ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

definition of “party” under Section 2(1)(h) of the Act, 1996 as opposed to the wide meaning assigned to the term “party” under Section(s) 8 and 45 of the Act, 1996, was misconstrued as a positive indicium that an arbitral tribunal lacks the power to implead a non-signatory as the scope and exercise of its jurisdiction is confined to the narrow meaning of “party” under Section 2(1)(h) i.e., only signatories or those specifically referred to arbitration, whereas the power and jurisdictional reach of the courts extends to the wider meaning of “party” i.e., “a party to an arbitration agreement or any person claiming through or under him” under Section(s) 8 and 45 of the Act, 1996 i.e., it extends to even non- signatories. (ii) Secondly, the position of law which existed at the time of Chloro Controls (supra), required the referral courts to make a determination of all issues fundamental to making a reference to arbitration including the issue whether a non-signatory could be said to be bound by the arbitration agreement. Since this primary duty of identifying and then in turn impleading a non- signatory who is bound by the arbitration agreement was cast upon the courts, it was presumed that the arbitral tribunal even if empowered is incapable or incompetent to undertake this task, as otherwise it would tantamount to usurping the jurisdiction of the referral courts.

111. Thus, the combined effect of the aforesaid was that an arbitral tribunal could not, on its own accord, resort to or apply the various principles for determining mutual consent, and thereby implead a non-signatory since both (i) the power to do so was presumed lie within the exclusive domain and jurisdiction as- well as the (ii) the corresponding duty to undertake this exercise was understood to have been entrusted solely to the referral courts.

112. However, with the advent of Cox and Kings (I) (supra), the legal foundation for the application of the ‘Group of Companies’ doctrine, or any analogous principles designed to determine mutual consent was clarified to exist in the definition of “party” under Section 2(1)(h) read with the meaning of “arbitration agreement” under Section 7 of the Act, 1996. Unlike Section(s) 8 and 45 of the Act, 1996, the provisions of Section(s) 2(1)(h) and 7 are not confined in their applicability to only judicial forums or courts, and rather extend equally to both courts and arbitral tribunals, as these provisions form the bedrock of the

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framework of arbitration under the Act, 1996. The logical sequitur of this is that arbitral tribunals, too, are vested with the requisite authority to engage with and apply principles, such as the ‘Group of Companies’ doctrine, when determining whether a non-signatory may be bound by an arbitration agreement.

113. It is well within the jurisdiction of the Arbitral Tribunal to decide the issue of joinder and non-joinder of parties and to assess the applicability of the Group of Companies Doctrine. Neither in Cox and Kings (I) (supra) nor in Ajay Madhusudhan (supra), this Court has said that it is only the reference courts that are empowered to determine whether a non-signatory should be referred to arbitration. The law which has developed over a period of time is that both ‘courts and tribunals’ are fully empowered to decide the issues of impleadment of a non-signatory and Arbitral Tribunals have been held to be preferred forum for the adjudication of the same.

114. In the case of Ajay Madhusudhan (supra), this Court, placing reliance on Cox and Kings (I) (supra), has expressly held that Section 16 is an inclusive provision which comprehends all preliminary issues touching upon the jurisdiction of the arbitral tribunal and the issue of determining parties to an arbitration agreement goes to the very root of the jurisdictional competence of the arbitral tribunal.

115. The case of Ajay Madhusudhan (supra) also recognizes that the legal relationship between the signatory and non-signatory assumes significance in determining whether the non-signatory can be taken to be bound by the Arbitration Agreement. This Court also issued a caveat that the ‘courts and tribunals should not adopt a conservative approach to exclude all persons or entities who are otherwise bound by the underlying contract containing the arbitration agreement through their conduct and their relationship with the signatory parties. The mutual intent of the parties, relationship of a non- signatory with a signatory, commonality of the subject matter, the composite nature of the transactions and performance of the contract are all factors that signify the intention of the non-signatory to be bound by the arbitration agreement’.

116. Recently, a coordinate bench of this Court in Adavya Projects Pvt. Ltd. v. M/s Vishal Strcturals Pvt. Ltd. & Ors. reported in 2025 INSC 507, also held that an arbitral tribunal under Section 16 of

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ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

the Act, 1996 has the power to implead the parties to an arbitration agreement, irrespective of whether they are signatories or non- signatories, to the arbitration proceedings. This Court speaking through P.S. Narasimha J. observed that since an arbitral tribunal’s jurisdiction is derived from the consent of the parties to refer their disputes to arbitration, any person or entity who is found to be a party to the arbitration agreement can be made a part of the arbitral proceedings, and the tribunal can exercise jurisdiction over him. Section 16 of the Act, 1996 which empowers the arbitral tribunal to determine its own jurisdiction, is an inclusive provision that covers all jurisdiction question including the determination of who is a party to the arbitration agreement, and thus, such a question would be one which falls within the domain of the arbitral tribunal. It further observed that, although most national legislations do not expressly provide for joinder of parties by the arbitral tribunal, yet an arbitral tribunal can direct the joinder of a person or entity, even if no such provision exists in the statute, as long as such person or entity is a party to the arbitration agreement. Accordingly, this Court held that since the respondents therein were parties to the underlying contract and the arbitration agreement, the arbitral tribunal would have the power to implead them as parties to the arbitration proceedings in exercise of its jurisdiction under Section 16 of the Act, 1996. The relevant observations read as under: - “24. As briefly stated above, the determination of who is a party to the arbitration agreement falls within the domain of the arbitral tribunal as per Section 16 of the ACA. Section 16 embodies the doctrine of kompetenz-kompetenz, i.e., that the arbitral tribunal can determine its own jurisdiction. The provision is inclusive and covers all jurisdictional questions, including the existence and validity of the arbitration agreement, who is a party to the arbitration agreement, and the scope of disputes referrable to arbitration under the agreement. Considering that the arbitral tribunal’s power to make an award that binds the parties is derived from the arbitration agreement, these jurisdictional issues must necessarily be decided through an interpretation of the arbitration agreement itself. Therefore, the arbitral tribunal’s jurisdiction must be determined against the touchstone of the arbitration agreement.

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25. This view finds support in the jurisprudence and practice of international commercial arbitration. It is notable that while most national legislations do not expressly provide for joinder of parties by the arbitral tribunal, this must be done with the consent of all the parties. Gary Born has taken the view that the arbitral tribunal can direct the joinder of parties when the arbitration agreement expressly provides for the same. However, he states that in reality, most arbitration agreements, whether ad hoc or providing for institutional arbitration, neither expressly preclude nor expressly permit the arbitral tribunal to join parties. In such cases, the power must be implied,25 particularly when there is a multi-party arbitration clause in the same underlying contract that does not expressly address the joinder of parties in the arbitral proceedings. He states that: “In these circumstances, there is a substantial argument that the parties have impliedly accepted the possibility of consolidating arbitrations under their multi-party arbitration agreement and/or the joinder or intervention of other contracting parties into such arbitrations… the parties’ joint acceptance of a single dispute resolution mechanism, to deal with disputes under a single contractual relationship, reflects their agreement on the possibility of a unified proceeding to resolve their disputes, rather than necessarily requiring fragmented proceedings in all cases.” Further, in jurisdictions where there is no provision in the national arbitration statute authorising the courts to consolidate arbitrations or to join parties, it is left to the arbitral tribunal to determine this issue at the first instance.

