Calcutta High Court
Bimla Devi Jaiswal vs M/S. Indus Towers Limited on 30 June, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
2025:CHC-OS:96
IN THE HIGH COURT AT CALCUTTA
ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
COMMERCIAL DIVISON
BEFORE :-
THE HON'BLE JUSTICE SHAMPA SARKAR
AP- 256 of 2021
BIMLA DEVI JAISWAL
VS.
M/s. INDUS TOWERS LIMITED
For the Petitioner : Mr. Shaunak Ghosh, adv.
Mr. Rajib Mullick, adv.
Ms. Ayantika Saha, adv.
For the Respondent : Mr. Surojit Nath Mitra,Sr.Adv.
Mr. Arindam Chandra, Adv.
Mr. Atish Ghosh, Adv.
Ms. Susmita Das, Adv.
Hearing concluded on : 10.06.2025
Judgment on : 30.06.2025
Shampa Sarkar, J.
1. This is an application for appointment of an arbitrator.
2. The facts pleaded by the petitioner are that, the petitioner is the owner of
a roof in respect of premises No. 243/2M Acharya Prafulla Chandra Road,
Kolkata-700006. The property was earlier known as premises No. 243/2,
Upper Circular Road, Kolkata. The said property was divided into various
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holdings, including holding no. 243/2C. By a deed of conveyance dated 21st
May, 1975, the erstwhile owners sold a portion of the property being premises
no. 243/2C, Acharya Prafulla Chandra Road, Kolkata – 700006, to Smt. Duija
Devi Shaw, who was the predecessor in interest of the petitioner. By another
deed of conveyance dated February, 20, 1976, the erstwhile owners sold the
balance portion of the premises to Shri. Jamuna Prasad Shaw, husband of
Smt. Duija Devi Shaw. Jamuna Pasad Shaw died on April 4, 1991, leaving
behind his last will and testament dated December, 21, 1990, whereby he
bequeathed his entire estate including the portion of the premises being no.
243/2C, Acharya Prafulla Chandra Road, Kolkata to his wife Smt. Duija Devi
Shaw. Probate was duly granted by the High Court at Calcutta. The two
premises were later amalgamated and numbered as premises no. 243/2M,
Acharya Prafulla Chandra Road Kolkata. Duija Devi Shaw obtained a sanction
from the Kolkata Municipal Corporation in the year 1992 and raised a five-
storied building on the said premises. Duija Devi Shaw left behind her last will
and testament, bequeathing premises no. 243/2M to the petitioner. Probate in
respect of the will was granted. Duija Devi Shaw had sold all the flats in the
building, barring one, to third parties. One flat remained with the petitioner,
which she had gifted to her daughter. The petitioner retained exclusive rights
over the roof of the said building. Duija Devi Shaw had entered into an
agreement on January 19, 2001, with Usha Martin Telekom Limited for
installation of a mobile tower, on the roof of the premises. The agreement
specifically mentioned that, the same was for a period of 20 years commencing
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from January 1, 2001 and ending on December 31, 2020. A monthly licence fee
of Rs. 18,000/- was payable by Usha Martin Telekom Limited. Security deposit
of Rs. 64,000/- was additionally payable. The agreement for licence contained
an arbitration clause. Clause 16.1 thereof provided that any difference or
dispute arising out of the agreement shall be referred to arbitration. The parties
agreed that the Courts at Calcutta would have jurisdiction. A supplementary
agreement dated May 14, 2014, was entered into between the petitioner and
the respondent, who were both successors in interest of the original signatories
to the agreement dated January 19, 2001. It was contended by the petitioner
that the supplementary agreement, although commenced from May 1, 2014, it
was co-existing, co-extensive and co-terminus with the principal agreement
dated January 19, 2001. Such fact was recorded in the supplementary
agreement. The petitioner submitted that all the terms and conditions in the
original agreement, including the arbitration agreement were agreed to be
incorporated in the supplementary agreement. Thus, the arbitration clause was
incorporated in the supplementary agreement by reference.
