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Non-signatories cannot attend arbitration despite having a stake in the subject property
Kamal Gupta v. LR Builders Pvt Ltd
Supreme Court of India | SLP (Civil) No. 4775 of 2025
The Supreme Court recently ruled that the presence of non-signatories in arbitral proceedings amounts to a breach of confidentiality and is impermissible under the Arbitration and Conciliation Act, 1996 (Act). The decision reinforces the fundamental principles of party autonomy and confidentiality that underpin arbitration. It clarifies that a non-signatory, even if having a commercial or proprietary stake in the subject matter, cannot participate in or attend arbitral proceedings to which they are not bound. The decision safeguards the consensual nature of arbitration, ensuring that only those who have expressly agreed to arbitrate can be part of the process. Allowing outsiders would compromise confidentiality under Section 42A of the Act and dilute the integrity of private dispute resolution. Parties should therefore ensure that all necessary stakeholders are expressly included in arbitration agreements at the contracting stage, and adopt strict confidentiality protocols to avoid procedural challenges or breaches.
SUMMARY OF FACTS
Pawan Gupta and Kamal Gupta entered into an oral family settlement agreement, subsequently converted into a Memorandum of Understanding (MoU), to which Kamal's son, Rahul, was not a signatory.
Disputes arose under the MoU, and Pawan filed an application under Section 11(6) of the Act seeking the appointment of an arbitrator. Rahul filed an application seeking intervention. The Court rejected Rahul's application, citing party autonomy and appointed a sole arbitrator.
After disposal of the application under Section 11(6) of the Act, Rahul filed an application under Section 151 of the Code of Civil Procedure, 1908, seeking withdrawal of the earlier order. The subsequent order allowed him to be present in the arbitral proceedings, and his share in the MoU properties (23%) was excluded from the award. Aggrieved, Pawan and Kamal approached the Supreme Court.
DECISION OF THE COURT
The Court held that a non-signatory to an agreement leading to arbitration could not be present in such proceedings. As Section 35 of the Act only binds parties to an arbitration agreement, a non-signatory would not be bound by the award. As such, there is no legal basis to permit a stranger/non-party to remain present in the proceedings.
Further, permitting a stranger to observe the proceedings would be a clear breach of Section 42A, which requires the arbitrator, arbitral institution, and parties to maintain confidentiality. While Rahul may have had a bona fide apprehension about any alienation of his share of properties in the MoU, the same could not justify his presence in the arbitration.
Integration of essential parts constitutes 'manufacture' under excise law
Quippo Energy Ltd v. Commissioner of Central Excise, Ahmedabad – II
Supreme Court of India | 2025 SCC OnLine SC 2021
The Supreme Court has recently reaKirmed the twin tests of transformation and marketability to determine when a process constitutes 'manufacture' under Section 2(f) of the Central Excise Act, 1944. While addressing additional parts, the Court drew a clear distinction between the incorporation of components/parts integral to the functioning of a new product (constitutes 'manufacture') and addition of accessories that merely enhance convenience or support.
The decision emphasises that 'manufacture' occurs only when the process results in a new commercial product with a distinct name, character, and use – rather than from minor modifications such as sterilisation. Where integration of additional components fundamentally alters the structure and function of the original item, the process qualifies as 'manufacture'. Businesses should reassess assembly and conversion processes to ensure compliance and manage excise exposure proactively.
SUMMARY OF FACTS
Quippo Energy Ltd (QEL) imported Gas Generating Sets (Gensets) for its business of leasing Containerised Gensets (Power Packs).
For ease of relocation and transportation, QEL mounted the imported Gensets inside steel containers and indigenously fitted various components such as radiators, fans, oil tanks, silencers, and control panels.
The Central Excise Department held that the said activity amounted to 'manufacture' under Section 2(f) of the Central Excise Act, 1944 (1944 Act), read with Notes 4 and 6 of Section XVI of the Central Excise Tarie Act, 1985, and thus eligible for levy of excise duty.
Aggrieved, QEL appealed before the Customs, Excise and Service Tax Appellate Tribunal and the Supreme Court, contending that the said activity merely enhanced portability and convenience, without changing the essential character of the Gensets, which were already complete and functional. It had not transformed them into a new product.
Dispute Resolution & ADR Newsletter - October 2025.
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