26. Therefore, as per the legal principles under the ACA as well as in international commercial arbitration, it is a foundational tenet that the arbitral tribunal’s jurisdiction is derived from the consent of the parties to refer their disputes to arbitration, which must be recorded in an arbitration agreement. The proper judicial inquiry to decide a jurisdictional issue under Section 16 as to whether a person/ entity can be made a party to the arbitral proceedings will therefore entail an examination of the arbitration agreement and whether such person is a party to it. If the answer is

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ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

in the affirmative, such person can be made party to the arbitral proceedings and the arbitral tribunal can exercise jurisdiction over him as he has consented to the same.

39. [...] Since they are parties to the underlying contract and the arbitration agreement, the arbitral tribunal has the power to implead them as parties to the arbitration proceedings while exercising its jurisdiction under Section 16 of the ACA and as per the kompetenz-kompetenz principle.” (Emphasis supplied)

117. As observed in Adavya Projects (supra), Gary Born in his seminal work; the International Commercial Arbitration, Vol 2 (3rd edn, Kluwer Law International 2021) as held that consolidation and joinder/ intervention may be ordered by an arbitral tribunal, arbitral institution, as long as the same is pursuant to parties (unanimous) agreement thereto. He has observed that “In almost all cases, the approach taken by national law is that consolidation and joinder/intervention may be ordered by an arbitral tribunal, arbitral institution, or a national court, but only pursuant to the parties’ (unanimous) agreement thereto. If the parties have not so agreed, both the tribunal and local courts will lack the authority under national law to order either consolidation or joinder/intervention.” Since the aspect of joinder of a party to the arbitration agreement, either signatory or non-signatory stems from a conjoint reading of Section(s) 2(1)(h) and 7 of the Act, 1996 as explained by Cox and Kings (I) (supra) and by us in the foregoing paragraphs, even if the parties are to agree that a tribunal or for that matter a referral court will not have the power to implead any party to the arbitration proceeding, such an agreement will only operate to the extent that (i) the arbitration agreement is not governed by the Act, 1996 i.e., does not fall under Part I of the Act, 1996 and (ii) that such party is not otherwise bound by the arbitration agreement. This is because such an agreement is an agreement in respect of the rules of procedure of the arbitration, and as per Section 19 of the Act, 1996, more particularly sub-section (2), any such agreement is subject to Part I i.e., the parties are free to agree on the procedure to be followed by the arbitral insofar as it is not inconsistent with Part I. Since, the legal basis for the joinder or impleadment of any party who is bound by the arbitration agreement originates from the substantive provisions of the Act, 1996 i.e., Section(s) 2(1)(h) and 7, respectively,

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the parties cannot denude the arbitral tribunal of such power in terms of the non-obstante clause of Section 19(2) of the Act, 1996. Gary Born, further observes that “this approach is consistent with that prescribed by the New York Convention and with the general respect for the parties’ procedural autonomy in international arbitration”. Thus, it acknowledges, that such stipulation as to consolidation or joinder is purely within the realm of procedural autonomy, hence Section 19 of the Act, 1996 which is the source of procedural autonomy will be subject to the conditions stipulated therein.

118. Further, it is true that the entire scheme of Act, 1996 is silent on the power of a court or arbitral tribunal to join or implead a party to the arbitration proceedings. Gary Born argues, that “In the absence of specific statutory provisions, the topics of consolidation and joinder/intervention are generally subject to the Model Law’s basic requirement that arbitration agreements be recognized and enforced in accordance with the parties’ intentions. That is, consolidation and joinder/intervention should be both permitted and required – as an element of the parties’ agreement to arbitrate” The UNCITRAL Model Law being the genesis of the Act, 1996, even if there is no explicit statutory provision recognizing such power of impleadment, it nevertheless should not only be permitted but also required, as long as it is exercised within the confines of the intention of the parties and the scope of arbitration agreement, which is exactly what has also been laid down in so many words by Cox and Kings (I) (supra).

119. He says that, more often than not arbitration agreements, particularly for ad hoc arbitration “will neither expressly preclude nor expressly authorize consolidation”. But, “there is no reason, however, that an agreement authorizing (or forbidding) consolidation or joinder/ intervention cannot be implied ... various aspects of an arbitration agreement are routinely implied (such as confidentiality, a tribunal’s power to order provisional relief or disclosure, the choice of applicable law and the like”. He accordingly, advocates that “The same approach can, and indeed must, be taken to questions of consolidation and joinder/intervention” where the “questions of implied agreement to consolidation and joinder/intervention depend in substantial part on the structure of the parties’ contractual relations and the terms of their agreements to arbitrate”.

120. Thus, the natural corollary to the aforesaid is that even in the absence of any express statutory provision, such power exists impliedly. In

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ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

this regard, we may profitably refer to the recent five Judge-Bench decision of this Court in Gayatri Balasamy v. M/s ISG Novasoft Technologies Ltd. reported in 2025 INSC 605, wherein this Court recognized the applicability of the doctrine of ‘implied power’ to the Act, 1996, in the context of Section 34. The majority opinion held that, the doctrine of implied power may be read into the Act, 1996 for the purpose of effectuating and advancing its object and to avoid hardship. The relevant observations read as under: - “The doctrine of implied power is to only effectuate and advance the object of the legislation, i.e., the 1996 Act and to avoid the hardship. It would, therefore, be wrong to say that the view expressed by us falls foul of express provisions of the 1996 Act.”

121. K.V. Vishwanathn J. in his dissenting opinion in Gayatri Balasamy (supra) observed that if a statute confers a power and circumscribes its exercise on certain conditions, any power which is inconsistent with those express conditions cannot be implied. He observed that the doctrine of implied powers is invoked to effectuate the final power, where it is impossible to effectuate the final power for doing something which although not provided in express terms but nevertheless is required to be done. In such scenarios, the power by virtue of the doctrine of implied powers will be supplied as a necessary intendment of the legislation, to advance its object and avoid grave hardship. The relevant observations read as under: - “100. Undeterred, an attempt was made to fall back upon the doctrine of implied powers to somehow vest in Section 34 Court a power to modify the award. It is well settled that if a statute conferring a power to be exercised on certain conditions, the conditions prescribed are normally held to be mandatory and a power inconsistent with those conditions is impliedly negatived. No doubt, there is a principle in law that a Court must as far as possible adopt a construction which effectuates the legislative intent and purpose and that an express grant of a statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective.

xxx xxx xxx

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102. As is clear, the doctrine of implied powers is invoked to effectuate the final power. Where it is impossible to effectuate the final power unless something not authorized in express terms be also done, in such an event, the power will be supplied by necessary intendment as an exception. The exceptional situation is to advance the object of the legislation under consideration and to avoid grave hardship.”

122. Reliance was also placed on the decision of Savitri v. Govind Singh Rawat, reported in (1985) 4 SCC 337, wherein it was held that “Whenever anything is required to be done by law and it is found impossible to do that thing unless something not authorised in express terms be also done then that something else will be supplied by necessary intendment. Such a construction though it may not always be admissible in the present case however would advance the object of the legislation under consideration. A contrary view is likely to result in grave hardship to the applicant, who may have no means passed to subsist until the final order is passed.” It further, observed that “Every court must be deemed to possess by necessary intendment all such powers as are necessary to make its orders effective. This principle is embodied in the maxim “ubi aliquid conceditur, conceditur et id sine quo res ipsa esse non potest” (Where anything is conceded, there is conceded also anything without which the thing itself cannot exist)”.

123. What can be discerned from the above is that the recourse to doctrine of implied powers would be permissible, if without it, it is impossible to effectuate a final power, and such exercise of implied power would effectuate and advance the object of the legislation.