3. A dispute arose when the respondent did not pay the rent from April,
2018. The agreement dated January 19, 2002, came to an end on December
31, 2020, due to efflux of time. The petitioner alleged that the respondent
continued to be in illegal possession of the roof. The petitioner invoked
arbitration, by a letter dated February 10, 2021. The letter was withdrawn by a
letter dated March 16, 2021. The petitioner once again invoked arbitration and
proposed the name of a learned Advocate, who would act as an arbitrator. The
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letter was received by the respondent on March 18, 2021. The respondent
replied to the letter on April 5, 2021. It was contended that the arbitration
clause did not survive as the principal agreement had already expired. As the
respondent refused the proposal for reference of the dispute to arbitration, this
application was filed.
4. Mr. Shaunak Ghosh, learned Advocate for the petitioner submitted that,
the disputes were required to be settled by arbitration, in terms of clause 16 of
the agreement dated January 19, 2001. The clause provided that in the event
of any dispute or difference arising out of the contract the same shall, unless
settled, be referred to three arbitrators. Each party was to appoint one
arbitrator and the two appointed arbitrators were to appoint the third
arbitrator, who would be the presiding arbitrator. The jurisdiction clause
provided that, if any dispute or difference arose between the parties during the
pendency of the agreement or after its termination, as to its meaning and
construction or in respect of any other matter or thing arising directly or
indirectly under the agreement, the same shall be subject to the jurisdiction of
the Courts at Calcutta. It was further contended that, in the Agreement dated
January 19, 2001, the expression “licensor” i.e. Duija Devi Shaw deemed to
include her heirs, executors, administrators and assigns. Similarly, the
expression “Licensee” i.e. Usha Martin Telekom Limited included its
successors, administrators, liquidators, representatives and assigns. Thus, the
said agreement was binding upon the petitioner and the respondent, as
successors of the erstwhile signatories to the agreement dated January 19,
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2021. The petitioner became the owner of the roof by virtue of the probate
granted in respect of the will of Duija Devi Shaw. Similarly, the respondent also
stepped into the shoes of Usha Martin Telekom Limited. The name of Usha
Martin Telekom Limited had also been struck off from the register of the
Registrar of Companies. Mr. Ghosh referred to the affidavit-in-opposition filed
by the respondent and submitted that the respondent admitted the fact that, it
had continued as the licensee of the premises in place and instead of Usha
Martin Telekom Limited. Mr. Ghosh submitted that another agreement was
entered into between the parties to this proceeding on May 14, 2014, which
was only a supplementary agreement. The agreement recorded that the
petitioner had become the sole owner of the premises which was occupied by
the respondent and the parties agreed to continue the license of the demised
premises in terms of the principal agreement under the same terms and
conditions. The supplementary agreement which was executed on and from
May 1, 2014, was agreed to be co-existing, co-extensive and co-terminus with
the principal agreement dated January 19, 2001.
5. Under such circumstances, the arbitration clause also became binding
upon the parties as the same had been incorporated by reference in the
supplementary agreement. Moreover, as the principal agreement provided that
the expression “licensor” and “licensee” would include their heirs,
representatives, successors and assigns, both the parties were claiming
through and under the original signatories. The arbitration clause became
binding on the respondent, who had admitted to have occupied the property.
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The respondent was the successor of Usha Martin Telekom Limited. In the
affidavit-in-opposition, the details of how the respondent had come into
occupation of the said premises, had been pleaded. Reliance was placed on the
decision of M/s. Avinash Hitech City 2 Society and others v. Boddu
Manikya Malini and another Etc. reported in AIR 2019 SC 4142.
