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Supreme Court of India
Kamal Gupta vs M/S L.R. Builders Pvt. Ltd on 13 August, 2025
Author: Pamidighantam Sri Narasimha
Bench: Pamidighantam Sri Narasimha
REPORTABLE
2025 INSC 975
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
[Arising out of SLP (Civil) Nos. 4775-4779/2025]
KAMAL GUPTA & ANR. APPELLANT(S)
VERSUS
M/S L.R. BUILDERS PVT. LTD & ANR. ETC. RESPONDENT(S)
WITH
CIVIL APPEAL NOS. OF 2025
(Arising out of SLP (CIVIL) Nos. of 2025)
(@ DIARY NO. 9078/2025)
JUDGMENT
ATUL S. CHANDURKAR, J.
1. Leave granted.
2. Two questions arise for consideration in these appeals namely,
(a) Whether it is permissible for a non-signatory to an agreement
leading to arbitration proceedings to remain present in such
Signature Not Verified
Digitally signed by
KAPIL TANDON
Date: 2025.08.13
17:01:55 IST
Reason:
arbitration proceedings?
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 1
(b) After appointment of an arbitrator under Section 11 (6) of the
Arbitration and Conciliation Act, 1996, whether it is permissible
for the Court in such disposed of proceedings to issue any further
ancillary directions concerning the arbitration proceedings that
have commenced pursuant to appointment of the arbitrator?
3. Facts relevant for considering the aforesaid questions are that on
20.06.2015, an oral family settlement was entered into between
members of the Gupta family, namely Pawan Gupta and Kamal
Gupta (hereinafter referred to as ‘PG’ and ‘KG’). The said oral
agreement was said to be reduced in a Memorandum of
Understanding /Family Settlement Deed (hereinafter referred to as
‘the MoU/FSD’) dated 09.07.2019. This MoU/FSD was not signed by
Rahul Gupta, son of KG (hereinafter referred to as ‘RG’). Proceedings
under Section 11(6) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as ‘the Act’) were filed by PG and another
against KG and others seeking appointment of a sole arbitrator for
adjudicating disputes between the parties under the MoU/FSD. In the
proceedings filed under Section 11(6) of the Act, an application for
intervention being I.A. No.13282 of 2023 was filed by RG, a non-
signatory, seeking permission to intervene in the said proceedings so
as to oppose the maintainability of the same. PG and one other also
filed a petition under Section 9 of the Act seeking interim measures
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 2
on the basis of the MoU/FSD dated 09.07.2019. A similar application
for intervention was filed by RG and one other in these proceedings
being I.A. No.12227 of 2023. By the order dated 22.03.2024,
Arbitration Petition No.1010 of 2022 seeking appointment of an
arbitrator as well as OMP(I) (COMM) No.198 of 2023 being the
petition filed under Section 9 of the Act praying for interim measures
came to be decided. A sole arbitrator came to be appointed to
adjudicate the disputes between the parties. The petition filed under
Section 9 of the Act was directed to be treated as an application under
Section 17 of the Act for being decided by the sole arbitrator. As
regards the prayer for permission to intervene in the proceedings was
concerned, the same was not granted by the learned Judge
principally on the ground that such intervention was sought by RG, a
non-signatory to the MoU/FSD. Arbitration Petition No.1010 of 2022
as well as OMP(I) (COMM) No. 198 of 2023 came to be disposed of
accordingly.
4. On 05.08.2024, two non-signatory companies through RG, their
authorized representative filed I.A. No. 37567 of 2024 in the disposed
of Section 11(6) proceedings making the following prayers:
“It is humbly prayed before this Hon’ble Court:
1. Allow this present application of the Intervenor to permit
the intervenor in the arbitration proceedings or to be
present in the Arbitration Proceedings.
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 3
2. Revive the intervention application of the Intervenor as
concession given by the parties in the arbitration is being
violated by themselves
3. Direct the Arbitrator to let the intervenor to have the
access of all pleadings before the Ld. Arbitrator, the orders
passed by the Ld. Arbitrator in the present arbitration
proceedings and also of the arbitration award passed by
the Ld. Arbitrator in the present arbitration proceedings.
4. Any such order which the Court may deem fit and in the
interest of justice.”A similar application being I.A. No.39500 of 2024 seeking
permission to intervene was also filed by RG and nine other non-
signatory companies. Besides the prayer for intervention, a prayer
for recall of the order dated 22.03.2024 appointing a sole arbitrator
was also made.
