ASF BUILDTECH PRIVATE LIMITED vs SHAPOORJI PALLONJI AND COMPANY PRIVATE LIMITED & ORS.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on 8th May, 2024
Date of decision:4th July, 2024
+ ARB. A. (COMM.) 4/2024 & I.As.2124/2024-25/2024
ASF BUILDTECH PRIVATE LIMITED ….. Petitioner
Through: Dr. Amit George, Mr. Vaibhav Jain, Mr. Shashank Pandey & Mr. Rayadurgam Bharat, Advs. (M: 9711218483)
versus
SHAPOORJI PALLONJI AND COMPANY PRIVATE LIMITED & ORS. …..Respondents
Through: Mr. Saurav Agrawal, Ms. Aakanksha Kaul, Mr. Aman Sahani, Mr. Anshuman Chowdhary, Mr. Satya Sabharwal, Ms. Rhea Borkotoky & Mr. Akash Saxena, Advs. for R-1.
Mr. Sanyat Lodha, Adv. for R-2.
Mr. Tejas Karia, Ms. Avlokita Rajvi, Mr. Ramakrishna Veerendra & Mr. Mahir Amir, Advs.
WITH
+ ARB. A. (COMM.) 5/2024 & I.A.2197/2024
ASF INSIGNIA SEZ PVT LTD. ….. Petitioner
Through: Mr. Sanyat Lodha, Adv. (M: 8447477651)
versus
SHAPOORJI PALLONJI AND COMPANY PRIVATE
LIMITED & ORS. ….. Respondents
Through: Mr. Saurav Agrawal, Ms. Aakanksha Kaul, Mr. Aman Sahani, Mr. Anshuman Chowdhary, Mr. Satya Sabharwal, Ms. Rhea Borkotoky & Mr. Akash Saxena, Advs. for R-1.
Mr. Tejas Karia, Ms. Avlokita Rajvi, Mr. Ramakrishna Veerendra & Mr. Mahir Amir, Advs.
Mr. Sanyat Lodha, Adv. for R-2.
Dr. Amit George, Mr. Vaibhav Jain, Mr. Shashank Pandey & Mr. Rayadurgam Bharat, Advs. for R-3.
AND
+ O.M.P. (T) (COMM.) 4/2024
BLACK CANYON SEZ PRIVATE LIMITED ….. Petitioner
Through: Mr. Tejas Karia, Ms. Avlokita Rajvi, Mr. Ramakrishna Veerendra & Mr. Mahir Amir, Advs. (M: 9650269285)
versus
SHAPOORJI PALLONJI AND COMPANY
PRIVATE LIMITED & ORS. ….. Respondents
Through: Dr. Amit George, Mr. Vaibhav Jain, Mr. Shashank Pandey & Mr. Rayadurgam Bharat, Advs. for R-3.
CORAM:
JUSTICE PRATHIBA M. SINGH

JUDGMENT

Prathiba M. Singh, J.
1. The hearing in these matters has been held in hybrid mode.
Background Facts
2. The present batch of proceedings include two appeals filed under Section 37(2) of the Arbitration and Conciliation Act, 1996, (hereinafter, ‘1996 Act’) being, Arb. A. (Comm.) 4/2024 and Arb. A. (Comm.) 5/2024 and one petition under Section 14 of the 1996 Act being O.M.P. (T) (Comm.) 4/2024.
3. All three proceedings arise out of orders dated 23rd May, 2023 and 17th October, 2023 passed by the ld. Sole Arbitrator, who was appointed by this Court vide order dated 22nd July, 2022 in Arb.P. 431/2022 titled ‘Black Canyon SEZ Pvt. Ltd. v. Shapoorji Pallonji and Company Pvt. Ltd.’
4. In these three proceedings, the parties are as follows:
O.M.P. (T) (Comm.) 4/2024
Petitioner
Respondent(s)
Lis
M/s. Black Canyon SEZ Private Ltd.
(hereinafter, ‘BCSPL’)
Respondent No. 1-Shapoorji Pallonji and Company Private Ltd.
(hereinafter, ‘SPCPL’)
This petition seeks termination of mandate of the ld. Sole Arbitrator in terms of Section 14(1)(a) read with Section 14(2) of the 1996 Act.

Respondent No. 2-ASF Insignia SEZ Private Ltd.
(hereinafter, ‘AISPL’)

Respondent No. 3- ASF Buildtech Private Ltd.
(hereinafter, ‘ABPL’)

Arb. A. (Comm.) 4/2024
Appellant
Respondents
Lis
ABPL
SPCPL
This appeal under Section 37(2) of the 1996 Act has been filed seeking setting aside of the orders dated 23rd May, 2023 and 17th October, 2023.

Prayer is also for a declaration that ABPL is not a necessary/proper party to the arbitral proceedings arising out of SPCPL’s Statement of Claim (hereinafter, ‘SOC’)

AISPL

BCSPL

Arb. A. (Comm.) 5/2024
Appellant
Respondents
Lis
AISPL
SPCPL
This appeal under Section 37(2) of the 1996 Act has been filed seeking setting aside of the orders dated 23rd May, 2023 and 17th October, 2023.

Prayer is also for a direction that AISPL be deleted from the array of parties in the arbitral proceedings before the ld. Sole Arbitrator, out of the purported SoC sought by SPCPL.

BCSPL

ABPL

5. All the above three proceedings find their genesis in the following agreements/instruments executed between different parties:
Agreement/Instrument

Parties
Works Contract dated 21st November, 2016
AISPL
SPCPL
—
Co-Development Agreement dated 14th November, 2017
AISPL
BCSPL
—
Supplementary Works Contract dated 9th February, 2018
AISPL
SPCPL
—
Novation Agreement dated 17th April, 2018
AISPL
BCSPL
SPCPL
Settlement Agreement dated 24th July, 2020
BCSPL
SPCPL