6. Mr. S. N. Mitra, learned senior Advocate for the respondent submitted
that the supplementary agreement did not contain an arbitration clause. The
principal agreement which contained the clause had been executed between
Duija Devi Shaw and Usha Martin Telekom Limited. Neither the petitioner nor
the respondent were signatories. The respondent was not bound by the
arbitration clause. An arbitration agreement was a separate agreement. Even if
the same was contained in the principal agreement, it was not incorporated by
reference in the supplementary agreement. The later document should have
specified that the parties agreed to be specifically bound by the arbitration
clause contained in the principal agreement as well. A mere reference to the
document which contained the arbitration agreement, could not be taken to be
incorporation of the arbitration clause by reference. The provision of section
7(5) of the Arbitration and Conciliation Act, 1996 would not be applicable in
the present case. Admittedly, the supplementary agreement did not specifically
provide that the arbitration clause had also been incorporated. Reliance was
placed on the following decisions:-
(a) M.R. Engineers and Contractors Pvt. Ltd. Vs. Som Datt Builders Ltd.
reported in (2009) 7 SCC 696.
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(b) Delhi Iron and Steel Company Limited vs U.P. Electricity Board &
Another reported in 2002 (61) DRJ 280
(c) NBCC (INDIA) Ltd. Vs Zillion Infra Projects Private Limited reported in
(2024) 7SCC 174
(d) Vishranti CHSL vs Tattva Mittal Corporation Pvt. Ltd. reported in 2020
SCC Online Bom 7618
7. Mr. Mitra urged that this application was not maintainable and the
prayer for reference should be refused. Learned senior Advocate submitted
that, the notice invoking arbitration had been issued on the misconception that
the supplementary agreement also contained the arbitration clause by
reference. The invocation was bad in law.
8. Considered the submissions of the learned Advocates for the respective
parties. The agreement dated January 19, 2001 was entered into between the
Duija Devi Shaw and Usha Martin, for installation of a cellular cite. The
agreement clearly described the expressions ‘licensor’ and ‘licensee’. The
relevant portions are quote below :-
“THIS AGREEMENT made at Calcutta on the Nineteenth day of January
in the year Two Thousand One between Smt. Duija Devi wife of Shri
Jamuna Prasad Shaw residing at 243/2M, A. P.C. Road, Calcutta –
700006, under police station Bot Tala, in the town of Calcutta, by caste
Hindu, by occupation house-wife hereinafter referred to as the ‘Licensor’
(which expression shall unless excluded by or made repugnant to the
context shall be deemed to include her heirs, executors, administrators
and assigns) of the ONE PART.
Messers USHA MARTIN TEEKOM LTD a company incorporated under the
Companies Act, 1956, having its registered office at 11, Dr. U.N.
Brahmachari Street, Constantia Office Complex, 2nd & 4th floor, Calcutta
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– 700017 hereinafter referred to as the “Licensee” (which expression
shall, unless excluded by or repugnant to the context include its
successor, Administrators, Liquidators, representatives and assigns)
acting through Mr. Himadri Sankar Bhattacharjee (Dy. General Manager
– Commercial) authorized representative of the OTHER PART)”
9. The parties to the original agreement clearly understood that the
agreement would be binding upon the heirs, executors, administrators and
assigns of the licensor and the successors, administrators, liquidators,
representatives and assigns of the licensee. The arbitration clause is quoted
below:-
“ARBITRATION
16:1. In the event of any dispute or difference arising from this contract,
the same shall, unless settled, be first referred to three arbitrators, each
party shall appoint one arbitrator and two appointed arbitrators shall
appoint the third arbitrator who shall act as the presiding arbitrator. The
decision of the three arbitrators shall be final and binding between the
parties.
16.2. This is an agreement for arbitration within the meaning of The
Arbitration and Conciliation Act, 1996 including any statutory
modification thereof.”
10. The jurisdiction clause indicates that the parties subjected themselves to
the jurisdiction of the Courts at Calcutta. The jurisdiction clause is quoted
below :-
“17.0. JURISDICTION
In case any dispute or difference shall arise between the parties during
the pendency of this agreement or after its termination or earlier
determination as to its meaning and construction or to any other matter
or thing arising directly or indirectly under this agreement then and in
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2025:CHC-OS:96such an event the same shall be subject to the jurisdiction of courts at
Calcutta.”
11. Admittedly, disputes arose. The license expired due to efflux of time on
December 31, 2020, but the respondent did not vacate. The petitioner alleged
that rent/licence fee, was not being paid and the respondent was in possession
of the property illegally and as a trespasser.
