Punjab-Haryana High Court
State Of Punjab vs Wipro Limited And Others on 20 July, 2026
CWP-13133-2026 (O&M) [1]
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-13133-2026 (O&M)
Reserved on: 26.05.2026
Pronounced on: 20.07.2026
Uploaded on: 21.07.2026
State of Punjab .........Petitioner
Versus
Wipro Limited and others ......Respondents
CORAM : HON’BLE MR. JUSTICE VIKRAM AGGARWAL
Argued by: Mr. Maninderjit Singh Bedi, Senior Advocate,
Advocate General, Punjab with
Mr. Sangam Garg, Advocate, &
Ms. Kavita Joshi, Advocate, for the petitioner.
Mr. Puneet Bali, Senior Advocate, with
Ms. Pragya Chauhan, Advocate,
Mr. Rohit Khanna, Advocate &
Mr. Saurabh Gautam, Advocate,
for respondent No.1.
VIKRAM AGGARWAL, J
The petitioner (State of Punjab) has instituted the
instant writ petition under Article 226/227 of the Constitution of
India seeking the issuance of a writ of Certiorari quashing the
order dated 19.03.2026 (Annexure P.26) passed by the learned
Sole Arbitrator, vide which the decision on the application
preferred by the petitioner under Section 16 of the Arbitration
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CWP-13133-2026 (O&M) [2]
and Conciliation Act, 1996 (for short `the 1996 Act’), has been
deferred to the final stage i.e. the stage of passing of the Award.
2. Shorn of unnecessary details, the facts as, emanating
from the petition are that on 16.02.2011, a Master Services
Agreement (for short `the MSA’) (Annexure P.1) was executed
between respondent No.1 (Wipro Limited) and respondent No.2
(Excise and Taxation Technical Services Agency). Respondent
No.2 was desirous of getting the project of e-Governance in its
department implemented. Thereafter, pursuant to it having
been notified by way of the tendering process, the MSA was
executed.
2.1 Since as per respondent No.2, respondent No.1
failed to complete the project within the stipulated contractual
timeline, a termination notice dated 11.01.2017 (Annexure P.2)
was issued to respondent No.1. This led to the filing of CWP-
COM-4-2017 by respondent No.1. During the pendency of the
same, the MSA was terminated pursuant to which, CWP-COM-
11-2017 was instituted by respondent No.1.
2.2 Vide order dated 24.01.2017 (Annexure P.4), both
writ petitions were dismissed in view of the remedy of arbitration
being available.
2.3 Aggrieved by the aforesaid decisions, appeals were
filed by respondent No.1, which were later withdrawn on
12.09.2018.
2.4 Subsequently, a petition under Section 9 of the 1996
Act was also instituted by respondent No.1, which was
dismissed, leading to the filing of FAO-3978-2018 in this Court.
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CWP-13133-2026 (O&M) [3]
It is the case of the petitioner that in all these cases, the
petitioner was not impleaded as a party.
2.5 Eventually, upon an application under Section 11 of
the 1996 Act having been filed, Hon’ble Mr. Justice V.N. Khare,
former Chief Justice of India, was appointed as a Sole Arbitrator
vide order dated 08.02.2019 (Annexure P.9). Pursuant to the
same, respondent No.1 filed its Statement of Claim in which,
apart from respondent No.2, the present petitioner was also
impleaded as a party.
2.6 As a result, the petitioner instituted an application
under Section 16 of the 1996 Act (Annexure P.10) seeking
deletion of its name on the ground that no contractual
relationship existed between the petitioner and respondent No.1
and the same existed only between respondent No.1 and
respondent No.2.
2.7 The said application was opposed by way of a reply
(Annexure P.11) followed by a rejoinder (Annexure P.12).
2.8 An application under Section 24 of the 1996 Act
(Annexure P.14) was also instituted by respondent No.1, seeking
permission to lead oral evidence and requesting that the deletion
application be deferred to the final stage of the proceedings.