ARB. A. (COMM.) 5/2024
6. According to the AISPL (the Appellant in Arb. A. (Comm.) 5/2024), it is engaged in acquiring land for sale, developing plots, constructing buildings and flats, and acting as real estate agents. It also operates as a civil contractor for various construction projects. AISPL was involved in developing an IT/ITES SEZ project in Haryana, India, which includes a building named ‘Black Canyon B1’, measuring about 21,60,000 sq. ft., within the SEZ’s processing zone. The background of these proceedings is that in order to execute various construction works associated with the project, AISPL and SPCPL entered into a Works Contract dated 21st November, 2016, designating AISPL as the ‘Owner’. The Works Contract included an arbitration clause, which was not invoked during AISPL’s involvement. Subsequently, a Supplementary Works Contract dated 9th February 2018 was entered into to incorporate changes purportedly due to the implementation of Goods and Services Tax in India, revising the contract price.
7. It is also stated that to ensure better operations of the project, a Co-Development Agreement dated 14th November, 2017 was also executed between AISPL and BCSPL, designating BCSPL as a Co-Developer. As per AISPL, the said Co-Development Agreement transferred all of AISPL’s obligations under the said Works Contract to BCSPL. Following this, it is stated by AISPL that BCSPL received necessary approvals from the Ministry of Commerce and Industry, Government of India, allowing AISPL to completely withdraw from its role as the ‘Owner’ under the said Works Contract.
8. Further, to ratify the arrangement where BCSPL took over the project’s operation and management, a tripartite Novation Agreement dated 17th April 2018 was entered into among AISPL, BCSPL, and SPCPL. As per AISPL, the said Novation Agreement substituted AISPL with BCSPL as the ‘Owner’ under the Works Contract, with SPCPL’s consent and acknowledgment. Consequently, as per AISPL, BCSPL fully replaced AISPL in all the responsibilities and obligations under the said Works Contract. It is claimed by AISPL that the execution of the said Novation Agreement discharged AISPL from all its obligations under the said Works Contract, with SPCPL’s consent.
9. To further clarify the extent of its obligations, AISPL issued a Letter of Comfort on 17th April, 2018. According to AISPL, the said Letter of Comfort stated that in case BCSPL failed to make any payment(s) under the Works Contract, AISPL would ensure prompt payment by BCSPL. According to AISPL, the said Letter did not imply that AISPL itself would be liable for any payments. Following these agreements, AISPL claims to have withdrawn from the Works Contract and did not interfere with BCSPL’s management of the project, as per the terms of the Co-Development Agreement.
10. After the Novation Agreement, AISPL was discharged from its obligations under the Works Contract. However, due to delays in completing the work, BCSPL and SPCPL agreed to foreclose the said Works Contract, leading to the execution of a Settlement Agreement on 24th July 2020. This agreement, which did not include AISPL as a party or signatory, stipulated that all arising liabilities would be satisfied by BCSPL. As per AISPL, the said Settlement Agreement did not mention any obligations to be fulfilled by the ‘ASF Group’. Thus, it is AISPL’s case that it was released from its obligations and liabilities under the said Works Contract, with BCSPL assuming full responsibility for the project’s continuation and any arising disputes.
11. Thereafter, proceedings under the Insolvency and Bankruptcy Code, 2016 were initiated. AISPL received a demand notice dated 13th January, 2022 from SPCPL under Section 8 of the Insolvency and Bankruptcy Code, 2016, (hereinafter, ‘IBC’) demanding payment of certain sums due to it from AISPL. As per AISPL, SPCPL mischaracterised it as a Corporate Guarantor based on the said Letter of Comfort. The said notices under Section 8 of the IBC were replied to by AISPL on 28th January, 2022, stating the nature of their contractual relationship. However, as per AISPL, National Company Law Tribunal (‘NCLT’) dismissed SPCPL’s application against AISPL on 5th August 2022, stating that AISPL could not be treated as a Corporate Guarantor.
12. As per AISPL, despite the NCLT’s order, AISPL received a letter from SPCPL on 4th March, 2022, which was a reply to a notice allegedly invoking arbitration and seeking an arbitrator’s appointment. However, it is claimed by AISPL that it had not received any prior letter or notice from SPCPL for about 14 months until the ld. Sole Arbitrator passed the impugned order dated 23rd May, 2023, rejecting BCSPL’s application under Section 16 of the 1996 Act, and taking SPCPL’s SoC on record, thereby impleading AISPL in the arbitral proceedings.
13. It is the case of AISPL that upon receiving the notice dated 23rd May 2023 from the ld. Sole Arbitrator, AISPL learnt about SPCPL’s efforts to implead it in the arbitration proceedings under Section 11 of the 1996 Act before the High Court of Delhi. As per AISPL, SPCPL did not provide any notice or communication regarding its intention to do so, or to produce AISPL before the Court.
14. It is in the above background that AISPL maintains that there is no arbitration agreement between AISPL and SPCPL, and the dispute between SPCPL and BCSPL, arising from their inter-se agreement(s), does not involve AISPL. It is claimed that the said Novation Agreement clearly delineates that AISPL has been discharged from its obligations, with BCSPL taking over its role completely. Therefore, SPCPL’s efforts to implead AISPL in the arbitration proceedings are not borne out by the existing agreements, and consequently, it ought to be deleted from the array of parties.
AISPL’s application under Section 16 of the 1996 Act before the ld. Sole Arbitrator
15. As per AISPL, having been wrongfully impleaded in the arbitration proceedings between BCSPL and SPCPL by the impugned order dated 23rd May 2023, it challenged its impleadment by filing an application under Section 16 of the 1996 Act on 4th July, 2023. After hearing the parties, the ld. Sole Arbitrator on 17th October, 2023, rejected AISPL’s Section 16 application, thereby confirming AISPL’s impleadment in the arbitration proceedings and directing them to file a Statement of Defence (hereinafter, ‘SoD’). AISPL filed their SoD on 29th November 2023, and reiterated their stand against their impleadment. The said order rejecting AISPL’s application under Section 16 of the 1996 Act has also been impugned in the present proceedings.
ARB. A. (COMM.) 5/2024
16. ABPL (the Appellant in Arb. A. (Comm.) 5/2024) is engaged in the business of purchasing, selling, contracting, and developing various types of land or plots, whether residential, commercial, industrial, rural, or urban. As per ABPL, on 23rd May, 2023, it received a notice from the ld. Sole Arbitrator, informing it that SPCPL had filed a SoC against them, and directed them to appear on 7th July 2023.
17. Upon a perusal of the SoC, it is ABPL’s case that the disputes primarily involved SPCPL and BCSPL regarding their respective obligations under the Works Contract, the Novation Agreement, and the Settlement Agreement. According to ABPL, the SoC did not contain specific allegations against it. SPCPL’s case against ABPL was based solely on ABPL’s association with the ASF Group of Companies, which includes both AISPL and BCSPL.
ABPL’s application under Section 16 of the 1996 Act before the ld. Sole Arbitrator
18. On 3 July 2023, ABPL filed an application under Section 16 of the 1996 Act. It argued that it had no involvement in the dispute as alleged by SPCPL in its SoC. ABPL claimed to be a separate and distinct legal entity, not an alter ego of BCSPL, despite both being part of the ‘ASF Group’ of companies. It was emphasised that there was no contractual relationship between BCSPL and SPCPL and that it had not received any notice invoking arbitration from SPCPL. Furthermore, ABPL was not a party to the Section 11 petition before the High Court, and thus, had no opportunity to participate in the constitution of the arbitral tribunal. Based on these arguments, ABPL sought a declaration that the ld. Sole Arbitrator did not have the jurisdiction to adjudicate SPCPL’s SoC against ABPL and requested its deletion from the arbitration proceedings.
19. In its order dated 17th October, 2023, the ld. Sole Arbitrator rejected ABPL’s Section 16 application. The ld. Sole Arbitrator noted that ABPL appeared to be an entity ‘inextricably linked’ to the performance of the Works Contract and the Settlement Agreement. Relying on the ‘Group of Companies’ doctrine, the Tribunal justified SPCPL’s inclusion of ABPL as a party to the arbitration, suggesting that ABPL ‘seemed’ to be an alter ego of BCSPL, operating under the same directors/management as part of the ASF Group of Companies. The ld. Sole Arbitrator concluded that the question of impleadment involved mixed questions of law and fact, requiring adjudication, and thus it was not possible to reject SPCPL’s SoC based on a preliminary scrutiny.

