Arbitral Tribunal May Implead Non‑Signatories; Supreme Court Affirms Tribunal’s Power Under Kompetenz‑Kompetenz

A bench of Justices J.B. Pardiwala and R. Mahadevan on Friday heard an appeal by ASF Buildtech Pvt. Ltd. against a Delhi High Court order dated 4 July 2024 and held that an Arbitral Tribunal possessed the authority to implead non‑signatories to an arbitration agreement and to rule on questions of its own jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996. The appeal arose from a challenge to orders of a Sole Arbitrator that had refused to reject a counterclaim against ASF group entities on the ground that they were non‑signatories.

The Court summarised the principal holding that the referral court’s role under Section 11 was confined to a prima facie examination of the existence of an arbitration agreement, while complex factual determinations about whether a non‑signatory was a “veritable party” to an arbitration agreement were to be left to the arbitral tribunal. The Court, in its reasoning, observed: “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; 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.”

Background The dispute originated from construction and settlement documents concerning a Black Canyon SEZ project. Black Canyon SEZ Pvt. Ltd. (BCSPL) initiated arbitration against Shapoorji Pallonji & Co. Pvt. Ltd. (SPCPL). SPCPL filed a counterclaim that implicated other ASF group companies — ASF Insignia SEZ Pvt. Ltd. (AISPL) and ASF Buildtech Pvt. Ltd. (ABPL) — relying on group‑of‑companies and alter‑ego principles. The Sole Arbitrator dismissed Section 16 jurisdictional challenges filed by BCSPL, AISPL and ABPL by orders dated 23 May 2023 and 17 October 2023, holding that factual questions about the role and conduct of AISPL and ABPL required adjudication after they were arrayed parties.

The Delhi High Court affirmed those orders and directed that “AISPL and ABPL are impleaded as Respondent Nos. 2 and 3 in the arbitral proceedings,” treating the pleadings as a single reference and directing that evidence be led first by BCSPL, AISPL and ABPL and thereafter by SPCPL. The High Court noted material suggesting integrated management and common commercial conduct, recording that “the ASF Group is one cohesive group in which AISPL, ABPL and BCSPL are part of the group.”

Before the Supreme Court, ASF Buildtech contended it was a non‑signatory who had not been party to the Section 11 proceedings and that the Arbitrator could not implead it without a fresh notice of invocation under Section 21. SPCPL and the arbitral respondents argued that jurisprudence in Cox & Kings and subsequent authorities allowed tribunals to examine and, where justified, implead non‑signatories and that Section 21 served principally to fix the date of commencement for limitation purposes rather than to determine tribunal jurisdiction.

The Supreme Court rejected the appeal and dismissed it, holding that there was no legal infirmity in the Arbitrator’s or High Court’s approach: an arbitral tribunal, applying the tests in Cox & Kings and related precedents, could determine whether a non‑signatory was a veritable party and implead it; referral courts were limited to prima facie existence of an arbitration agreement; and questions of joinder involving mixed questions of fact and law were appropriately left to the tribunal. The Court recorded that other legal contentions remained open for the tribunal and ordered circulation of the judgment to all High Courts and the Ministry of Law and Justice.

Case Details: Case No.: CIVIL APPEAL NO. 5823 OF 2025 (Arising out of SLP (C) No. 21286 of 2024) Case Title: ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited Appearances: For the Petitioner(s): Mr. Devadatt Kamat, Senior Counsel For the Respondent(s): Ms. Aakanksha Kaul, Advocate

Disposition: Appeal dismissed (judgment delivered 2 May 2025).