12. According to the petitioner, at the time of invocation of arbitration, Rs.
13,32,322.56/- was due and payable on account of the licence fee from May,
2018 to December, 2020, along with further sum of Rs. 1,66,540.30/- for
January and February 2021. Although, a notice to vacate the premises was
issued by letter dated January 28, 2021, Indus Tower refused to vacate the
premises and continued to be in occupation of the same. The arbitration clause
was invoked. The supplementary agreement clearly indicates that the license of
the demised premises continued with the petitioner as the licensor and the
respondent as the licensee, on the basis of the principal agreement dated
January 19, 2001. Each and every term and condition of the said licence was
made applicable by the parties, in respect of the supplementary agreement. The
parties consciously adopted the principal agreement. The supplementary
agreement was deemed to have commenced from May 1, 2014 and was co-
existing, co-extensive and co-terminus with the principal Agreement dated
January 19, 2001. Thus, the fact that the respondent was continuing the
premises under the same terms and conditions as those contained in the
original agreement, is not in dispute.
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13. The principal agreement clearly provided that expressions ‘licensor’ and
‘licensee’ would include the representatives, heirs, successors, administrators
or assigns of the signatories to the principal agreement.
14. In the affidavit-in-opposition, the respondent had pleaded that it was a
Company within the meaning of the Companies Act, 2013. It was engaged in
the business of providing telecom infrastructure. Pursuant to a scheme of
amalgamation and arrangement approved by the National Company Law
Tribunal, Chandigarh, the respondent merged with Bharti Infratel. The name of
Bharti Infratel had been changed to Indus Towers Limited with effect from
December 10, 2020. The merged entity was known as Indus Towers Limited. It
has been admitted in the affidavit that, on and from May, 2013, the respondent
continued to make payments to the person entitled to receive payments in
terms of the agreement dated January 19, 2001. The fact that the respondent
sought to be bound by the principal agreement is, prima facie, available from
the records. The respondent admits to have acted in terms of the original
agreement entered into with Usha Martin Telekom Limited. The respondent
stepped into the shoes of Usha Martin. Bharti Infratel was subsequently
renamed as Indus Tower Ltd. The relevant portions of the averments are
quoted below:-
“a) The respondent is a company within the meaning and provisions of
the Companies Act, 2013 and is, inter alia, engaged in the business of
providing passive telecom infrastructure, i.e., the establishment,
maintenance and provision of telecommunication infrastructure and
assets including mobile tower.
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b) That, pursuant to a scheme of amalgamation and arrangement (“the
Scheme”) approved by the Hon’ble National Company Law w Tribunal
(NCLT) at Chandigarh vide its order dated 31.05.2019 read with order
dated 22.10.2020, the respondent, Indus Towers Limited having CIN NO.
U92100HR2007PLC073822 merged with Bharti Infratel Limited CIN No.
L64201HR2006PLC073821 having its registered office address at Park
Centra, 9th floor, Sector 30 NH-8, Gurugram 122001 Haryana, along
with all its properties including mobile towers rights, claims, title,
benefits, Liabilities, obligations and interest therein.
c) Further, the name of the Company Bharti Infratel Limited’ has been
changed to Indus Towers Limited (having CIN No.
164201HR2006PLC073821) with effect from 10.12.2020. Therefore, the
merged entity is now known as Indus Towers Limited. However, petitioner
chose not to disclose this aspect to this Hon’ble Court for reason best
known to it.
d) Indus Towers Ltd. (respondent company) formerly known as Bharti
Infratel Ltd., is a duly registered Passive Infrastructure Provider (IP-1)
Company with the Department of Telecommunications, Ministry of
Communications, Government of India. The respondent company is the
largest Telecom Tower Passive Infrastructure Provider (IP-1) Company in
India-and-is one of the largest in the world and is also listed on National
Stock Exchange as well as Bombay Stock Exchange since 2012. The
respondent company provides Telecom Passive Infrastructure services to
the telecom service providers having license under Section 4 of the Indian
Telegraph Act, 1885 viz, Airtel, Vodafone Idea Ltd., RJIO and BSNE etc.
