the only recourse here would
be to prefer to move a referral court under Section 11 of the Act,
1996, the aforesaid contention, merits outright rejection. Not only
does it reflect a hyper-technical and overly dogmatic approach to the
procedural framework of arbitration — which is to be construed in a
manner that facilitates, rather than frustrates, party autonomy and
consensual resolution — but it also fundamentally misunderstands
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the legislative purpose and limited procedural function of Section
21 of the Act, 1996, which we shall now discuss, in the later parts
of this judgment.

ii. Arbitral Tribunal has the authority and power to implead
Non- Signatories to the arbitration agreement on its own
accord.

a. There is no inhibition in the scheme of Act, 1996 which
precludes the Arbitral Tribunal from impleading a Non-
Signatory on its own accord.
109. From the above exposition of law, it can be seen that there is nothing
within the scheme of the Act, 1996, which prohibits or restrains an
arbitral tribunal from, impleading a non-signatory to the arbitration
proceedings on its own accord. So long as such impleadment is
undertaken upon a consideration of the applicable legal principles —
including, but not limited to, the doctrines of ‘group of companies’,
‘alter ego’, ‘composite transaction’, and the like — the arbitral tribunal
is fully empowered to summon the non-signatory to participate in the
arbitration. This autonomy stems from the broad jurisdiction conferred
upon arbitral tribunals under the Act, 1996 to rule upon their own
jurisdiction, including any objections with respect to the existence or
validity of the arbitration agreement, as enshrined under Section 16.
The impleadment of a non-signatory, being fundamentally a question
of jurisdiction and consent, falls squarely within the province of the
tribunal’s powers, free from any statutory prohibition.
110. The aversion towards recognizing such power of the arbitral tribunal
to implead a non-signatory, that previously prevailed, had stemmed
from two major misconceptions – a lack of power being vested on
the arbitral tribunal and a corresponding entrustment of this duty to
implead a non-signatory to the referral courts alone.
(i) First, the initial understanding of Chloro Controls (supra) that
the legal basis for the doctrine of ‘group of companies’ and
other alike principles for determining mutual consent was only
under the provisions which empowered the courts to make a
reference to arbitration i.e., under Section(s) 8 and 45 of the
Act, 1996, was construed to mean that only the courts have
the power to resort to and apply the aforesaid principles for
determining mutual consent. Similarly, the unaltered general
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ASF Buildtech Private Limited v.
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definition of “party” under Section 2(1)(h) of the Act, 1996 as
opposed to the wide meaning assigned to the term “party”
under Section(s) 8 and 45 of the Act, 1996, was misconstrued
as a positive indicium that an arbitral tribunal lacks the power
to implead a non-signatory as the scope and exercise of its
jurisdiction is confined to the narrow meaning of “party” under
Section 2(1)(h) i.e., only signatories or those specifically referred
to arbitration, whereas the power and jurisdictional reach of the
courts extends to the wider meaning of “party” i.e., “a party to
an arbitration agreement or any person claiming through or
under him” under Section(s) 8 and 45 of the Act, 1996 i.e., it
extends to even non- signatories.
(ii) Secondly, the position of law which existed at the time of
Chloro Controls (supra), required the referral courts to make
a determination of all issues fundamental to making a reference
to arbitration including the issue whether a non-signatory could
be said to be bound by the arbitration agreement. Since this
primary duty of identifying and then in turn impleading a non-
signatory who is bound by the arbitration agreement was cast
upon the courts, it was presumed that the arbitral tribunal even
if empowered is incapable or incompetent to undertake this task,
as otherwise it would tantamount to usurping the jurisdiction of
the referral courts.
111. Thus, the combined effect of the aforesaid was that an arbitral
tribunal could not, on its own accord, resort to or apply the various
principles for determining mutual consent, and thereby implead a
non-signatory since both (i) the power to do so was presumed lie
within the exclusive domain and jurisdiction as- well as the (ii) the
corresponding duty to undertake this exercise was understood to
have been entrusted solely to the referral courts.
112. However, with the advent of Cox and Kings (I) (supra), the legal
foundation for the application of the ‘Group of Companies’ doctrine, or
any analogous principles designed to determine mutual consent was
clarified to exist in the definition of “party” under Section 2(1)(h) read
with the meaning of “arbitration agreement” under Section 7 of the
Act, 1996. Unlike Section(s) 8 and 45 of the Act, 1996, the provisions
of Section(s) 2(1)(h) and 7 are not confined in their applicability to
only judicial forums or courts, and rather extend equally to both courts
and arbitral tribunals, as these provisions form the bedrock of the
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framework of arbitration under the Act, 1996. The logical sequitur
of this is that arbitral tribunals, too, are vested with the requisite
authority to engage with and apply principles, such as the ‘Group
of Companies’ doctrine, when determining whether a non-signatory
may be bound by an arbitration agreement.
113. It is well within the jurisdiction of the Arbitral Tribunal to decide
the issue of joinder and non-joinder of parties and to assess the
applicability of the Group of Companies Doctrine. Neither in Cox
and Kings (I) (supra) nor in Ajay Madhusudhan (supra), this Court
has said that it is only the reference courts that are empowered to
determine whether a non-signatory should be referred to arbitration.
The law which has developed over a period of time is that both
‘courts and tribunals’ are fully empowered to decide the issues of
impleadment of a non-signatory and Arbitral Tribunals have been
held to be preferred forum for the adjudication of the same.
114. In the case of Ajay Madhusudhan (supra), this Court, placing
reliance on Cox and Kings (I) (supra), has expressly held that
Section 16 is an inclusive provision which comprehends all
preliminary issues touching upon the jurisdiction of the arbitral
tribunal and the issue of determining parties to an arbitration
agreement goes to the very root of the jurisdictional competence
of the arbitral tribunal.
115. The case of Ajay Madhusudhan (supra) also recognizes that the
legal relationship between the signatory and non-signatory assumes
significance in determining whether the non-signatory can be taken
to be bound by the Arbitration Agreement. This Court also issued a
caveat that the ‘courts and tribunals should not adopt a conservative
approach to exclude all persons or entities who are otherwise bound by
the underlying contract containing the arbitration agreement through
their conduct and their relationship with the signatory parties. The
mutual intent of the parties, relationship of a non- signatory with a
signatory, commonality of the subject matter, the composite nature
of the transactions and performance of the contract are all factors
that signify the intention of the non-signatory to be bound by the
arbitration agreement’.
116. Recently, a coordinate bench of this Court in Adavya Projects Pvt.
Ltd. v. M/s Vishal Strcturals Pvt. Ltd. & Ors. reported in 2025
INSC 507, also held that an arbitral tribunal under Section 16 of
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ASF Buildtech Private Limited v.
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the Act, 1996 has the power to implead the parties to an arbitration
agreement, irrespective of whether they are signatories or non-
signatories, to the arbitration proceedings. This Court speaking
through P.S. Narasimha J. observed that since an arbitral tribunal’s
jurisdiction is derived from the consent of the parties to refer their
disputes to arbitration, any person or entity who is found to be a
party to the arbitration agreement can be made a part of the arbitral
proceedings, and the tribunal can exercise jurisdiction over him.
Section 16 of the Act, 1996 which empowers the arbitral tribunal to
determine its own jurisdiction, is an inclusive provision that covers
all jurisdiction question including the determination of who is a party
to the arbitration agreement, and thus, such a question would be
one which falls within the domain of the arbitral tribunal. It further
observed that, although most national legislations do not expressly
provide for joinder of parties by the arbitral tribunal, yet an arbitral
tribunal can direct the joinder of a person or entity, even if no such
provision exists in the statute, as long as such person or entity is a
party to the arbitration agreement. Accordingly, this Court held that
since the respondents therein were parties to the underlying contract
and the arbitration agreement, the arbitral tribunal would have the
power to implead them as parties to the arbitration proceedings in
exercise of its jurisdiction under Section 16 of the Act, 1996. The
relevant observations read as under: -
“24. As briefly stated above, the determination of who is a
party to the arbitration agreement falls within the domain of
the arbitral tribunal as per Section 16 of the ACA. Section 16
embodies the doctrine of kompetenz-kompetenz, i.e., that
the arbitral tribunal can determine its own jurisdiction. The
provision is inclusive and covers all jurisdictional questions,
including the existence and validity of the arbitration
agreement, who is a party to the arbitration agreement,
and the scope of disputes referrable to arbitration under the
agreement. Considering that the arbitral tribunal’s power
to make an award that binds the parties is derived from
the arbitration agreement, these jurisdictional issues must
necessarily be decided through an interpretation of the
arbitration agreement itself. Therefore, the arbitral tribunal’s
jurisdiction must be determined against the touchstone of
the arbitration agreement.
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25. This view finds support in the jurisprudence and practice
of international commercial arbitration. It is notable that
while most national legislations do not expressly provide
for joinder of parties by the arbitral tribunal, this must be
done with the consent of all the parties. Gary Born has
taken the view that the arbitral tribunal can direct the
joinder of parties when the arbitration agreement expressly
provides for the same. However, he states that in reality,
most arbitration agreements, whether ad hoc or providing
for institutional arbitration, neither expressly preclude nor
expressly permit the arbitral tribunal to join parties. In
such cases, the power must be implied,25 particularly
when there is a multi-party arbitration clause in the same
underlying contract that does not expressly address the
joinder of parties in the arbitral proceedings. He states that:
“In these circumstances, there is a substantial argument
that the parties have impliedly accepted the possibility of
consolidating arbitrations under their multi-party arbitration
agreement and/or the joinder or intervention of other
contracting parties into such arbitrations… the parties’ joint
acceptance of a single dispute resolution mechanism, to
deal with disputes under a single contractual relationship,
reflects their agreement on the possibility of a unified
proceeding to resolve their disputes, rather than necessarily
requiring fragmented proceedings in all cases.” Further,
in jurisdictions where there is no provision in the national
arbitration statute authorising the courts to consolidate
arbitrations or to join parties, it is left to the arbitral tribunal
to determine this issue at the first instance.
26. Therefore, as per the legal principles under the ACA
as well as in international commercial arbitration, it is a
foundational tenet that the arbitral tribunal’s jurisdiction is
derived from the consent of the parties to refer their disputes
to arbitration, which must be recorded in an arbitration
agreement. The proper judicial inquiry to decide a
jurisdictional issue under Section 16 as to whether a person/
entity can be made a party to the arbitral proceedings will
therefore entail an examination of the arbitration agreement
and whether such person is a party to it. If the answer is
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