5. The prayer made by the non-signatory intervenors in I.A. No.35767
of 2024 to remain present in the arbitral proceedings was considered
by the learned Judge. On 07.08.2024, the learned Judge permitted
the non-signatory intervenors to be present, either personally or
through counsel during the course of arbitration.
6. Thereafter, on 12.11.2024 the various applications as filed were
considered. Insofar as the prayer made for recall of the order dated
22.03.2024 was concerned, the learned Judge held that he was not
inclined to recall or review the said order as it was passed by another
learned Judge. Insofar as the prayer for issuing various directions as
made by RG and the other non-signatory companies was concerned,
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 4
it was held that RG could remain present in all future proceedings
before the sole arbitrator. The order dated 07.08.2024 was made
absolute. It was further directed that properties belonging to the
intervenor companies mentioned in Annexure A and B of the
submissions filed by RG would remain outside the process of
arbitration and that the arbitral proceedings qua properties mentioned
in Annexure B would be limited to 77% thereof.
7. The parties to the arbitration proceedings, namely PG and KG are
aggrieved by the aforesaid directions issued by the learned Judge on
12.11.2024 and have thus challenged the same in these appeals.
8. Mr. C. Aryama Sundaram and Mr. V. Giri, learned Senior Advocates
in support of the appeals submitted that the learned Judge had no
jurisdiction whatsoever to entertain the interim applications moved by
the non-signatories to the MoU/FSD after disposal of the proceedings
under Section 11(6) of the Act. After the application filed under
Section 11(6) of the Act was decided on 22.03.2024, the Court
became functus officio and thus had no jurisdiction to entertain the
applications as filed. Referring to the provisions of Section 35 of the
Act, it was urged that the arbitral award that was to be passed in the
arbitration proceedings would bind only the parties to the arbitration
proceedings and persons claiming under said parties. Since the
intervenors were not parties to the MoU/FSD, they would not be
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 5
bound by the award that was to be passed. The direction as issued
in the impugned order permitting the non-signatories to remain
present in the arbitration proceedings therefore was without
jurisdiction. Reference in this regard was made to the decisions in
Nimet Resources Inc. & Anr. v. Essar Steels Ltd., (2009) 17 SCC
313 and In Re: Interplay between Arbitration Agreements under
the Arbitration and Conciliation Act, 1996 and the Indian Stamp
Act, 1899, 2023 INSC 1066. It was further submitted that though the
learned Judge held that the prayer for recall or review of the order
dated 22.03.2024 was not being entertained, he in fact, proceeded to
re-consider the entire matter and issue additional directions. The
original order dated 22.03.2024 was referred to in detail and that
order formed the basis of the impugned directions as issued. It having
been held by the earlier order dated 22.03.2024 that the intervenors
had no right to urge their prayers in said proceedings, the impugned
direction permitting RG to remain present in the arbitration
proceedings amounted to granting relief that was refused earlier. On
this count, it was urged that the impugned order was liable to be set
aside as being without jurisdiction.
9. It was then submitted that permitting a non-signatory to the MoU/FSD
as well as non-party to the arbitration proceedings to remain present
during the course of the arbitration proceedings was beyond the
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 6
provisions of the Act. If a non-signatory was not to be bound by the
arbitral award that was to be passed, there was no justification
whatsoever to permit such non-signatory to remain present during the
arbitral hearings. Reference was made to the provisions of Section
42A of the Act to urge that such direction breached the principle of
confidentiality. The impugned direction also affected the autonomy of
the arbitral process and was beyond the provisions of the Act. The
same was therefore liable to be set aside. It was further submitted
that since the impugned order was without jurisdiction, various
directions issued including the recognition of 23% share of RG in the
family corpus were without jurisdiction. By granting such declaration,
relief was granted to RG which was not permissible in proceedings
that had been disposed of on 22.03.2024 with the appointment of the
sole arbitrator. In fact, the impugned order had proceeded to review
and modify the earlier order that was passed under Section 11(6) of
the Act. On these counts, it was urged that the impugned order was
liable to be set aside.
