Power Of Tribunal To Implead Non-signatories In An Arbitration Proceeding: Analysis With Reference To HPCL v. BCL Secure Premises P. Ltd.

Introduction 

This Article discusses the powers and limitations of both the referral court as well as the arbitrator with respect to impleadment of non-signatories to an arbitration agreement in light of the Judgment of the Hon'ble Supreme Court in the matter of HPCL v. BCL Secure Premises P. Ltd. (2025 SCC OnLine SC 2746). 

Brief Overview and Background 

The Arbitral tribunal is a creature of the contract, from reference till award the powers of the Tribunal stems from the Agreement entered into between the intending parties yet modern day commercial arrangements involves a complex web of parties who may or may not be a formal signatory to the agreement to arbitrate but, their conduct might reveal a mutual intention to submit themselves to the arbitration agreement. 

The authors hereunder provide a brief overview of the relevant provisions of the Act for a better understanding of the issue at hand: 

Firstly, Section 8 of the Arbitration and Conciliation Act, 1996 (“Act”) empowers the Court to refer parties to Arbitration where there exists a valid arbitration agreement, the Provision does not explicitly empower the Court to refer a non-signatory to arbitration, however, the Law has evolved through judicial pronouncements over the years culminating to the power of referral court to refer parties who are not a signatory to the arbitration agreement.  

The Position of Law with regard to impleadment of non-signatories in an arbitration was first discussed by  the Hon'ble Supreme Court in the judgment of Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. [(2013) 1 SCC 641] wherein it was held that non-signatories can become a party to the arbitration proceeding under Section 8 only if they are claiming through or under a signatory party. Thereafter, the 2015 amendment to the Act expanded the scope of Section 8 by including the words “claiming through or under him” in Section 8 (1) of the Act. Subsequently, multiple judgments by Indian Courts such as Ameet Lalchand Shah v. Rishabh Enterprises [(2018) 15 SCC 678] accepted the proposition and impleaded non-signatories to the principal agreement in that case as they were parties to various inter-connected agreements which were part of the same transaction stemming from the principal agreement.  

The Hon'ble Supreme Court in the case of ONGC Ltd. v. Discovery Enterprises (P) Ltd. [(2022) 8 SCC 42] laid down five principles for the applicability of Group of Companies doctrine in cases where a non-signatory is to be impleaded in an arbitration agreement. These principles are as follows: (i) The mutual intent of the parties; (ii) The relationship of a non-signatory to a party which is signatory to the agreement; (iii) The commonality of subject matter; (iv) The composite nature of transaction, and; (v) The performance of the contract. 

Thereafter, in 2024 the Hon'ble Supreme Court in the landmark case of Cox & Kings Ltd. v. SAP India (P) Ltd. [(2024) 4 SCC 1] overruled the judgment in the case of Chloro Controls (supra) holding that non-signatories can be bound to an agreement to arbitrate and they need not plead in a derivative capacity under Section 8 (1) as expounded in the Chloro Control case (supra). The Court further held that Group of Companies Doctrine is applicable in the Indian jurisprudence for binding non-signatories to an arbitration agreement. It was held that the power of reference court under Section 8 is limited to only deciding on the existence of a valid agreement to arbitrate and a decision on whether the non-signatory is a veritable party to the arbitration agreement, the issue ultimately rests in the hands of the arbitral tribunal who is empowered under Section 16 of the Act to decide whether the party so made veritable by the referring court should be impleaded in the arbitration agreement. 

Secondly, Section 11 of the Act empowers the Court to appoint arbitrator under various circumstances. 

In furtherance to the above, the authors refer to Section 16 of the Act grants power to the Arbitrator to decide on issues pertaining to its own jurisdiction including ruling on any objections with respect to the existence or validity of the Agreement to arbitrate, this power also extends to determining whether the disputes involving non-signatories can be referred to arbitration. 

The Hon'ble Supreme Court in Adavya Projects (P) Ltd. v. Vishal Structurals (P) Ltd. [(2025) 9 SCC 686] held that Arbitral Tribunal can implead a non-signatory to an arbitration agreement even if the Court under Section 11 does not refer that party to arbitration, the Court opined that the referral court's jurisdiction under Section 11 is limited to only prima facie determining the existence of a valid arbitration agreement and appointing an arbitrator when the procedure as prescribed in the agreement fails to do so, the ultimate power of impleadment lies with the Tribunal alone under Section 16 of the Act.  