in the affirmative, such person can be made party to the
arbitral proceedings and the arbitral tribunal can exercise
jurisdiction over him as he has consented to the same.
39. [...] Since they are parties to the underlying contract and
the arbitration agreement, the arbitral tribunal has the power
to implead them as parties to the arbitration proceedings
while exercising its jurisdiction under Section 16 of the ACA
and as per the kompetenz-kompetenz principle.”
(Emphasis supplied)

117. As observed in Adavya Projects (supra), Gary Born in his seminal
work; the International Commercial Arbitration, Vol 2 (3rd edn, Kluwer
Law International 2021) as held that consolidation and joinder/
intervention may be ordered by an arbitral tribunal, arbitral institution,
as long as the same is pursuant to parties (unanimous) agreement
thereto. He has observed that “In almost all cases, the approach taken
by national law is that consolidation and joinder/intervention may be
ordered by an arbitral tribunal, arbitral institution, or a national court,
but only pursuant to the parties’ (unanimous) agreement thereto. If
the parties have not so agreed, both the tribunal and local courts
will lack the authority under national law to order either consolidation
or joinder/intervention.” Since the aspect of joinder of a party to the
arbitration agreement, either signatory or non-signatory stems from
a conjoint reading of Section(s) 2(1)(h) and 7 of the Act, 1996 as
explained by Cox and Kings (I) (supra) and by us in the foregoing
paragraphs, even if the parties are to agree that a tribunal or for that
matter a referral court will not have the power to implead any party
to the arbitration proceeding, such an agreement will only operate
to the extent that (i) the arbitration agreement is not governed by
the Act, 1996 i.e., does not fall under Part I of the Act, 1996 and (ii)
that such party is not otherwise bound by the arbitration agreement.
This is because such an agreement is an agreement in respect of
the rules of procedure of the arbitration, and as per Section 19 of the
Act, 1996, more particularly sub-section (2), any such agreement is
subject to Part I i.e., the parties are free to agree on the procedure to
be followed by the arbitral insofar as it is not inconsistent with Part I.
Since, the legal basis for the joinder or impleadment of any party who
is bound by the arbitration agreement originates from the substantive
provisions of the Act, 1996 i.e., Section(s) 2(1)(h) and 7, respectively,
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the parties cannot denude the arbitral tribunal of such power in terms of
the non-obstante clause of Section 19(2) of the Act, 1996. Gary Born,
further observes that “this approach is consistent with that prescribed
by the New York Convention and with the general respect for the
parties’ procedural autonomy in international arbitration”. Thus, it
acknowledges, that such stipulation as to consolidation or joinder is
purely within the realm of procedural autonomy, hence Section 19
of the Act, 1996 which is the source of procedural autonomy will be
subject to the conditions stipulated therein.
118. Further, it is true that the entire scheme of Act, 1996 is silent on
the power of a court or arbitral tribunal to join or implead a party to
the arbitration proceedings. Gary Born argues, that “In the absence
of specific statutory provisions, the topics of consolidation and
joinder/intervention are generally subject to the Model Law’s basic
requirement that arbitration agreements be recognized and enforced
in accordance with the parties’ intentions. That is, consolidation and
joinder/intervention should be both permitted and required – as
an element of the parties’ agreement to arbitrate” The UNCITRAL
Model Law being the genesis of the Act, 1996, even if there is no
explicit statutory provision recognizing such power of impleadment, it
nevertheless should not only be permitted but also required, as long
as it is exercised within the confines of the intention of the parties
and the scope of arbitration agreement, which is exactly what has
also been laid down in so many words by Cox and Kings (I) (supra).
119. He says that, more often than not arbitration agreements, particularly
for ad hoc arbitration “will neither expressly preclude nor expressly
authorize consolidation”. But, “there is no reason, however, that
an agreement authorizing (or forbidding) consolidation or joinder/
intervention cannot be implied ... various aspects of an arbitration
agreement are routinely implied (such as confidentiality, a tribunal’s
power to order provisional relief or disclosure, the choice of applicable
law and the like”. He accordingly, advocates that “The same approach
can, and indeed must, be taken to questions of consolidation and
joinder/intervention” where the “questions of implied agreement to
consolidation and joinder/intervention depend in substantial part on
the structure of the parties’ contractual relations and the terms of
their agreements to arbitrate”.
120. Thus, the natural corollary to the aforesaid is that even in the absence
of any express statutory provision, such power exists impliedly. In
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ASF Buildtech Private Limited v.
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this regard, we may profitably refer to the recent five Judge-Bench
decision of this Court in Gayatri Balasamy v. M/s ISG Novasoft
Technologies Ltd. reported in 2025 INSC 605, wherein this Court
recognized the applicability of the doctrine of ‘implied power’ to the
Act, 1996, in the context of Section 34. The majority opinion held
that, the doctrine of implied power may be read into the Act, 1996
for the purpose of effectuating and advancing its object and to avoid
hardship. The relevant observations read as under: -
“The doctrine of implied power is to only effectuate and
advance the object of the legislation, i.e., the 1996 Act
and to avoid the hardship. It would, therefore, be wrong
to say that the view expressed by us falls foul of express
provisions of the 1996 Act.”
121. K.V. Vishwanathn J. in his dissenting opinion in Gayatri Balasamy
(supra) observed that if a statute confers a power and circumscribes
its exercise on certain conditions, any power which is inconsistent
with those express conditions cannot be implied. He observed that
the doctrine of implied powers is invoked to effectuate the final power,
where it is impossible to effectuate the final power for doing something
which although not provided in express terms but nevertheless is
required to be done. In such scenarios, the power by virtue of the
doctrine of implied powers will be supplied as a necessary intendment
of the legislation, to advance its object and avoid grave hardship.
The relevant observations read as under: -
“100. Undeterred, an attempt was made to fall back upon
the doctrine of implied powers to somehow vest in Section
34 Court a power to modify the award. It is well settled
that if a statute conferring a power to be exercised on
certain conditions, the conditions prescribed are normally
held to be mandatory and a power inconsistent with those
conditions is impliedly negatived. No doubt, there is a
principle in law that a Court must as far as possible adopt
a construction which effectuates the legislative intent and
purpose and that an express grant of a statutory power
carries with it by necessary implication the authority to
use all reasonable means to make such grant effective.

