The main legal point established in the judgment is the recognition of interdependence in transactions and the commonality of subject matter, allowing for the participation of non-parties in arbitration proceedings, as well as the exercise of discretion in desealing the property.

S. RAVINDRA BHAT, J.

1. Issue notice. Sh. Aditya Malhotra and Sh. P.S. Bindra, Advocates accept notice on behalf of the respondents. With learned counsels’ consent, the appeal was heard finally – as the record of the learned Single Judge was available electronically.

2. The appellants in this appeal under Section 37 of the Arbitration and Conciliation Act [hereafter “the Act”] are aggrieved by the order of the learned Single Judge made under Section 9 of the Act, in effect, permitting impleadment of a third party to the arbitration proceedings. The appellants are also aggrieved by the direction of the learned Single Judge, whereby the premises (which are the subject matter of arbitration proceedings), had been sealed pendente lite, were required to be desealed.

3. The essential facts are that the appellant and her husband were shareholders in one M/s. SS Leasing and Finance Limited [hereafter “the debtor company”] - a closely owned entity. The property, owned by Sh. R.L. Jain was mortgaged to the UCO Bank in 1986 to secure an advance by the bank. Since the debtor company defaulted in the fulfilment of its obligation to repay the loan, proceedings were initiated under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 before the Debts Recovery Tribunal [hereafter “DRT”] in 1997. These proceedings did not resolve and continued to remain pending. In the meanwhile, the appellant and her husband - Sh. R.L Jain, the owners of the property entered into an agreement to sell, agreeing to convey title, possession of the said property to respondents – Sh. Batra and Sh. Manjinder Singh [hereafter referred to as “the purchasers”].

4. The agreement to sell spawned disputes which were referred to arbitration; the appellant claimed that he could not convey the property and alleged that the agreement to sell was void. Since the proceedings before the DRT did not attain any finality, the bank resorted to the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI). Eventually, the proceedings culminated in the possession of the property being taken-over by the bank. Through advertisement (dated 30.07.2007), sale of the property in auction was resorted to, which culminated in a Sale Certificate dated 17.08.2007. This sale was confirmed. Ultimately, the proceedings before DRT resulted in the dismissal of the appeal (preferred under Section 17 of the SARFAESI by the borrowers) by order of the DRT dated 06.08.2012. The appeal against that decision is said to be pending.

5. It is a matter of record that in the pending arbitration proceedings status quo prevails and binds the parties, which was made in 2004. Concededly, it has not been varied. In these circumstances, the auction purchaser - Jasbir Singh (who is also the father of Sh. Manjinder Singh - one of the purchasers who had approached this Court under Section 9), approached claiming two main relief’s – (1) to be permitted impleadment in the pending arbitration proceedings, and (2) the property, which is lying sealed since 2014, ought to be handed over to him subject to the status quo order prevailing. The learned Single Judge granted both relief’s.

6. Sh. Ravi Sikri, learned senior counsel urges that the learned Single Judge fell into error in permitting third party to intervene in the arbitration proceedings. Learned senior counsel was at pains to point out that the auction notice expressly spelt out that the sale of the property was subject to the pending arbitration proceedings. It was noted by all parties, especially the impleaded third party - Jasbir Singh that his rights would be subject to the arbitration proceedings. Highlighting that past attempts were made for variation of status quo order and expressly seeking desealing of the property, learned senior counsel submitted that given these attendant circumstances, the learned Single Judge should not have permitted a rank outsider to be im