2026 Supreme(Online)(Del) 13693

IN THE HIGH COURT OF DELHI AT NEW DELHI
Mini Pushkarna, J
Chirag Jain – Appellant
Versus
Rahul Jain – Respondent
ARB.P. 145/2026 | ARB.P 146/2026

The referral court under the Arbitration Act, 1996, must limit its inquiry at the Section 11 stage to the prima facie existence of an arbitration agreement; the determination of whether a non-signatory is a veritable party constitutes an expansive factual inquiry to be undertaken by the Arbitral Tribunal.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 7, 11(6), 11(6A), 12, 16, 21 and 37 - Appointment of Arbitrator - Petition for arbitration against signatories and non-signatory - Scope of inquiry at referral stage - Referral court is to restrict itself to prima facie satisfaction regarding existence of arbitration agreement.

(B) Arbitration - Joinder of non-signatory - Determination of whether a non-signatory is a veritable party is a complex inquiry involving factual evidence and application of legal doctrine - Referral court should not perform a minute investigation into the relationship or conduct of the non-signatory but should leave the determination to the Arbitral Tribunal.

(C) Arbitration - Notice under Section 21 - Not a mandatory prerequisite for the commencement of arbitration or a bar to the joinder of additional parties - Section 21 is primarily to determine limitation and for procedural commencement of proceedings. (Paras 50-54)

(D) Arbitrability - Contractual disputes involving share transfer and corporate governance - Claims for specific performance and personal relief against breaches are disputes in personam and are arbitrable, even if they arise from agreements involving corporate entities. (Paras 57-61)

Facts of the case:
The petitioner sought the appointment of a sole arbitrator for adjudicating disputes arising out of Share Purchase Agreements. The petitioner impleaded a company as a respondent, which was not a signatory to the agreements. The company contested its inclusion, arguing that it was a separate legal entity, that the arbitration clause was limited to the signatories, and that no notice had been served upon it under Section 21 of the Act. The petitioner contended that the company was a veritable party based on its involvement in the performance of the agreements, the assumption of trust obligations, and the affixation of its common seal.

Findings of Court:
The court observed that the existence of the arbitration agreement was not in dispute. Applying the principle that the referral court's role under Section 11 is narrow, it held that the question of whether a non-signatory is a veritable party requires an expansive factual inquiry better suited for the Arbitral Tribunal under Section 16. It further held that Section 21 notice is not a mandatory jurisdictional prerequisite and its absence does not bar the joinder of a non-signatory.

Issues: The main issues were whether a non-signatory can be joined to arbitral proceedings at the referral stage, the extent of the court's power to conduct a detailed inquiry into the non-signatory's status, and the necessity of mandatory formal notice to all respondents for the commencement of arbitration.

Ratio Decidendi: The court held that the referral court must maintain a hands-off approach and limit its inquiry to the prima facie existence of the arbitration agreement. Determination of whether a non-signatory is bound by the agreement involves complex evidence-based analysis which must be left to the Arbitral Tribunal, invoking the principle of competence-competence. Result : Petition disposed of by appointing a sole arbitrator; all rights and contentions of the parties left open for the Tribunal to decide.