xxx xxx xxx
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102. As is clear, the doctrine of implied powers is invoked
to effectuate the final power. Where it is impossible to
effectuate the final power unless something not authorized
in express terms be also done, in such an event, the
power will be supplied by necessary intendment as an
exception. The exceptional situation is to advance the
object of the legislation under consideration and to avoid
grave hardship.”
122. Reliance was also placed on the decision of Savitri v. Govind
Singh Rawat, reported in (1985) 4 SCC 337, wherein it was held
that “Whenever anything is required to be done by law and it is
found impossible to do that thing unless something not authorised
in express terms be also done then that something else will be
supplied by necessary intendment. Such a construction though it
may not always be admissible in the present case however would
advance the object of the legislation under consideration. A contrary
view is likely to result in grave hardship to the applicant, who may
have no means passed to subsist until the final order is passed.” It
further, observed that “Every court must be deemed to possess by
necessary intendment all such powers as are necessary to make its
orders effective. This principle is embodied in the maxim “ubi aliquid
conceditur, conceditur et id sine quo res ipsa esse non potest” (Where
anything is conceded, there is conceded also anything without which
the thing itself cannot exist)”.
123. What can be discerned from the above is that the recourse to doctrine
of implied powers would be permissible, if without it, it is impossible
to effectuate a final power, and such exercise of implied power would
effectuate and advance the object of the legislation.
124. Cox and Kings (I) (supra) has elaborately acknowledged the unique
complexities posed by contemporary business transactions to the
traditional framework of arbitration. Historically, arbitration gained
prominence in the context of straightforward and linear bilateral
transactions under the mercantile system of law. While over the
past century, the nature of modern commercial transactions has
undergone a profound transformation with the involvement of
multifaceted obligations between multiple parties and complex
contractual structures more sophisticated than the linear parent‐
subsidiary type of organization, that has rendered the traditional
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Shapoorji Pallonji and Company Private Limited

dyadic paradigms of business obsolete, particularly in areas such as
construction contracts, financing transactions, reinsurance contracts,
the framework of arbitration has, to a significant extent remained
unchanged, leading to a mismatch between procedural form and
commercial substance.
125. For arbitration to remain a viable and effectively alternative mechanism
for dispute resolution, it is imperative to ensure that commercial reality
does not outgrow this mechanism. The mechanisms of arbitration must
be sufficiently elastic to accommodate the complexities of multi-party
and multi-contract arrangements without compromising foundational
principles such as consent and party autonomy. The approach of
courts and arbitral tribunal in particular must be responsive to the
emerging commercial practices and expectations of the parties who
submit themselves to it.
126. It was in this backdrop and the emerging best international practices
that Cox and Kings (I) (supra) recognized the applicability of the
‘Group of Companies’ doctrine and other principles of determining
mutual consent, to bind even non-signatories to the arbitration
agreement as parties, as long as they were a veritable party and
found to have impliedly consented to such agreement. The legal
basis of these principles were traced to not only the object of the
Act, 1996, but to the substantive provisions of Section(s) 2(1)(h)
and 7 thereto. However, mere recognition of this principles which
ultimately seeks to make the Indian arbitration law more responsive
to the contemporary requirements, would be a farce, if the power
to actually effectuate such principles, is not recognized, merely due
to the absence of any explicit provision in this regard. We are of
the considered opinion, that recognition of the power of joinder or
impleadment of a non-signatory by an arbitral tribunal is a necessary
intendment of the express provisions of Section(s) 2(1)(h) and 7
and the overall scheme and object of the Act, 1996 as well as the
fundamental cannons of the law of arbitration of providing an effective
alternative dispute resolution mechanism.
127. Thus, even in the absence of an express provisions in the Act, 1996
empowering the arbitral tribunal to implead or join a party who is
otherwise bound by the arbitration agreement, the arbitral tribunal
does possess such power by virtue of the doctrine of implied powers,
as long as the same is in tandem with the scheme of Act, 1996 i.e.,
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as long as the parties had either expressly or impliedly consented
to the arbitration agreement as held in Cox and Kings (I) (supra).

b. Doctrine of Kompetenz-Kompetenz and the Jurisdictional
Reach of an Arbitral Tribunal.
128. The aforesaid may be looked at from one another angle, through the
‘Always Speaking’ statutory interpretation rule. The said rule dictates
that the words of a statute should be treated as ambulatory, speaking
continuously in the present and conveying a contemporary meaning.
This approach entails that if things not known or understood at the
time when the enactment came into force, fall, on a fair construction,
within its words, those things should be held to be included or
intended by the statute. It lays that the context or application of a
statutory expression may change over time, but the meaning of the
expression itself cannot change’. It therefore provides for a statute
to be applied to new circumstances and developments without the
need for legislative revision or amendment. In other words, the
core meaning of a statute is fixed but its context or application may
change which is inherently capable of ‘embracing future changes
in the subject matter.
129. Historically, the rule of interpretation of statutes, was premised on the
understanding that statutes were to be construed in accordance with
their natural meaning as at the date of their enactment. It was based
on the Latin maxim “contemporanea expositio est optima et fortissima
in lege” which means “Contemporary exposition is the best and
strongest in law”. However, over time the courts started recognizing
the problems underlying this orthodoxic rule of interpretation. Sir
Peter Benson Maxwell, On the Interpretation of Statutes, ed Frederick
Stroud (Sweet and Maxwell, 5th ed, 1912) explained that the use
of “contemporanea expositio est optima et fortissima in lege” for
interpretation of statutes had largely been abandoned except perhaps
in the construction of ambiguous language used in very old statutes
where the language itself may have had a rather different meaning.
130. The modern approach to statutory interpretation insists that the
context be considered in the first instance, not merely at some later
stage when ambiguity might be thought to arise, and include such
things as the existing state of the law and the mischief which, by
legitimate means such as reference to reports of law reform bodies,
one may discern the statute was intended to remedy.
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131. If close consideration of a statutory text in its wider context and by
reference to its purpose establishes that Parliament has deliberately
chosen words to provide for its application to new circumstances and
developments then the application of the ‘always speaking’ approach
is judicially required. The interpretive process with the ‘always
speaking’ approach is, in essence, to put the cart before the horse.
132. Section 16 of the Act, 1996, which enshrines the principle of
“kompetenz- kompetenz” could be said to be one such provision
when seen in light of the object of the Act, 1996, which requires the
courts to adopt a pragmatic and ‘always speaking’ approach in its
interpretation.
133. Section 16 of the Act, 1996 empowers the arbitral tribunal to rule
on its own jurisdiction. The policy rationale underlying this provision
is twofold: first, to respect and uphold the intention of the parties
to resolve their disputes through arbitration by empowering the
forum they have contractually chosen; and second, to prevent a
fragmentation of proceedings through premature judicial intervention,
which can frustrate the efficacy of arbitration by causing delays and
fostering multiplicity of litigation.
134. The negative aspect of competence-competence is aimed at
restricting the interference of the courts at the referral stage by
preventing the courts from examining the issues pertaining to the
jurisdiction of the arbitral tribunal before the arbitral tribunal itself has
had the opportunity to entertain them AND to also enable the arbitral
tribunal to exercise necessary powers without any dependency upon
the national courts, with the courts taking a back-seat and being
permitted to review the exercise of power of the arbitral tribunal and
its decision at a later stage.
135. The legislative choice of the word “rule” in Section 16 is both deliberate
and significant. It does not merely suggest that the arbitral tribunal is
competent to “consider” or “review” questions of its jurisdiction, but
rather that it is vested with the authority to decisively adjudicate and
pronounce upon such issues. It connotes that the arbitral tribunal
is not only competent to entertain jurisdictional questions, but also
capable — in terms of procedural and substantive mandate — to
exercise necessary power for effectually issuing binding rulings
thereon during the course of the proceedings. It endows the tribunal
with the necessary powers to formulate its ruling. It illustrates the
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intention of the legislature to endow the arbitral tribunal with all powers
and jurisdictional reach for effectively deciding its jurisdiction, even
where no challenge is made by either parties, and to exercise the
necessary powers for making such rulings.
136. Redfern and Hunter on International Arbitration (5th edn, Oxford
University Press 2009), have observed that an arbitral tribunal’s
jurisdiction is derived “from the will of the parties to the arbitration
agreement and therefore joinder or intervention is generally only
possible with the consent of all parties concerned” and “such consent
may be either express, implied, or by reference to a particular set
of arbitration rules agreed to by the parties that provide for joinder”
However, “unlike litigation in state courts, in which third parties can
often be joined to proceedings, the jurisdiction of an arbitral tribunal
to allow for the joinder or intervention of third parties to an arbitration
is limited” to the arbitration agreement and parties bound by it.
137. Adavya Projects (supra) has observed that Section 16 of the Act,
1996 is inclusive and covers all jurisdictional questions, including the
existence and validity of the arbitration agreement, who is a party
to the arbitration agreement, and the scope of disputes referrable
to arbitration under the agreement and thus, the arbitral tribunal’s
jurisdiction must also be determined against the touchstone of the
arbitration agreement.
138. It is often loosely said that an arbitral tribunal does not have any
jurisdiction except what has been conferred by the parties. While the
same may on the surface be correct, however much significance of an
arbitral tribunal’s jurisdiction often finds itself lost and obscured due
to the semantics of the above statement. The misconception arises
when the acts of party is conflated with the source of legal authority.
139. The present case is a classic textbook example of this misconception.
What has ben argued by the appellants herein in so many words,
is that since it was never a party to the proceedings under Section
11 of the Act, 1996 before the referral court, and the arbitral tribunal
was constituted by the referral court without arraying the appellant
herein, the arbitral tribunal had no jurisdiction later to implead it.
The crux of this argument is that, the jurisdiction of the arbitral
tribunal is only confined to the act of the parties and the manner
in which the referral court, had constituted the arbitral tribunal. It
stems from a failure to appreciate that while the parties’ conduct
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may set in motion the arbitral process, it is not the determinant of
the arbitral tribunal’s jurisdiction in a legal sense. Rather, it is the
arbitration agreement itself—once validly concluded—that creates
the jurisdictional foundation upon which the arbitral edifice rests.
140. It erroneously presumes that jurisdiction is derived solely from
the act of appointment rather than from the arbitration agreement
that preceded and necessitated such appointment. The arbitration
agreement, not the referral court’s order nor the procedural formalities
attendant to the tribunal’s constitution, is the true source of jurisdiction.
The act of the referral court in constituting the arbitral tribunal is
but an enabling mechanism to activate a tribunal whose jurisdiction
was already latent in the arbitration agreement itself. This Court in
M/s Arif Azim Co. Ltd. v. M/s Micromax Informatics Fze, wherein,
one of us (J.B. Pardiwala J.) had had held that referral courts are
only a conduit or means to arbitration, and the sum and substance
of the arbitration has to be derived from the choices of the parties
and their intentions contained in the arbitration agreement.
141. The jurisdiction of an arbitral tribunal is not created by the mere
subjective intent or volition of the parties. Rather, it is the arbitration
agreement—a legally cognisable and objective instrument—that
operates as the foundational source of jurisdiction in the eyes of the
law. Just as the creation of a property automatically vests jurisdiction
in the territorial courts competent to adjudicate over such property,
the conclusion of an arbitration agreement ipso jure brings into
existence the jurisdiction of the arbitral tribunal. This jurisdiction
exists in a de jure sense from the moment the arbitration agreement
is validly executed, regardless of whether the tribunal has been
formally constituted.
142. In other words, it is not the tribunal’s subsequent constitution through
procedural steps — whether by the parties themselves or by the
intervention of a court under Section 11 of the Act, 1996 — that
bestows jurisdiction upon it. Rather, such procedural mechanisms
merely activate or operationalise a jurisdiction that is already in
existence by virtue of the arbitration agreement. The arbitral tribunal,
upon being constituted, steps into an already established legal
framework of jurisdiction, rooted in the consensual and binding
nature of the arbitration agreement. The arbitral tribunal is not a
creature of mere procedural will but of substantive legal consequence
flowing from the arbitration agreement. To hold otherwise would be
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to invert the fundamental cannons of law of arbitration which treats
the arbitration agreement as the cornerstone of arbitral competence.
143. It was in this background, that Adavya Projects (supra) held, and
rightly so, that the jurisdiction of the arbitral tribunal to implead a
person depends on whether such person is a party to the arbitration
agreement.