Reply to the application was filed by the petitioner.
2.9 Vide order dated 09.01.2021 (Annexure P.16),
learned Arbitral Tribunal, allowed the application for deletion
and rejected the application under Section 24 of the 1996 Act.
An appeal was preferred against the said order, which was
dismissed by the Court of Additional District Judge, Patiala on
17.02.2022 (Annexure P.17). Aggrieved by the same, respondent
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CWP-13133-2026 (O&M) [4]
No.1 filed SLP(C) 11386-2022. The said application was disposed
of vide order dated 11.12.2024 (Annexure P.18) with the consent
of learned counsel for the parties and the matter was remitted to
the learned Arbitral Tribunal, for reconsideration of the deletion
application. The application under Section 24 of the 1996 Act
was also revived and it was ordered that the said application
would also be decided by the learned Tribunal.
3. Pursuant thereto, the matter was considered by the
learned Arbitral Tribunal and vide order dated 19.03.2026
(Annexure P.26), the learned Arbitral Tribunal deferred the
decision on the application under Section 16 of the 1996 Act to
the final stage and called upon the petitioner to file its statement
of defence, whereafter evidence would be led.
4. Aggrieved by the aforesaid decision, the instant writ
petition has been instituted.
5. Learned Advocate General, Punjab and Shri Puneet
Bali, learned Senior counsel representing respondent No.1-
caveator, were heard.
5.1 It was strenuously urged by learned Advocate
General, Punjab that the learned Arbitral Tribunal has gravely
erred in deferring the decision on the application to the final
stage. Referring to the order dated 11.12.2024 passed by the
Apex Court, he submitted that the direction of the Apex Court
was to decide the application and not to defer the same till the
final stage. Learned Advocate General, Punjab, also referred to
Article 229 of the Constitution of India and submitted that in
any case, the State of Punjab could not have been impleaded as
a party.
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CWP-13133-2026 (O&M) [5]
5.2 Learned Advocate General, Punjab, also referred to
the chronology of events, starting from the execution of the MSA
and submitted that the State of Punjab had no role to play and,
therefore, the learned Arbitral Tribunal erred in not considering
that there was no occasion for the petitioner to participate in the
entire arbitral proceedings and that a decision on the application
under Section 16 of the Act, should have been taken.
5.3 In support of his contentions, learned Advocate
General placed reliance upon the judgments of the Apex Court in
Bihar Eastern Gangetic Fishermen Co-operative Society
Limited Vs. Sipahi Singh and others, (1977)4 SCC 145; State
of Punjab and others Vs. M/s Om Parkash Baldev Krishan,
1988 (Supp) SCC 722; Bhikraj Jaipuria Vs. Union of India,
AIR 1962 SC 113; Mulamchand Vs. State of Madhya Pradesh,
(1968)3 SCR 214; K.P. Chowdhry Vs. State of Madhya
Pradesh, (1996)3 SCR 919; State of Punjab and others Vs.
Dhanjit Singh Sadhu, (2014) 15 SCC 144; Bhaven
Construction through Authorised Signatory Premjibhai K.
Shah Vs. Executive Engineer, Sardar Sarovar Narmada
Nigam Limited and another, (2022)1 SCC 75; Punjab State
Power Corporation Limited Vs. Emta Coal Limited and
another, (2020)17 SCC 93 and Deep Industries Limited Vs.
Oil and Natural Gas Corporation Limited and another,
(2020)15 SCC 706 and the judgments of the Bombay High
Court in Sudhir Joshi Vs. Rajesh Khandelwal and others,
MANU/MH/8738/2025 and Shri Guru Gobind Singhji
Institute of Engineering and Technology Vs. M/s Kay Vee
Enterprises, 2024:BHC-AUG:28934 and Delhi High Court in
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Surender Kumar Singhal & others Vs. Arun Kumar Bhalotia
& Others, 2021 SCC OnLine Del 3708.