The respondent company utilizes and avails, services of various service
providers for the operation and maintenance of its telecom towers.
e) In the instant case, by virtue of the aforesaid the respondent thus
continued to act in terms of the agreement dated 19th January, 2001
which was originally entered into by one Usha Martin Telecom Limited for
installation of cellular site until fresh agreement dated 14 May, 2014 was
executed by the respondent.
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f) On and from May 2013 the respondent continued to make payment to
the person entitled to receive payment in terms of the agreement dated
19th January, 2001.
g) On 14th May 2014 a fresh agreement was entered into by the
petitioner with the respondent in terms of which it was, inter alia, agreed
that the respondent would with effect from 1 May, 2014 make payment of
monthly rent exclusively in favour of the petitioner herein namely, Bimla
Devi Jaiswal. Though the agreement was entered into by and between the
parties on the same consideration, terms and conditions of the principal
agreement dated 19th January, 2001 and the agreement was referred as
supplementary agreement which deemed to have commenced on and
from 14th May, 2014 and shall be coexisting, coextensive and
coterminous with the principal agreement dated 19 January, 2001, but
the said agreement dated 14th May, 2014 does not contain any
arbitration clause or arbitration agreement nor does the same referred to
any arbitration clause or agreement so as to bind the parties to any
arbitration as would be evident from the copy of the said agreement.”
15. Under such circumstances, the fact that Indus Towers had by conduct
sought to bound by the principal agreement as a successor or assign of Usha
Martin and continued to act in accordance with the terms and conditions of the
principal agreement is, prima facie, available from the averments. Moreover,
the law permits the arbitral tribunal to rule on its own jurisdiction. The issue of
jurisdiction covers all questions, including the validity of the arbitration
agreement, joinder of parties, scope of the disputes referable etc.
16. The referral court is to satisfy itself, prima facie, as to the existence of an
arbitration agreement and/or whether the parties chose to be bound by the
same, thereby agreeing to refer all disputes between them to an independent
and impartial private Tribunal.
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17. The law with regard to non-joinder or mis-joinder of parties and whether
non-signatories can be bound by an arbitration agreement has been developed
by the Hon’ble Apex Court. Some of the decisions are discussed below:-
In Ajay Madhusudan Patel v. Jyotrindra S. Patel, reported in (2025) 2 SCC
147, the Hon’ble Apex Court held as follows:-
“(2024) 251 Comp Case 680] as follows : (SCC pp. 75-77, paras 123 & 126-
27)
“123. … The intention of the parties to be bound by an arbitration
agreement can be gauged from the circumstances that surround the
participation of the non-signatory party in the negotiation,
performance, and termination of the underlying contract containing
such agreement. The Unidroit Principle of International Commercial
Contract, 2016 [Unidroit Principles of International Commercial
Contracts, 2016, Article 4.3.] provides that the subjective intention of
the parties could be ascertained by having regard to the following
circumstances:
(a) preliminary negotiations between the parties;
(b) practices which the parties have established between themselves;
(c) the conduct of the parties subsequent to the conclusion of the
contract;
(d) the nature and purpose of the contract;
(e) the meaning commonly given to terms and expressions in the trade
concerned; and
(f) usages.
***
126. Evaluating the involvement of the non-signatory party in the
negotiation, performance, or termination of a contract is an important
factor for a number of reasons. First, by being actively involved in the
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performance of a contract, a non-signatory may create an appearance
that it is a veritable party to the contract containing the arbitration
agreement; second, the conduct of the non-signatory may be in
harmony with the conduct of the other members of the group, leading
the other party to legitimately believe that the non-signatory was a
veritable party to the contract; and third, the other party has
legitimate reasons to rely on the appearance created by the non-
signatory party so as to bind it to the arbitration agreement.