c. Requirement of Notice of Invocation under Section 21 of
the Act, 1996.
144. At this juncture, it would apposite to explain the modalities for the
exercise of such power of joinder / impleadment by an arbitral
tribunal. The appellant herein has vehemently contended that even
if it is assumed that it is bound by the arbitration agreement, the
impugned order is nevertheless liable to be set- aside, inasmuch
as the appellant herein has been improperly arrayed as a party to
the arbitration solely on the basis of a separate statement of claim /
counter- claim filed by respondent no. 1, without the issuance of
any notice of invocation as mandated under Section 21 of the
Act, 1996. It was argued that once the arbitral tribunal had been
constituted for the dispute between the respondent no. 1 and 3
herein, if at all the respondent no. 1 was of the opinion that the
appellant herein was bound by the arbitration agreement, it ought
to have impleaded it by initiating an independent, fresh arbitration
proceedings by first issuing a notice under Section 21 of the Act,
1996, and only thereafter filing a statement of claim against the
appellants herein, rather than proceeding to implead it directly
on the basis of a purported statement of claim in the arbitration
proceedings that had been originally commenced solely between
BCSPL and SPCL, i.e., respondent nos. 1 and 3 respectively,
with no prior or contemporaneous invocation or commencement
of arbitration viz-à-viz the appellant. According to the appellant,
this approach not only contravenes the procedural mandate of the
Act, 1996, more particularly, the purpose of Section 21 but also
undermines the principles of natural justice and party consent,
which lie at the heart of consensual arbitration.
145. The marginal note appended to Section 21 of the Act, 1996 makes
it abundantly clear, that the notice to be issued thereunder is for
the purpose of “commencement of arbitration proceedings”. The
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substantive provision further makes it clear that, the date on which
a request / notice of invocation for referring a dispute is received by
the respondent, would the date on which the arbitral proceedings in
respect of a particular dispute commences. The words “particular
dispute” assumes significance in the interpretation of this provision and
its underlying object. It indicates that the provision is concerned only
with determining when arbitration is deemed to have commenced for
the specific dispute mentioned in the notice. The language in which the
said provision is couched is neither prohibitive or exhaustive insofar
as reference of any other disputes which although not specified in
the notice of invocation yet, nonetheless falls within the scope of the
arbitration agreement. The term “particular dispute”, does not mean
all disputes, nor does it confine the jurisdiction of the arbitral tribunal
which is said to be one emanating from the ‘arbitration agreement’
to only those disputes mentioned in the notice of invocation, as it
would tantamount to reading a restriction into the jurisdiction of the
arbitral tribunal to the bounds of the notice of invocation instead of the
arbitration agreement. Thus, there is no inhibition under Section 21
of the Act, 1996 for raising any other dispute or claim which is
covered under the arbitration agreement in the absence of any such
notice. Section 21 is procedural rather than jurisdictional — it does
not serve to create or validate the arbitration agreement itself, nor
is it a precondition for the existence of the tribunal’s jurisdiction, but
merely operates as a statutory mechanism to ascertain the date of
initiation for reckoning limitation.
146. The aforesaid is further fortified from the distinct manner in which the
scheme of the Act, 1996 treats and refers to a ‘notice of invocation’
under Section 21 and the subsequent filing of a ‘statement of claim’
or ‘counter-claim’ under the Section 23. Section 23 of the Act, 1996
reads as under: -