O.M.P. (T) (COMM.) 4/2024
20. BCSPL has filed this petition under Section 14 of the 1996 Act, seeking termination of the mandate of the ld. Sole Arbitrator on the ground that the ld. Sole Arbitrator has de jure become incapable of performing his functions in respect of the arbitral proceedings arising out of the Works Contract, the Novation Agreement, and the Settlement Agreement. The said petition arises out of several orders passed by the ld. Sole Arbitrator dated 7th July,2023, 7th August, 2023, 25th August, 2023, and 17th October, 2023.
21. The background of this petition is that on 23rd January, 2023, SPCPL filed its SoD but did not file any Counter Claim. According to BCSPL, instead of filing a Counter Claim or an application for condonation of delay, SPCPL filed a SoC on 14th February, 2023, naming BCSPL, AISPL and ABPL as Respondents without due permission from the ld. Sole Arbitrator. The said SoC stated that it was a fresh claim against companies of the ASF Group. Thereafter, on 3rd March 2023, BCSPL filed an application under Section 16 of the 1996 Act, challenging the ld. Sole Arbitrator’s jurisdiction, arguing that SPCPL had forfeited its right to file a Counter Claim under Section 4 of the 1996 Act. BCSPL also requested the rejection of SPCPL’s SoC. The ld. Sole Arbitrator, however, dismissed the said Section 16 application on 23rd May 2023, stating that SPCPL had the right to file a Counter Claim, and it was preferable to try both claims together. Notices were issued to AISPL and ABPL. After notices were issued to both AISPL and ABPL, these two entities filed their respective applications under Section 16 of the 1996 Act, challenging the authority of the ld. Sole Arbitrator, as already narrated above.
22. On 7th July 2023, the ld. Sole Arbitrator bifurcated the arbitral proceedings into two cases:
* Case-1: For the disputes from the BCSPL’s SoC, with SPCPL as the sole contesting Respondent.
* Case-2: For the disputes from SPCPL’s SoC, with BCSPL, AISPL and ABPL as Respondents.
23. Thereafter, on 7th August 2023, BCSPL raised concerns about above bifurcation and consolidation. The ld. Sole Arbitrator clarified that the labels ‘Case-1’ and ‘Case-2’ were for convenience and did not imply consolidation or segregation. The ld. Sole Arbitrator, vide order dated 7th August, 2023, kept open the question of whether the cases should be tried together, pending formulation of issues. BCSPL’s contention to label SPCPL’s SoC as a ‘Counter Claim’ was noted and deferred the decision.
24. Vide order dated 17th October, 2023, the ld. Sole Arbitrator dismissed the Section 16 applications filed by AISPL and ABPL, as already narrated above. In the said order, insofar as the bifurcation was concerned, the ld. Sole Arbitrator noted that the labels ‘Case-1’ and ‘Case-2’ were for reference purposes only and did not imply any procedural significance. The question of consolidation was kept open for future determination, after issues had been formulated. In light of the approach taken by the ld. Sole Arbitrator, BCSPL seeks termination of the ld. Sole Arbitrator’s mandate with respect to Case-2, on various grounds.
Impugned Orders
25. In the present proceedings, two orders passed by ld. Sole Arbitrator have been challenged i.e., 23rd May, 2023 and 17th October, 2023.
26. Before the ld. Sole Arbitrator, arguments were heard regarding two pending applications:
* An application filed by SPCPL, on 17th February, 2023, seeking condonation of the delay in filing its SoC.
* An application filed by the BCSPL, on 3rd March, 2023, invoking Section 16 of the 1996 Act, seeking declaration that SPCPL forfeited and failed to file its Counter-Claim in terms of Section 4 of the Act, the Arbitral Tribunal did not have the jurisdiction to decide and adjudicate the SoC presented by SPCPL on 14th February, 2023, and consequently, SPCPL’s SoC ought to be rejected.
27. The order dated 23rd May, 2023, decided the above said applications. The relevant portion of the order dated 23rd May, 2023 passed by the ld. Sole Arbitrator is as follows:
“23. The argument of the learned counsel for the Claimant BCSPL that the Respondent SPCPL has not complied with the liberty granted by the Hon’ble High Court by raising the issue of joinder before this Tribunal is factually not correct. As already noted, the objection to nonjoinder of AFSPL has been taken in the SoD in answer to the SoC of BCSPL and also reiterated in its own SoC filed by SPCPL.