The Hon'ble Supreme Court in the case of ASF Buildtech (P) Ltd. v. Shapoorji Pallonji & Co. (P) Ltd. [(2025) 9 SCC 76] extensively discussed on the powers of the Arbitral Tribunal to implead non-signatories to an arbitration agreement. The Court reaffirmed the position as was laid down in Adavya Projects (supra) that the referral court's power under section 11 of the Act are limited to only deciding whether there exists a valid arbitration agreement, the Court held that the Arbitral Tribunal under section 16 is empowered to decide on its own jurisdiction which includes decisions pertaining to joinder of a non-signatory to an arbitration agreement. The Court favoured a “hands off approach” under section 11 of the Act as this provision is non-appealable and denying reference to arbitration would leave a party remediless as the question as to impleadment can be pursued before the Tribunal who is empowered under Section 16 and if there is an aggrieved party they can appeal against it under section 37 of the act. 

Case Analysis of HPCL v. BCL Secure Premises P. Ltd. 

In light of the above, the Hon'ble Supreme Court in the case of HPCL v. BCL Secure Premises P. Ltd. (supra) discusses on the issue of impleadment of non-signatories to an arbitration agreement. Wherein, The Hon'ble Supreme Court framed the question; whether the High Court was justified in referring the parties to arbitration by allowing BCL's Section 11(4) petition when BCL was in fact not a signatory to the Agreement. 

Brief Facts of the case 

The Petitioner, HPCL in this case issued a purchase order in favour of AGC Networks (presently Black Box Ltd.) in furtherance of a tender pertaining to Tank Truck Locking System (TTLS) which was accepted. The Respondent, BCL, engaged by AGC on a back‑to‑back basis, later asserted claims against HPCL premised on its role as sub‑vendor and a subsequent settlement‑cum‑assignment of receivables from AGC to BCL. The Hon'ble Bombay High Court, on BCL's Section 11 application, appointed an arbitrator, directing the tribunal to decide arbitrability as a preliminary issue. HPCL filed a Special Leave Petition (SLP) aggrieved by the Judgment of the High Court. 

Decision 

HPCL submitted that BCL was not privy to the contract between HPCL and AGC, that there existed an express anti‑assignment/subletting clause in the main Agreement, they also submitted that the scope of the Court under Section 11 is limited to only examining the existence of an arbitration agreement which in this case does not exist between the parties. BCL on the other hand argued that the question whether BCL is a party to the agreement is a fact specific question and the Arbitral tribunal is the correct forum for adjudication of such question.  

The Hon'ble Supreme Court while adjudicating the validity of the High Court's judgment in referring the parties to arbitration, considered the law laid down by its own judgments such as Cox & Kings and ASF Buildtech (supra) to hold that BCL's petition cannot be allowed. The Court held that BCL failed to prove existence of a valid arbitration agreement with HPCL, they also did not fall under the heading claiming through or under a signatory, the Court cited Cox & Kings (supra) to show that mere commercial connection is not enough and hence, BCL cannot be said to be claiming through or under AGC. 

Conclusion 

HPCL v. BCL exemplifies the calibrated allocation of roles of the referral court as well as the arbitral tribunal. It accepted the position of law as settled in the Judgment of Cox & Kings (supra) stating that referral court's power is not only limited to checking the existence of a valid arbitration agreement but also checking whether the party seeking reference is a veritable party. The Court further agreed with the Judgment of ASF Buildtech (supra) holding that the Arbitral Tribunal is empowered under section 16 of the Act to implead parties to an arbitration agreement. 

The Court clearly stated that the Judgment in the cases of Cox & Kings and ASF Buildtech (supra) are in harmony with each other. Further, the position was clarified stating that referral courts are prima facie required to rule on the existence of an arbitration agreement and whether the party seeking impleadment is a veritable party. The Court cautioned however that, referral court's role cannot be relegated to that of monotonous automation, as in, when the referral court refuses reference to a non-signatory, it cannot again seek impleadment before the Arbitral Tribunal. The Court was of the opinion that such disastrous proposition would mean that absolute strangers could seek reference to arbitration before the Referral court and the unwilling party would be subjected to undertake highly expensive arbitration proceedings. 

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