23. Statements of claim and defence.—
(1) Within the period of time agreed upon by the parties
or determined by the arbitral tribunal, the claimant shall
state the facts supporting his claim, the points at issue
and the relief or remedy sought, and the respondent shall
state his defence in respect of these particulars, unless the
parties have otherwise agreed as to the required elements
of those statements.
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(2) The parties may submit with their statements all
documents they consider to be relevant or may add a
reference to the documents or other evidence they will
submit.
(2A) The respondent, in support of his case, may also
submit a counterclaim or plead a set-off, which shall
be adjudicated upon by the arbitral tribunal, if such
counterclaim or set-off falls within the scope of the
arbitration agreement.
(3) Unless otherwise agreed by the parties, either party
may amend or supplement his claim or defence during
the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow the amendment
or supplement having regard to the delay in making it.
(4) The statement of claim and defence under this section
shall be completed within a period of six months from the
date the arbitrator or all the arbitrators, as the case may
be, received notice, in writing of their appointment.
147. Section 23 sub-section (1) places an obligation upon the claimant
to state the facts supporting his “claim”, the points at issue and the
relief or remedy sought by way of its statement of claim, before the
arbitral tribunal. Notably, the legislature, in the first part of the said
sub-section, has deliberately and consciously used the term “claim”
as opposed to “particular dispute” employed in Section 21 of the Act,
1996. Although, it could said that the term “particular dispute” under
Section 21 connotes a larger umbrella within which the term “claim”
under Section 23 would be subsumed, thereby suggesting that there
is no scope to deviate from what was sought to be referred by the
notice of invocation, we do not think so. We say so because, the
requirement for providing the points at issue and the relief or remedy
sought that exists in sub-section (1) of Section 23 of the Act, 1996 is
patently absent in Section 21 of the Act, 1996, which clearly shows
that the scope and object of these two provisions are at variance to
each other. Further this, sub-section does not stipulate either explicitly
or implicitly, that such “claim” must be the same or in tandem with
the “particular dispute” in respect of which the notice of invocation
was issued under Section 21 of the Act, 1996. This distinction in
terminology is neither incidental nor redundant; rather, it reflects a
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conscious legislative design to demarcate the procedural objective
of Section 21 from the substantive function served by Section 23.
Unlike Section 23, Section 21 does not require any articulation of
the relief sought or the framing of issues —its sole purpose is to
indicate when arbitration is deemed to have commenced, for the
limited purpose of computing the limitation period.
148. This is further fortified from the fact that nowhere does the Act, 1996
lay down any specific format or form of notice under Section 21 of the
Act, 1996, or any strict requirement of the contents to be stipulated
therein. This was noticed by this Court in Milkfood Ltd. v. GMC Ice
Cream (P) Ltd. reported in (2004) 7 SCC 288, wherein it was held
that Section 21 of the Act, 1995 must be construed in tune with its
analogous counter-part provisions of Article 21 of the UNCITRAL
Model Law read with Article 3 of the UNCITRAL Arbitration
Rules and Section 14 of the English Arbitration Act, 1996 wherein
at least the form of notice and strict adherence thereto has become
redundant due to the absence of any specific form or requirement
of such notice. The relevant observations read as under: -
“69. The UNCITRAL Model Rules of Arbitration vis-à-vis
provision of Section 14 of the English Arbitration Act,
1996 must be construed having regard to the decisions
of the English courts as also this Court which addressed
the form of notice to be given in order to commence the
arbitration for the purpose of Section 34(3) of the Limitation
Act. By reason of Section 14, merely the form of notice
and strict adherence thereto has become redundant, as
now in terms of Section 14 of the Arbitration Act there
is otherwise no specific requirement as to the form of
notice subject to any contract operating in the field. (See
paras 5-020, 5-027 and 5-028 of Russell on Arbitration,
22nd Edn.) Section 21 of the 1996 Act must be construed
accordingly. It defines the moment of the commencement
of arbitral proceedings. [...]”
149. Similarly, sub-section (2) of Section 23, which enables the respondent
to make a counter-claim or plead set-off, does not envisage any
requirement that such counter-claim or set-off must be in respect
of or correspond to the “particular dispute” in terms of Section 21
of the Act, 1996, thus, suggesting the legislature’s intention to give
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a wide import to the term “claim” and by extension “counter-claim”.
In order to further obviate any confusion in respect of what claims
can be raised, Section 23 sub-section (3) goes one step ahead and
stipulates that, unless agreed otherwise by the parties, any party
may amend or supplement its “claim” during the course of the arbitral
proceedings, and further, that such amendment or supplement may
be rejected only if the arbitral tribunal considers it inappropriate for
one and only one reason, that being, the delay in making or seeking
such amendment or supplement. What can be discerned from the
above is that there is no restriction whatsoever, in the plain words of
Section 23 of the Act, 1996, which would be indicative of an inhibition
in raising those claims or counter-claims etc., that have no bearing
with the notice of invocation under Section 21 of the Act, 1996.
150. The language used in Section 23 of the Act, 1996 makes no reference
whatsoever, either explicitly to the provision of Section 21 or the
particular words used thereunder, that would be suggestive of any
correlation between the two provisions. On the contrary, the singular
ground that has been mentioned in Section 23 sub-section (3) upon
which an amendment or supplement of claim may be rejected by the
arbitral tribunal i.e., if it is deemed inappropriate due to delay, is a
positive indicium that that no restriction can be read into the scope
of claims that may be raised in the statement of claim or counter-
claim beyond what was stipulated in the notice of invocation under
Section 21 of the Act, 1996. Any limitation or restriction on the scope
of a statement of claim or a counter-claim as the case may be, has
to be understood not from the provision of Section 21 but only from
the explicit language used in Section 23 of the Act, 1996.
151. Any restriction on the nature or content of claims, counter-claims,
or set-offs in arbitration must be sourced solely from the express
language of Section 23 and not from Section 21. Section(s) 21 and
23 of the Act, 1996 although overlap in some aspects with each
other in terms of the claims that would ordinarily be referred to the
tribunal more often than not tend to coincide, yet they are by no
means tethered together in such a manner that neither of them can
survive without one another. The latter serves only a procedural
function and does not condition or limit the tribunal’s jurisdiction to
adjudicate claims that may not have been specifically invoked at the
threshold stage. To read such a limitation into the statutory scheme
would run contrary to both the text and the object of the Act.
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152. In Milkfood (supra) this Court was called upon the examine the
object underlying Section 21 of the Act, 1996. This Court after a
comprehensive examination of a catena of decisions, both under
the English Law and pertaining to the Act, 1996, held that the
purpose of a notice under Section 21 of the Act, 1996 is for the
applicability of the provisions of the Limitation Act, 1963 in terms of
Section 43 of the Act, 1996 to the claims sought to be referred to
arbitration and when can an appointment of an arbitrator be sought
in terms of Section 11 of the Act, 1996. It explained that the date
when arbitration proceeding commences would be relevant for the
purpose of attracting the Limitation Act, 1963 or for the purpose of
time bar clauses or for the rules applicable in terms of the arbitration
agreement, such as for setting into motion the conflict of laws when
the proper law of the contract is one law and the law of the arbitral
procedure is another. Lastly, that this “commencement of arbitration
proceeding” by Section 21 of the Act, 1996 would also be relevant
for of applicability of the 1940 Act having regard to Section 85(2)(a).
Apart from the aforesaid, no other relevancy of Section 21 of the
Act, 1996 was laid down by this Court, much less for the purposes
of Section 23 thereunder. The relevant observations read as under: -
“26. The commencement of an arbitration proceeding for
the purpose of applicability of the provisions of the Indian
Limitation Act is of great significance. Even Section 43(1)
of the 1996 Act provides that the Limitation Act, 1963 shall
apply to the arbitration as it applies to proceedings in court.
Sub-section (2) thereof provides that for the purpose of the
said section and the Limitation Act, 1963, an arbitration
shall be deemed to have commenced on the date referred
to in Section 21.
29. For the purpose of the Limitation Act an arbitration
is deemed to have commenced when one party to the
arbitration agreement serves on the other a notice requiring
the appointment of an arbitrator. This indeed is relatable
to the other purposes also, as, for example, see Section
29(2) of (English) Arbitration Act, 1950.
30. The date when arbitration proceeding commences
would depend upon various factors and the purposes which
it seeks to achieve. It may be for the purpose of attracting
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the Limitation Act or for the purpose of time bar clauses
or for the rules applicable therefor, as, for example, the
rules of the International Chamber of Commerce.
31. The date of commencement of an arbitration also
affects the position under the conflict of laws when the
proper law of the contract is one law and the law of the
arbitral procedure is another, for then, up to the date of
commencement of the arbitration proceeding, the law of
the contract must govern, and the law of the procedure
will only govern thereafter. [...]
32. Sections 14(3) and (5) of the (English) Arbitration Act,
1996 would also show that commencement of arbitral
proceeding is not only for the purpose of limitation but
also for the purpose of considering a case when the
parties by their contract agree that the arbitration must
be commenced within a specified time, failing which the
right to arbitration, or indeed the claim itself, is apt to be
barred. Determination of time elements in an arbitration is
provided for in Section 21 of the 1996 Act clearly indicating
as to when such arbitration has officially begun.
72. Keeping in view the fact that in all the decisions, referred
to hereinbefore, this Court has applied the meaning given to
the expression “commencement of the arbitral proceeding”
as contained in Section 21 of the 1996 Act for the purpose
of applicability of the 1940 Act having regard to Section
85(2)(a) thereof, we have no hesitation in holding that in
this case also, service of a notice for appointment of an
arbitrator would be the relevant date for the purpose of
commencement of the arbitration proceeding.”
(Emphasis supplied)

153. Remarkably, Milkfood (supra) observes that both under Article 21
of the UNCITRAL Model Law and by extension Section 21 of the
Act, 1996, what is necessary in a notice or request under the said
proiviosn, is the indication that the claimant seeks arbitration of the
dispute. This Court consciously did not hold that such indication
must be of what all disputes is sought to be referred to arbitration.
The relevant observations read as under: -
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“27. Article 21 of the Model Law which was modelled on
Article 3 of the UNCITRAL Arbitration Rules had been
adopted for the purpose of drafting Section 21 of the
1996 Act. Section 3 of the 1996 Act provides for as to
when a request can be said to have been received by the
respondent. Thus, whether for the purpose of applying the
provisions of Chapter II of the 1940 Act or for the purpose
of Section 21 of the 1996 Act, what is necessary is to
issue/serve a request/notice to the respondent indicating
that the claimant seeks arbitration of the dispute.”
(Emphasis supplied)

