Hemant D. Shah HUF & Anr. v. Chittaranjan D. Shah HUF & Ors.

2026 INSC 1111 Non-Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026 (Arising out of SLP (C) No.26474 of 2026)

Hemant D. Shah HUF & Anr. ...Appellant(s)

Versus

Chittaranjan D. Shah HUF & Ors. ...Respondent(s)

JUDGMENT

K. VINOD CHANDRAN, J.

Leave granted.

2. ‘Veritable Party’ in a constituted arbitration is a vexing

question that props up oftener than ever, which question has

to be determined more on the facts; the multiple aspects

arising therefrom, which cannot be put down in a strait jacket

formula.

3. We have heard Sri Ashim Sood, learned Counsel for

the appellants, Sri Sanjay Sarin, learned Counsel for the 1st

Signature Not Verified and 2nd respondents and Sri Ritin Rai, learned Senior Counsel Digitally signed by CHANDRESH Date: 2026.10.12 15:51:36 IST Reason: for the 3rd and 4th respondents.

CA@ SLP (C) No.26474 of 2026 Page 1 of 10

4. The issue is with respect to whether the 2nd and 3rd

respondents must be included in the arbitration; whom, if we

find to be veritable parties on a prima facie consideration of

the facts and circumstances, still the question would be open

before the Arbitrator appointed.

5. The High Court, considering the application under

Section 11 of the Arbitration and Conciliation Act, 19961, first

considered the aspect of limitation, especially since there

was an earlier Arbitral Award at the instance of the appellants

themselves, which was set aside under Section 34 of the said

Act. The question of limitation was found in favour of the

appellants, which we need not engage with, especially since

the issue of limitation is deemed to have been answered only

as against 1st and 2nd respondents; and with respect to 3rd and

4th respondents, prayer to join them in the arbitration was

declined. The rejection of such prayer was also on account of

the finding that they are not signatories to the Arbitration

Agreement and do not fall within the recognized exceptions

as person/persons claiming through or under a signatory or

covered under the Group of Companies doctrine.

1 Hereinafter referred to as ‘the Act’ CA@ SLP (C) No.26474 of 2026 Page 2 of 10

6. We would first look at the facts which led to the

application before the High Court. The dispute specifically

arises with respect to a property numbered as Unit No.2

admeasuring 3,500 sq. ft. in the ground floor of Manish

Commercial Centre, 216-A, Dr. Annie Besant Road, Worli,

Mumbai - 400 030, which is hereinafter termed as the ‘subject

asset’. This originally belonged to a partnership firm called

M/s Prospective Traders. The original deed of partnership

was executed between three family trusts, respectively of V.

U. Shah, N.U. Shah and C.U. Shah; who are referred to as the

original partners, by a deed of partnership executed on

02.04.1977. The asset was acquired by the partnership on

03.10.1977. On 09.12.1985, the partnership was reconstituted

by a deed, wherein the appellants; Hemant D. Shah HUF and

the wife of Hemant D. Shah, the 1st and 2nd appellants as also

Chittaranjan D. Shah HUF and the daughter in law of C.D.

Shah, the 1st and 2nd respondents were inducted as partners.

7. Subsequently on 30.12.1987, by another deed of

partnership; which is also disputed by the appellants, the

partnership firm was reconstituted and the original partners

retired. On 03.07.1995, by a deed of retirement, the

appellants are asserted to have retired from the partnership CA@ SLP (C) No.26474 of 2026 Page 3 of 10

firm, which document is alleged to be a forged one by the

appellants. Later, on 01.07.2005, the 2nd respondent retired

from the partnership firm, resulting in dissolution of the said

partnership firm and it continued as a proprietorship with its

assets vested with the 1st respondent. Again, by a deed of

30.09.2009, 3rd and 4th respondents were brought as partners

into the proprietorship, constituting a new partnership. On

retirement of the 1st respondent, by a deed of 04.11.2009, 3rd

and 4th respondents continued as partners of the firm.

8. The 3rd and 4th respondents distanced themselves

from the partnership agreement of 09.12.1985; which

contains an arbitration clause and the 1st and 2nd respondents

assert the dissolution of the firm on the retirement of 2nd

respondent, subsequent to the retirement of the appellants.

The appellants, on the other hand, assert that they never

retired from the firm and the partnership continues even

now, as also the assets belong to the original partnership.

9. Learned Single Judge has relied on Cox & Kings

Limited v. SAP India Private Limited and Another2 and

2 (2024) 4 SCC 1 CA@ SLP (C) No.26474 of 2026 Page 4 of 10

Hindustan Petroleum Corporation Limited v. BCL Secure

Premises Private Limited3.