124. Cox and Kings (I) (supra) has elaborately acknowledged the unique complexities posed by contemporary business transactions to the traditional framework of arbitration. Historically, arbitration gained prominence in the context of straightforward and linear bilateral transactions under the mercantile system of law. While over the past century, the nature of modern commercial transactions has undergone a profound transformation with the involvement of multifaceted obligations between multiple parties and complex contractual structures more sophisticated than the linear parent‐ subsidiary type of organization, that has rendered the traditional

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ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited

dyadic paradigms of business obsolete, particularly in areas such as construction contracts, financing transactions, reinsurance contracts, the framework of arbitration has, to a significant extent remained unchanged, leading to a mismatch between procedural form and commercial substance.

125. For arbitration to remain a viable and effectively alternative mechanism for dispute resolution, it is imperative to ensure that commercial reality does not outgrow this mechanism. The mechanisms of arbitration must be sufficiently elastic to accommodate the complexities of multi-party and multi-contract arrangements without compromising foundational principles such as consent and party autonomy. The approach of courts and arbitral tribunal in particular must be responsive to the emerging commercial practices and expectations of the parties who submit themselves to it.

126. It was in this backdrop and the emerging best international practices that Cox and Kings (I) (supra) recognized the applicability of the ‘Group of Companies’ doctrine and other principles of determining mutual consent, to bind even non-signatories to the arbitration agreement as parties, as long as they were a veritable party and found to have impliedly consented to such agreement. The legal basis of these principles were traced to not only the object of the Act, 1996, but to the substantive provisions of Section(s) 2(1)(h) and 7 thereto. However, mere recognition of this principles which ultimately seeks to make the Indian arbitration law more responsive to the contemporary requirements, would be a farce, if the power to actually effectuate such principles, is not recognized, merely due to the absence of any explicit provision in this regard. We are of the considered opinion, that recognition of the power of joinder or impleadment of a non-signatory by an arbitral tribunal is a necessary intendment of the express provisions of Section(s) 2(1)(h) and 7 and the overall scheme and object of the Act, 1996 as well as the fundamental cannons of the law of arbitration of providing an effective alternative dispute resolution mechanism.

127. Thus, even in the absence of an express provisions in the Act, 1996 empowering the arbitral tribunal to implead or join a party who is otherwise bound by the arbitration agreement, the arbitral tribunal does possess such power by virtue of the doctrine of implied powers, as long as the same is in tandem with the scheme of Act, 1996 i.e.,

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as long as the parties had either expressly or impliedly consented to the arbitration agreement as held in Cox and Kings (I) (supra).

b. Doctrine of Kompetenz-Kompetenz and the Jurisdictional Reach of an Arbitral Tribunal.

128. The aforesaid may be looked at from one another angle, through the ‘Always Speaking’ statutory interpretation rule. The said rule dictates that the words of a statute should be treated as ambulatory, speaking continuously in the present and conveying a contemporary meaning. This approach entails that if things not known or understood at the time when the enactment came into force, fall, on a fair construction, within its words, those things should be held to be included or intended by the statute. It lays that the context or application of a statutory expression may change over time, but the meaning of the expression itself cannot change’. It therefore provides for a statute to be applied to new circumstances and developments without the need for legislative revision or amendment. In other words, the core meaning of a statute is fixed but its context or application may change which is inherently capable of ‘embracing future changes in the subject matter.

129. Historically, the rule of interpretation of statutes, was premised on the understanding that statutes were to be construed in accordance with their natural meaning as at the date of their enactment. It was based on the Latin maxim “contemporanea expositio est optima et fortissima in lege” which means “Contemporary exposition is the best and strongest in law”. However, over time the courts started recognizing the problems underlying this orthodoxic rule of interpretation. Sir Peter Benson Maxwell, On the Interpretation of Statutes, ed Frederick Stroud (Sweet and Maxwell, 5th ed, 1912) explained that the use of “contemporanea expositio est optima et fortissima in lege” for interpretation of statutes had largely been abandoned except perhaps in the construction of ambiguous language used in very old statutes where the language itself may have had a rather different meaning.

130. The modern approach to statutory interpretation insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and include such things as the existing state of the law and the mischief which, by legitimate means such as reference to reports of law reform bodies, one may discern the statute was intended to remedy.

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131. If close consideration of a statutory text in its wider context and by reference to its purpose establishes that Parliament has deliberately chosen words to provide for its application to new circumstances and developments then the application of the ‘always speaking’ approach is judicially required. The interpretive process with the ‘always speaking’ approach is, in essence, to put the cart before the horse.

132. Section 16 of the Act, 1996, which enshrines the principle of “kompetenz- kompetenz” could be said to be one such provision when seen in light of the object of the Act, 1996, which requires the courts to adopt a pragmatic and ‘always speaking’ approach in its interpretation.

133. Section 16 of the Act, 1996 empowers the arbitral tribunal to rule on its own jurisdiction. The policy rationale underlying this provision is twofold: first, to respect and uphold the intention of the parties to resolve their disputes through arbitration by empowering the forum they have contractually chosen; and second, to prevent a fragmentation of proceedings through premature judicial intervention, which can frustrate the efficacy of arbitration by causing delays and fostering multiplicity of litigation.

134. The negative aspect of competence-competence is aimed at restricting the interference of the courts at the referral stage by preventing the courts from examining the issues pertaining to the jurisdiction of the arbitral tribunal before the arbitral tribunal itself has had the opportunity to entertain them AND to also enable the arbitral tribunal to exercise necessary powers without any dependency upon the national courts, with the courts taking a back-seat and being permitted to review the exercise of power of the arbitral tribunal and its decision at a later stage.

135. The legislative choice of the word “rule” in Section 16 is both deliberate and significant. It does not merely suggest that the arbitral tribunal is competent to “consider” or “review” questions of its jurisdiction, but rather that it is vested with the authority to decisively adjudicate and pronounce upon such issues. It connotes that the arbitral tribunal is not only competent to entertain jurisdictional questions, but also capable — in terms of procedural and substantive mandate — to exercise necessary power for effectually issuing binding rulings thereon during the course of the proceedings. It endows the tribunal with the necessary powers to formulate its ruling. It illustrates the

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intention of the legislature to endow the arbitral tribunal with all powers and jurisdictional reach for effectively deciding its jurisdiction, even where no challenge is made by either parties, and to exercise the necessary powers for making such rulings.

136. Redfern and Hunter on International Arbitration (5th edn, Oxford University Press 2009), have observed that an arbitral tribunal’s jurisdiction is derived “from the will of the parties to the arbitration agreement and therefore joinder or intervention is generally only possible with the consent of all parties concerned” and “such consent may be either express, implied, or by reference to a particular set of arbitration rules agreed to by the parties that provide for joinder” However, “unlike litigation in state courts, in which third parties can often be joined to proceedings, the jurisdiction of an arbitral tribunal to allow for the joinder or intervention of third parties to an arbitration is limited” to the arbitration agreement and parties bound by it.

137. Adavya Projects (supra) has observed that Section 16 of the Act, 1996 is inclusive and covers all jurisdictional questions, including the existence and validity of the arbitration agreement, who is a party to the arbitration agreement, and the scope of disputes referrable to arbitration under the agreement and thus, the arbitral tribunal’s jurisdiction must also be determined against the touchstone of the arbitration agreement.

138. It is often loosely said that an arbitral tribunal does not have any jurisdiction except what has been conferred by the parties. While the same may on the surface be correct, however much significance of an arbitral tribunal’s jurisdiction often finds itself lost and obscured due to the semantics of the above statement. The misconception arises when the acts of party is conflated with the source of legal authority.

