Supreme Court Upholds Arbitral Tribunal’s Power to Implead Non-Signatory Parties

ASF Buildtech Private Limited Vs Shapoorji Pallonji And Company Private Limited (Supreme Court of India)

Summary: The Supreme Court in ASF Buildtech Private Limited Vs Shapoorji Pallonji And Company Private Limited considered whether an arbitral tribunal has the power to implead or join a non-signatory to an arbitration agreement after constitution of the arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996. ASF Buildtech Private Limited (ABPL), a holding company within the ASF Group, challenged its impleadment in arbitration proceedings arising from disputes concerning the Works Contract and subsequent agreements. ABPL contended that it had not signed the arbitration agreement, had not participated in the negotiation or performance of the relevant contracts, and could not be joined merely because it was a holding company or part of the ASF Group. Shapoorji Pallonji & Co. Pvt. Ltd. relied upon the Group of Companies Doctrine and contended that ABPL, ASF Insignia SEZ Pvt. Ltd. and Black Canyon SEZ Pvt. Ltd. had acted as a single economic unit, with common management, personnel, resources, branding and financial backing. The Supreme Court examined the divergent views of various High Courts concerning the power of an arbitral tribunal to join non-signatories. It considered the principles laid down in Chloro Controls, Oil and Natural Gas Corporation Ltd. v. Discovery Enterprises Pvt. Ltd., Cox and Kings Ltd. v. SAP India Pvt. Ltd. and Ajay Madhusudan Patel v. Jyotrindra S. Patel.