10. Mr. Amit Sibal and Mr. J. Sai Deepak, learned Senior Advocates as
well as Ms. Bansuri Swaraj learned Advocate for the respondents
supported the impugned order. According to them, since it was found
that there had been breach of the assurance given by PG and KG as
recorded in paragraphs 17 and 18 of the judgment dated 22.03.2024,
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 7
the said fact gave rise to the filing of interim applications by the non-
signatories. The undertakings as given were binding on PG and KG
and it was not permissible for them to take contrary steps in that
regard. It was in these facts that the intervenors had invoked the
provisions of Section 151 of the Code of Civil Procedure, 1908
(hereinafter referred to as ‘the Code’). Though the prayer for recall of
the judgment dated 22.03.2024 was made, that relief was not
granted. The other reliefs granted permitting RG to remain present in
the arbitration proceedings and recognising his 23% rights in the
family properties were based on the undertaking given by the
signatories to the MoU/FSD and thus merely a consequence of the
judgment dated 22.03.2024. None of the directions issued in the
impugned order could be said to be beyond the scope of the Act or
contrary to what was held in the order passed under Section 11(6) of
the Act. The respective rights of the parties would be worked out
before the sole arbitrator. Since jurisdiction under Section 151 of the
Code had been rightly invoked by the Court, there was no reason
whatsoever to interfere with the impugned order. It was thus urged
that the appeals were liable to be dismissed.
11. We have heard the learned counsel for the parties and we have
perused the relevant documentary material on record. In our
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 8
considered view, both the questions as framed have to be answered
in the negative.
12. In proceedings filed under Section 11(6) of the Act seeking
appointment of an arbitrator, the respondents had made a prayer for
intervention. The said prayer was duly considered by the learned
Judge while appointing a sole arbitrator on 22.03.2024. While
declining the prayer for intervention, it was specifically held that the
apprehension expressed by the intervenors that in the proposed
arbitration proceedings the parties would deal with the properties of
the intervenors was misplaced. It was further observed that even if it
was assumed that the sole arbitrator was to deal with the properties
of the intervenors, the resultant arbitral award would not be binding
on them. It was thus held in clear terms that the presence of the
intervenors before the sole arbitrator was not essential for
adjudication of disputes between the parties to the MoU/FSD, namely
PG and KG. In express terms, the intervention applications filed in
the arbitration petition as well as similar applications filed in
proceedings under Section 9 of the Act came to be dismissed as can
be seen in paragraph 34 of the judgment dated 22.03.2024.
13. It is not in dispute that RG and the other intervenors are not
signatories to the MoU/FSD that has given rise to the arbitration
proceedings. The provisions of Section 35 of the Act are clear
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 9
inasmuch as an award passed would only bind parties to the
arbitration and persons claiming under them. The expression ‘party’
has been defined by Section 2(h) of the Act to mean a party to an
arbitration agreement. By virtue of the order passed under Section
11(6) of the Act, the sole arbitrator is empowered to adjudicate the
disputes between the signatories to the MoU/FSD. Once it is clear
that the arbitral award would not bind non-parties to the said
MoU/FSD as such parties were not signatories to the said
documents, there would be no legal basis whatsoever to permit a
non-signatory to the MoU/FSD to remain present in the proceedings
before the sole arbitrator. When the arbitration proceedings can take
place only between parties to an arbitration agreement and Section
35 of the Act does not make the arbitral award to be passed binding
on non-signatories to such agreement, we do not find any legal right
conferred by the Act that would enable a non-party to the agreement
to remain present in arbitration proceedings between signatories to
the agreement. It is not the case of any of the parties to the MoU/FSD
that RG and the intervenors were claiming through any of them in the
context of Section 35 of the Act. The parties to the agreement being
bound by the terms of the agreement and the sole arbitrator being
required to resolve the disputes between parties to the agreement, a
non-signatory to the agreement would be a stranger to such
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 10
arbitration proceedings. Permitting a stranger to remain present in the
arbitration proceedings especially when the award to be passed
would not be binding on such stranger would be charting a course
unknown to law. The remedy, if any, to a party who is not a signatory
to the agreement is available under Section 36 of the Act if such
award is sought to be enforced against him.
14. At this stage, it is necessary to refer to the provisions of Section 42A
of the Act. The arbitrator, the arbitral institution and the parties to the
arbitration agreement have to maintain confidentiality of all arbitral
proceedings. The legislative intent behind maintaining confidentiality
of information is quite clear. Permitting a stranger to the arbitration
proceedings to remain present and observe the said proceedings
would result in breach of the provisions of Section 42A of the Act.
