Factual Background 

In the Instant case of Arupri Logistics Pvt Ltd. v. Vilas Gupta, The appellant filed an appeal questioning the authority of an arbitral tribunal to include and bring claims against non-signatories to an arbitration agreement after disputes were referred to it by a court on the grounds that there was no express delegation of authority that could be inferred from the Arbitration and Conciliation Act’s provisions.

Argument Advance 

The appellant’s attorney argued that an arbitral tribunal lacks the power or jurisdiction to summon individuals who may not have signed an arbitration agreement or participated in legal proceedings before a referral court. Only courts have the authority to use the alter ego or group of companies’ theories, which have occasionally been used to join third parties. The order of a referring Court, which must be acknowledged as outlining the boundaries of its competence, including the parties between whom only actions may be brought, binds the arbitral tribunal. The appellants contend that it would be completely erroneous to acknowledge an inherent right of the Arbitral Tribunal to include non-signatories because arbitration is predicated on party consent.

According to the respondent’s legal representative, the Act’s provisions must be read in a way that enables the Arbitral Tribunal to successfully and definitively decide every dispute. When the provisions of the Act are interpreted in light of the statute’s overall design and determination to establish arbitration as a successful alternative dispute resolution method, it is impossible to avoid the inevitable conclusion that the Arbitral Tribunal must be acknowledged as possessing all the authority that would otherwise be inherent in and available to courts generally. Thus, they urge the Court to acknowledge that the Arbitral Tribunal has an inherent right to implead.

Analysis of Court order 

The impugned order, dated December 23, 2021, was overturned by a single-judge panel of the Delhi High Court, led by Justice Yashwant Varma, who also ruled that the Act does not grant an arbitral tribunal the authority to exercise any powers similar to those granted to national courts under Order I Rule 10 of the CPC.

The foundations of the Arbitral Tribunal may be found in a number of places, such as contracts, institutional regulations, and statutory legislation controlling arbitration. These sources combine to create the code or body of laws that outline the authority the Tribunal has. However, the Tribunal is not permitted to arrogate authority that is not granted by laws or regulations or to use inherent authority. These powers are recognised to belong exclusively to courts and judicial bodies. The Act in this matter is the applicable prevailing legislation, and its provisions continue to bind the Tribunal. The Tribunal would not be able to join or implead parties to the proceedings without the power of impeachment.

There are no provisions in the Arbitration Act that may be viewed as the repository of the Arbitral Tribunal’s authority to enjoin. If the alter ego or collection of firms’ principles were to be acknowledged as being enforceable by the Arbitral Tribunal, it would probably lead to the Tribunal attempting to compel the attendance of a party who had never consented or accepted to its jurisdiction or power to decide. As a result, even if it might not have been ad idem on problems being handled by arbitration, the Arbitral Tribunal would attempt to exert its jurisdiction over that party and compel them to participate in the proceedings. This would contradict arbitration’s essential concept of consensus and agreement. The Act does not give an arbitral tribunal the authority to exercise powers similar to Order I Rule 10 of the CPC, the Court held, and the Sole Arbitrator proceeded to join the appellants on the basis of considerations acknowledged as the basis for the exercise of power under Order I Rule 10.

CASE NAME – Arupri Logistics Pvt Ltd. v. Vilas Gupta, Arbitration Appeal 05 of 2022