Non-Party Document Production In Indian Arbitration: Limits Of Arbitral Jurisdiction

I. INTRODUCTION

The Arbitral Tribunal is intended to function with minimal hinderance from courts to carry out smoother arbitral pleadings in India. The tribunal primarily derives its authority from the terms governing the arbitration agreement and its proceedings are governed by the Arbitration and Conciliation Act 1996 (“A&C Act”).  

Section 19(1) of the A&C Act specifically excludes the applicability of the Code of Civil Procedure 1908 (“CPC”) and the Bharati Sakshya Adhiniyam 2023 to arbitral proceedings.

The arbitral tribunal is statutorily disabled from compelling a person who is not a party to the arbitration to produce documents or appear as a witness. The issue assumes particular significance when considering the remedies and procedural avenues available to an arbitral tribunal seeking the production of documents or evidence from a non-party. Section 27 of the A&C Act specifically bars the arbitral tribunal from independently compelling such production and mandates recourse to the Court instead.

II. STATUTORY PROVISIONS GOVERNING COURT ASSISTANCE IN TAKING EVIDENCE

A cohesive reading of Section 5, 19 and 27 of the A&C Act, provides the complete statutory scheme in case a party or the tribunal requires evidence which is not otherwise obtainable.

Section 27 of the A&C Act permits intervention by courts for taking evidence under two circumstances. These are when such assistance is either sought by -

1. The arbitral tribunal on its own motion, or by
2. A party to the dispute with the prior approval of the arbitral tribunal.

Further, sub-sections (4) and (5) of Section 27 empower the Court, upon executing such a request, to issue the same processes to witnesses as it would issue in suits tried before it. The Courts also have the authority to impose penalties and disadvantages upon defaulting persons as it would apply in ordinary civil suits.

It is also pertinent to note that the bar under Section 27 lies specifically against the arbitral tribunal exercising compulsive powers over non-parties, and not against the tribunal evaluating evidence generally. Judicial precedents further indicate that certain arguments have been advanced by tribunals to bypass recourse to Section 27 by contending that the party in default is, in substance, still a party before the tribunal and therefore amenable to a direct order. However, this argument has met with mixed success before the High Courts, as discussed below.

III. WHETHER THE ARBITRAL TRIBUNAL MAY COMPEL EVIDENCE WITHOUT RECOURSE TO SECTION 27

The scope of the arbitral tribunal's power to compel evidence, absent recourse to the Court, is not defined under the A&C Act with precision. However, it is commonly understood that the tribunal's authority to direct production is confined to parties before it, and that Section 27 alone furnishes the mechanism for reaching non-parties.

The Hon'ble Delhi High Court, in the case of Thiess Iviinecs India (P) Ltd. v. NTPC Ltd. reported in 2014 DHC 2994, observed that recourse to Section 27 would arise only after the arbitral tribunal has first directed the concerned party to produce the document and such party has failed to comply; there would be no cause to invoke Section 27 as a first resort. Thus, it is evident that Section 27 operates as a residuary mechanism, engaged only where the tribunal's own directive authority under Section 19(4) has been exhausted and has failed.

As regards the issue of how strictly courts must scrutinise a tribunal's decision to invoke Section 27, there has been a discernible tightening in the decisions of various High Courts post-2021.

1. While deciding an application under Section 27, the Hon'ble Delhi High Court in Steel Authority of India Ltd. v. Uniper Global Commodities (2023) held that an order of the arbitral tribunal permitting a party to approach the Court, passed without independent application of mind to relevance and materiality, is a non-speaking order founded on a misconception of law. The Hon'ble Court accordingly remanded the matter, directing the tribunal to record, even on a prima facie basis, its satisfaction as to relevance before permission under Section 27 could be granted.
2. Concurring with this restrictive approach, the Hon'ble Bombay High Court in Dilip s/o Bhavanji Shah v. Errol Moraes (2022) held that the arbitral tribunal remains the best forum to decide relevancy or materiality of evidence, being the master of its own proceedings, and that the Court's role under Section 27 is confined to execution of the tribunal's request rather than re-adjudication of its merits.
3. The Hon'ble Gujarat High Court, in Aepl Infrastructure Pvt. Ltd. v. Tehran Jonoob Technical and Construction Co. (2023), went further and held that the Court possesses no jurisdiction whatsoever to review or sit in appeal over the arbitral tribunal's procedural decisions, and that the Court's function under Section 27 is purely executory.
4. Contrary to any suggestion that this scrutiny is a mere formality, the Hon'ble Delhi High Court in PSA Nitrogen Ltd. v. Company Secretary, GAIL (India) Ltd. (2022) dismissed a Section 27 petition on the short ground that it had not been filed with the prior approval of the arbitral tribunal at all, underscoring that the gateway condition under Section 27(1) is treated as jurisdictional, not directory.