24. In the considered view of this arbitral tribunal, the label put to the pleadings by SPCPL cannot be the decisive factor. It is the substance of a pleading which is to be considered and not the form [see, Ram Sarup Gupta (Dead) by LRs v. Bishun Narain Inter College (1987) 2 SCC 555 and Bachhaj Nahar v. Nilima Mandai & Anr. (2008) 17 SCC 491]. The claims in the SoC of SPCPL arise from the transaction and works that are the subject matter of the dispute already before this arbitral tribunal, courtesy the SoC of BCSPL. It seems to be not in dispute that BCSPL and AISPL have not paid monies to SPCPL claimed due under the Settlement Agreement. From the pleadings on record, prima facie, the Respondent SPCPL may not be wrong in contending that BCSPL and AISPL have essentially sought setoff of such dues against dues claimed on account of the alleged failure of SPCPL to demobilize. The questions as to whether SPCPL failed to demobilize, whether SPCPL can be held liable for any delay in such demobilization and whether BCSPL are entitled to any compensation for such alleged delay or alleged failure, are pending adjudication on the basis of the SoC of BCSPL. Having regard to the position taken by BCSPL in its own Claim, these very questions will, in all likelihood, be also some of the issues raised by BCSPL in its contest to the Claims of SPCPL.

25. It was clarified by the legislature through amendment by Act 3 of 2016- post the decision in State of Goa v. Praveen Enterprises (supra)- by insertion of sub-section (2A) in Section 23 of the Act that the “respondent, in support of his case, may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement”. As is clear from Section 2(9), reference to “claim” in the statutory provisions applies equally to a “counterclaim”. A claim referred for adjudication by arbitration under the Act may be defended with right given to the Respondent to press his Counter-claim in the same proceedings. A Counter-claim may be equated with a plaint in a cross-suit [see, Laxmidas Dayabhai Kabrawala v. Nanabhai Chunilal Kabrawala & Ors. 1 964) 2 SCR 567; Jag Mohan Chawla V. Dera Radha Swami Sa/sang (1996) 4 sec 699; Union Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd. & Ors. (2000) 7 SCC 357; Rajni Rani & Anr. v. Khairati La/ & Ors. (2015) 2 SCC 682; and Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri (2020) 2 SCC 394]. The absence of third parties in the cases cited makes no difference. It is trite that a Claim and a Counter-claim (or a set-oft) cannot be separated. It is desirable that both are ”tried” together.

26. The reliance by the Claimant BCSPL on ruling of Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd. (supra) in the present matter is misplaced. It is not being denied that the Respondent SPCPL had initiated legal action by serving on BCSPL and AISPL the statutory Notices dated 26.08.2021 and 13.01.2022 under Section 8 of IBC. The said notices were resisted and while responding BCSPL had issued the NTA. The High Court of Delhi has taken a view that Demand Notice under IBC suffices for the purposes of Section 21 of the Act [Brilltech Engineers Pvt. Ltd v. Shapoorji Pallonji and Company Pvt. Ltd. 2022/DHC/005579]. Even if such view were not to be taken as a general rule- because, as was pointed out, the respondent in that case was willing to submit to arbitration in parallel Section 9 proceedings – it cannot be ignored that SPCPL had put forward the foundational facts for its own claim against BCSPT, and other group companies in the reply to the said NIA, also marking copy to ASPL, giving unto it a right to press its claims against BCSPL. Since the reference to arbitration has come by an order on the petition under Section 11 of the Claimant BCSPL, it is only proper that SPCPL is pressing its Claims in the same proceedings.

27. If the argument of BCSPL is correct that ASPL and ABPL are different juristic persons, it is not for BCSPL to bat for them. The claim at hand is presented by BCSPL and the Respondent SPCPL is within its rights to press for its own claim, arising out of same contracts, in the same proceedings. The argument of BCSPL that the SoC presented by Respondent SPCPL cannot be pressed against ASPL and ABPL because of absence of independent notice under section 21 to them and their absence in proceedings under section 11 before the High Court, has been considered for complete scrutiny, subject to the rights of ASPL and ABPL to raise such (or similar) issues in their own rights at appropriate stage and in appropriate proceedings.

28. It bears repetition to note that the issue of joinder of ASPL was raised before the High Court and the right of SPCPL to raise the same before this tribunal was reserved. The test to be applied in case of objection of joinder is as to whether the party in question is necessary or proper party. Given the element of the Comfort letter issued by AISPL at the stage of execution of the Novation Agreement dated 17.04.2028 by by AISPL, BCSPL and SPCPL, the said party AISPL is prima facie a necessary party, answerable to the claims of SPCPL. Having regard to the chronology of events leading to the execution of the Settlement Agreement, prima facie, both ASPL and ABPL are proper parties, if not necessary, even to the Claim of BCSPL.

29. Whilst BCSPL is the master of the case arising out of its SoCs against SPCPL, so is the status of SPCPL vis-a-vis its own SoCs. The view that additional parties, and also some nonparties, may be impleaded in the counter-claim, because they are necessary parties interested, is well settled [see, Punnakkal Suresh v. Saraswathi 2018 SCC OnLine Ker 3494; Gaya Prasad v. Jamwanti Devi 1997 SCC OnLine Pat 290]. It was observed in Punnakkal Suresh v. Saraswathi (supra) that the “counter-claim necessarily has to be between the parties to the suit which means between the plaintiff and the defendants and for that purpose, if third parties are also necessary for considering the question of counter-claim, they also can be impleaded as additional defendants in the counter-claim”.

30. The issue as to whether the SoCs ofBCSPL may continue without inclusion of AISPL and ABPL in the fray of parties will need to be examined and answered. The fact that BCSPL has chosen not to include them as parties to its own case cannot, however, control the opposite party SPCPL so as to inhibit their inclusion in its own counter case. That, if accepted, would also lead to undesirable result of spilling up one case into two proceedings.

31. Though it is doubtful if BCSPL has the locus to raise objections for AISPL and ABPL, since such plea has been raised it must be observed on the basis of available material that prima facie AISPL and the ASF Group are also bound by the arbitration agreement and may be subjected to the jurisdiction of this Tribunal even though they themselves are not signatories to the Arbitration agreement. SPCPL has made out a case by averments, supported by some material, which cannot be rejected at this stage, that the said entities are inextricably linked to and operationally holding control over the performance of the Works Contract and Settlement Agreement which are the subject matter of the present proceedings both (AISPL and ABPL) being seemingly alter egos of BCSPL. At the cost of repetition, it may be noted that it is not denied that ABPL is the holding company of BCSPL and AISPL, with 81.01% and 100% shareholding, respectively. There is material indicating that BCSPL does not have a separate website but it finds its mention on the website of the ASF Group, namely www.asfinfrastructure.com. Even in the said website, “Black Canyon” (name of the Claimant) is statedly used along with “ASF Insignia”. BCSPL, AISPL and ABPL form part of the ASF Group of Companies and seem to be operating under the same Directors/Management/Persons, the ASF Group of Companies being a conglomerate statedly owned and controlled by Mr. Anil Saraf & Family.

