CONTRASTING VIEWS ON WHETHER THE ARBITRAL TRIBUNAL IS VESTED WITH THE POWER TO IMPLEAD PARTIES IN ARBITRATION PROCEEDINGS.

Two coordinate benches of the High Court of Delhi have taken contrasting views with respect to the power vested with the Arbitral tribunal under section 16 of the Arbitration & Conciliation Act,1996.

In Arupri Logistics (P) Ltd. v. Vilas Gupta, 2023 SCC OnLine Del 4297  it was held that an Arbitral Tribunal cannot join or delete parties, or proceed on principles akin to Order I Rule 10 of the Code of Civil Procedure 1908. The power to join or delete parties in a proceeding, it is held, vests only in Court. As such, it is only the Referral Court which, at the stage of referring the dispute to arbitration, can join non-signatories to the arbitral proceedings. The Arbitral Tribunal is bound to decide the issue inter se the parties who are before it and cannot carry out any addition or deletion thereto.

On the contrary after the Constitution Bench of the Supreme Court had rendered its decision in Cox and Kings vs SAP, 2023 INSC 1051 on 6^th December 2023, The High Court of Delhi in Indraprastha Power Generation Co. Ltd. v. Hero Solar Energy (P) Ltd., 2024 SCC OnLine Del 6080 relying on the constitutional bench judgement of Cox and Kings(Supra) held that the Arbitral Tribunal does possess the jurisdiction to implead non-signatories who may be bound by the outcome of the Arbitral proceedings.

Another constitutional bench judgement of the Supreme court rendered on 13^th December, 2023 in IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN STAMP ACT 1899, 2023 INSC 1066. also elucidated that the referral court is not the appropriate forum to conduct a mini trial by allowing the parties to adduce the evidence with regard to the existence or validity of an arbitration agreement and the courts at the referral stage should only confine to the determination of the arbitration agreement notwithstanding that even if a prima facie view as to the existence of an arbitration agreement is taken away by the referral court, it does not take away the Kompetenz of the Arbitral tribunal under section 16 to examine the issue in dept.

Recently, the Apex court in SBI General Insurance Co. Ltd vs. Krish Spinning, 2024 SCC Online SC 1754 reiterating Interplay (Supra) held that the court is empowered to prime-facie ‘examine’ the existence of an arbitration agreement in terms of section 7 of the Act. The word ‘Examine’ has a very narrow scope in terms of section 11(6A) and is limited to the requirement of a formal validity. It opined that “The use of the term ‘examination’ under Section 11(6-A) as distinguished from the use of the term ‘rule’ under Section 16 implies that the scope of enquiry under section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the Arbitral tribunal to ‘rule’ under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the Arbitral tribunal or the court enforcing the Arbitral award.”

Reiterating the recent judicial precedents laid down by the apex court, A recent ruling of the High Court of Delhi in KKH Finvest Private Limited and Another vs. Jonas Haggard and Others 2024 SCC Online Del 7254 while dealing with the issue of necessary parties to arbitration at the referral stage held that referral court should take a bird's eye view and not go into the minute details at the referral stage and gave the parties the liberty to agitate the issue before the arbitrator to decide

Hence, The legal footing with respect to the Kompetenz of the Arbitral Tribunal as held in Krish Spinning (supra) and Interplay (supra) has affirmed that the scope of judicial interference under section 11 (6A) of the Act is only confined to the limited scrutiny of ‘prima facie existence of the arbitration agreement nothing more and nothing else’ and the Arbitral tribunal under section 16 of the Act has the complete Kompetenz to decide on issues with respect to addition or deletion of parties even if its contrary to what was held by the referral court under section 11(6) of the Act.