IV. THE DISTINCT QUESTION OF BINDING NON-SIGNATORIES: GROUP OF COMPANIES DOCTRINE

It must be clarified at the outset that the question of whether a non-signatory may be joined as a party to the arbitration agreement is analytically distinct from the question of whether the tribunal may compel evidence from a true third party, and the two are frequently, and incorrectly, conflated.

The Hon'ble Supreme Court, in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. reported in (2013) 1 SCC 641, first recognised that a non-signatory group company could be bound by an arbitration agreement. It was observed where a mutual intention to be bound to the agreement could be identified, a doctrine to the phrase "claiming through or under" in Section 45 of the A&C Act.  

The doctrine was thereafter authoritatively reconsidered by a five-Judge Constitution Bench in Cox and Kings Ltd. v. SAP India Pvt. Ltd. reported in 2023 SCC OnLine SC 1634. The Hon'ble Court held that the determination of whether a non-signatory is a "party" turns on a cumulative assessment of several factors. These include the mutual intent of the parties, the relationship of the non-signatory to the signatory, commonality of subject matter, the composite nature of the transaction, and performance of the contract. The Hon'ble Court further clarified that the principle of alter ego, or piercing of the corporate veil, cannot by itself furnish an independent basis for invoking the doctrine.

However, it is understood that none of the above line of authority assists a tribunal seeking to compel evidence from a genuine third party. The Group of Companies doctrine operates upon a finding of consent, however a true stranger to the transaction furnishes no such consent. Accordingly, the doctrine has no application to it.  

VI. A POSSIBLE FUTURE SOLUTION

The question, then, is not whether the arbitral tribunal ought to be vested with the same coercive power as a Court for the reasons set out above, such a course would be constitutionally untenable, since compulsion over a person who has never consented to the tribunal's jurisdiction is an incident of sovereign and not contractual authority. The more tenable question is whether the existing judicial practice of restraint ought to be codified into the statute itself, so what Courts presently do as a matter of self-discipline becomes a matter of statutory entitlement for the tribunal.

Such a solution could take the following shape. Firstly, Section 27 could be amended to expressly confine the Court's role. Once the tribunal's approval has been granted and its application of mind is evident on the record, to execution alone save and except for a narrowly defined set of grounds such as privilege, extraterritorial incapacity, or manifest procedural irregularity. This would statutorily entrench the position already arrived at judicially in Aepl Infrastructure. Secondly, the persisting vacuum concerning witnesses resident outside India as recognised by the Hon'ble Delhi High Court's line of authority holding that Indian courts lack jurisdiction to summon foreign-resident witnesses under Section 27 ought to be addressed, particularly given the Draft Arbitration and Conciliation (Amendment) Bill, 2024's proposal to extend Sections 9, 27 and 37(1)(3) to arbitrations seated outside India under the amended Section 2(2). That extension addresses reach, not power, and a corresponding mechanism for cross-border execution, whether through reciprocal arrangements or clarified procedure remains conspicuously absent from the Draft Bill. Thirdly, given that the Hon'ble Supreme Court has itself, in the course of the ASF Buildtech proceedings, urged the Ministry of Law and Justice to address gaps in the 2024 Bill before its finalisation, this would be an opportune moment for the Ministry to import a provision along the lines of Article 3 of the IBA Rules on the Taking of Evidence in International Arbitration, at least insofar as production as between parties is concerned, thereby reducing recourse to Section 27 for the more routine category of inter-party document disputes and reserving the Court's assistance for the genuinely hard case of the true third party.

VII. CONCLUSION

The law in its present form achieves a defensible, albeit imperfect, balance whereby the ultimate authority to compel non-parties continues to rest with the courts, while judicial intervention in such matters has, particularly following the post-2021 jurisprudence, evolved into a predominantly facilitative and executory function. What remains missing is legislative codification of that judicial restraint, and a corresponding mechanism for cross-border enforcement. The Draft Arbitration and Conciliation (Amendment) Bill, 2024, despite its stated objective of reducing court intervention, does not presently address either gap which serves an omission that the Ministry of Law and Justice would do well to correct before the Bill is tabled.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.