33. The Respondent invokes the Group of Companies Doctrine, and rightly so, to justify inclusion of non-signatories as party respondents in a claim presented for adjudication by arbitration. The learned Counsel for SPCPL is supported by law when he submitted that a party, which is not a signatory to a contract containing an arbitration clause, may be bound by the agreement to arbitrate if it is an alter ego of a party which executed the agreement and the parties have engaged in conduct or made statements indicating an intention to bind a non-signatory. Where the signatory to the arbitration agreement is a mere puppet of the mother company (being a non-signatory), such corporate mother must be bound by arbitration as well. While determining whether to pierce the corporate veil and deciding a claim for alter ego liability, the adjudicatory fora consider numerous factors such as whether the parent corporation exercised dominance and control over the main contractor, whether the parent and subsidiary are run by common officers, do not deal at arm’s length with each other, are not treated as separate profit centers and share common office space.

38. The learned Counsel for the Respondent SPCPL is right in submitting that the Claims in its SoCs arise from the transaction and works that are the subject matter of the dispute before this Arbitral Tribunal, the Claimant BCSPL and AISPL having allegedly not paid monies to the Respondent SPCPL herein as stipulated under the Settlement Agreement, the Claims in own SoCs of BCSPL being in the nature of set off against reliefs claimed on account of alleged failure ofthe Respondent SPCPL to demobilize. Indeed, the questions as to whether the Respondent SPCPL had failed to demobilize, or it can be held liable for delay in such demobilization or further as to whether the Claimant BCSPL is entitled to any compensation for such delay or failure (as are alleged) are pending adjudication before this Tribunal and, from this perspective, there is bound to be an overlap of the issues arising from the two sets of Claims which would require simultaneous adjudication. Thus, this arbitral tribunal may also adjudicate the Claims raised by the Respondent SPCPL in its SoC.

44. It must be observed that SPCPL has filed its SoC while the arbitration proceedings are at the stage of completion of pleadings, issues on the pleadings concerning SoC of BCSPL are yet to be framed and the “trial”, if that expression may be used in absence of more appropriate word, on the issues of fact yet to begin. Thus, no prejudice is likely to be caused to BCSPL by the SoC of SPCPL being entertained beyond the time-lines prescribed by the procedural orders. 45. Upon consideration of the rival contentions on this issue, this tribunal is of the view that Delay, not beyond the limitation prescribed under the Limitation Act, ought not be a ground to decline taking the SoD or SoC on record or from being entertained.

46. For the foregoing reasons, keeping open the right of the other Respondents in the above said matter to raise such pleas as may be available in law to each of them, the application moved on 03.03.2023 by the Claimant BCSPL invoking Section 16 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking declarations to the effect that the Respondent SPCPL has forfeited or failed to file its Counter-Claim in terms of Section 4 of the Act and that this Arbitral Tribunal does not have jurisdiction to decide and adjudicate the SoC presented by the Respondent SPCPL on 14.02.2023 also seeking rejection of the said SoC ofthe Respondent is found devoid of merit and, therefore, dismissed.

47. Further, the application moved on 17.02.2023 by the Respondent SPCPL seeking condonation of delay in filing of its Statement of Claims is allowed and the delay in it being filed in relation to the procedural orders is condoned.

51. Thus, formal notices on the SoC of SPCL are issued to the two other Respondents in the SoC of SPCPL viz. M/S ASF Insignia SEZ Pvt. Ltd. (“AISPL”) and MIS ASF Buildtech Pvt. Ltd. (“ABPL”), i.e., Respondent nos. 2 and 3 respectively, to be sent by post/dasti/email to their available addresses, calling upon them to appear before this arbitral tribunal on the next date, being hereby fixed, in proceedings to be held by Video-conferencing (“VC”) and file their respective Statements of Defence in answer to SoC of SPCPL within six weeks from the date of receipt of the copy of the said SoC. The learned Counsel for SPCPL is called upon to assist in service and take necessary steps to serve copies of the SoC, complete in all respects, on the said Respondent nos. 2 and 3 at the earliest. A copy of this order shall be sent to the respondent nos. 2 and 3 with the above-mentioned notices, also requesting each of them to provide the full particulars (including email addresses) of the Counsel and officers or authorised representatives who shall be concerned with or participating on their respective behalf in the present Arbitration for facility of communication and sharing of the VC link and to enable the Arbitral Tribunal to proceed further with the matters.”

28. Thus, in terms of the above order passed by the ld. Sole Arbitrator, the application moved on 3rd March, 2023 by BCSPL under Section 16 of the 1996 Act, seeking a declaration that SPCPL has forfeited or failed to file its counterclaim and that the ld. Arbitral Tribunal does not have jurisdiction to decide the SoC presented by SPCPL on 14th February, 2023, was found devoid of merit and dismissed. Further, the application moved on 17th February, 2023 by SPCPL seeking condonation of delay in filing its SoC was allowed, and the delay was condoned. Thus, formal notices on the SoC of SPCPL were issued to the two other Respondents, AISPL and ABPL, to appear before the ld. Arbitral Tribunal and file their respective SoDs within six weeks.
29. On 7th July, 2023, the ld. Sole Arbitrator thereafter bifurcated the claims as Case 1 and Case 2, which can be represented as follows:
Case
Claimant
Respondents