139. The present case is a classic textbook example of this misconception. What has ben argued by the appellants herein in so many words, is that since it was never a party to the proceedings under Section 11 of the Act, 1996 before the referral court, and the arbitral tribunal was constituted by the referral court without arraying the appellant herein, the arbitral tribunal had no jurisdiction later to implead it. The crux of this argument is that, the jurisdiction of the arbitral tribunal is only confined to the act of the parties and the manner in which the referral court, had constituted the arbitral tribunal. It stems from a failure to appreciate that while the parties’ conduct

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may set in motion the arbitral process, it is not the determinant of the arbitral tribunal’s jurisdiction in a legal sense. Rather, it is the arbitration agreement itself—once validly concluded—that creates the jurisdictional foundation upon which the arbitral edifice rests.

140. It erroneously presumes that jurisdiction is derived solely from the act of appointment rather than from the arbitration agreement that preceded and necessitated such appointment. The arbitration agreement, not the referral court’s order nor the procedural formalities attendant to the tribunal’s constitution, is the true source of jurisdiction. The act of the referral court in constituting the arbitral tribunal is but an enabling mechanism to activate a tribunal whose jurisdiction was already latent in the arbitration agreement itself. This Court in M/s Arif Azim Co. Ltd. v. M/s Micromax Informatics Fze, wherein, one of us (J.B. Pardiwala J.) had had held that referral courts are only a conduit or means to arbitration, and the sum and substance of the arbitration has to be derived from the choices of the parties and their intentions contained in the arbitration agreement.

141. The jurisdiction of an arbitral tribunal is not created by the mere subjective intent or volition of the parties. Rather, it is the arbitration agreement—a legally cognisable and objective instrument—that operates as the foundational source of jurisdiction in the eyes of the law. Just as the creation of a property automatically vests jurisdiction in the territorial courts competent to adjudicate over such property, the conclusion of an arbitration agreement ipso jure brings into existence the jurisdiction of the arbitral tribunal. This jurisdiction exists in a de jure sense from the moment the arbitration agreement is validly executed, regardless of whether the tribunal has been formally constituted.

142. In other words, it is not the tribunal’s subsequent constitution through procedural steps — whether by the parties themselves or by the intervention of a court under Section 11 of the Act, 1996 — that bestows jurisdiction upon it. Rather, such procedural mechanisms merely activate or operationalise a jurisdiction that is already in existence by virtue of the arbitration agreement. The arbitral tribunal, upon being constituted, steps into an already established legal framework of jurisdiction, rooted in the consensual and binding nature of the arbitration agreement. The arbitral tribunal is not a creature of mere procedural will but of substantive legal consequence flowing from the arbitration agreement. To hold otherwise would be

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to invert the fundamental cannons of law of arbitration which treats the arbitration agreement as the cornerstone of arbitral competence.

143. It was in this background, that Adavya Projects (supra) held, and rightly so, that the jurisdiction of the arbitral tribunal to implead a person depends on whether such person is a party to the arbitration agreement.

c. Requirement of Notice of Invocation under Section 21 of the Act, 1996.

144. At this juncture, it would apposite to explain the modalities for the exercise of such power of joinder / impleadment by an arbitral tribunal. The appellant herein has vehemently contended that even if it is assumed that it is bound by the arbitration agreement, the impugned order is nevertheless liable to be set- aside, inasmuch as the appellant herein has been improperly arrayed as a party to the arbitration solely on the basis of a separate statement of claim / counter- claim filed by respondent no. 1, without the issuance of any notice of invocation as mandated under Section 21 of the Act, 1996. It was argued that once the arbitral tribunal had been constituted for the dispute between the respondent no. 1 and 3 herein, if at all the respondent no. 1 was of the opinion that the appellant herein was bound by the arbitration agreement, it ought to have impleaded it by initiating an independent, fresh arbitration proceedings by first issuing a notice under Section 21 of the Act, 1996, and only thereafter filing a statement of claim against the appellants herein, rather than proceeding to implead it directly on the basis of a purported statement of claim in the arbitration proceedings that had been originally commenced solely between BCSPL and SPCL, i.e., respondent nos. 1 and 3 respectively, with no prior or contemporaneous invocation or commencement of arbitration viz-à-viz the appellant. According to the appellant, this approach not only contravenes the procedural mandate of the Act, 1996, more particularly, the purpose of Section 21 but also undermines the principles of natural justice and party consent, which lie at the heart of consensual arbitration.

145. The marginal note appended to Section 21 of the Act, 1996 makes it abundantly clear, that the notice to be issued thereunder is for the purpose of “commencement of arbitration proceedings”. The

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substantive provision further makes it clear that, the date on which a request / notice of invocation for referring a dispute is received by the respondent, would the date on which the arbitral proceedings in respect of a particular dispute commences. The words “particular dispute” assumes significance in the interpretation of this provision and its underlying object. It indicates that the provision is concerned only with determining when arbitration is deemed to have commenced for the specific dispute mentioned in the notice. The language in which the said provision is couched is neither prohibitive or exhaustive insofar as reference of any other disputes which although not specified in the notice of invocation yet, nonetheless falls within the scope of the arbitration agreement. The term “particular dispute”, does not mean all disputes, nor does it confine the jurisdiction of the arbitral tribunal which is said to be one emanating from the ‘arbitration agreement’ to only those disputes mentioned in the notice of invocation, as it would tantamount to reading a restriction into the jurisdiction of the arbitral tribunal to the bounds of the notice of invocation instead of the arbitration agreement. Thus, there is no inhibition under Section 21 of the Act, 1996 for raising any other dispute or claim which is covered under the arbitration agreement in the absence of any such notice. Section 21 is procedural rather than jurisdictional — it does not serve to create or validate the arbitration agreement itself, nor is it a precondition for the existence of the tribunal’s jurisdiction, but merely operates as a statutory mechanism to ascertain the date of initiation for reckoning limitation.

146. The aforesaid is further fortified from the distinct manner in which the scheme of the Act, 1996 treats and refers to a ‘notice of invocation’ under Section 21 and the subsequent filing of a ‘statement of claim’ or ‘counter-claim’ under the Section 23. Section 23 of the Act, 1996 reads as under: -

23. Statements of claim and defence.— (1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.

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(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. (2A) The respondent, in support of his case, may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement. (3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. (4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing of their appointment.

147. Section 23 sub-section (1) places an obligation upon the claimant to state the facts supporting his “claim”, the points at issue and the relief or remedy sought by way of its statement of claim, before the arbitral tribunal. Notably, the legislature, in the first part of the said sub-section, has deliberately and consciously used the term “claim” as opposed to “particular dispute” employed in Section 21 of the Act,

1996. Although, it could said that the term “particular dispute” under Section 21 connotes a larger umbrella within which the term “claim” under Section 23 would be subsumed, thereby suggesting that there is no scope to deviate from what was sought to be referred by the notice of invocation, we do not think so. We say so because, the requirement for providing the points at issue and the relief or remedy sought that exists in sub-section (1) of Section 23 of the Act, 1996 is patently absent in Section 21 of the Act, 1996, which clearly shows that the scope and object of these two provisions are at variance to each other. Further this, sub-section does not stipulate either explicitly or implicitly, that such “claim” must be the same or in tandem with the “particular dispute” in respect of which the notice of invocation was issued under Section 21 of the Act, 1996. This distinction in terminology is neither incidental nor redundant; rather, it reflects a

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conscious legislative design to demarcate the procedural objective of Section 21 from the substantive function served by Section 23. Unlike Section 23, Section 21 does not require any articulation of the relief sought or the framing of issues —its sole purpose is to indicate when arbitration is deemed to have commenced, for the limited purpose of computing the limitation period.