6. Shri Puneet Bali, learned Senior counsel representing
respondent No.1 submitted that there is no illegality in the
impugned order. It was submitted that the State of Punjab
cannot contend that it is in no way concerned with respondent
No.1. Reference was made to the MSA, wherein it has been
recorded that respondent No.2 is a Government of Punjab
Undertaking. He further submitted that the learned Arbitral
Tribunal has not rejected the application and has only deferred
its decision to the final stage to ascertain the issue as extensive
evidence would have to be led. It was submitted that the
decision of the learned Arbitral Tribunal is in accordance with
the law laid down by the Apex Court in Cox and Kings Ltd. Vs.
SAP India Pvt. Ltd. and another, (2025)1 SCC 611.
6.1 Learned Senior counsel also referred to various other
clauses of the MSA and submitted that the State of Punjab
would be a necessary party.
6.2 Learned Senior counsel also submitted that the order
passed by the Arbitral Tribunal could not be challenged under
Article 226 or 227 of the Constitution of India in view of the
provisions of Section 5 of the 1996 Act and the law on the
subject.
6.3 In support of his contentions, learned Senior counsel
placed reliance upon the judgments of the Apex Court in Deep
Industries Limited Vs. Oil and Natural Gas Corporation
Limited, (2020) 15 SCC 706; Punjab State Power Corporation
Limited Vs. EMTA Coal Limited, (2020)17 SCC 93; Bhaven
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Construction through Authorised Signatory Premjibhai K.
Shah Vs. Executive Engineer, Sardar Sarovar Narmada
Nigam Limited, (2022)1 SCC 75; Serosoft Solutions Pvt. Ltd.
Vs. Dexter Capital Advisors Pvt. Ltd., 2025 SCC OnLine SC
22; Cox and Kings Ltd. Vs. SAP India Pvt. Ltd. and another,
(2025)1 SCC 611; ASF Buildtech Pvt. Ltd. Vs. Shapoorji
Pallonji & Co. Pvt. Ltd., (2025)9 SCC 76; Maharshi Dayanand
University and others Vs. Anand Cooperative Society Ltd.,
(2007)5 SCC 295 and Cox and Kings Limited Vs. SAP India
Private Limited and another, (2024)4 SCC 1 and the
judgments of Delhi High Court in Steel Authority of India Ltd.
and others Vs. Indian Council of Arbitration and others,
MANU/DE/4181/2013; Meera Goyal Vs. Priti Saraf,
MANU/DE/0607/2020 and Shri Pankaj Arora Vs. AVV
Hospitality LLP & others, (OMP(T) (COMM.)32/2020 decided
on 20.07.2020) and the judgment of the High Court of Orissa at
Cuttack in Mahanadi Coalfields Limited and another Vs. Shri
Ram Construction, Phularitand, Kharkharee, Dhanbad,
Jharkhand (ARBA No. 1 of 2006 decided on 02.02.2023).
7. I have considered the submissions made by learned
Advocate General, Punjab and learned Senior counsel for
respondent No.1.
8. When the matter reached the Apex Court, it was
disposed of with the consent of both parties vide order dated
11.12.2024 (Annexure P.18);
“Leave granted.
2. The appellant/claimant and the first respondent is
engaged in arbitration proceedings. The genesis of the
controversy in this case arises from an application filed by
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CWP-13133-2026 (O&M) [8]parties as respondent No.2 in the Statement of Claim filed
by the appellant/claimant. By the said application, the
State of Punjab prayed that its name be struck of by the
Arbitral Tribunal as it is not a party to the Arbitration
Agreement or even otherwise in anyway concerned with
the arbitration. 3. By the order of the learned sole
Arbitrator dated 09.01.2021, the application filed by the
State of Punjab was allowed and deletion of its name from
the array of parties in the Statement of Claim was
permitted. Consequently, the name of State of Punjab
arrayed as respondent No.2 in the Claim Petition was
struck off from the array of parties. As a result, another
application filed by the claimant under Section 24 of the
Arbitration and Conciliation Act was disposed of as being
otiose. The said order was assailed by the appellant herein
before the Court of District Judge, Patiala in Arbitration
Case No.41/2021 under Section 37(2)(a) of the Arbitration
and Conciliation Act, 1996. The said appeal was considered
by the learned District Judge, Patiala and by judgment
dated 17.02.2022, the appeal was dismissed, sustaining
the order of the learned Arbitrator dated 09.01.2021. Being
aggrieved by the aforesaid two orders, this appeal has been
preferred before this Court.