1
BCSPL
SPCPL

2
SPCPL
1. BCSPL
2. AISPL
3. ABPL

30. On the said date, AISPL and ABPL moved applications under Section 16 of the 1996 Act, challenging the jurisdiction of the ld. Sole Arbitrator in Case-2 and seeking the deletion of their names from the memo of parties as Respondents. These applications were submitted via email in PDF and Word formats. Notices on these applications have been accepted by the learned Counsel for SPCPL, who has been granted two weeks to file replies. The learned Counsel for R-2 and R-3 may file rejoinders to these replies within one week thereafter. Additionally, it was agreed that pleadings and proceedings from Case-1 will be shared with the learned Counsel for R-2 and R-3 in Case-2 by those participating from the beginning.
31. The relevant portions of the order dated 17th October, 2023 passed by the ld. Sole Arbitrator reads as follows:
“23. The objection of SPCPL to the defect on non-joinder, based particularly on the contention that AISPL is a necessary party was raised before the High Court and the same was reserved to be pressed before this tribunal. Ordinarily, the arbitral proceedings would engage only such disputants as are party to the Arbitration Agreement. But it is well settled that non-signatories may also be made parties to such adjudicatory process, inter alia, upon attendant facts and circumstances justifying invocation of group of Companies doctrine. Whilst there may be no quarrel with the proposition that the arbitral tribunal is “not bound” by the Code of Civil Procedure and the Indian Evidence Act (Kerala State Electricity Board and Ors. vs. Kurien E. Kalathil and Ors. (2018) 4 SCC 793), it does not mean the civil jurisprudence does not apply. In adversarial adjudicatory process, the test to be applied for such purposes, and in case of objection to joinder, remains the most fundamental consideration viz. as to whether the party in question is necessary or proper party. Given the element of the Comfort letter issued by AISPL at the stage of execution of the Novation Agreement dated 17.04.2028 by AISPL, BCSPL and SPCPL, the said party AISPL is prima facie a necessary party, answerable to the claims of SPCPL. Having regard to the chronology of events leading to the execution of the Settlement Agreement and the subsequent conduct ascertainable from correspondence exchanged in its wake, prima facie, both AISPL and ABPL are proper parties, if not necessary, even in relation to the Claim of BCSPL.

24. BCSPL had taken out the petition under Section 11 of the A&C Act before the High Court. It is the master of the case arising out of its SoCs against SPCPL. It chose to restrict the array of opposite side to SPCPL. But, SPCPL against which the said claim is directed is entitled in law to press its own claims, provided it is able to plead and substantiate a cause of action for the same, against BCSPL, whether styled as Counter-Claim or set off or, to use slightly loose expression (in absence of a better one coming to mind), by a petition in the nature of a cross-suit. This, it may do, whilst raising for adjudication objection to non-joinder of what from its perspective is necessary or proper party, in the case of the opponent and, by joining such parties (being described by it as necessary or proper) as respondents, in its own case. Like the opponent, it is also master of its own SoC. Whether the SoC of the second party is to be labelled as Counter-Claim or Set-off or something else is a question of semantics.

25. It is trite that additional parties, and also some non-parties, may be impleaded in the counter-claim, because they are necessary parties [ see, Punnakkal Suresh v. Saraswathi 2018 SCC Online Ker 3494; Caya Prasad v. Jamwunti Devi 1997 SCC Online Pat 290]. In Punnakkal Suresh v. Saraswathi (supra), it was ruled that the “counter-claim necessarily has to be between the parties to the suit which means between the plaintiff and the defendants and for that purpose, if third parties are also necessary for considering the question of counter-claim, they also can be impleaded as additional defendants in the counter-claim.” In the matter before this Tribunal, SPCPL had raised the issue of non-joinder before the High Court. The issue was kept open and left to be pressed before this Tribunal. And whilst such objection in the matter arising out of the SoC ofBCSPL is pending consideration, objection cannot be taken to impleadment, on the ground the fray has been improperly enlarged, it being in exercise of its discretion by SPCPL to press its own SoC including therein the parties whose absence in the former case is objected to.

26. Noticeably, the applicants (AISPL and ABPL) raise questions of facts. It is their case that AISPL is not the alter-ego of BCSPL, they being separate and distinct legal entities, they having never acted at any time on behalf of BCSPL and that the intent of the Letter of Comfort was not to assume responsibility to pay for BCSPL.

27. Having regard to the material available on record, it does appear, prima facie, that AISPL (R-2) and ABPL (R-3) are entities which may have been inextricably linked to and operationally holding control over the performance of the Works Contract and Settlement Agreement which are the subject matter of the present proceedings. Both of them (AISPL and ABPL) seem to be alter egos of BCSPL, they being part of the same group of Companies.

28. It is not denied that ABPL is the holding company of BCSPL and AISPL, with 81.01.% and 100% shareholding, respectively. There is material indicating that BCSPL does not have a separate website but it finds its mention on the website of the ASF Group, namely www.asfinfrastructure.com. It is alleged by SPCPL, which cannot be rejected at this stage when opportunity to adduce evidence is yet to be afforded, that the three Companies under the ASF Group function with the same staff, managers & officials using common domain email IDS (@asfinfrastructure.com). Even in the said website, “Black Canyon” (name of the Claimant) is statedly used along with “ASF Insignia”. BCSPL, AISPL and ABPL, forming part of the ASF Group of Companies, seem to be operating under the same Directors/ Management/ Persons, the ASF Group of Companies being a conglomerate statedly owned and controlled by Mr. Anil Saraf & Family.

29. It is not denied that the Works Contract dated 21.11.2016 was signed by AISPL (R-2), being SPV of ASF Group that was to develop the SEZ, it being the case of SPCPL that there were representations and assurances that AISPL had the entire support, backing and strength of the ASF Group of Companies. Reliance is placed by SPCPL on email dated 02.06.2021, issued by Mr. Anil Sharma, Vice President (Projects), ASF Group, conveying the commitment of ‘ASF Management’ to release outstanding dues to SPCPL. Pertinently, the said communication, assumed at this stage to be real, is much later in time to the execution of the Novation Agreement and constitutes prima facie material reflective of the conduct of the partis. This would be relevant to understand the intent of the parties in context of the Comfort Letter (relevant part quoted earlier) admittedly issued to SPCPL contemporaneous to the execution of the novation agreement dated 17.04.2018 acknowledging that “AISPL and BCSPL are the group of companies of ASF group and both companies are under the management & control of the same set of management/owners”, AISPL statedly having “nominated/appointed its associate company Black Canyon SEZ Pvt. Ltd. (“BCSPL “) as a Co-Developer with regard to Black Canyon Private Campus Land, Black Canyon Building and its allied structure “.
….

33. Indeed, last above-mentioned submissions of AISPL and ABPL are founded in ruling of a learned Single Judge of the High Court of Delhi in Arupri Logistics Pvt. Ltd. v. Shri Vilas Gupta and others (Arb. A. 5/2022 decided on 24.07.2023) accepting the said proposition, endorsing such view expressed by learned Single benches of the Madras High Court in two judgments reported as VG. Santhosam v. Shanthi Gnanasekaran & others (2020 SCC OnLine Mad 560) and Abhibus Services India Pvt. Ltd v. Pallavan Tramport Consultancies Services Ltd (2022 SCC OnLine Mad 796). A lot of argument was raised on the issue as to whether the decision of jurisdictional High Court in Arupri (supra) is binding or is per incurium (as contended by SPCPL) on the ground, inter alia, that previous ruling of another coordinate bench – Amazon. COM NV Investment Holdings LLC v. Future Coupons Private Limted (supra) – holding to the contrary having not been noticed, the rulings of Madras High Court having only a persuasive value. This tribunal need not venture into such issues for more than one reason.