148. This is further fortified from the fact that nowhere does the Act, 1996 lay down any specific format or form of notice under Section 21 of the Act, 1996, or any strict requirement of the contents to be stipulated therein. This was noticed by this Court in Milkfood Ltd. v. GMC Ice Cream (P) Ltd. reported in (2004) 7 SCC 288, wherein it was held that Section 21 of the Act, 1995 must be construed in tune with its analogous counter-part provisions of Article 21 of the UNCITRAL Model Law read with Article 3 of the UNCITRAL Arbitration Rules and Section 14 of the English Arbitration Act, 1996 wherein at least the form of notice and strict adherence thereto has become redundant due to the absence of any specific form or requirement of such notice. The relevant observations read as under: - “69. The UNCITRAL Model Rules of Arbitration vis-à-vis provision of Section 14 of the English Arbitration Act, 1996 must be construed having regard to the decisions of the English courts as also this Court which addressed the form of notice to be given in order to commence the arbitration for the purpose of Section 34(3) of the Limitation Act. By reason of Section 14, merely the form of notice and strict adherence thereto has become redundant, as now in terms of Section 14 of the Arbitration Act there is otherwise no specific requirement as to the form of notice subject to any contract operating in the field. (See paras 5-020, 5-027 and 5-028 of Russell on Arbitration, 22nd Edn.) Section 21 of the 1996 Act must be construed accordingly. It defines the moment of the commencement of arbitral proceedings. [...]”

149. Similarly, sub-section (2) of Section 23, which enables the respondent to make a counter-claim or plead set-off, does not envisage any requirement that such counter-claim or set-off must be in respect of or correspond to the “particular dispute” in terms of Section 21 of the Act, 1996, thus, suggesting the legislature’s intention to give

p. 1714

a wide import to the term “claim” and by extension “counter-claim”. In order to further obviate any confusion in respect of what claims can be raised, Section 23 sub-section (3) goes one step ahead and stipulates that, unless agreed otherwise by the parties, any party may amend or supplement its “claim” during the course of the arbitral proceedings, and further, that such amendment or supplement may be rejected only if the arbitral tribunal considers it inappropriate for one and only one reason, that being, the delay in making or seeking such amendment or supplement. What can be discerned from the above is that there is no restriction whatsoever, in the plain words of Section 23 of the Act, 1996, which would be indicative of an inhibition in raising those claims or counter-claims etc., that have no bearing with the notice of invocation under Section 21 of the Act, 1996.

150. The language used in Section 23 of the Act, 1996 makes no reference whatsoever, either explicitly to the provision of Section 21 or the particular words used thereunder, that would be suggestive of any correlation between the two provisions. On the contrary, the singular ground that has been mentioned in Section 23 sub-section (3) upon which an amendment or supplement of claim may be rejected by the arbitral tribunal i.e., if it is deemed inappropriate due to delay, is a positive indicium that that no restriction can be read into the scope of claims that may be raised in the statement of claim or counter- claim beyond what was stipulated in the notice of invocation under Section 21 of the Act, 1996. Any limitation or restriction on the scope of a statement of claim or a counter-claim as the case may be, has to be understood not from the provision of Section 21 but only from the explicit language used in Section 23 of the Act, 1996.

151. Any restriction on the nature or content of claims, counter-claims, or set-offs in arbitration must be sourced solely from the express language of Section 23 and not from Section 21. Section(s) 21 and 23 of the Act, 1996 although overlap in some aspects with each other in terms of the claims that would ordinarily be referred to the tribunal more often than not tend to coincide, yet they are by no means tethered together in such a manner that neither of them can survive without one another. The latter serves only a procedural function and does not condition or limit the tribunal’s jurisdiction to adjudicate claims that may not have been specifically invoked at the threshold stage. To read such a limitation into the statutory scheme would run contrary to both the text and the object of the Act.

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152. In Milkfood (supra) this Court was called upon the examine the object underlying Section 21 of the Act, 1996. This Court after a comprehensive examination of a catena of decisions, both under the English Law and pertaining to the Act, 1996, held that the purpose of a notice under Section 21 of the Act, 1996 is for the applicability of the provisions of the Limitation Act, 1963 in terms of Section 43 of the Act, 1996 to the claims sought to be referred to arbitration and when can an appointment of an arbitrator be sought in terms of Section 11 of the Act, 1996. It explained that the date when arbitration proceeding commences would be relevant for the purpose of attracting the Limitation Act, 1963 or for the purpose of time bar clauses or for the rules applicable in terms of the arbitration agreement, such as for setting into motion the conflict of laws when the proper law of the contract is one law and the law of the arbitral procedure is another. Lastly, that this “commencement of arbitration proceeding” by Section 21 of the Act, 1996 would also be relevant for of applicability of the 1940 Act having regard to Section 85(2)(a). Apart from the aforesaid, no other relevancy of Section 21 of the Act, 1996 was laid down by this Court, much less for the purposes of Section 23 thereunder. The relevant observations read as under: - “26. The commencement of an arbitration proceeding for the purpose of applicability of the provisions of the Indian Limitation Act is of great significance. Even Section 43(1) of the 1996 Act provides that the Limitation Act, 1963 shall apply to the arbitration as it applies to proceedings in court. Sub-section (2) thereof provides that for the purpose of the said section and the Limitation Act, 1963, an arbitration shall be deemed to have commenced on the date referred to in Section 21.

29. For the purpose of the Limitation Act an arbitration is deemed to have commenced when one party to the arbitration agreement serves on the other a notice requiring the appointment of an arbitrator. This indeed is relatable to the other purposes also, as, for example, see Section 29(2) of (English) Arbitration Act, 1950.

30. The date when arbitration proceeding commences would depend upon various factors and the purposes which it seeks to achieve. It may be for the purpose of attracting

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the Limitation Act or for the purpose of time bar clauses or for the rules applicable therefor, as, for example, the rules of the International Chamber of Commerce.

31. The date of commencement of an arbitration also affects the position under the conflict of laws when the proper law of the contract is one law and the law of the arbitral procedure is another, for then, up to the date of commencement of the arbitration proceeding, the law of the contract must govern, and the law of the procedure will only govern thereafter. [...]

32. Sections 14(3) and (5) of the (English) Arbitration Act, 1996 would also show that commencement of arbitral proceeding is not only for the purpose of limitation but also for the purpose of considering a case when the parties by their contract agree that the arbitration must be commenced within a specified time, failing which the right to arbitration, or indeed the claim itself, is apt to be barred. Determination of time elements in an arbitration is provided for in Section 21 of the 1996 Act clearly indicating as to when such arbitration has officially begun.

72. Keeping in view the fact that in all the decisions, referred to hereinbefore, this Court has applied the meaning given to the expression “commencement of the arbitral proceeding” as contained in Section 21 of the 1996 Act for the purpose of applicability of the 1940 Act having regard to Section 85(2)(a) thereof, we have no hesitation in holding that in this case also, service of a notice for appointment of an arbitrator would be the relevant date for the purpose of commencement of the arbitration proceeding.” (Emphasis supplied)

153. Remarkably, Milkfood (supra) observes that both under Article 21 of the UNCITRAL Model Law and by extension Section 21 of the Act, 1996, what is necessary in a notice or request under the said proiviosn, is the indication that the claimant seeks arbitration of the dispute. This Court consciously did not hold that such indication must be of what all disputes is sought to be referred to arbitration. The relevant observations read as under: -

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“27. Article 21 of the Model Law which was modelled on Article 3 of the UNCITRAL Arbitration Rules had been adopted for the purpose of drafting Section 21 of the 1996 Act. Section 3 of the 1996 Act provides for as to when a request can be said to have been received by the respondent. Thus, whether for the purpose of applying the provisions of Chapter II of the 1940 Act or for the purpose of Section 21 of the 1996 Act, what is necessary is to issue/serve a request/notice to the respondent indicating that the claimant seeks arbitration of the dispute.” (Emphasis supplied)

154. The aforesaid observations of Milkfood (supra) when read in conjunction with the other observations made therein, more particularly paragraph 32, shows that this Court consistently held that the purpose of Section 21 of the Act, 1996 is for the determination of various time elements in an arbitration.

