A non-signatory being directly involved in the contract can be compelled to arbitrate: Delhi High Court

The Delhi High Court has passed a judgment on 07-04-2021 in the case of Shapoorji Pallonji and Co Pvt Ltd v. Rattan India Power Ltd & Anr ARB. P. 716/2019. Justice Vibhu Bakhru disposed of the petition.


The petitioner (hereafter referred to as ‘Shapoorji’), a company incorporated under the Companies Act, 1956, has filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’), inter alia, praying as under:-

“Appoint Hon’ble Mr. Justice C. K. Prasad (Retd.) Former Judge, Supreme Court of India, the Nominee Arbitrator already appointed by Respondent No.2 for the BTG contract, or any other person, as this Hon’ble Court may deem fit and proper as the Nominee Arbitrator on behalf of the Respondents for adjudication of the disputes that have arisen between the parties;”

Respondent no.1, previously known as Indiabulls Power Limited, (hereafter referred to as ‘Indiabulls’) was desirous of developing a 5×270 MW thermal power plant at Amravati, Maharashtra (hereafter referred to as the ‘Project’). Respondent no. 2 (hereafter ‘Elena’) is a wholly owned subsidiary of Indiabulls.

On 19.05.2008, Indiabulls invited bids for execution of Civil and Structural Works, Boiler Turbine Generator Package (hereafter ‘BTG Works’), which was a part of the Project. Shapoorji submitted its bid in response to the said invitation, which was subsequently revised. The revised bid was accepted and a Letter of Award (hereafter ‘the LoA’) dated 06.02.2010 for the contract of execution of the BTG Works at an estimated price of ₹180 Crores, was awarded to Shapoorji. The LoA was signed on behalf of Elena but the letterhead carried the name “Indiabulls”.

Thereafter, on 26.03.2010 Shapoorji and Elena entered into the ‘Contract for BTG Civil and Structural Works’ (hereafter ‘BTG Contract’) for execution of BTG Works. The BTG Contract expressly Signature Not Verified By:DUSHYANT RAWAL included the LoA as one of the contract documents. The initial scope of work for the BTG Works was subsequently increased through twenty-one different amendments issued by Elena and the contract price for BTG Contract was changed to ₹189,18,87,147.07/- (Rupees One Hundred and Eighty-Nine Crores Eighteen Lakh Eighty-Seven Thousand One Hundred Forty-Seven and Seven Paisa only). The Work Order bearing Amendment No. 21 is dated 31.05.2017. The said Work Order also included an arbitration clause.

On 03.01.2012, Work Order for Civil and Structural work for Balance of Plant (BoP Contract) was issued to Shapoorji. Prior to that, on 29.10.2010, the contract for Civil and Structural work for the Balance of Plant (BoP Works) was entered into with Gannon Dunkerley & Co. Ltd. The respondents claim that Gannon Dunkerley & Co. could not complete the BoP Works. Shapoorji agreed to complete it; therefore, the same was offloaded to Shapoorji. Shapoorji claims that the BoP Contract was supplemental to BTG Works and therefore, is covered within the Dispute Resolution Clause under the BTG Contract.


Given the facts and circumstances of the case, this Court is of the view that it would be apposite to compel Indiabulls to arbitrate as there is sufficient material to show that Elena is its alter ego. This is evident from the fact that Elena’s name has been mentioned in parenthesis against the name of Indiabulls in the LoA. The shareholding pattern confirms that Indiabulls does exercise complete control as a shareholder over Elena. The fact that the officials of Indiabulls acted on behalf of Elena also indicate that Indiabulls exercises substantial and dominant direct control over the affairs of Elena.

Before concluding, it is apposite to clarify that none of the findings recorded in this order would preclude the parties from agitating their respective contentions before the Arbitral Tribunal. As indicated by the Supreme Court in Vidya Drolia v Durga Trading Corporation: (2021), this Court has conducted an “intense yet summary prima facie review” of the controversy involved. None of the observations made in the present petition should be construed as foreclosing the rights of the parties to a full contest before the Arbitral Tribunal.

Elena had appointed Justice C.K. Prasad as its nominee arbitrator. He would also be considered as the nominee Arbitrator of Indiabulls. He, along with the learned Arbitrator nominated by Shapoorji, shall nominate the third Arbitrator to constitute an Arbitral Tribunal within a further period of two weeks from date, failing which Signature Not Verified By:DUSHYANT RAWAL the parties are at liberty to approach this Court for appointment of the third Arbitrator.

The petition is allowed in the aforesaid terms. The pending application is also disposed of.

“PRIME LEGAL is a full service law firm that has won a national award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”


Click here to view full judgment

Leave a Reply

Your email address will not be published. Required fields are marked *