34. It is not correct to argue that by the SoC presented by SPCPL, it has called upon this Tribunal to allow impleadment of AISPL and ABPL. SPCPL has come up with its SoC asserting in its own rights that the said parties are necessary and proper, showing them in the fray, invoking the group of Companies doctrine. It is not contested that the Group of Companies doctrine carves out an exception to the general rule that only signatories to the Arbitration agreement can be party to the proceedings as at hand. Whether or not the inclusion of AISPL and ABPL amongst the party-Respondents on basis of such doctrine is correct on basis of facts narrated by SPCPL, some crucial and on which AISPL and ABL join issue, would need adjudication as questions mixed of facts and law arise and, thus, is yet to be determined. The High Court, by its order in the proceedings under Section 11 of the A&C Act, has left the issue of inclusion of other entities, on basis of averments of SPCPL, to be determined by this Tribunal. With such imprimatur by the “Court”, this Tribunal is duty-bound to consider if the objection of non-joinder in relation to the SoC of BCSPL is well-founded and, conversely, if the inclusion of AISPL and ABPL in the array of Respondents in SoC of SPCPL is correct. So, it cannot be said that this Tribunal has exceeded jurisdiction vested in it by the law by entertaining the Soc of SPCPL.

35. For the foregoing reasons, it is not fair to seek, nor possible to order, rejection of the SoC of SPCPL to the extent it is directed against AISPL (R-2) and ABPL (R-3), based on threshold scrutiny. The issue of liability – joint or several – of the said parties for defaults primarily attributed to BCSPL (R-1) will have to be decided after findings are reached on the basis of evidence germane to invocation of the group of companies doctrine. If SPCPL succeeds in establishing such linkage, and brings home its case of defaults by BCSPL vis-a.vis the obligations under the Settlement Agreement and other aspects, it would have to also prove that AISPL and ABPL are accountable. It is in that context that the application of group of companies doctrine would need to be examined. Conversely, gaps in proof of germane facts might entail SPCPL failing in holding the applicants accountable. When some of the crucial facts are in dispute, giving rise to mixed questions of facts and law, it is not permissible to reject the contentions without opportunity to substantiate. It, thus, cannot be held at this stage that the jurisdiction has been wrongly invoked against AISPL (R-2) and ABPL (R-3). The issue is kept open. The applications under section 16 A&C Act of AISPL (R-2) and ABPL (R-3) are disposed of with these observations.

36. Some tentative and prima facie observations have been recorded in the above order but only for purposes of deciding the captioned applications. Nothing in this order shall be construed as tantamount to expression of final opinion on any of the issues raised.”

32. In relation to the objections raised to the description of SoCs as Case-1 and Case-2, the ld. Sole Arbitrator observed as follows:
“Objection to description of Statements of Claims as Case-1 and Case-2

37. The Claims of SPCPL in its SoC arise from the same transaction and works that are the subject matter of the dispute before this Arbitral Tribunal, BCSPL and AISPL having allegedly not paid monies to SPCPL as stipulated under the Settlement Agreement. This is counter when compared with the case of BCSPL in its SoC for reliefs founded on alleged failure of SPCPL to demobilize and, thus, in the nature of cross-version, or set off, or Counter-Claim, or a cross-suit. Indeed, the questions as to whether SPCPL had failed to demobilize, or it can be held liable for delay in such demobilization or further as to whether BCSPL is entitled to any compensation for such delay or failure (as are alleged) are pending adjudication on the basis of SoC of BCSPL. The claims pressed by BCSPL and the reliefs sought by SPCPL are two facets of essentially the same dispute for adjudication by arbitral process of which this tribunal has been constituted. From this perspective, there is bound to be an overlap of the issues arising from the two sets of rival Claims which would require simultaneous adjudication.

38. It was noted in the proceedings of 07.08.2023 that there is no direction yet by this Tribunal for the two captioned matters to be consolidated. It was also pointed out that the observations in Para 6 of the Record of Proceedings dated 07.07.2023, as quoted above, have to be read with observations in paras 2 and 3 whereby the two Statements Claims ‘re labelled as Case-I and Case-2 respectively “for convenience of reference”. The suggestion of the learned Counsel for BCSPL that the Statement of Claims of SPCPL be instead referred to as “Counter-Claim” seemed to be one possible solution but for reluctance of the learned Counsel for SPCPL to agree to it. The expressions – Case-1 and Case-2 – have been adopted only as labels and not to signify anything more. Nothing further needs to be read into it. The dispute between the parties is same, each side having its own version and set of grievances, the nomenclature used not meant to indicate clubbing or segregation or anything else. The question whether they ought to be put together to “trial”, if such be the appropriate expression to deploy in the present context, is presently kept open and shall be decided at appropriate stage after pints for determination (Issues) have been formulated.

39. The above should allay apprehensions expressed by the learned Counsel for BCSPL. This tribunal, thus, will continue with the description of the Statements of Claims of BCSPL and SPCPL as Case-I and Case-2 respectively.

40. The second and third Respondents in Case-2, i.e., AISPL (R-2) and ABPL (R-3) are called upon to fil their Statements of Defence in answer to the Statement of Claims of SPCPL. They may do so within six weeks from today, as is the time now sought by their leaned Counsel, a clear understanding being that there shall be no request for enlargement of time.”

