ASF Vs Shapoorji: Arbitral Tribunal Can Implead Non-Signatories Based on Conduct and Intent

In a significant ruling for arbitration jurisprudence in India, the Supreme Court on May 3, 2025, held that arbitral tribunals are empowered to implead non-signatories as parties to arbitration proceedings if their conduct indicates a clear intention to be bound by the arbitration agreement.

A Bench comprising Justice JB Pardiwala and Justice R Mahadevan clarified that the power to do so arises from Section 2(1)(h) read with Section 7 of the Arbitration and Conciliation Act, 1996, and reinforced the principles established in its 2023 decision in Cox and Kings (I).

Key Holding: Tribunal Can Bind Non-Signatories

The Court in ASF Vs Shapoorji rejected ASF Buildtech Pvt Ltd’s (ABPL) appeal against its impleadment in an arbitration initiated by Shapoorji Pallonji and Company Pvt Ltd (SPCPL), despite ABPL not being a signatory to the arbitration agreement. The Court upheld the Delhi High Court’s decision which had affirmed the arbitral tribunal’s power to implead ABPL under the “Group of Companies” doctrine.

“There is no inhibition in the scheme of the Act, 1996 which precludes the arbitral tribunal from impleading a non-signatory on its own accord,” the Court observed.

The judgment emphasised that jurisdictional determinations—such as whether a person is a party to the arbitration—fall within the purview of Section 16, which allows the arbitral tribunal to rule on its own jurisdiction.

Factual Background of ASF Vs Shapoorji

The case arose from disputes linked to a settlement agreement dated July 24, 2020, between SPCPL and Black Canyon SEZ Pvt Ltd (BCSPL), a company within the ASF Group. SPCPL later filed counterclaims against not just BCSPL, but also ASF Insignia SEZ Pvt Ltd (AISPL) and ASF Buildtech Pvt Ltd (ABPL), invoking the Group of Companies doctrine.

Both AISPL and ABPL objected to their impleadment under Section 16, arguing that as non-signatories, they could not be made parties. The tribunal rejected their objections. When the Delhi High Court also refused to interfere under Section 37, ABPL approached the Supreme Court.

Supreme Court’s Reasoning

1. Tribunal’s Power Not Limited to Referral Courts: The Court dismantled the misconception that only courts (under Section 8 or 11) could decide on the inclusion of non-signatories. It held that post-Cox and Kings (I), tribunals can undertake this assessment themselves.
   
2. Section 16 is Broad and Inclusive: It reaffirmed that Section 16 enables tribunals to decide on all jurisdictional questions, including whether a person is bound by an arbitration clause.
   
3. Section 21 Notice Not Mandatory for Non-Signatories: The Court held that the absence of a notice under Section 21 does not vitiate jurisdiction over a non-signatory. The arbitration agreement itself is the source of jurisdiction.
   
4. Foundation of Group of Companies Doctrine: The Court found that Sections 2(1)(h) and 7 of the Act provide the statutory foundation for applying the Group of Companies doctrine to arbitration proceedings—both by courts and tribunals.

“Recognition of the power of joinder or impleadment of a non-signatory by an arbitral tribunal is a necessary intendment of the express provisions… as well as the fundamental cannons of arbitration law,” the judgment stated.

Application in Present Case

Based on the parties’ conduct and participation in the underlying commercial transactions, the Supreme Court in ASF Vs Shapoorji concluded that ABPL was substantially involved and had demonstrated intent to be bound. Thus, its impleadment by the tribunal was upheld.