4. We have heard learned senior counsel, Mr. Parag P.
Tripathi for the appellant and learned AAG/Sr. Advocate,
Mr. Shadan Farasat for second respondent-State and
learned counsel, Mr. Pradyuman Sewar for respondent No.1
and perused the material on record.
5. During the course of submissions, it was brought to
our notice that the earlier decision of judgment of this
Court in Chloro Controls India (P) Ltd. vs. Severn Trent
Water Purification Inc. (2013) 1 SCC 641 (“Chloro Controls
India (P) Ltd.”) was reconsidered by a Constitution Bench
of five learned Judges in Cox and Kings Limited vs. SAP
India Private Limited & Another, (2024) 4 SCC 1 (“Cox and
Kings Limited”). The conclusions in the aforesaid
judgment are at ‘paragraph 170’ which is extracted herein
for immediate reference:
“170. In view of the discussion above, we arrive at the
following conclusions:
170.1. 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;
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CWP-13133-2026 (O&M) [9]
170.2. Conduct of the non-signatory parties could be an
indicator of their consent to be bound by the arbitration
agreement;
170.3. The requirement of a written arbitration agreement
under Section 7 does not exclude the possibility of binding
non-signatory parties;
170.4. 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;
170.5. The underlying basis for the application of the
Group of Companies doctrine rests on maintaining the
corporate separateness of the group companies while
determining the common intention of the parties to bind
the non-signatory party to the arbitration agreement;
170.6. The principle of alter ego or piercing the corporate
veil cannot be the basis for the application of the Group of
Companies doctrine;
170.7. The Group of Companies doctrine has an
independent existence as a principle of law which stems
from a harmonious reading of Section 2(1)(h) along with
Section 7 of the Arbitration Act;
170.8. To apply the Group of Companies doctrine, the
Courts or tribunals, as the case may be, have to consider
all the cumulative factors laid down in Discovery
Enterprises [ONGC Ltd. v. Discovery Enterprises (P) Ltd.,
(2022) 8 SCC 42 : (2022) 4 SCC (Civ) 80] . Resultantly, the
principle of single economic unit cannot be the sole basis
for invoking the Group of Companies doctrine;
170.9. The persons “claiming through or under” can only
assert a right in a derivative capacity;
170.10. The approach of this Court in Chloro
Controls [Chloro Controls India (P) Ltd. v. Severn Trent
Water Purification Inc., (2013) 1 SCC 641 : (2013) 1 SCC
(Civ) 689] to the extent that it traced the Group of
Companies doctrine to the phrase “claiming through or
under” is erroneous and against the well-established
principles of contract law and corporate law;
170.11. The Group of Companies doctrine should be
retained in the Indian arbitration jurisprudence
considering its utility in determining the intention of the
parties in the context of complex transactions involving
multiple parties and multiple agreements;
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.”
6. One of the submissions advanced at the bar was that
since the impugned order of the learned Arbitrator was
during the regime of the dictum of this Court in Chloro
Controls India (P) Ltd. and now in Cox and Kings Limited,
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CWP-13133-2026 (O&M) [10]
there has been a crystallization of the law, therefore, the
matter could be remanded to the learned Arbitrator for
reconsideration of the application filed by the second
respondent-State of Punjab vis a-vis its deletion from the
array of parties in the claim made by the appellant herein.
7. Learned AAG appearing for the second respondent-
State of Punjab submitted that without going into the
merits of the issue if the matter is to be reconsidered by
the learned Arbitrator possibly the State of Punjab may not
have any serious objection in that regard.