***
127. … The nature or standard of involvement of the non-signatory in
the performance of the contract should be such that the non-signatory
has actively assumed obligations or performance upon itself under the
contract. In other words, the test is to determine whether the non-
signatory has a positive, direct, and substantial involvement in the
negotiation, performance, or termination of the contract. Mere
incidental involvement in the negotiation or performance of the
contract is not sufficient to infer the consent of the non-signatory to be
bound by the underlying contract or its arbitration agreement. The
burden is on the party seeking joinder of the non-signatory to the
arbitration agreement to prove a conscious and deliberate conduct of
involvement of the non-signatory based on objective evidence.”
18. In the matter of Chloro Controls India (P) Ltd. v. Severn Trent Water
Purification Inc., reported in(2013) 1 SCC 641, the Hon’ble Apex Court held
as follows:-
“70. Normally, arbitration takes place between the persons who have,
from the outset, been parties to both the arbitration agreement as well as
the substantive contract underlining (sic underlying) that agreement.
But, it does occasionally happen that the claim is made against or by
someone who is not originally named as a party. These may create some
difficult situations, but certainly, they are not absolute obstructions to
15
2025:CHC-OS:96law/the arbitration agreement. Arbitration, thus, could be possible
between a signatory to an arbitration agreement and a third party. Of
course, heavy onus lies on that party to show that, in fact and in law, it
is claiming “through” or “under” the signatory party as contemplated
under Section 45 of the 1996 Act. Just to deal with such situations
illustratively, reference can be made to the following examples in Law
and Practice of Commercial Arbitration in England (2ndEdn.) by Sir Michael
J. Mustill:
‘1. The claimant was in reality always a party to the contract, although
not named in it.
2. The claimant has succeeded by operation of law to the rights of the
named party.
3. The claimant has become a party to the contract in substitution for
the named party by virtue of a statutory or consensual novation.
4. The original party has assigned to the claimant either the underlying
contract, together with the agreement to arbitrate which it incorporates,
or the benefit of a claim which has already come into existence.”
19. In the matter of Cox & Kings Ltd. v. SAP (India) (P) Ltd.,reported in
(2025) 1 SCC 611, the Hon’ble Apex Court held as follows:-
“31.
****
169. In case of joinder of non-signatory parties to an arbitration agreement,
the following two scenarios will prominently emerge : first, where a
signatory party to an arbitration agreement seeks joinder of a non-signatory
party to the arbitration agreement; and second, where a non-signatory
party itself seeks invocation of an arbitration agreement. In both the
scenarios, the referral court will be required to prima facie rule on the
existence of the arbitration agreement and whether the non-signatory is a
veritable party to the arbitration agreement. In view of the complexity of
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2025:CHC-OS:96such a determination, the referral court should leave it for the Arbitral
Tribunal to decide whether the non-signatory party is indeed a party to the
arbitration agreement on the basis of the factual evidence and application of
legal doctrine. The Tribunal can delve into the factual, circumstantial, and
legal aspects of the matter to decide whether its jurisdiction extends to the
non-signatory party. In the process, the Tribunal should comply with the
requirements of principles of natural justice such as giving opportunity to
the non-signatory to raise objections with regard to the jurisdiction of the
Arbitral Tribunal. This interpretation also gives true effect to the doctrine of
competence-competence by leaving the issue of determination of true
parties to an arbitration agreement to be decided by the Arbitral Tribunal
under Section 16.”
20. Reference is also made to the decisions of Adavya Projects Pvt. Ltd. vs
M/s Vishal Structurals Pvt. Ltd. & Ors. reported in 2025 INSC 507 and
ASF Building Private Limited v Shapoorji Pallonji and Company Private
Limited reported in 2025 INSC 616.
21. The relevant portions from Adavya Projects (supra) is quoted below:-
“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.23 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
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agreement.”
22. In the decision of the Hon’ble Supreme Court in ASF Buildtech Pvt. Ltd.
(supra) it was decided that the issues of joinder, non-joinder, mis-joinder etc.
are also within the domain of the learned Arbitrator. The relevant portions are
quoted below:-
“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
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2025:CHC-OS:96intent 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. Vishal Strcturals Pvt. Ltd., 2025 INSC 507, also held that an
arbitral tribunal under Section 16 of 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
19
2025:CHC-OS:96arbitral 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.”