Even on this count the impugned order cannot be sustained.
15. We are therefore of the view that the permission granted to RG, a
non-signatory to remain present in all proceedings before the sole
arbitrator is without jurisdiction as well as beyond the scope of the
Act. The first question stands answered accordingly.
16. It can be seen from the record that the application under Section 11(6)
of the Act came to be filed on 22.08.2022. The appointment of a sole
arbitrator was sought in terms of Clause 16 of the MoU/FSD dated
09.07.2019. Admittedly, RG and the other intervenors were not
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 11
parties to the aforesaid MoU/FSD and hence they were not parties to
the application filed under Section 11(6) of the Act. RG and the other
intervenors therefore on 13.07.2023 filed I.A. No.13282 of 2024 with
a prayer seeking permission to intervene in the proceedings filed
under Section 11(6) of the Act.
17. It is to be noted that a separate application under Section 9 of the Act
also came to be filed on 13.06.2023 with a prayer to restrain the
parties to the MoU/FSD from creating any third party rights or from
alienating the immovable properties that were subject matter of the
MoU/FSD. In the said proceedings, a similar application came to be
filed by RG and other intervenors seeking leave to intervene in those
proceedings vide I.A. No.12227 of 2023. The petition filed under
Section 11(6) of the Act bearing Arbitration Petition No.1010 of 2022
as well as the petition filed under Section 9 of the Act bearing OMP(I)
(COMM) No.198 of 2023 were heard and decided together by the
learned Single Judge on 22.03.2024. Insofar as the prayer for
appointment of an arbitrator was concerned, a retired judge of this
Court was appointed as the sole arbitrator. Insofar as the application
filed under Section 9 of the Act was concerned, it was directed that
the same be treated as an application under Section 17 of the Act for
being decided by the sole arbitrator. Accordingly, Arbitration Petition
No.1010 of 2022 and OMP(I) (COMM) No.198 of 2023 came to be
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 12
disposed of. This would indicate that no further proceedings were
pending on 22.03.2024 after disposal of the same.
18. It appears from the record that much thereafter on 05.08.2024, RG
and other intervenors herein filed I.A. No.37567 of 2024 in the
disposed of proceedings seeking permission to remain present in the
arbitration proceedings. A similar application seeking permission to
intervene was also filed in OMP(I)(COMM) No.198 of 2023. Besides
the prayer for intervention, a prayer for recall of the order dated
22.03.2024 was also made by virtue of I.A. No.39500 of 2024.
19. In this regard, it may be stated that when the application filed under
Section 11(6) of the Act came to be decided on 22.03.2024 and
Arbitration Petition No.1010 of 2022 came to be disposed of, there
was no question of entertaining any prayer for permission to
intervene in the arbitration proceedings. The sole arbitrator having
been appointed by virtue of the power conferred by Section 11(6) of
the Act on 22.03.2024, the Court did not have any further jurisdiction
to entertain a fresh application with a prayer for permission to remain
present in the arbitration proceedings. In our view, Interim Application
No.37567 of 2024 preferred by the respondents in the disposed
proceedings was not liable to be entertained since the Court had
become functus officio on the conclusion of the proceedings filed
under Section 11(6) of the Act to consider such prayer. This aspect
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 13
goes to the root of the matter and it is evident that the learned Judge
committed an error in entertaining the Interim Application with a
prayer for intervention much after disposal of the main proceedings
in which the sole arbitrator was appointed.
20. It can be gathered from the order dated 07.08.2024 that RG and other
non-signatories were aggrieved by the action of the signatories in
dealing with one of the properties that was the subject matter of the
undertaking given by them. Assuming the apprehension of RG and
other non-signatories to be bonafide, we do not find that it can justify
the direction to permit a non-signatory to remain present in the
arbitration proceedings. It must be stated that the learned Judge was
cognizant of the fact that the Act does not envisage an observer in
arbitral proceedings as can be seen from the observations in
paragraph 19 of the order dated 07.08.2024. Despite that, such
permission has been granted. The direction, even if well-intentioned,
does not have any statutory support.
