NEW DELHI, MAY 2, 2025 —
In a scathing judgment, the Supreme Court of India has criticised the Arbitration and Conciliation (Amendment) Bill, 2024 for failing to address a long-standing legislative vacuum regarding the power of arbitral tribunals to implead non-signatories. The apex court expressed disapproval during the verdict in ASF Buildtech Pvt Ltd v. Shapoorji Pallonji and Company Pvt Ltd, reigniting a critical debate on India’s arbitration law.
COURT: LEGISLATIVE CLARITY STILL MISSING AFTER 30 YEARS
A Bench of Justices JB Pardiwala and R Mahadevan noted with concern that despite repeated judicial pronouncements, the draft Bill fails to clarify the power of tribunals to bring in non-signatory parties under the Group of Companies Doctrine.
“What is expressly missing in the Act, 1996 is still missing in the Arbitration and Conciliation Bill, 2024…despite a catena of decisions…highlighting the need for statutory recognition of such power in order to obviate all possibilities of confusion,” the Bench observed.
The Court lamented the continued ambiguity in India’s arbitration regime, even decades after the 1996 law was enacted.
“It is very sad that even after nearly thirty years since the 1996 Act was enacted to modernise arbitration in India, procedural ambiguities continue to persist.”
In a strong recommendation to the executive, the Court urged the Department of Legal Affairs to reconsider the draft Bill:
“We urge the Department of Legal Affairs, Ministry of Law and Justice to take a serious look at the arbitration regime that is prevailing in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024 is still being considered.”
CASE BACKGROUND: ASF BUILDTECH’S CHALLENGE DISMISSED
The case involved disputes arising from construction and development contracts between the ASF Group (comprising ASF Buildtech Pvt Ltd, ASF Insignia SEZ Pvt Ltd, and Black Canyon SEZ Pvt Ltd) and Shapoorji Pallonji and Company Pvt Ltd (SPCPL). While only Black Canyon SEZ was a formal signatory to a 2020 settlement agreement, SPCPL filed counterclaims against all three ASF entities, invoking the arbitration clause from a 2016 works contract.
SPCPL argued that the ASF Group functioned as a single economic unit and sought to bind all group entities under the arbitration agreement based on their conduct and interlinked operations.
ASF BUILDTECH’S LEGAL OBJECTIONS
ASF Buildtech (ABPL) contested its inclusion in the arbitration, arguing it was not a party to the agreement. It filed a Section 16 application under the Arbitration and Conciliation Act, 1996, which was dismissed by the arbitral tribunal. A Section 37 appeal before the Delhi High Court also failed.
The company then moved the Supreme Court, which upheld the arbitral tribunal’s decision, finding that ABPL’s actions indicated an intention to be bound by the arbitration clause.
LEGAL REPRESENTATION
ASF Buildtech Pvt Ltd: Senior Advocate Devadatt Kamat, with Advocates Dr Amit George, Anindita Mitra, Harsh Pandey, and Hruday Bajentri
Shapoorji Pallonji and Company Pvt Ltd: Advocates Aakanksha Kaul, Saurav Agrawal, Salvador Santosh Rebello, Aman Sahani, Anshuman Chowdhary, Rhea Borkotoky, Akash Saxena, Kritika, Ashima Chopra, Prachi Dubey, and Pooja Gill
Black Canyon SEZ Pvt Ltd: Senior Advocate Jayant Mehta, with Advocates SS Shroff, Shruti Sabharwal, Avlokita Rajvi, Lakshya Khanna, Vikramaditya Sanghi, and Sanskriti Sinha
ASF Insignia SEZ Pvt Ltd: Advocates Sanyat Lodha and Sanjana Saddy
CONCLUSION
The ruling is a landmark moment in India’s arbitration jurisprudence and reiterates the judiciary’s reliance on the Group of Companies Doctrine to uphold the integrity of commercial arbitration. The Supreme Court’s observations are expected to exert pressure on lawmakers to revise the Arbitration and Conciliation (Amendment) Bill, 2024, and bring long-overdue clarity to India’s arbitration regime.
