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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VIPUL M. PANCHOLI, J.
Ashokbhai Raisingbhai Parmar – Appellant
Versus
The Abritrator, Kumari Neetaben V. Patel – Respondent
R/Special Civil Application No. 13800 of 2020
Decided on : 10-03-2021
Arbitration and Conciliation Act, 1996 - Sections 5, 8, 16, 17, 29A,16, 34 and 37 - Constitution of India,1950 – Article 226,227 - Partnership Firm in name and style of “Ronak Developers”. The said partnership firm is registered. Partnership Deed was executed. It is submitted that said Partnership Deed provides that in case of any dispute or difference of opinion, which may raise between the parties, the dispute is required to be referred to the Arbitrator. It is submitted that the dispute or difference of opinion arose between respondent Nos.2 and 3 and therefore, respondent No.2 has invoked the arbitration clause and matter was referred to concerned Arbitrator i.e. respondent No - On receipt of the notice, the petitioner appeared and raised an objection before respondent No.1 Arbitrator and contended that the petitioner cannot be joined as party opponent in the arbitration proceedings. However, without considering objection raised by the petitioner, the impugned order has been passed by respondent No.1, by which, the petitioner is joined as party opponent in the said arbitration case - Whether a composite reference of such parties would serve the ends of justice - Whether a case is made out for impleading a third party by applying the doctrine of lifting of corporate veil, is a matter which is to be examined having regard to facts of each case and keeping in mind the concept of group Companies
Finding of the court: Doctrine has found favourable consideration in the United States and French jurisdictions. The US Supreme Court in Ruhrgos discussed this doctrine at some length and relied on more traditional principles, such as, the non-signatory being an alter ego, estoppel, agency and third party beneficiaries to find jurisdiction over the non-signatories. - Court will have to examine such pleas with greater caution and by definite reference to the language of the contract and intention of the parties. In case of composite transactions and multiple agreements, it may again be possible to invoke such principle in accepting the pleas of non-signatory parties for reference to arbitration. Where the agreements are consequential and in the nature of a followup to the principal or mother agreement, the latter containing the arbitration agreement and such agreements being so intrinsically intermingled or interdependent that it is their composite performance which shall discharge the parties of their respective mutual obligations and performances, this would be a sufficient indicator of intent of the parties to refer signatory as well as non-signatory parties to arbitration. Principle of 'composite performance' would have to be gathered from the conjoint reading of the principal and supplementary agreements on the one hand and the explicit intention of the parties and the attendant circumstances on the other - a non-signatory or third party can be subjected to arbitration without their prior consent in exceptional cases. From the order passed by respondent No.1, it is clear that presence of the petitioner is required to decide the dispute between respondent Nos.2 and 3 and, therefore, the petitioner is impleaded as party respondent in arbitration proceedings
Result: petition accordingly dismissed
ORDER :
1. This petition is filed under Article 227 of the Constitution of India, in which, the petitioner has challenged the order dated 30.09.2020 passed below Exh.23 passed by respondent No.1 Arbitrator in Arbitration Case No.1 of 2020.
2. Heard learned advocate Ms.Tejal A. Vashi for learned advocate Mr. V.H. Desai for the petitioner and learned advocate Mr.Mrugen K. Purohit for respondent No.2.
3. Learned advocate for the petitioner submitted that respondent Nos.2 and 3 have formed a Partnership Firm on 01.08.2008 in the name and style of “Ronak Developers”. The said partnership firm is registered on 01.08.2008. Partnership Deed was executed. It is submitted that the said Partnership Deed provides that in case of any dispute or difference of opinion, which may raise between the parties, the dispute is required to be referred to the Arbitrator. It is submitted that the dispute or difference of opinion arose between respondent Nos.2 and 3 and therefore, respondent No.2 has invoked the arbitration clause and matter was referred to the concerned Arbitrator i.e. respondent No.1.
3.1 It is submitted the respondent No.2 filed a Statement of Claim. Thereafter, respondent No.2 submitted an application on 01.08.2020 and requested respondent No.1 Arbitrator to join the present petitioner as opponent No.2 in the said Arbitration Case No.1 of 2020. Respondent No.1 issued the notice to the petitioner. On receipt of the notice, the petitioner appeared and raised an objection before respondent No.1 Arbitrator and contended that the petitioner cannot be joined as party opponent in the arbitration proceedings. However, without considering the objection raised by the petitioner, the impugned order has been passed by respondent No.1, by which, the petitioner is joined as party opponent in the said arbitration case. The petitioner has, therefore, filed the present petition.
4. Learned advocate Ms.Tejal A. Vashi appearing for the petitioner has assailed the impugned order mainly on the ground that respondent No.1 has no jurisdiction to entertain the application filed by respondent No.2 for joining the petitioner as party opponent in the arbitration proceedings. There is no agreement entered into between the petitioner and respondent Nos.2 and 3. Thus, as the petitioner is not a partner in the partnership firm, there was no reason for respondent No.1 Arbitrator to join the present petitioner as opponent in the proceedings. Learned advocate for the petitioner has referred the provisions contained in Sections 16, 34 and 37 and Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act” for short). After referring to the same, it is contended that the petitioner has no other alternative remedy but to challenge the impugned order before this Court and, therefore, the present petition is filed. It is also contended that from the relief prayed by respondent No.2 before respondent No.1 Arbitrator, it is clear that such type of reliefs can be considered by the competent Civil Court and not by the Arbitrator and, therefore, the impugned order be quashed and set aside.
4.1 Learned advocate Ms.Tejal A. Vashi has placed reliance upon the order dated 30.07.2020 passed by the Division Bench of this Court in the case of Narmada Cleantech Versus Indian Council of Arbitration, passed in Letters Patent Appeal No.308 of 2020. After referring to the said decision, it is submitted that the present petition challenging the order of the learned Arbitrator is maintainable. It is, therefore, urged that this Court may entertain this petition and thereby quash and set aside the impugned order.
5. On the other hand, learned advocate Mr.Mrugen Purohit for respondent No.2 has opposed this petition and mainly contended that though this petition is maintainable as per the various decisions rendered by the Honourable Supreme Court, the scope of interference is very limited. It is submitted that ordinarily, High Court should not interfere with the order passed by the A
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