155. In State of Goa v. Praveen Enterprises reported in (2012) 12 SCC 581, this Court elucidated the limited but important function of Section 21 of the Act, 1996. It held that, in the absence of any contrary stipulation in the arbitration agreement, the purpose of a notice under Section 21 is only to demarcate the commencement of arbitral proceedings with respect to a particular dispute. The issuance of such notice serves primarily to establish a definite point in time when the arbitral proceedings are in the eyes of law said to have commenced for the purpose of calculating and reckoning the period of limitation for the substantive claims therein. It was further held that once arbitral proceedings have commenced, the claimant is not precluded from raising additional claims that were not mentioned in the original notice of invocation under Section 21 of the Act, 1996. Such claims may be introduced for the first time in the statement of claim, without necessitating a fresh notice of invocation. The only caveat, however, is that the limitation period for these additional claims shall be computed from the date on which they are actually raised in the proceedings. Similarly, in the case of counter-claims as-well, there is no need to establish a date of ‘commencement’ by issuing a notice under Section 21 of the Act, 1996, as the period of limitation would be reckoned from the date on which the counterclaim is made before the arbitrator, except where such claim was initially

p. 1718

raised by a notice under Section 21 but subsequently raised as a counter-claim instead. The relevant observations read as under: - “15. Taking a cue from the said section, the respondent submitted that arbitral proceedings can commence only in regard to a dispute in respect of which notice has been served by a claimant upon the other party, requesting such dispute to be referred to arbitration; and therefore, a counterclaim can be entertained by the arbitrator only if it has been referred to him, after a notice seeking arbitration in regard to such counterclaim. On a careful consideration we find no basis for such a contention.

16. The purpose of Section 21 is to specify, in the absence of a provision in the arbitration agreement in that behalf, as to when an arbitral proceeding in regard to a dispute commences. This becomes relevant for the purpose of Section 43 of the Act. Sub- section (1) of Section 43 provides that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in courts. Sub- section (2) of Section 43 provides that for the purposes of Section 43 and the Limitation Act, 1963, an arbitration shall be deemed to have commenced on the date referred to in Section 21 of the Act. Having regard to Section 43 of the Act, any claim made beyond the period of limitation prescribed by the Limitation Act, 1963 will be barred by limitation and the Arbitral Tribunal will have to reject such claims as barred by limitation.

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18. In regard to a claim which is sought to be enforced by filing a civil suit, the question whether the suit is within the period of limitation is decided with reference to the date of institution of the suit, that is, the date of presentation of a plaint. As the Limitation Act, 1963 is made applicable to arbitrations, there is a need to specify the date on which the arbitration is deemed to be instituted or commenced as that will decide whether the proceedings are barred by limitation or not. Section 3 of the Limitation Act, 1963 specifies the date of institution for suit, but does not specify the date of “institution” for arbitration proceedings. Section

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21 of the Act supplies the omission. But for Section 21 there would be considerable confusion as to what would be the date of “institution” in regard to the arbitration proceedings. It will be possible for the respondent in an arbitration to argue that the limitation has to be calculated as on the date on which statement of claim was filed, or the date on which the arbitrator entered upon the reference, or the date on which the arbitrator was appointed by the court, or the date on which the application was filed under Section 11 of the Act. In view of Section 21 of the Act providing that the arbitration proceedings shall be deemed to commence on the date on which “a request for that dispute to be referred to arbitration is received by the respondent” the said confusion is cleared. Therefore, the purpose of Section 21 of the Act is to determine the date of commencement of the arbitration proceedings, relevant mainly for deciding whether the claims of the claimant are barred by limitation or not.

19. There can be claims by a claimant even without a notice seeking reference. Let us take an example where a notice is issued by a claimant raising disputes regarding Claims A and B and seeking reference thereof to arbitration. On appointment of the arbitrator, the claimant files a claim statement in regard to the said Claims A and B. Subsequently if the claimant amends the claim statement by adding Claim C [which is permitted under Section 23(3) of the Act] the additional Claim C would not be preceded by a notice seeking arbitration. The date of amendment by which Claim C was introduced, will become the relevant date for determining the limitation in regard to the said Claim C, whereas the date on which the notice seeking arbitration was served on the other party, will be the relevant date for deciding the limitation in regard to Claims A and B. Be that as it may.

20. As far as counterclaims are concerned, there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of the Limitation Act, 1963 provides that in regard to a counterclaim in suits, the date on which the counterclaim is made in court shall be deemed

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to be the date of institution of the counterclaim. As the Limitation Act, 1963 is made applicable to arbitrations, in the case of a counterclaim by a respondent in an arbitral proceeding, the date on which the counterclaim is made before the arbitrator will be the date of “institution” insofar as counterclaim is concerned. There is, therefore, no need to provide a date of “commencement” as in the case of claims of a claimant. Section 21 of the Act is therefore not relevant for counterclaims. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counterclaim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under Section 11 of the Act, the limitation for such counterclaim should be computed, as on the date of service of notice of such claim on the claimant and not on the date of filing of the counterclaim.” (Emphasis supplied)

156. In Adavya Projects (supra) this Court held that the purpose of a notice under Section 21 of the Act, 1996 is only to fulfilled the various time-related objects pertaining to the arbitration and the arbitration agreement. The relevant observation reads as under: - “11. It is clear that by fixing the date of commencement of arbitral proceedings by anchoring the same to a notice invoking arbitration, Section 21 of the ACA fulfils various objects that are time-related. The receipt of such notice is determinative of the limitation period for substantive disputes as well as the Section 11 application, and also the law applicable to the arbitration proceedings.” (Emphasis supplied)

157. Adavya Projects (supra) explained the aforesaid object of a notice under Section 21 of the Act, 1996 in four parts: - (i) First, that the plain language of Section 21 of the Act, 1996 does not expressly mandate the claimant to send a notice invoking arbitration to the respondents, instead what it mandates

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is the receipt of such notice for a ‘commencement of arbitral proceedings” in terms of the Act, 1996, unless agreed otherwise. The relevant observations read as under: - “9. A plain reading of the provision shows that in the absence of an agreement between the parties, arbitral proceedings are deemed to have commenced when the respondent receives a request to refer disputes to arbitration. It is clear that Section 21 does not expressly mandate the claimant to send a notice invoking arbitration to the respondents. However, the provision necessarily mandates such notice as its receipt by the respondent is required to commence arbitral proceedings, unless the parties have mutually agreed on another date/event for determining when the arbitral proceedings have commenced.” (Emphasis supplied)