8. Learned counsel for the first respondent who is a
party to the arbitration proceeding also submitted that
appropriate orders may be made in the matter.
9. Consequently, we find that interest of justice would
be sub-served if the matter is remanded to the learned
arbitrator to reconsider the application filed by the second
respondent State of Punjab vis-a-vis its deletion from the
array of parties in the Claim Petition filed by the appellant
herein in light of the judgments of this Court including the
latest judgment of this Court in Cox and Kings Limited. As
a consequence of the aforesaid directions, the impugned
order passed by the learned Additional District Judge,
Patiala, Punjab in Arbitration Case No.41/2021 dated
17.02.2022 as well as the order dated 09.01.2021 passed
by the learned Sole Arbitrator, are set-aside with a request
to reconsider the said application having regard to the
dicta of this Court and in accordance with law.
10. We say that we have not expressed anything on the
merits of the application filed by the second respondent
seeking deletion from the array of parties in the Claim
Statement. All contentions on both sides are left open.
11. Consequently, the application filed by the appellant
herein under Section 24 of the Arbitration and
Conciliation Act also stands revived and to be disposed of
along with the application filed by the State of Punjab, in
accordance with law.
This appeal is disposed of in the aforesaid terms.
No costs.
Pending application(s), if any, shall stand disposed
of.”
9. Pursuant to the order of the Apex Court, the Arbitral
Tribunal held as under:-
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"4.14 In these circumstances, the Tribunal is satisfied,
given the complexity involved in determination of
Respondent No.2’s role in the facts of the present arbitral
matter, that it would be appropriate to allow the parties to
lead their respective evidence before taking up the issue of
deletion of Respondent No.2 from the array of parties. This
aspect is also strengthened by the Supreme Court Order by
way of which the Claimant’s Application for leading
evidence has been revived by the Supreme Court.
4.15 The submission of the Ld. Advocate General that
permitting evidence to be led would amount to subjecting
a non-signatory to prolonged arbitral proceedings also
requires consideration. It is true that jurisdictional
objections ought not to be rendered illusory. However, as
noticed above, the Supreme Court itself has contemplated
that such objections may, in appropriate cases, require
evidentiary examination.
4.16 It is to be highlighted at this stage that if after
evidence is led and the matter is finally heard, the
Tribunal concludes that Respondent No.2 is required to be
deleted from the array of parties, appropriate orders as to
costs can be passed so as to compensate Respondent No.2
for any inconvenience or expense occasioned by its
participation in the proceedings. The Act vests the
Tribunal with sufficient discretion in this regard.
4.17 On the other hand, to decide the Application for
Deletion at this stage without first permitting the parties
to adduce evidence, especially in a matter where the
Supreme Court has itself emphasised the complexity of the
nature of the inquiry, may not be consistent with the
approach laid down in Cox & Kings. The Tribunal is of the
considered view that such an approach would not be
consistent with the spirit of the remand order.
4.18 It is clarified that after evidence is led on all issues,
including the issue of deletion, the Tribunal shall while
rendering the final award, first determine the objection of
Respondent No.2 relating to its jurisdiction and status as a
non-signatory. Only thereafter, the Tribunal would proceed
to adjudicate upon the merits of the claims and
counterclaims in accordance with the principle enunciated
in Maharshi Dayanand University.
4.19 The Tribunal is also mindful of the submission made
on behalf of Ld. AG that, having regard to Article 299 of
the Constitution of India, the Spate of Punjab cannot in
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CWP-13133-2026 (O&M) [12]
law be treated as a party to the MSA or the arbitration
agreement. The said contention raises important legal
issues. However, whether the Constitutional requirements
were satisfied, whether Respondent No.1 acted with the
requisite authority, and what legal consequences, if any,
arise from the conduct alleged by the Claimant, cannot be
determined in isolation from the factual record. At this
stage, the Tribunal does not consider it appropriate to
express any view on the merits of that contention, which
shall remain open for consideration at the stage of final
determination.