21. The matter can be viewed from another angle. Section 5 of the Act
restricts the extent of judicial intervention making it permissible only
where it is so provided in Part-I of the Act. In paragraph 80, the
Constitution Bench in Re: Interplay (supra) held as under:
“80. Section 5 has two facets — positive and negative. The
positive facet vests judicial authorities with jurisdiction over
arbitral proceedings in matters expressly allowed in or dealtCIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 14
with under Part I of the Arbitration Act. The flip side to this
approach is that judicial authorities are prohibited from
intervening in arbitral proceedings in situations where the
Arbitral Tribunal has been bestowed with exclusive
jurisdiction. This is the negative facet of Section 5. The non
obstante clause limits the extent of judicial intervention in
respect of matters expressly provided under the Arbitration
Act. [Secur Industries Ltd. v. Godrej & Boyce Mfg. Co. Ltd.,
(2004) 3 SCC 447] In Bhaven Construction v. Sardar
Sarovar Narmada Nigam Ltd. (2022) 1 SCC 75, a Bench of
three Judges of this Court observed that the
“non obstante clause is provided to uphold the
intention of the legislature as provided in the
Preamble to adopt UNICITRAL Model Law and
Rules, to reduce excessive judicial interference which
is not contemplated under the Arbitration Act.”
It was further observed that every provision of the Act ought tobe construed in view of Section 5 to give true effect to the legislative
intention of minimal judicial intervention.
22. The Constitution Bench further held that the Act is a self-contained
Code with regard to matters dealing with appointment of arbitrators,
commencement of arbitration, making of an award and challenges to
the arbitral award as well as execution of such awards. In paragraph
85, it was stated as under:
“85. The Arbitration Act is a self-contained code inter alia
with respect to matters dealing with appointment of
arbitrators, commencement of arbitration, making of an
award and challenges to the arbitral award, as well as
execution of such awards. [Pasl Wind Solutions (P) Ltd. v.
GE Power Conversion (India) (P) Ltd., (2021) 7 SCC 1;
Kandla Export Corpn. v. OCI Corpn., (2018) 14 SCC 715CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 15
When a self-contained code sets out a procedure, the
applicability of a general legal procedure would be impliedly
excluded. [Subal Paul v. Malina Paul, (2003) 10 SCC 361]
Being a self-contained and exhaustive code on arbitration
law, the Arbitration Act carries the imperative that what is
permissible under the law ought to be performed only in the
manner indicated, and not otherwise. Accordingly, matters
governed by the Arbitration Act such as the arbitration
agreement, appointment of arbitrators and competence of
the Arbitral Tribunal to rule on its jurisdiction have to be
assessed in the manner specified under the law. The
corollary is that it is not permissible to do what is not
mentioned under the Arbitration Act. Therefore, provisions of
other statutes cannot interfere with the working of the
Arbitration Act, unless specified otherwise.”
23. It thus becomes clear that firstly, the sole arbitrator having been
appointed under Section 11(6) of the Act on 22.03.2024, nothing
further was required to be done in exercise of jurisdiction under
Section 11(6) thereafter. The prayer made by RG and other
intervenors to permit them to remain present in the arbitration
proceedings before the sole arbitrator was not liable to be entertained
as such request went beyond the scope of Section 11(6) of the Act.
The provisions of Section 151 of the Code could not have been
invoked in this regard. Further, the Court had become functus officio
after the sole arbitrator was appointed and the proceedings under
Section 11(6) of the Act had been disposed of. Even the spirit of
Section 5 of the Act precluded the Court from entertaining such
request which does not find place in Part-I of the Act. Moreover, the
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 16
impugned direction runs counter to Section 42A of the Act. The
second question stands answered accordingly.
24. For all the aforesaid reasons, in our view the applications filed by RG
and other non-signatory companies in the disposed of proceedings
were misconceived. The attempt on their behalf to re-open the
proceedings amounted to an abuse of the process of law. The
applications deserved outright rejection. The learned Judge erred in
entertaining the same on merits.
25. Accordingly, the order dated 12.11.2024 passed on the various
interim applications is set aside. The parties to the present
proceedings are free to work out their rights in accordance with the
order dated 22.03.2024. The appeals are allowed in aforesaid terms.
The respondents shall pay costs quantified at Rs.3,00,000/- (Rupees
Three Lakhs) to the Supreme Court Advocates On-Record
Association within a period of two weeks.
……………………………..……………..J.
[PAMIDIGHANTAM SRI NARASIMHA]
…………………………….……………..J.
[ATUL S. CHANDURKAR]
NEW DELHI,
AUGUST 13, 2025.
CIVIL APPEALS ARISING OUT OF SLP (C) NOS.4775-4779 OF 2025 17
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