(ii) Secondly, placing reliance on Milkfood (supra) it held that the date of receipt of the Section 21 notice is also used to determine whether a dispute has been raised within the limitation period as specified in the Schedule to the Limitation Act, 1963. The relevant observations read as under: - “10.1 First, the notice is necessary to determine whether claims are within the period of limitation or are time- barred. Section 43(1) of the ACA stipulates that the Limitation Act, 1963 shall apply to arbitrations as it applies to court proceedings. Further, Section 43(2) provides that for the purpose of the Limitation Act, an arbitration shall be deemed to have commenced on the date referred to in Section 21. Hence, the date of receipt of the Section 21 notice is used to determine whether a dispute has been raised within the limitation period as specified in the Schedule to the Limitation Act, as held by this Court in Milkfood Ltd. v. GMC Ice Cream (P) Ltd.5 and State of Goa v. Praveen Enterprises.” (Emphasis supplied)

p. 1722

(iii) Thirdly, that as held in Milkfood (supra) the date of receipt of such notice is also relevant for determining either (1) when the lex-arbitri or the law governing the arbitration agreement would apply or (2) for ascertaining the applicability of Arbitration Act, 1940 and Foreign Awards (Recognition and Enforcement) Act, 1961 to arbitral proceedings commenced prior to the Act, 1996 in terms of Section 85(2)(a) thereunder. The relevant observations read as under: - “10.2 Second, the date of receipt of notice is also relevant to determine the applicable law to the arbitral proceedings. This can be understood in two senses: (i) When the arbitral proceedings are governed by a law that is different from the proper law of the contract, the governing law applies only after the arbitral proceedings have commenced, as held in Milkfood Ltd (supra). And, (ii) Section 85(2)(a) of the ACA provides that the Arbitration Act, 1940 and Foreign Awards (Recognition and Enforcement) Act, 1961 will apply to arbitral proceedings that commenced prior to the ACA coming into force, unless otherwise agreed by the parties. Hence, the date of invoking arbitration is necessary to determine which arbitration law applies to the proceedings as per the decisions in Milkfood Ltd (supra) and Geo-Miller & Co (P) Ltd. v. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd. Similarly, the applicability of amendments to the ACA to arbitral proceedings is determined by reference to the date on which such proceedings commenced as per Section 21.” (Emphasis supplied)

(iv) Fourthly, in terms of Nortel Networks (supra), it is also relevant for determining the ‘failure’ on part of any party to the arbitration agreement in appointment of an arbitrator to avail the remedy under Section 11 of the Act, 1996 and for the purpose of reckoning the limitation period for filing an application thereunder for seeking appointment of the arbitration through a referral court. The relevant observations read as under: -

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“10.3 Third, an application before the High Court or this Court under Section 11(6) of the ACA for appointment of arbitrator can be filed only after the respondent has failed to act as per the appointment procedure in the arbitration agreement. Hence, invocation of arbitration as provided in Section 21, and the subsequent failure of the respondent to appoint its arbitrator or agree to the appointment of a sole arbitrator as provided in Sections 11(4) and 11(5), are necessary for invoking the court’s jurisdiction under Section 11. This is as per the decision of this Court in BSNL v. Nortel Networks (India) (P) Ltd. Further, the limitation period within which the Section 11 application must be filed is also calculated with reference to the date on which the appointment procedure under the arbitration agreement fails.” (Emphasis supplied)

158. Adavya Projects (supra) placing reliance on Praveen Enterprises (supra) further held that there is nothing in the wording of the provision or the scheme of the Act, 1996 that would indicate that a party to an arbitration agreement – signatory or non-signatory – cannot be impleaded to the arbitral proceedings, merely because no notice under Section 21 was served on them. Non-service of the notice under Section 21 and the absence of a dispute being raised against certain parties therein would not bar their impleadment into the arbitration proceedings. The relevant observations read as under: - “12. [...] However, there is nothing in the wording of the provision or the scheme of the ACA to indicate that merely because such notice was not served on respondent nos. 2 and 3, they cannot be impleaded as parties to the arbitral proceedings. The relevant considerations for joining them as parties to the arbitration will be discussed at a later stage.

13. At this point, it is important to note this Court’s decision in State of Goa v. Praveen Enterprises (supra) wherein it was held that the claims and disputes raised in the notice under Section 21 do not restrict and limit the claims that can be raised before the arbitral tribunal. The consequence

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of not raising a claim in the notice is only that the limitation period for such claim that is raised before the arbitral tribunal for the first time will be calculated differently vis-a- vis claims raised in the notice. However, non inclusion of certain disputes in the Section 21 notice does not preclude a claimant from raising them during the arbitration, as long as they are covered under the arbitration agreement. Further, merely because a respondent did not issue a notice raising counter-claims, he is not precluded from raising the same before the arbitral tribunal, as long as such counter-claims fall within the scope of the arbitration agreement.

14. A similar rationale may be adopted in this case as well, especially considering the clear purpose served by a Section 21 notice. Extending this logic, non-service of the notice under Section 21 and the absence of disputes being raised against respondent nos. 2 and 3 in the appellant’s notice dated 17.11.2020 do not automatically bar their impleadment as parties to the arbitration proceedings.

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21. [...] it is clear that not being served with a Section 21 notice and not being made a party in the Section 11 application are not sufficient grounds to hold that a person cannot be made party to arbitral proceedings.” (Emphasis supplied)

159. It is noteworthy to mention that Adavya Projects (supra) acknowledge that although the decision of the Delhi High Court in Alupro Building Systems Pvt Ltd. v. Ozone Overseas Pvt Ltd reported in 2017 SCC OnLine Del 7228, is correct insofar as it hold that some the functions that a notice under Section 21 of the Act, 1996 serves inter-alia includes (i) informing the other party as to the claims, which will enable them to accept or dispute the claims; (ii) enabling the other party to point out if certain claims are time barred, barred by law, or untenable, or if there are counter-claims; (iii) for arriving at a consensus for appointment of arbitrators under the arbitration agreement; (iv) for proposing an arbitrator, to enable the other party to raise any objections/issues regarding qualification; (v) or for triggering

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the court’s jurisdiction under Section 11 in case the appointment procedure fails; and (vi) for fixing the date of commencement of arbitration for the purpose of Section 43(1), yet the decision of Alupro Building Systems (supra) cannot be construed to have held that hat the notice under Section 21 is a mandatory requirement before a person can be made party to arbitral proceedings. Adavya Projects (supra) held that while a notice under Section 21 is mandatory, the non-service of such notice on a party would not nullify the arbitral tribunal’s jurisdiction over such party. The other purposes served by such notice as delineated by Alupro Building Systems (supra) are only incidental and secondary, and the primary purpose of such notice is only to the extent of determination of various time elements in an arbitration. The relevant observations read as under: - “30. The Delhi High Court in Alupro Building Systems Pvt Ltd. v. Ozone Overseas Pvt Ltd. allowed an application under Section 34 of the ACA against an award passed by an arbitrator who was unilaterally appointed by the respondent therein, without issuing a notice to the petitioner therein under Section 21 of the ACA. The High Court proceeded to delineate the various functions served by a Section 21 notice as follows: (i) To inform the other party as to the claims, which will enable them to accept or dispute the claims; (ii) To enable the other party to point out if certain claims are time barred, barred by law, or untenable, or if there are counter- claims; (iii) For arriving at a consensus for appointment of arbitrators under the arbitration agreement; (iv) For parties to inform each other about their proposed arbitrator, to enable the other party to raise any objections/ issues regarding qualification; (v) To trigger the court’s jurisdiction under Section 11 in case the appointment procedure fails; and (vi) To fix the date of commencement of arbitration for the purpose of Section 43(1). 30.1. The decision in Alupro Building Systems (supra) has been relied on by the High Court in its impugned order to hold that the notice under Section 21 is a mandatory requirement before a person can be made party to arbitral proceedings. 30.2. While we agree with the decision insofar as holding that the notice under Section 21 is mandatory, unless

p. 1726

the contract provides otherwise, we do not agree with the conclusion that non-service of such notice on a party nullifies the arbitral tribunal’s jurisdiction over him. The purpose of the Section 21 notice is clear – by fixing the date of commencement of arbitration, it enables the calculation of limitation and it is a necessary precondition for filing an application under Section 11 of the ACA. The other purposes served by such notice – of informing the respondent about the claims, giving the respondent an opportunity to admit and contest claims and raise counter- claims, and to object to proposed arbitrators – are only incidental and secondary. We have already held that the contents of the notice do not restrict the claims, and any objections regarding limitation and maintainability can be raised before the arbitral tribunal, and the ACA provides mechanisms for challenging the appointment of arbitrators on various grounds. Hence, while a Section 21 notice may perform these functions, it is not the primary or only mechanism envisaged by the ACA.” (Emphasis supplied)

