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

- **Citation:** 2025 INSC 616
- **Court:** Supreme Court of India
- **Decided:** 2025-05-02
- **Case number:** Civil Appeal No. 5823 of 2025
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/asf-buildtech-private-limited-v-shapoorji-pallonji-and-company-private-limited-38687
- **Pages:** 166

## Headnote

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

## Text

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[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 NonSignatories 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 nonsignatory 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 KompetenzKompetenz 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 KompetenzKompetenz; 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.
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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
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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.
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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
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Supreme Court Reports
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.