154. The aforesaid observations of Milkfood (supra) when read in
conjunction with the other observations made therein, more
particularly paragraph 32, shows that this Court consistently held that
the purpose of Section 21 of the Act, 1996 is for the determination
of various time elements in an arbitration.
155. In State of Goa v. Praveen Enterprises reported in (2012) 12
SCC 581, this Court elucidated the limited but important function
of Section 21 of the Act, 1996. It held that, in the absence of any
contrary stipulation in the arbitration agreement, the purpose of a
notice under Section 21 is only to demarcate the commencement of
arbitral proceedings with respect to a particular dispute. The issuance
of such notice serves primarily to establish a definite point in time
when the arbitral proceedings are in the eyes of law said to have
commenced for the purpose of calculating and reckoning the period
of limitation for the substantive claims therein. It was further held
that once arbitral proceedings have commenced, the claimant is not
precluded from raising additional claims that were not mentioned in
the original notice of invocation under Section 21 of the Act, 1996.
Such claims may be introduced for the first time in the statement of
claim, without necessitating a fresh notice of invocation. The only
caveat, however, is that the limitation period for these additional
claims shall be computed from the date on which they are actually
raised in the proceedings. Similarly, in the case of counter-claims
as-well, there is no need to establish a date of ‘commencement’ by
issuing a notice under Section 21 of the Act, 1996, as the period of
limitation would be reckoned from the date on which the counterclaim
is made before the arbitrator, except where such claim was initially
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raised by a notice under Section 21 but subsequently raised as a
counter-claim instead. The relevant observations read as under: -
“15. Taking a cue from the said section, the respondent
submitted that arbitral proceedings can commence only
in regard to a dispute in respect of which notice has been
served by a claimant upon the other party, requesting
such dispute to be referred to arbitration; and therefore, a
counterclaim can be entertained by the arbitrator only if it
has been referred to him, after a notice seeking arbitration
in regard to such counterclaim. On a careful consideration
we find no basis for such a contention.
16. The purpose of Section 21 is to specify, in the absence
of a provision in the arbitration agreement in that behalf,
as to when an arbitral proceeding in regard to a dispute
commences. This becomes relevant for the purpose
of Section 43 of the Act. Sub- section (1) of Section
43 provides that the Limitation Act, 1963 shall apply to
arbitrations as it applies to proceedings in courts. Sub-
section (2) of Section 43 provides that for the purposes
of Section 43 and the Limitation Act, 1963, an arbitration
shall be deemed to have commenced on the date referred
to in Section 21 of the Act. Having regard to Section 43
of the Act, any claim made beyond the period of limitation
prescribed by the Limitation Act, 1963 will be barred by
limitation and the Arbitral Tribunal will have to reject such
claims as barred by limitation.

xxx xxx xxx
18. In regard to a claim which is sought to be enforced by
filing a civil suit, the question whether the suit is within the
period of limitation is decided with reference to the date
of institution of the suit, that is, the date of presentation of
a plaint. As the Limitation Act, 1963 is made applicable to
arbitrations, there is a need to specify the date on which
the arbitration is deemed to be instituted or commenced
as that will decide whether the proceedings are barred
by limitation or not. Section 3 of the Limitation Act, 1963
specifies the date of institution for suit, but does not specify
the date of “institution” for arbitration proceedings. Section
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ASF Buildtech Private Limited v.
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21 of the Act supplies the omission. But for Section 21
there would be considerable confusion as to what would
be the date of “institution” in regard to the arbitration
proceedings. It will be possible for the respondent in an
arbitration to argue that the limitation has to be calculated
as on the date on which statement of claim was filed, or the
date on which the arbitrator entered upon the reference,
or the date on which the arbitrator was appointed by
the court, or the date on which the application was filed
under Section 11 of the Act. In view of Section 21 of the
Act providing that the arbitration proceedings shall be
deemed to commence on the date on which “a request for
that dispute to be referred to arbitration is received by the
respondent” the said confusion is cleared. Therefore, the
purpose of Section 21 of the Act is to determine the date
of commencement of the arbitration proceedings, relevant
mainly for deciding whether the claims of the claimant are
barred by limitation or not.
19. There can be claims by a claimant even without
a notice seeking reference. Let us take an example
where a notice is issued by a claimant raising disputes
regarding Claims A and B and seeking reference thereof to
arbitration. On appointment of the arbitrator, the claimant
files a claim statement in regard to the said Claims A
and B. Subsequently if the claimant amends the claim
statement by adding Claim C [which is permitted under
Section 23(3) of the Act] the additional Claim C would not
be preceded by a notice seeking arbitration. The date of
amendment by which Claim C was introduced, will become
the relevant date for determining the limitation in regard to
the said Claim C, whereas the date on which the notice
seeking arbitration was served on the other party, will be
the relevant date for deciding the limitation in regard to
Claims A and B. Be that as it may.
20. As far as counterclaims are concerned, there is no room
for ambiguity in regard to the relevant date for determining
the limitation. Section 3(2)(b) of the Limitation Act, 1963
provides that in regard to a counterclaim in suits, the date
on which the counterclaim is made in court shall be deemed
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to be the date of institution of the counterclaim. As the
Limitation Act, 1963 is made applicable to arbitrations, in
the case of a counterclaim by a respondent in an arbitral
proceeding, the date on which the counterclaim is made
before the arbitrator will be the date of “institution” insofar
as counterclaim is concerned. There is, therefore, no need
to provide a date of “commencement” as in the case of
claims of a claimant. Section 21 of the Act is therefore
not relevant for counterclaims. There is however one
exception. Where the respondent against whom a claim
is made, had also made a claim against the claimant and
sought arbitration by serving a notice to the claimant but
subsequently raises that claim as a counterclaim in the
arbitration proceedings initiated by the claimant, instead of
filing a separate application under Section 11 of the Act,
the limitation for such counterclaim should be computed,
as on the date of service of notice of such claim on the
claimant and not on the date of filing of the counterclaim.”
(Emphasis supplied)

156. In Adavya Projects (supra) this Court held that the purpose of a
notice under Section 21 of the Act, 1996 is only to fulfilled the various
time-related objects pertaining to the arbitration and the arbitration
agreement. The relevant observation reads as under: -
“11. It is clear that by fixing the date of commencement
of arbitral proceedings by anchoring the same to a notice
invoking arbitration, Section 21 of the ACA fulfils various
objects that are time-related. The receipt of such notice
is determinative of the limitation period for substantive
disputes as well as the Section 11 application, and also
the law applicable to the arbitration proceedings.”
(Emphasis supplied)

157. Adavya Projects (supra) explained the aforesaid object of a notice
under Section 21 of the Act, 1996 in four parts: -
(i) First, that the plain language of Section 21 of the Act, 1996
does not expressly mandate the claimant to send a notice
invoking arbitration to the respondents, instead what it mandates
[2025] 5 S.C.R. 1721

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

is the receipt of such notice for a ‘commencement of arbitral
proceedings” in terms of the Act, 1996, unless agreed otherwise.
The relevant observations read as under: -
“9. A plain reading of the provision shows that
in the absence of an agreement between the
parties, arbitral proceedings are deemed to have
commenced when the respondent receives a request
to refer disputes to arbitration. It is clear that Section
21 does not expressly mandate the claimant to send
a notice invoking arbitration to the respondents.
However, the provision necessarily mandates such
notice as its receipt by the respondent is required to
commence arbitral proceedings, unless the parties
have mutually agreed on another date/event for
determining when the arbitral proceedings have
commenced.”
(Emphasis supplied)

