The case centres around the scope of the Court’s jurisdiction and the role of the referral court in the appointment of an arbitrator, particularly in determining whether a non-signatory can be considered a party to an arbitration agreement. This matter pertains to an arbitration petition under Section 11(6) of The Arbitration and Conciliation Act, 1996.
In this case, the Family Arrangement Agreement (FAA) was signed between the AMP Group (the petitioners) and the JRS Group. The petitioners sought the appointment of a sole arbitrator to resolve disputes. The petitioners argued that the SRG Group, although not a signatory, should be included in the arbitration due to their involvement in negotiations and the benefits they derived from the FAA. The respondents opposed this, asserting that the SRG Group was not bound by the agreement.
The petitioners contended that despite the SRG Group not being a signatory, their involvement in negotiations and implementation of the FAA and their benefit from it should bind them to the agreement, warranting their inclusion in the arbitration proceedings. The JRS Group, while not objecting to arbitration with the AMP Group, opposed the inclusion of the SRG Group, arguing that the FAA was exclusively between the AMP and JRS Groups, with no obligations or definitions extending to the SRG Group. The SRG Group also asserted that they were neither parties to the FAA nor involved in its execution, arguing that there was no privity of contract between them and the petitioners and thus, they should be excluded from arbitration proceedings.
The primary legal issue was whether the SRG Group, as a non-signatory to the FAA, could be referred to arbitration, which required examining the scope of the referral court’s jurisdiction under Section 11(6) of the Act, 1996. After considering various earlier precedents like Cox and Kings Ltd. Vs. SAP India Pvt. Ltd. and Vidya Drolia and various documents crucial to the dispute, the Court concluded that while the SRG Group prima facie may be connected to the FAA and included in the settlement contemplated therein, this aspect should be looked into more closely by the Arbitral Tribunal. The Court emphasized that it should not engage in a mini-trial or delve into disputed facts. Given the complexity of determining whether the SRG Group is a veritable party to the arbitration agreement or not, the Court held that it is appropriate for the Arbitral Tribunal to assess the evidence and apply relevant legal doctrines, as outlined in the Cox and Kings decision.