The apex court, led by Justice J.B. Pardiwala, affirmed the Arbitral Tribunal’s decision to reject jurisdictional objections raised by ASF Buildtech Pvt. Ltd. (ABPL), a non-signatory, in a commercial dispute initiated by Shapoorji Pallonji & Co. Pvt. Ltd. (SPCPL). The Tribunal’s ruling was earlier upheld by the Delhi High Court.
“This Court finds no inhibition in the scheme of the Arbitration and Conciliation Act, 1996, which precludes an arbitral tribunal from impleading a non-signatory on its own accord,” the Bench stated, reinforcing the autonomy and jurisdictional reach of arbitral tribunals.
Dispute Details
The matter traces back to a Settlement Agreement dated July 24, 2020, under which Black Canyon SEZ Pvt. Ltd. (BCSPL), a part of the ASF Group, initiated arbitration proceedings against SPCPL. In response, SPCPL filed a counterclaim against BCSPL as well as ASF Insignia SEZ Pvt. Ltd. (AISPL) and ABPL—both part of the ASF Group.
The heart of SPCPL’s argument lay in the "Group of Companies" doctrine. The company asserted that although ABPL and AISPL were not signatories to the arbitration agreement embedded in the Works Contract dated November 21, 2016, their conduct, control, and economic involvement made them bound by it.
Money Matters and Tribunal’s Observations
SPCPL’s counterclaim involved financial claims against all ASF entities, not just the signatory BCSPL. While exact monetary figures were not disclosed, the nature of the contractual works implied significant financial stakes. The Arbitral Tribunal, through orders dated May 23, 2023, and October 17, 2023, ruled that facts concerning ABPL and AISPL’s roles necessitated adjudication.
“Whether or not the inclusion of ABPL and AISPL on the basis of such doctrine is correct involves crucial aspects of their conduct and role—questions that are mixed of facts and law,” noted the Tribunal in its order.
The appellants had challenged these findings under Section 37 of the Act. However, the Delhi High Court dismissed the appeals, a stance now endorsed by the Supreme Court.
Key Legal Takeaways
The Court’s judgment reiterates principles from prior rulings such as Chloro Controls, Cox and Kings, and Krish Spinning, all of which expanded the boundaries of arbitration jurisprudence by enabling tribunals to interpret the intent and relationship among corporate entities in disputes.
Justice Pardiwala remarked, “The Doctrine of Kompetenz-Kompetenz allows the tribunal to rule on its own jurisdiction, including the question of whether there is an arbitration agreement.”
This ruling strengthens India’s pro-arbitration stance and ensures that complex corporate structures cannot be used to evade legal responsibility.
Read The Judgment Here
keywords: Arbitration agreement, Non-signatories in arbitration, Group of Companies doctrine, Supreme Court arbitration ruling, ASF Buildtech Shapoorji case, Arbitral tribunal jurisdiction