(ii) Secondly, placing reliance on Milkfood (supra) it held that the
date of receipt of the Section 21 notice is also used to determine
whether a dispute has been raised within the limitation period
as specified in the Schedule to the Limitation Act, 1963. The
relevant observations read as under: -
“10.1 First, the notice is necessary to determine
whether claims are within the period of limitation or are
time- barred. Section 43(1) of the ACA stipulates that
the Limitation Act, 1963 shall apply to arbitrations as
it applies to court proceedings. Further, Section 43(2)
provides that for the purpose of the Limitation Act,
an arbitration shall be deemed to have commenced
on the date referred to in Section 21. Hence, the
date of receipt of the Section 21 notice is used to
determine whether a dispute has been raised within
the limitation period as specified in the Schedule to
the Limitation Act, as held by this Court in Milkfood
Ltd. v. GMC Ice Cream (P) Ltd.5 and State of Goa v.
Praveen Enterprises.”
(Emphasis supplied)
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(iii) Thirdly, that as held in Milkfood (supra) the date of receipt
of such notice is also relevant for determining either (1) when
the lex-arbitri or the law governing the arbitration agreement
would apply or (2) for ascertaining the applicability of Arbitration
Act, 1940 and Foreign Awards (Recognition and Enforcement)
Act, 1961 to arbitral proceedings commenced prior to the Act,
1996 in terms of Section 85(2)(a) thereunder. The relevant
observations read as under: -
“10.2 Second, the date of receipt of notice is also
relevant to determine the applicable law to the arbitral
proceedings. This can be understood in two senses:
(i) When the arbitral proceedings are governed by a
law that is different from the proper law of the contract,
the governing law applies only after the arbitral
proceedings have commenced, as held in Milkfood
Ltd (supra). And, (ii) Section 85(2)(a) of the ACA
provides that the Arbitration Act, 1940 and Foreign
Awards (Recognition and Enforcement) Act, 1961
will apply to arbitral proceedings that commenced
prior to the ACA coming into force, unless otherwise
agreed by the parties. Hence, the date of invoking
arbitration is necessary to determine which arbitration
law applies to the proceedings as per the decisions in
Milkfood Ltd (supra) and Geo-Miller & Co (P) Ltd. v.
Chairman, Rajasthan Vidyut Utpadan Nigam Ltd.
Similarly, the applicability of amendments to the ACA
to arbitral proceedings is determined by reference to
the date on which such proceedings commenced as
per Section 21.”
(Emphasis supplied)

(iv) Fourthly, in terms of Nortel Networks (supra), it is also relevant
for determining the ‘failure’ on part of any party to the arbitration
agreement in appointment of an arbitrator to avail the remedy
under Section 11 of the Act, 1996 and for the purpose of
reckoning the limitation period for filing an application thereunder
for seeking appointment of the arbitration through a referral
court. The relevant observations read as under: -
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ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

“10.3 Third, an application before the High Court
or this Court under Section 11(6) of the ACA for
appointment of arbitrator can be filed only after the
respondent has failed to act as per the appointment
procedure in the arbitration agreement. Hence,
invocation of arbitration as provided in Section 21, and
the subsequent failure of the respondent to appoint
its arbitrator or agree to the appointment of a sole
arbitrator as provided in Sections 11(4) and 11(5),
are necessary for invoking the court’s jurisdiction
under Section 11. This is as per the decision of this
Court in BSNL v. Nortel Networks (India) (P) Ltd.
Further, the limitation period within which the Section
11 application must be filed is also calculated with
reference to the date on which the appointment
procedure under the arbitration agreement fails.”
(Emphasis supplied)

158. Adavya Projects (supra) placing reliance on Praveen Enterprises
(supra) further held that there is nothing in the wording of the provision
or the scheme of the Act, 1996 that would indicate that a party to
an arbitration agreement – signatory or non-signatory – cannot be
impleaded to the arbitral proceedings, merely because no notice
under Section 21 was served on them. Non-service of the notice
under Section 21 and the absence of a dispute being raised against
certain parties therein would not bar their impleadment into the
arbitration proceedings. The relevant observations read as under: -
“12. [...] However, there is nothing in the wording of the
provision or the scheme of the ACA to indicate that merely
because such notice was not served on respondent nos. 2
and 3, they cannot be impleaded as parties to the arbitral
proceedings. The relevant considerations for joining them
as parties to the arbitration will be discussed at a later stage.
13. At this point, it is important to note this Court’s decision
in State of Goa v. Praveen Enterprises (supra) wherein it
was held that the claims and disputes raised in the notice
under Section 21 do not restrict and limit the claims that
can be raised before the arbitral tribunal. The consequence
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of not raising a claim in the notice is only that the limitation
period for such claim that is raised before the arbitral
tribunal for the first time will be calculated differently vis-a-
vis claims raised in the notice. However, non inclusion of
certain disputes in the Section 21 notice does not preclude
a claimant from raising them during the arbitration, as
long as they are covered under the arbitration agreement.
Further, merely because a respondent did not issue a
notice raising counter-claims, he is not precluded from
raising the same before the arbitral tribunal, as long as
such counter-claims fall within the scope of the arbitration
agreement.
14. A similar rationale may be adopted in this case as
well, especially considering the clear purpose served by a
Section 21 notice. Extending this logic, non-service of the
notice under Section 21 and the absence of disputes being
raised against respondent nos. 2 and 3 in the appellant’s
notice dated 17.11.2020 do not automatically bar their
impleadment as parties to the arbitration proceedings.

xxx xxx xxx
21. [...] it is clear that not being served with a Section
21 notice and not being made a party in the Section 11
application are not sufficient grounds to hold that a person
cannot be made party to arbitral proceedings.”
(Emphasis supplied)

159. It is noteworthy to mention that Adavya Projects (supra) acknowledge
that although the decision of the Delhi High Court in Alupro Building
Systems Pvt Ltd. v. Ozone Overseas Pvt Ltd reported in 2017
SCC OnLine Del 7228, is correct insofar as it hold that some the
functions that a notice under Section 21 of the Act, 1996 serves
inter-alia includes (i) informing the other party as to the claims,
which will enable them to accept or dispute the claims; (ii) enabling
the other party to point out if certain claims are time barred, barred
by law, or untenable, or if there are counter-claims; (iii) for arriving
at a consensus for appointment of arbitrators under the arbitration
agreement; (iv) for proposing an arbitrator, to enable the other party to
raise any objections/issues regarding qualification; (v) or for triggering
[2025] 5 S.C.R. 1725

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

the court’s jurisdiction under Section 11 in case the appointment
procedure fails; and (vi) for fixing the date of commencement of
arbitration for the purpose of Section 43(1), yet the decision of Alupro
Building Systems (supra) cannot be construed to have held that
hat the notice under Section 21 is a mandatory requirement before a
person can be made party to arbitral proceedings. Adavya Projects
(supra) held that while a notice under Section 21 is mandatory, the
non-service of such notice on a party would not nullify the arbitral
tribunal’s jurisdiction over such party. The other purposes served
by such notice as delineated by Alupro Building Systems (supra)
are only incidental and secondary, and the primary purpose of such
notice is only to the extent of determination of various time elements
in an arbitration. The relevant observations read as under: -
“30. The Delhi High Court in Alupro Building Systems Pvt
Ltd. v. Ozone Overseas Pvt Ltd. allowed an application
under Section 34 of the ACA against an award passed by an
arbitrator who was unilaterally appointed by the respondent
therein, without issuing a notice to the petitioner therein
under Section 21 of the ACA. The High Court proceeded
to delineate the various functions served by a Section 21
notice as follows: (i) To inform the other party as to the
claims, which will enable them to accept or dispute the
claims; (ii) To enable the other party to point out if certain
claims are time barred, barred by law, or untenable, or if
there are counter- claims; (iii) For arriving at a consensus for
appointment of arbitrators under the arbitration agreement;
(iv) For parties to inform each other about their proposed
arbitrator, to enable the other party to raise any objections/
issues regarding qualification; (v) To trigger the court’s
jurisdiction under Section 11 in case the appointment
procedure fails; and (vi) To fix the date of commencement
of arbitration for the purpose of Section 43(1).
30.1. The decision in Alupro Building Systems (supra) has
been relied on by the High Court in its impugned order
to hold that the notice under Section 21 is a mandatory
requirement before a person can be made party to arbitral
proceedings.
30.2. While we agree with the decision insofar as holding
that the notice under Section 21 is mandatory, unless
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the contract provides otherwise, we do not agree with
the conclusion that non-service of such notice on a party
nullifies the arbitral tribunal’s jurisdiction over him. The
purpose of the Section 21 notice is clear – by fixing the
date of commencement of arbitration, it enables the
calculation of limitation and it is a necessary precondition
for filing an application under Section 11 of the ACA. The
other purposes served by such notice – of informing the
respondent about the claims, giving the respondent an
opportunity to admit and contest claims and raise counter-
claims, and to object to proposed arbitrators – are only
incidental and secondary. We have already held that the
contents of the notice do not restrict the claims, and any
objections regarding limitation and maintainability can be
raised before the arbitral tribunal, and the ACA provides
mechanisms for challenging the appointment of arbitrators
on various grounds. Hence, while a Section 21 notice
may perform these functions, it is not the primary or only
mechanism envisaged by the ACA.”
(Emphasis supplied)