4.20 In view of the above discussion, and having regard to
(i) the absence of any statutory mandate requiring
immediate adjudication of the Application for Deletion; (i)
the procedural autonomy of the Tribunal under Section 19
of the Act; (ii) the complex nature of inquiry contemplated
under Cox & Kings; and (iv) the availability of
compensatory costs as a safeguard against prejudice, the
Tribunal is of the considered view that the Application for
Deletion need not be decided as a preliminary issue at this
stage and may appropriately be determined after the
parties have led evidence on all their claims and counter –
claims.
4.21 Needless to state, nothing contained in this order
would be tantamount to any finding that Respondent No.2
is bound by the arbitration agreement. Its objection to
jurisdiction remains open in its entirety. The present order
is confined to the limited issue taken up with the consent
of the parties as to the stage at which the issue of deletion
is to be decided.
5. In view of the analysis and reasoning above, the
Tribunal directs that the Application for Deletion filed by
Respondent No.2 would be taken up at the stage of
rendering the final award after the parties have led
evidence in this arbitral matter. The Application for
leading evidence filed by the Claimant stands disposed of
in the terms above.
5.1 Resultantly, it is directed that Respondent No.2 shall
file, provisionally, its Statement of Defence and Counter –
Claim, if any, within a period of 4 weeks from the date of
pronouncement of this order. The Claimant shall file its
reply within 3 weeks thereafter. Rejoinder, if any, may be
filed within 2 weeks thereafter.”
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10. In Cox and Kings (2) (supra), the Apex Court, held
as under:-
“34. Further, on the issue of impleadment of Respondent
2, which is not a signatory to the arbitration agreement,
elaborate submissions have been made on both the sides,
placing reliance on terms of the agreements, email
exchanges, etc. In view of the complexity involved in the
determination of the question as to whether Respondent 2
is a party to the arbitration agreement or not, we are of
the view that it would be appropriate for the Arbitral
Tribunal to take a call on the question after taking into
consideration the evidence adduced before it by the parties
and the application of the legal doctrine as elaborated in
the decision in Cox & Kings.”
11. Still further, in the case of ASF Buildtech (supra), it
was held by the Apex Court as under:-
“115. This hands-off approach of Referral Courts in relation
to the question of whether a non-signatory is a veritable
party to the arbitration agreement or not was reiterated in
Cox & Kings (2), wherein one of us, (J.B. Pardiwala, J.),
observed that once an Arbitral Tribunal stands constituted,
it becomes automatically open to all parties to raise any
preliminary objections, including preliminary objections
touching upon the jurisdiction of such tribunal, and to
seek an early determination thereof. Consequently, the
issue of impleadment of a non-signatory was deliberately
left for the Arbitral Tribunal to decide, after taking into
consideration the evidence adduced before it by the parties
and the principles enunciated under Cox & Kings (I).
116. Similarly, in Ajay Madhusudan it was held that since
a detailed examination of numerous disputed questions of
fact was required for determining whether the non-
signatory is a veritable party to the arbitration agreement,
the same cannot be examined in the limited jurisdiction
under Section 11 of the 1996 Act as it would tantamount
to a mini trial. Accordingly, the Arbitral Tribunal was
found to be the appropriate forum for deciding the said
issue on the basis of the evidence that may be adduced by
the parties.
117. This approach is necessitated by the inherent
complexity involved in determining whether a non-
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CWP-13133-2026 (O&M) [14]agreement, a determination that hinges upon a
multiplicity of factual aspects and demands a high
threshold of satisfaction based on a cumulative and
holistic evaluation of the entire factual matrix. Such an
intricate and evidence driven exercise makes the Arbitral
Tribunal the most appropriate forum to adjudicate the
matter, as it possesses the institutional advantage of
conducting a comprehensive scrutiny of all evidences and
materials adduced by the parties.”