10. Cox & Kings Limited2 elaborately considered the

principle of ‘claiming through or under’ and the ‘doctrine of

group companies’, which we are of the opinion, does not

apply to the present proceedings. However, the principle

stated therein would assist us in resolving the question raised

herein, which has to be resolved on the facts arising in the

present case. Holding arbitration law to be an autonomous

legal field, there was a distinction drawn from the corporate

law and contract law, insofar as the main purpose of the latter

is imputation of substantive legal liability while the law of

arbitration determines whether an Arbitration Tribunal has

jurisdiction over the disputes arising between the parties to

an arbitration agreement. A non-signatory, who has not put

pen to paper, indicates an intention, not to assume rights or

responsibilities under the agreement. But, it was held that

the Courts and Tribunals cannot adopt a rigid approach to

exclude all persons or entities, who through conduct and

relationship with the signatories intended to be bound by the

3 (2026) 3 SCC 711 CA@ SLP (C) No.26474 of 2026 Page 5 of 10

underlying contract containing the arbitration clause (para

11. It was held in paragraph 132 of Cox & Kings Limited 2

that ‘Looking at the factors holistically, it could be inferred that

the non-signatories, by virtue of their relationship with the

signatory parties and active involvement in the performance of

commercial obligations which are intricately linked to the

subject-matter, are not actually strangers to the dispute

between the signatory parties.’(sic)

12. From the conclusion of Cox & Kings Ltd.2, we extract

paragraphs 170.3, 170.12 and 170.13 as under:

‘170.3. The requirement of a written arbitration agreement under Section 7 does not exclude the possibility of binding non-signatory parties; xxx xxx xxx 170.12. At the referral stage, the referral court should leave it for the Arbitral Tribunal to decide whether the non-signatory is bound by the arbitration agreement; and 170.13. In the course of this judgment, any authoritative determination given by this Court pertaining to the Group of Companies doctrine should not be interpreted to exclude the application of other doctrines and principles for binding non-signatories to the arbitration agreement.’

13. Hindustan Petroleum Corporation Limited3 referred

to Cox & Kings Limited2 and culled out the principle of a

prima facie satisfaction being entered by the Referral Court, CA@ SLP (C) No.26474 of 2026 Page 6 of 10

that there exists an Arbitration Agreement and the non-

signatory being a veritable party. It was found that despite

such prima facie satisfaction entered, the jurisdiction of the

Arbitral Tribunal to decide on it, on the basis of factual

evidence and the application of legal doctrine, is preserved.

However, it was held that the Referral Court under Section 11

of the Act is not deprived of its jurisdiction from examining

whether the non-signatory, in the real sense, is a party to the

agreement, the answer to which will depend on the facts and

circumstances of each case. Therein the appellant

Corporation floated a tender, the successful tenderer in

which gave a sub-contract to the respondent. There was a

civil suit and later an arbitration attempted by the sub-

contractor to settle the disputes with the original contractor.

That having failed, the sub-contractor filed an application

under Section 11 of the Act against the appellant Corporation,

which stood allowed. In the factual scenario, it was found that

there was not even a semblance of an intent to affect a legal

relationship between the sub-contractor and the awarder or

that such a third party was a veritable party.

14. Be that as it may, in the present case, the dispute

revolves around the ‘subject asset’ which is an immovable CA@ SLP (C) No.26474 of 2026 Page 7 of 10

property. Admittedly, the asset was acquired by the

partnership firm, in which, later the appellants and the 1st and

2nd respondents were partners, along with the original

partners. The original partners retired and though the said

document is disputed by the appellants, the original partners

do not raise any dispute on the said document. The

retirement of the original partners also does not affect the

rights of the appellants, if the deed of 09.12.1985 subsists.

The bone of contention is the deed of retirement dated

03.07.1995, by which the appellants are said to have retired;

which is alleged to be a forged document.

15. In fact, it is this retirement which led to the eventual

constitution of another partnership by the 1st and 2nd

respondents; subsequently with the retirement of 2nd

respondent, the firm continued as a proprietorship with the

1st respondent, who inducted 3rd and 4th respondents and

then retired from the firm. If the deed of retirement of

03.07.1995 is found to be invalid on the allegations raised,

then necessarily the parties revert to the partnership of

09.12.1985. In which event, it would affect the rights of the 3rd

and 4th respondents, who were inducted by the 1st

respondent, as partners who obtained rights over the CA@ SLP (C) No.26474 of 2026 Page 8 of 10

‘subject asset’ by that partnership deed, in which neither the

appellants nor the 1st and 2nd respondents are partners. The

dispute raised for arbitration revolves around the ownership

of the ‘subject asset’; whether it be by virtue of the deed of

09.12.1985 or by the deed of 04.11.2009.

16. On the facts and circumstances of this case, we are of

the opinion that 3rd and 4th respondents are veritable parties

to the dispute, since it would substantially affect their rights

also as per the partnership deed of 30.11.2009 which can be

valid only if the deed of retirement of the appellants is valid.

However, this is not to say that the questions of limitation

raised by 3rd and 4th respondents and whether the appellants

are estopped from including 3rd and 4th respondents, as they

were not included in the earlier arbitration proceedings,

despite knowledge of the retirement deed at that point of

time, would not survive. These aspects are definitely left to

be agitated before the Arbitral Tribunal.

17. The impugned order is modified only to the extent of

finding the 3rd and 4th respondents to be veritable parties to

the arbitration, despite the said respondents being not

signatories to the partnership deed of 09.12.1985.

CA@ SLP (C) No.26474 of 2026 Page 9 of 10

18. We hasten to observe that our findings on 3rd and 4th

respondents being veritable parties, is a prima facie finding,

which would not govern the adjudication of the said issue or

the issue of limitation or the ground raised of an estoppel

against the appellants by 3rd and 4th respondents, which

would be alive; left to be considered by the Arbitral Tribunal.

19. With the above observations and modification to the

impugned order, the appeal stands disposed of.

20. Pending application(s), if any, shall stand rejected.

.......…….……………………. J. (J. B. PARDIWALA)

....……….……………………. J. (K. VINOD CHANDRAN)

NEW DELHI; OCTOBER 12, 2026.

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