160. In light of the decision of this Court in Adavya Projects (supra)
and a catena of other decisions as-well as the scope and object of
Section 21 of the Act, 1996 in contrast to Section 23 as explained
by us in the foregoing paragraphs, mere non-service of a notice of
invocation on a party would not nullify the arbitral tribunal’s jurisdiction
over such party, and that such party can be impleaded and arrayed
in the arbitration proceedings if any claim or counter- claim is made
against such party by the claimant in statement of claims or counter-
claims, or by even amending the memo of parties of the putative
statement of claims counter-claims filed by it, provided that such party
is found to be bound by the arbitration agreement either by virtue of
it being a signatory, or where such party is a non-signatory, in terms
of the decision of Cox and Kings (I) (supra) as explained by us.
161. In the case on hand, as mentioned earlier, the Tribunal has by way
of two separate orders passed in Section 16 Applications filed by
BCSPL, in the first round, and AISPL and ABPL, in the second round
ruled on its jurisdiction and added AISPL and ABPL to the array of
parties in the proceedings. This determination under the principle of
[2025] 5 S.C.R. 1727

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

‘kompetenz-kompetenz’ enshrined in Section 16 of the 1996 Act must
be permitted to take its course, given that the arbitral proceedings
are in any case nearing conclusion.
162. The High Court in its impugned judgment while upholding the
Arbitrator’s Orders, has rightly held that ABPL, BCSPL and AISPL
‘fall under the same management, and it appears that the substitution
in the contract, took place merely for convenience...’. Further, ‘all
the correspondence is in respect of the contract with ASF and ASF
Group of Companies. There is no differentiation between BCSPL,
AISPL, or ABPL, all of which are part of the ASF Group.’. In arriving
at its conclusion, the High Court correctly applied the test laid down
in Cox and Kings Ltd. (I) (supra), taking note of the communications
exchanged, conduct of the ASF Group officials, active involvement of
the appellant with contractual obligations, intertwined nature of the
agreements involving BCSPL, AISPL, and ABPL and the composite
business operations.
163. The conclusion reached by the Arbitral Tribunal and the High Court
is premised on the following: -
(i) SPCPL had made out a case supported by material, which cannot
be rejected at the preliminary stage, that AISPL and ABPL are
inextricably linked to and operationally holding control over the
performance of the Works Contract and Settlement Agreement
which are the subject matter of the arbitral proceedings.
(ii) SPCPL had rightly invoked the doctrine of Group of Companies
to justify inclusion of the non-signatories.
(iii) Having regard to the chronology of events leading to the
execution of the Settlement Agreement, prima facie, both
ASPL and ABPL are proper parties, if not necessary, even to
the claim of BCSPL.
(iv) The High Court, in particular, noted the factor of mutual intent,
the same demonstrated by AISPL and ABPL; substantial
involvement in the negotiations, performance, and termination
of the various contracts entered into between the parties. The
continuous use of ASF insignia and the participation of ASF
Group officials in correspondences indicate that all entities within
the ASF Group intended to be bound by the same arbitration
agreement.
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(v) AISPL and ABPL, as subsidiaries within the ASF Group, have a
direct relationship with BCSPL. They all have common directors,
if not the same directors. Their interconnected roles in the Black
Canyon project, as evidenced by their involvement in securing
demobilization by SPCPL and other contractual obligations,
highlight this relationship.
(vi) The Works Contract, the Novation Agreement, the Settlement
Agreement, and the Comfort Letter all pertain to the same
redevelopment project of the Black Canyon project. The
shared subject matter across these agreements establishes a
‘commonality’ that justifies the inclusion of AISPL and ABPL in
the arbitration proceedings. Further, the various transactions
entered into the between the parties must form a cohesive
whole, indicating that they cannot be viewed in isolation.
The intertwined nature of the agreements involving BCSPL,
AISPL, and ABPL demonstrates that these transactions form
a composite whole. The responsibilities across the ASF Group
entities reflect a composite business operation.
164. The judicial trend is that all issues should be before the Arbitral
Tribunal and the power under Section 11 sub-section (6A) is restricted
to examination of the existence of an arbitration agreement. The
concept of a ‘reference’ as it existed under the Arbitration Act, 1940
does not find itself in the 1996 Act. Once the Arbitral Tribunal stands
appointed, all disputes and issues are to be decided by it as a ‘one-
stop forum’ for adjudication. [See: Gammon India Ltd. v. NHAI,
reported in 2020 SCC OnLine Del 659]
165. As aforementioned, Section 7(4)(b) of the Act, 1996 provides
that an Arbitration Agreement may be contained in exchange of
telecommunication, such as emails, which provide a record of the
principal agreement. Emails have been exchanged between SPCPL
and ASF Group as a whole, where admission of liability on the part
of ASF Group to make payment under the Settlement Agreement
stands established. Clause 12 of the Settlement Agreement makes
the dispute resolution clause of the Works Contract applicable in
the present case.
166. In Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia
(P) Ltd., reported in (2015) 13 SCC 477, this Court has held that
signature is not a formal requirement under Section 7(4)(b) or
[2025] 5 S.C.R. 1729

ASF Buildtech Private Limited v.
Shapoorji Pallonji and Company Private Limited

7(4)(c) or under Section 7(5) of the 1996 Act. This position is
further supported by the definition of a ‘party’ in Section 2(h) of the
1996 Act to include a ‘party to an arbitration agreement’ and not a
signatory to an arbitration agreement. Section 7 of the 1996 Act also
does not stipulate a qualification that a party must be a signatory
to the arbitration agreement or the principal agreement containing
the arbitration clause. This was also reiterated in Cox and Kings
Ltd (I) (supra).
167. Even the non-issuance of Section 21 notice on the appellant cannot
be said to be fatal to its impleadment. The principle of consensus ad
idem for referring disputes to arbitral tribunals applies to the signato
ries to the arbitration agreement and not non-signatories who are
sought to be impleaded.
168. The decision of this Court in Praveen Enterprises (supra), , on
which strong reliance has been placed on behalf of the ABPL, as
already discussed, is contrary to their contention and rather fortifies
SPCPL’s argument in this regard, where this Court held that a notice
under Section 21 of the 1996 Act is not relevant for counterclaims.
169. We have looked into the other decisions also relied upon by Mr.
Kamat in support of his submissions, however, they are of no avail
to the appellant.

D. CONCLUSION
170. Before we close this matter, we would like to say something as
regards the litigation which has unfolded before us. The Arbitration
Act was the first legislative enactment that dealt with arbitration that
came into force in 1940. Fifty years, later, the aforesaid legislation
was replaced by the Arbitration and Conciliation Act, 1996. It has
been almost, thirty-years, since the Act, 1996 has remained in force.
Various amendments to the Act, 1996 have been made over the
years so as to ensure that arbitration proceedings are conducted and
concluded expeditiously. It is indeed very sad to note that even after
these many years, procedural issues such as the one involved in
the case at hand, have continued to plaque the arbitration regime of
India. The Department of Legal Affairs has now, once again proposed
to replace the existing legislation on arbitration with the Arbitration
and Conciliation Bill, 2024. Unfortunately, even the new Bill has
taken no steps whatsoever, for ameliorating the position of law as
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regards the power of impleadment or joinder of an arbitral tribunal.
What is expressly missing in the Act, 1996 is still missing in the
Arbitration and Conciliation Bill, 2024, despite a catena of decisions
of this Court as-well as the various High Courts, highlighting the
need for statutory recognition of such power in order to obviate all
possibilities of confusion. As observed in Gayatri Balasamy (supra),
any uncertainty in the law of arbitration would be an anathema to
business and commerce. We urge, the Department of Legal Affairs,
Ministry of Law and Justice to take a serious look at the arbitration
regime that is prevailing in India and bring about necessary changes
while the Arbitration and Conciliation Bill, 2024 is still being considered.
171. In the overall view of the matter, we are convinced that no error, not
to speak of any error of law, could be said to have been committed
by the High Court in passing the impugned judgment and order.
172. All other legal contentions available to the parties are kept open to
be canvassed before the Arbitral Tribunal.
173. For all the foregoing reasons, this appeal fails and is hereby dismissed.
174. Pending application, if any, also stands disposed of accordingly.
175. The Registry shall forward one copy each of this judgment to all the
High Courts across the country and the Principal Secretary, Ministry
of Law & Justice.

Result of the case: Appeal dismissed.

†
Headnotes prepared by: Ankit Gyan