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The Supreme Court on Friday lamented that despite several decisions by it, gaps from the Arbitration and Conciliation 1996 Act continue to exist in the Arbitration and Conciliation Bill, 2024, especially over the lack of clarity in law on the authority of tribunals to implead non-signatories.
The bench of Justice JB Pardiwala and Justice R. Mahadevan said statutory recognition of such power is needed to rule out confusion. The observation came to light during the ruling in the case of ASF Buildtech Pvt Ltd v. Shapoorji Pallonji and Company Pvt Ltd, highlighting ongoing issues even after decades of litigation and numerous judicial decisions.
The bench expressed disappointment that the proposed Arbitration and Conciliation (Amendment) Bill, 2024, currently under review by the Ministry of Law and Justice, does not address the longstanding legislative void.
The bench urged the Executive to reassess the current draft of the Bill, advocating for necessary reforms to streamline arbitration procedures.
The Supreme Court then dismissed ASF Buildtech’s objection to being impleaded in arbitration proceedings, despite being a non-signatory to the arbitration agreement. The Court upheld the arbitral tribunal’s decision, observing ASF Group companies operated as a single entity, with ASF Buildtech’s conduct indicating an intention to adhere to the agreement.
The case originated from disputes linked to construction and development agreements involving ASF Group and Shapoorji Pallonji Company Pvt Ltd (SPCPL) for infrastructure projects. Black Canyon SEZ Pvt Ltd (BCSPL) of the ASF Group signed a settlement agreement with SPCPL in 2020. The other ASF Group companies, ASF Buildtech (ABPL) and ASF Insignia SEZ Pvt Ltd (AISPL), were not signatories to the deal.
Though BCSPL was the only official signatory, SPCPL made claims against AISPL and ABPL also. It asserted the ASF Group acted as a single entity and sought to enforce the arbitration agreement included in the original contract dated November 21, 2016, under the Group of Companies Doctrine.
ABPL challenged its inclusion in the arbitral tribunal, claiming it was not party to the arbitration agreement and should not be included in proceedings. However, upon the dismissal of its objections by the tribunal and at the Delhi High Court, ABPL escalated the matter to the Supreme Court.
This article first appeared on India Legal
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