K C Aggarwal v. National Stock Exchange of India Limited & Anr.

2) Mr. Jaiyesh Bakhshi, Adv; 3) Mr. Ravi Tyagi, Adv; 4) Mr. Mayank Mishra, Adv; 5) Mr. Gaurav Mishra, Adv; 6) Mrs. Manmilan Sidhu, Adv; 7) Mr. Daman Popli, Adv; 8) Mr. Sudiksha Saini, Adv; 9) Mr. Abhijay Basu, Adv; 10) Mr. Abhishek Rathi, Adv. for R-1. Mr. Md Zaryab Jamal Rizvi, Ms. Firdouse Qutb Wani, Mr. Dilshad Ahmed, Advocate for R-2. CORAM: HON'BLE MR.

JUSTICE PURUSHAINDRA KUMAR KAURAV J U D G E M E N T PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The petition is for setting aside judgment dated 17.11.2021 passed in C.S. No. 677/2021, judgement dated 19.07.2023 passed in C.R.P NO. 23/2022, and judgment dated 30.05.2025 in Arb. P. No. 1264/2023. Further, KUMAR KAURAV the petitioner prays for directions to the Trial Court to continue proceedings in C.S. No. 677/2021.

2. The petitioner had filed civil suit bearing number C.S. 677/2021 against the respondents for various reliefs, including recovery of money which was allegedly misappropriated by respondent no. 2-M/s ICICI Securities Limited at the behest of respondent no. 1-National Stock Exchange.

3. The Trial Court, vide impugned order dated 17.11.2021, allowed an application filed by respondent no. 2 herein, under Section 8 of the Arbitration Act, 1996 (Arbitration Act), and referred the dispute to arbitration. The Trial Court took note of the existence of an arbitration clause in the contract between the petitioner and respondent no. 2, and was of the opinion that the primary prayers in the suit were against the said respondent and therefore, ought to be raised in arbitration proceedings. So far as the prayers against respondent no. 1 were concerned, the Court noted that the prayers were unsupported by necessary pleadings, and therefore could not be granted. As such, the absence of any arbitration agreement between the petitioner and respondent no. 1 would not preclude reference of the dispute to arbitration.

4. The judgment of the Trial Court was challenged by the petitioner before a coordinate Bench of this Court under Section 115 of the Code of Civil Procedure, 1908. The said revision petition was dismissed vide impugned judgment dated 19.07.2023, upon finding no infirmity in the judgment of the Trial Court.

5. The petitioner had, thereafter, filed Arb. P. 1264/2023 before this Court, seeking the appointment of an arbitrator and seeking initiation of arbitration proceedings against both the respondents. Taking note of the judgments in C.S. No. 677/2021 and C.R.P No. 23/2022, the Court, in the impugned judgment dated 30.05.2025, observed that at that stage, an arbitrator could be appointed for the dispute between the petitioner and only respondent no. 2. However, it was also observed that the Arbitral Tribunal was empowered under Section 16 of the Arbitration Act to add parties, should such a need arise, and the petition was disposed of accordingly.

6. The impugned judgments passed by the Trial Court and the Revisional Court have attained finality, and the petitioner has even proceeded to initiate a petition under Section 11 of the Arbitration Act, which ultimately culminated in the impugned judgment dated 30.05.2025.

7. The grievance of the petitioner is against the non-inclusion of respondent no. 1 in the arbitration proceedings by the Section 11 Court. However, it is pertinent to note that the Court has explicitly observed that the Arbitral Tribunal was empowered to add parties to the proceedings under Section 16 of the Arbitration Act. The relevant portion of the decision is extracted below, for reference:

8. This Court is not inclined to grant the reliefs sought in the petition, primarily, for the reason that in the exercise of the writ jurisdiction under Article 226/227 of the Constitution of India, challenges to orders of appointment of the Arbitral Tribunal under Section 11 of the Arbitration Act may not be entertained. Reference may be made to the decision of the Supreme Court in SBP & Co. v. Patel Engg. Ltd.,[3] the relevant portion whereof, is reproduced below, for reference:

9. Even otherwise, as noted by the Section 11 Court, the Arbitral Tribunal is empowered under Section 16 of the Arbitration Act to implead even non-signatories to arbitration agreements in arbitration proceedings. Reference may be made to the following paragraphs in the decision of the Supreme Court in Adavya Projects Pvt. Ltd. v. M/s Vishal Structuras Pvt.

“II. The purpose of an application under Section 11 is for the court to appoint an arbitrator, so as to enable dispute resolution through arbitration when the appointment procedure in the agreement fails. The court only undertakes a limited and prima facie examination into the existence of the arbitration agreement and its parties at this stage. Hence, merely because a court does not refer a certain party to arbitration in its order does not denude the jurisdiction of the arbitral tribunal from impleading them during the arbitral proceedings as the referral court’s view does not finally determine this issue.

III. The relevant consideration to determine whether a person can be made a party before the arbitral tribunal is if such a person is a party to the arbitration agreement. The arbitral tribunal must determine this jurisdictional issue in an application under Section 16 by examining whether a nonsignatory is a party to the arbitration agreement as per Section 7 of the ACA”