23. Whether non-signatories to the principal agreement is bound by the
terms and conditions of the principal agreement shall be finally decided by the
learned arbitral tribunal, but this court, prima facie, finds that both the parties
are intrinsically connected with the principal agreement and chose to abide by
the terms and conditions, in their entirety. They have acted in furtherance of
the said agreement. Whether the supplementary agreement incorporated the
arbitration agreement by reference, is also a matter to be decided by the
learned arbitrator especially in the facts and circumstances of the case which
have been narrated hereinabove. The matter has to be decided on evidence and
as per the applicable legal principles. The tribunal must decide the issue, upon
an interpretation of the clauses of both the agreements and how the parties
understood the same.
24. It is well settled that the scope of the referral Court is very limited. In the
matter of Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. &Anr.
reported in (2025) 1 SCC 502, the Hon’ble Apex Court held as follows:-
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“51. It is now well-settled law that, at the stage of Section 11 application,
the referral Courts need only to examine whether the arbitration
agreement exists — nothing more, nothing less. This approach upholds
the intention of the parties, at the time of entering into the agreement, to
refer all disputes arising between themselves to arbitration. However,
some parties might take undue advantage of such a limited scope of
judicial interference of the referral Courts and force other parties to the
agreement into participating in a time-consuming and costly arbitration
process. This is especially possible in instances, including but not limited
to, where the claimant canvasses either ex facie time-barred claims or
claims which have been discharged through “accord and satisfaction”, or
cases where the impleadment of a non-signatory to the arbitration
agreement is sought, etc.”
25. The referral court only gives legal meaning to the doctrine of competence-
competence. The decision of SBI General Insurance Co. Ltd. vs Krish
Spinning reported in 2024 SCC Online SC 1754, the relevant paragraphs are
quoted below:-
“94. A seven-Judge Bench of this Court, in In Re : Interplay Between
Arbitration Agreements under the Arbitration and Conciliation Act, 1966
and the Indian Stamp Act, 1899 reported in 2023 INSC 1066, speaking
eruditely through one of us, Dr Dhananjaya Y. Chandrachud, Chief
Justice of India, undertook a comprehensive analysis of Sections 8 and
11 respectively of the Act, 1996 and, inter alia, made poignant
observations about the nature of the power vested in the Courts insofar
as the aspect of appointment of arbitrator is concerned. Some of the
relevant observations made by this Court in In Re : Interplay (supra) are
extracted hereinbelow:
“179. […] However, the effect of the principle of competence-competence
is that the arbitral tribunal is vested with the power and authority to
21
2025:CHC-OS:96determine its enforceability. The question of enforceability survives,
pending the curing of the defect which renders the instrument
inadmissible. By appointing a tribunal or its members, this Court (or the
High Courts, as the case may be) is merely giving effect to the principle
enshrined in Section 16. The appointment of an arbitral tribunal does
not necessarily mean that the agreement in which the arbitration clause
is contained as well as the arbitration agreement itself are enforceable.
The arbitral tribunal will answer precisely these questions.
xxx xxx xxx
185. The corollary of the doctrine of competence-competence is that
courts may only examine whether an arbitration agreement exists on the
basis of the prima facie standard of review. The nature of objections to
the jurisdiction of an arbitral tribunal on the basis that stamp-duty has
not been paid or is inadequate is such as cannot be decided on a prima
facie basis. Objections of this kind will require a detailed consideration of
evidence and submissions and a finding as to the law as well as the facts.
Obligating the court to decide issues of stamping at the Section 8 or
Section 11 stage will defeat the legislative intent underlying the
Arbitration Act.
186. The purpose of vesting courts with certain powers under Sections 8
and 11 of the Arbitration Act is to facilitate and enable arbitration as well
as to ensure that parties comply with arbitration agreements. The
disputes which have arisen between them remain the domain of the
arbitral tribunal (subject to the scope of its jurisdiction as defined by the
arbitration clause). The exercise of the jurisdiction of the courts of the
country over the substantive dispute between the parties is only possible
at two stages:
a. If an application for interim measures is filed under Section 9 of the
Arbitration Act; or
b. If the award is challenged under Section 34.