12. If one examines the matter in its entirety, it emerges
that it was previously held that while deciding the application
under Section 11 of the 1996 Act, the Referral Court should not
decide about the issue as to whether a non signatory to an
arbitral agreement could be or could not be considered a
veritable party and the said exercise would have to be conducted
by the Arbitral Tribunal since evidence was required to be led on
the said issue.
13. Recently, the Apex Court, after considering the
judgments in Cox and Kings and ASF Buildtech (supra), held
in the case of Hindustan Petroleum Corporation Ltd. Vs. BCL
Secure Premises Pvt. Ltd., (2026)3 SCC 711, that where on
the face of it, the issue could be considered by the Referral
Court, it cannot be said that such issue should not be decided
by the Referral Court:-
“34. In fact, ASF Buildtech (Supra) expressly notices the
holding in Para 169 of Cox & Kings (Supra) to conclude
that the Referral Court was required to prima facie rule on
the existence of the arbitration agreement and whether the
non signatory was a veritable party. All that it holds
further in reiteration of the earlier line of judgments is
that even if the Court holds that prima facie a party is a
veritable party that will not foreclose the Arbitral Tribunal
from concluding to the contrary after an intensive inquiry.
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35. This does not mean that where the Referral Court
finds prima facie a party is not a veritable party still the
matter is left to the Arbitral Tribunal. To hold so, would
relegate the Referral Court to the status of a monotonous
automation. Further, to countenance such an extreme
proposition would lead to disastrous consequences, where
absolute strangers could walk into the Referral Court and
contend that the matter has to perforce go to the Arbitral
Tribunal for a decision on the veritable nature of the party.
We are not prepared to accept such an extreme
proposition.”
14. Before adverting to the merits of the issue, it is
worthwhile to notice that there has been a debate as to whether
the decisions of the Arbitral Tribunal are amenable to challenge
under Article 226/227 of the Constitution of India. There is one
line of decisions in which it has categorically been held that no
such challenge is possible. Reference may be made to the
judgments of the Apex Court in the cases of Deep Industries
Limited (supra) and Bhaven Construction (supra). Yet
another view is that the supervisory jurisdiction of the High
Court under Article 227 of the Constitution of India, cannot be
curtailed and that a decision of an Arbitral Tribunal which is
also a Tribunal, would be amenable to challenge under Article
226/227 of the Constitution of India. It was also held that the
non-obstante clause in Section 5 of the 1996 Act, does not apply
in respect of exercise of powers under Article 227 of the
Constitution of India, which is a Constitutional provision. It was
further held that for interference under Article 226/227 of the
Constitution of India, there have to be exceptional
circumstances. One such view was taken by the High Court of
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Delhi in the case of Surender Kumar Singhal‘s case (supra),
wherein it was held as under:-
“25. A perusal of the above-mentioned decisions, shows
that the following principles are well settled, in respect of
the scope of interference under Article 226/227 in
challenges to orders by an arbitral tribunal including
orders passed under Section 16 of the Act.
(i) An arbitral tribunal is a tribunal against which a petition
under Article 226/227 would be maintainable;
(ii) The non-obstante clause in Section 5 of the Act does
not apply in respect of exercise of powers under Article
227 which is a Constitutional provision;
(iii) For interference under Article 226/227, there have to
be `exceptional circumstances’;
(iv) Though interference is permissible, unless and until
the order is so perverse that it is patently lacking in
inherent jurisdiction, the writ court would not interfere;
(v) Interference is permissible only if the order is
completely perverse i.e., that the perversity must stare in
the face;
(vi) High Courts ought to discourage litigation which
necessarily interfere with the arbitral process;
(vii) Excessive judicial interference in the arbitral process
is not encouraged;
(viii) It is prudent not to exercise jurisdiction under Article
226/227;
(ix) The power should be exercised in `exceptional rarity’ or
if there is `bad faith’ which is shown;
(x) Efficiency of the arbitral process ought not to be
allowed to diminish and hence interdicting the arbitral
process should be completely avoided.”
