Supreme Court Criticises Arbitration Bill 2024 For Not Recognising Power To Implead Non-Signatories, Urges Union To Make Changes

The Supreme Court today (May 2) expressed its dissatisfaction with the continued absence of explicit statutory recognition for the power of arbitral tribunals to implead or join non-signatory parties. The Court noted with concern that, despite earlier omissions in the Arbitration and Conciliation Act, 1996, the newly proposed Arbitration and Conciliation Bill, 2024, which seeks to overhaul the legislation, also failed to address this critical issue.

“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 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.”, the court observed.

“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.”, the court added.

The bench comprising Justices J.B. Pardiwala and R. Mahadevan was hearing the case, which involved a question of whether the Appellant-ASF Buildtech Pvt. Ltd. (ABPL), a non-signatory to the arbitration agreement, could be joined to the arbitral proceedings initiated by the Respondent-Shapoorji Pallonji & Co. Pvt. Ltd. (SPCPL) based on the “Group of Companies” doctrine.

Affirming the Delhi High Court's decision which approved impleadment of the Appellant in the arbitral proceedings despite being non-signatory to the arbitral proceedings, the judgment authored by Justice Pardiwala emphasized that once an arbitral tribunal is constituted, all jurisdictional and factual issues including the status of non-signatories should be resolved by the tribunal, not by courts, except under the limited scope of review permitted by Section 34 (post-award challenge).

As there is no statutory provision for the joinder of non-signatories in arbitral proceedings under the existing Arbitration Act, the Court expects the Union to provide such recognition in the proposed Bill, which is currently under review.

Although in cases like Cox and Kings Ltd. v. SAP India Pvt. Ltd. & Anr., 2023 SCC Online SC 1634, Chloro Controls India Private Limited v. Severn Trent Water Purification Inc, (2013) 1 SCC 641 have recognized the need and legal foundation for such joinders, their decisions are based on evolving jurisprudence, not on express statutory language. It was in this context, the Court made the aforesaid observation, urging the Union to give statutory recognition to the arbitral tribunal's power to implead or join non-signatory parties to give no room for judicial uncertainty.

Case Title: ASF BUILDTECH PRIVATE LIMITED VERSUS SHAPOORJI PALLONJI AND COMPANY PRIVATE LIMITED

Citation : 2025 LiveLaw (SC) 521

Click here to read/download the judgment

Appearance:

For Petitioner(s) Mr. Devadatt Kamat, Sr. Adv. Mr. Dr. Amit George, Adv. Ms. Anindita Mitra, AOR Mr. Harsh Pandey, Adv. Mr. Hruday Bajentri, Adv.

For Respondent(s) Ms. Aakanksha Kaul, Adv. Mr. Saurav Agrawal, Adv. Mr. Salvador Santosh Rebello, AOR Mr. Aman Sahani, Adv. Mr. Anshuman Chowdhary, Adv. Ms. Rhea Borkotoky, Adv. Mr. Akash Saxena, Adv. Ms. Kritika, Adv. Ms. Ashima Chopra, Adv. Ms. Prachi Dubey, Adv. Ms. Pooja Gill, Adv. Mr. Jayant Mehta, Sr. Adv. Mr. S. S. Shroff, AOR Ms. Shruti Sabharwal, Adv. Ms. Avlokita Rajvi, Adv. Mr. Lakshya Khanna, Adv. Mr. Vikramaditya Sanghi, Adv. Ms. Sanskriti Sinha, Adv. Mr. Sanyat Lodha, AOR Ms. Sanjana Saddy, Adv.