Issues which concern the payment of stamp-duty fall within the remit of
the arbitral tribunal. The discussion in the preceding segments also
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2025:CHC-OS:96make it evident that courts are not required to deal with the issue of
stamping at the stage of granting interim measures under Section 9.
***
***
117. By referring disputes to arbitration and appointing an arbitrator by
exercise of the powers under Section 11, the referral court upholds and
gives effect to the original understanding of the contracting parties that
the specified disputes shall be resolved by arbitration. Mere appointment
of the arbitral tribunal doesn’t in any way mean that the referral court is
diluting the sanctity of “accord and satisfaction” or is allowing the
claimant to walk back on its contractual undertaking. On the contrary, it
ensures that the principal of arbitral autonomy is upheld and the
legislative intent of minimum judicial interference in arbitral proceedings
is given full effect. Once the arbitral tribunal is constituted, it is always
open for the defendant to raise the issue of “accord and satisfaction”
before it, and only after such an objection is rejected by the arbitral
tribunal, that the claims raised by the claimant can be adjudicated.
135. The existence of the arbitration agreement as contained in Clause
13 of the insurance policy is not disputed by the appellant. The dispute
raised by the claimant being one of quantum and not of liability, prima
facie, falls within the scope of the arbitration agreement. The dispute
regarding “accord and satisfaction” as raised by the appellant does not
pertain to the existence of the arbitration agreement, and can be
adjudicated upon by the arbitral tribunal as a preliminary issue.”
26. The non-signatories can also be bound by the terms and conditions of
the agreement, by their conduct or participation in the transaction, to indicate
that they have been acting pursuant to such terms or under the agreement. In
the present case, the supplementary agreement indicated that the parties were
intending to act on the terms of the agreement dated January 19, 2001 and the
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respondent has admitted to have continued to occupy the premises, upon
payment of rent to the petitioner.
27. In view of the above discussions, the decisions relied upon by Mr. Mitra
do not lend any support to the respondent’s case.
28. In M.R. Engineers and Contractors Pvt. Ltd. (supra) the Hon’ble Apex
Court clarified the position that sub-section (5) of section 7 merely reiterated
the well settled principles of construction of contracts. It made clear that, if
reference to a document in a contract showed that the document was not
intended to be incorporated in its entirety, then the reference would not make
the arbitration clause in the document, a part of the contract, unless there was
a special reference to the arbitration clause so as to make it applicable. A
general reference to another contract would not be sufficient. In the present
case, the parties to the proceeding accepted the entirety of the principal
agreement and agreed that the supplementary agreement would be co-existing,
co-extensive and co-terminus with the principal agreement dated January, 19,
2001. Here, in my prima facie view, the principal agreement was incorporated
and adopted by the parties to the supplementary agreement in its entirety.
29. In Vishranti CHSL (supra) the ratio in M.R. Engineers (supra) was
reiterated
30. In Delhi Iron and Steel Company Limited (supra), the issue decided
was whether an arbitration clause contained in a contract was assignable or
not.
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31. In NBCC (India) Ltd. (supra) it was held that the contract should show
the intention of the parties to incorporate the arbitration clause contained in
another document.
32. Under such circumstances, the application is allowed. Mr. Debjit
Mukherjee, learned Advocate Bar Association, will act as the petitioner’s
nominee. Mr. Rajarshi Datta, learned Advocate will act as the respondent’s
nominee and Mr. Saptansu Basu learned Senior Advocate will act as the
presiding arbitrator. The appointment is subject to compliance of section 12 of
the Arbitration and Conciliation Act, 1996. The learned arbitral tribunal shall
fix their remuneration in terms of the schedule of the Act. All points are left
open to be decided by the learned Tribunal. Objections raised by Mr. Mitra can
be raised before the learned Tribunal.
Urgent Photostat certified copies of this judgment, if applied for, be
supplied to the parties upon fulfillment of requisite formalities.
(Shampa Sarkar, J.)