15. It was held in this judgment that the scheme of
Section 16 of the 1996 Act envisages that issues of jurisdiction
ought to be raised before the Arbitral Tribunal at the earliest and
under Section 16(5) of the 1996 Act, the Tribunal is mandated to
decide the said issues. Relying upon the decision in the case of
Mcdermott International Inc vs Burn Standard Co. Ltd. &
Ors., (2006) 11 SCC 181, it was held that the jurisdictional
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question is to be decided as a preliminary ground and the same
has to be decided at the earliest. The Delhi High Court went on
to hold that there cannot be a hard and fast rule and depending
upon the facts and circumstances of each case, the Tribunal
ought to decide the objections under Section 16 of the 1996 Act
as soon as possible as a preliminary ground. The Delhi High
Court held as under:-
“31. ……The following factors can be borne in mind when
objections are raised under Section 16 of the Act:
i. If the issue of jurisdiction can be decided on the basis of
admitted documents on record then the Tribunal ought to
proceed to hear the matter/objections under Section 16 of
the Act at the inception itself;
ii. If the Tribunal is of the opinion that the objections
under Section 16 of the Act cannot be decided at the
inception and would require further enquiry into the
matter, the Tribunal could consider framing a preliminary
issue and deciding the same as soon as possible.
iii. If the Tribunal is of the opinion that objections
under Section 16 would require evidence to be led then the
Tribunal could direct limited evidence to be led on the said
issue and adjudicate the same.
iv. If the Tribunal is of the opinion that detailed evidence
needs to be led both written and oral, then after the
evidence is concluded, the objections under Section
16 would have to be adjudicated first before proceeding to
passing of the award.”
16. Special Leave to Appeal (C) No. 6171-2021 was
preferred against the said decision of the Delhi High Court,
which was dismissed by the Apex Court vide order dated
27.04.2021.
17. Reverting to the facts of the case, the Apex Court
had, while remanding the matter to the learned Arbitral
Tribunal, observed that the application filed by the petitioner
vis-Ã -vis its deletion from the array of the parties, would be
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reconsidered by the learned Arbitral Tribunal. Since extensive
evidence was required to be led to decide the said issue, the
learned Tribunal held that the application would be decided at
the final stage.
18. However, what emerges from the impugned order is
that the learned Arbitral Tribunal intends to decide the
application moved by the petitioner along with the Award. It has
clearly been stated that the application would be decided first,
which would be followed by the Award.
19. In the considered opinion of this Court, keeping in
view the nature of the matter and the decision of the Apex Court
vide which it had remanded the matter to the learned Arbitral
Tribunal, it would have been in the interest of justice and due
compliance of the order of the Apex Court to decide the
application before adjudicating on the merits of the case even if
the entire evidence would have to be led for the said purpose.
20. This Court does not intend to and in fact, should not
interfere in the decision that the application would be decided at
the final stage. In fact, this Court finds no error in the said
decision of the learned Arbitral Tribunal because extensive
evidence, as per the learned Arbitral Tribunal, would be required
to be led by both sides. The learned Tribunal also kept in mind,
the power to award costs/expenses etc. to compensate the
petitioner for any inconvenience caused or expenses occasioned
by its participation in the proceedings.
21. Under the circumstances, the decision of the learned
Tribunal that the application under Section 16 of the 1996 Act
would be decided at the final stage, does not call for any
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interference. However, keeping in mind the directions issued by
the Apex Court while remitting the matter on 11.12.2024, this
Court is of the considered opinion that in the first instance, after
the evidence has been led, the application under Section 16 of
the 1996 Act should be decided and thereafter, arguments can
be heard on merits and Award can be passed. This would be due
compliance of the directions of the Apex Court. This Court
accordingly requests the learned Tribunal to proceed in the
manner indicated above.
22. The writ petition is disposed of in the above terms.
Pending application(s), if any, shall also stand
disposed of.
(VIKRAM AGGARWAL)
JUDGE
20.07.2026
ds
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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