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TMI Blog2024 (2) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... ement as they are connected with the loan documents and form part of the loan transaction as in one way or the other, they have assured the petitioner regarding the execution of the loan documents and provided a security to the petitioner towards the loan transaction. Further, the fact that whether the respondent Nos. 3 to 5 can be bound by the Loan Agreement and can be impleaded as parties to the arbitral proceedings is left open for the to Arbitral Tribunal decide. Also, the Arbitral Tribunal will also decide whether M/s SMC Global Securities Limited is a proper and necessary party to the arbitral proceedings. Justice Ali Mohammad Magray (Retd.) (Chief Justice of J K) is appointed as a Sole Arbitrator to adjudicate the disputes between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued loan recall notice invoking arbitration on 27.04.2023 to the respondents. 5. Learned counsel further states that the respondent Nos. 3 to 5 needs to be impleaded as parties to the arbitration proceedings as they are signatories with the Loan Agreement. He further submits that the present case is squarely covered by the judgement of Cox Kings Ltd. v. SAP India (P) Ltd., 2023 SCC OnLine SC 1634. 6. Mr. Jha, learned counsel for the respondents states that the respondent Nos. 3 to 5 are not signatory to the arbitration agreement and cannot be part of the arbitration proceedings. 7. He further states that the only parties who are signatory to the arbitration agreement can be involved in the arbitration proceedings and in case the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution Bench has been primarily called upon to determine the validity of the group of companies doctrine in Indian arbitration jurisprudence. However, there are other broad ancillary issues which have been raised by the learned counsel. These include : (i) whether the Arbitration Act allows joinder of a non-signatory as a party to an arbitration agreement; and, (ii) whether Section 7 of the Arbitration Act allows for determination of an intention to arbitrate on the basis of the conduct of the parties. This Bench will address the issues arising out of the order of reference as well as the abovementioned ancillary issues in due course. . 157. When deciding the referral issue, the scope of reference under both Sections 8 and 11 is limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Aksh Optifibre Ltd., this Court observed that there are distinct advantages to leaving the final determination on matters pertaining to the validity of an arbitration agreement to the tribunal: 74. [ ] Even if the Court takes the view that the arbitral agreement is not vitiated or that it is not valid, inoperative or unenforceable, based upon purely a prima facie view, nothing prevents the arbitrator from trying the issue fully rendering a final decision thereupon. If the arbitrator finds the agreement valid, there is no problem as the arbitration will proceed and the award will be made. However, if the arbitrator finds the agreement invalid, inoperative or void, this means that the party who wanted to proceed for arbitration was give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an arbitration agreement to be decided by arbitral tribunal under Section 16. 165. In view of the discussion above, we arrive at the following conclusions: a. The definition of parties under Section 2(1)(h) read with Section 7 of the Arbitration Act includes both the signatory as well as non-signatory parties; b. Conduct of the non-signatory parties could be an indicator of their consent to be bound by the arbitration agreement; c. The requirement of a written arbitration agreement under Section 7 does not exclude the possibility of binding nonsignatory parties; d. Under the Arbitration Act, the concept of a party is distinct and different from the concept of persons claiming through or under a party to the arbitration agreement; e. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the referral court should leave it for the arbitral tribunal to decide whether the non-signatory is bound by the arbitration agreement; and m. 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 nonsignatories to the arbitration agreement. (emphasis added) 15. A perusal of the above judgment reflects that the Court in Section 11 jurisdiction is only required to see the existence of the arbitration clause and the issue of non signatory party shall be left open for the arbitral tribunal to decide. 16. Learned counsel for the parties are not disputing the existence o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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