160. In light of the decision of this Court in Adavya Projects (supra) and a catena of other decisions as-well as the scope and object of Section 21 of the Act, 1996 in contrast to Section 23 as explained by us in the foregoing paragraphs, mere non-service of a notice of invocation on a party would not nullify the arbitral tribunal’s jurisdiction over such party, and that such party can be impleaded and arrayed in the arbitration proceedings if any claim or counter- claim is made against such party by the claimant in statement of claims or counter- claims, or by even amending the memo of parties of the putative statement of claims counter-claims filed by it, provided that such party is found to be bound by the arbitration agreement either by virtue of it being a signatory, or where such party is a non-signatory, in terms of the decision of Cox and Kings (I) (supra) as explained by us.

161. In the case on hand, as mentioned earlier, the Tribunal has by way of two separate orders passed in Section 16 Applications filed by BCSPL, in the first round, and AISPL and ABPL, in the second round ruled on its jurisdiction and added AISPL and ABPL to the array of parties in the proceedings. This determination under the principle of

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‘kompetenz-kompetenz’ enshrined in Section 16 of the 1996 Act must be permitted to take its course, given that the arbitral proceedings are in any case nearing conclusion.

162. The High Court in its impugned judgment while upholding the Arbitrator’s Orders, has rightly held that ABPL, BCSPL and AISPL ‘fall under the same management, and it appears that the substitution in the contract, took place merely for convenience...’. Further, ‘all the correspondence is in respect of the contract with ASF and ASF Group of Companies. There is no differentiation between BCSPL, AISPL, or ABPL, all of which are part of the ASF Group.’. In arriving at its conclusion, the High Court correctly applied the test laid down in Cox and Kings Ltd. (I) (supra), taking note of the communications exchanged, conduct of the ASF Group officials, active involvement of the appellant with contractual obligations, intertwined nature of the agreements involving BCSPL, AISPL, and ABPL and the composite business operations.

163. The conclusion reached by the Arbitral Tribunal and the High Court is premised on the following: - (i) SPCPL had made out a case supported by material, which cannot be rejected at the preliminary stage, that AISPL and ABPL are inextricably linked to and operationally holding control over the performance of the Works Contract and Settlement Agreement which are the subject matter of the arbitral proceedings. (ii) SPCPL had rightly invoked the doctrine of Group of Companies to justify inclusion of the non-signatories. (iii) Having regard to the chronology of events leading to the execution of the Settlement Agreement, prima facie, both ASPL and ABPL are proper parties, if not necessary, even to the claim of BCSPL. (iv) The High Court, in particular, noted the factor of mutual intent, the same demonstrated by AISPL and ABPL; substantial involvement in the negotiations, performance, and termination of the various contracts entered into between the parties. The continuous use of ASF insignia and the participation of ASF Group officials in correspondences indicate that all entities within the ASF Group intended to be bound by the same arbitration agreement.

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(v) AISPL and ABPL, as subsidiaries within the ASF Group, have a direct relationship with BCSPL. They all have common directors, if not the same directors. Their interconnected roles in the Black Canyon project, as evidenced by their involvement in securing demobilization by SPCPL and other contractual obligations, highlight this relationship. (vi) The Works Contract, the Novation Agreement, the Settlement Agreement, and the Comfort Letter all pertain to the same redevelopment project of the Black Canyon project. The shared subject matter across these agreements establishes a ‘commonality’ that justifies the inclusion of AISPL and ABPL in the arbitration proceedings. Further, the various transactions entered into the between the parties must form a cohesive whole, indicating that they cannot be viewed in isolation. The intertwined nature of the agreements involving BCSPL, AISPL, and ABPL demonstrates that these transactions form a composite whole. The responsibilities across the ASF Group entities reflect a composite business operation.

164. The judicial trend is that all issues should be before the Arbitral Tribunal and the power under Section 11 sub-section (6A) is restricted to examination of the existence of an arbitration agreement. The concept of a ‘reference’ as it existed under the Arbitration Act, 1940 does not find itself in the 1996 Act. Once the Arbitral Tribunal stands appointed, all disputes and issues are to be decided by it as a ‘one- stop forum’ for adjudication. [See: Gammon India Ltd. v. NHAI, reported in 2020 SCC OnLine Del 659]

165. As aforementioned, Section 7(4)(b) of the Act, 1996 provides that an Arbitration Agreement may be contained in exchange of telecommunication, such as emails, which provide a record of the principal agreement. Emails have been exchanged between SPCPL and ASF Group as a whole, where admission of liability on the part of ASF Group to make payment under the Settlement Agreement stands established. Clause 12 of the Settlement Agreement makes the dispute resolution clause of the Works Contract applicable in the present case.

166. In Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia (P) Ltd., reported in (2015) 13 SCC 477, this Court has held that signature is not a formal requirement under Section 7(4)(b) or

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7(4)(c) or under Section 7(5) of the 1996 Act. This position is further supported by the definition of a ‘party’ in Section 2(h) of the 1996 Act to include a ‘party to an arbitration agreement’ and not a signatory to an arbitration agreement. Section 7 of the 1996 Act also does not stipulate a qualification that a party must be a signatory to the arbitration agreement or the principal agreement containing the arbitration clause. This was also reiterated in Cox and Kings Ltd (I) (supra).

167. Even the non-issuance of Section 21 notice on the appellant cannot be said to be fatal to its impleadment. The principle of consensus ad idem for referring disputes to arbitral tribunals applies to the signato ries to the arbitration agreement and not non-signatories who are sought to be impleaded.

168. The decision of this Court in Praveen Enterprises (supra), , on which strong reliance has been placed on behalf of the ABPL, as already discussed, is contrary to their contention and rather fortifies SPCPL’s argument in this regard, where this Court held that a notice under Section 21 of the 1996 Act is not relevant for counterclaims.

169. We have looked into the other decisions also relied upon by Mr. Kamat in support of his submissions, however, they are of no avail to the appellant.

D. CONCLUSION

170. Before we close this matter, we would like to say something as regards the litigation which has unfolded before us. The Arbitration Act was the first legislative enactment that dealt with arbitration that came into force in 1940. Fifty years, later, the aforesaid legislation was replaced by the Arbitration and Conciliation Act, 1996. It has been almost, thirty-years, since the Act, 1996 has remained in force. Various amendments to the Act, 1996 have been made over the years so as to ensure that arbitration proceedings are conducted and concluded expeditiously. It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plaque the arbitration regime of India. 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

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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. As observed in Gayatri Balasamy (supra), any uncertainty in the law of arbitration would be an anathema to business and commerce. 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.

171. In the overall view of the matter, we are convinced that no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned judgment and order.

172. All other legal contentions available to the parties are kept open to be canvassed before the Arbitral Tribunal.

173. For all the foregoing reasons, this appeal fails and is hereby dismissed.

174. Pending application, if any, also stands disposed of accordingly.

175. The Registry shall forward one copy each of this judgment to all the High Courts across the country and the Principal Secretary, Ministry of Law & Justice.

Result of the case: Appeal dismissed.