Submissions on behalf of ld. Counsel Mr. Tejas Karia in O.M.P. (T) (Comm.) 4/2024.
33. As recorded in the order dated 24th January 2024, Mr. Tejas Karia, ld. Counsel, sought the termination of the mandate of the ld. Sole Arbitrator. He argued that the ld. Sole Arbitrator improperly described the two claims made by SPCPL as Case 1 and Case 2. Mr. Karia contended that impleading AISPL and ABPL as respondents in the arbitral proceedings was impermissible, as the initial reference was only between BCSPL and SPCPL. He asserted that SPCPL should have sought impleadment in the main matter before the ld. Sole Arbitrator and then filed its claims as counterclaims. This position was contested by the counsel for SPCPL.
34. Mr. Karia also raised an objection regarding the ld. Sole Arbitrator’s actions, arguing that the Arbitrator not only condoned the delay in filing SPCPL’s claim but also treated it as a separate claim petition, thereby adding two new parties who were not referred to arbitration by the order of this Court dated 22nd July, 2022. According to Mr. Karia, the only permissible course of action was for the Arbitrator to treat SPCPL’s claim as a counterclaim. Additionally, if further parties were to be added, SPCPL should have sought their impleadment through an appropriate application. Instead, a separate, independent claim was allowed, and in the order dated 17th October, 2023, BCSPL’s claim was treated as Case No. 1 and SPCPL’s claim as Case No. 2. Mr. Karia contended that this approach is contrary to the scheme of the Arbitration and Conciliation Act, 1996, specifically Sections 23 and 2(9) of the 1996 Act.
Submissions on behalf of ld. Counsel Dr. Amit George in ARB. A. (COMM.) 4/2024.
35. On behalf of ABPL, it is submitted by ld. Counsel Dr. Amit George that the said company is the holding company of BCSPL and AISPL, which was never a party to either the initial reference or to the Settlement Agreement. The Settlement Agreement, at best, is between BCSPL and AISPL, not involving ABPL. ABPL, being a holding company, cannot be impleaded in a proceeding where there is no privity, and the Group of Companies doctrine cannot be stretched to such an extent to implead ABPL in these proceedings.
36. Dr. George further submits that, insofar as the maintainability of the present appeal is concerned, it is now settled in M/s Arupri Logistics Pvt Ltd v. Shri Vilas Gupta (2023 SCC OnLine Del 4297, paragraphs 54 and 61) that any order passed by the Tribunal impleading a party would be challengeable by way of an appeal. He took the Court through the reference order under Section 11 of the 1996 Act dated 22nd July, 2022, to argue that the only reference here in paragraph 18 of the said order, as also in the conclusion, is to AISPL and not to ABPL. Thus, the impugned order impleading ABPL as a holding company would not be sustainable.
37. He further submitted that in an arbitral proceeding, non-signatories to an arbitration agreement cannot be impleaded by the manner as is being sought to be done by SPCPL. The observations of the ld. Sole Arbitrator by confusing the Group of Companies Doctrine (hereinafter, ‘GoCD’) and Alter Ego Doctrine are contrary to settled legal principles as laid down in Cox and Kings Ltd. v. SAP India Pvt. Ltd. (2023 SCC Online SC 1634) and Arupri Logistics (supra). Reliance was placed on Cox and Kings (supra)1, specifically paragraphs 109 onwards, where there is a discussion on the distinction between GoCD and Alter Ego doctrine.
38. He further submits that the decision in Cox and Kings (supra) lays down that GoCD cannot be utilized to implead parties who have no connection and no liability under the respective agreement(s). According to him, if such an impleadment is allowed, especially in the case of large conglomerates, the holding company could get embroiled in thousands of disputes, which is contrary to the intention of arbitration law itself. It was further submitted that paragraph 171 of Cox and Kings (supra) is clear to the effect that insofar as non-signatories are concerned, the ld. Arbitral Tribunal may consider impleadment in respect of such non-signatories, only if the Referral Court refers a non-signatory to the ld. Sole Arbitrator. In the case of non-signatories in respect of whom, no observation has been made by the Referral Court, the Tribunal has no jurisdiction. Therefore, in his submission, the judgment of this Court in Arupri Logistics (supra) is good law. 
39. In Arupri Logistics (supra), ld. Counsel places reliance upon paragraphs 55 to 61 in support of his submission that individuals who are not parties to the arbitration agreement cannot be impleaded. Paragraph 93 of the said decision is also relied upon to argue that powers of an arbitral tribunal are distinct and different from the powers of the Court. The arbitral tribunal does not enjoy inherent powers and, therefore, cannot implead parties who are not strictly bound by the arbitration agreement.
40. Before this Court, in the reference petition, the only liberty granted was for raising the issue relating to impleadment of ASF before the ld. Sole Arbitrator. However, SPCPL chose not to implead ASF but instead filed a SoC, which has been accepted by the arbitral tribunal, and the same procedure is contrary to law. He further submitted that ASF is not a party to any of the agreements signed with SPCPL and BCSPL. Even in the reply to the notice under Section 21 of the 1996 Act dated 4th March, 2022, claims were raised only against ASF and not ABPL.
41. Dr. Amit George ld. Counsel places reliance on the following decisions:
* Cox & Kings Ltd. v. SAP India (P) Ltd. [2023 SCC Online SC 1634]
* Arupri Logistics (P) Ltd. v. Vilas Gupta [2023 SCC Online Del 4297]
* Cheran Properties Ltd. v. Kasturi & Sons Ltd. [(2018) 16 SCC 413]
* Mumbai International Airport (P) Ltd. v. Regency Convention Centre & Hotels (P) Ltd. [(2010) 7 SCC 417]
* Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd. (2017) 162 DRJ 412; [2017 SCC Online Del 7228]
Submissions on behalf of ld. Counsel Mr. Sanyat Lodha in ARB. A. (COMM.) 5/2024.
42. Mr. Sanyat Lodha, ld. Counsel appearing for AISPL, submits that AISPL is not a party to the said Settlement Agreement, out of which the present arbitral proceeding arise. AISPL is mentioned only in the recitals for the sake of background facts, and there are no obligations imposed on AISPL in the Settlement Agreement, as AISPL is not a signatory. Regarding the Letter of Comfort issued by AISPL, it is submitted that the said Letter also clarifies that the main obligation lies with BCSPL and not AISPL. Therefore, the impleadment of AISPL and the continuation of the counterclaim against AISPL are not maintainable.
43. Further, reference is made to the judgment in Sudhir Gopi v. Indira Gandhi National Open University (2017 SCC OnLine Del 8345), where the Court held that the arbitral tribunal cannot pierce the corporate veil (Paragraph 15). He further places reliance on the reference order dated 22nd July, 2022 passed by this Court, which only refers to a Settlement Agreement dated 24th July, 2020, and does not mention AISPL. The said Settlement Agreement is solely between BCSPL and SPCPL, with recovery only against BCSPL. The Settlement Agreement (at page 114) and the Novation Agreement (at page 104) make it clear that Clause 5.2 of the Novation Agreement supersedes all earlier agreements, including the Letter of Comfort issued by AISPL. Relevant clauses of the Novation Agreement relied upon are: Recitals D and E, Clauses 1.1, 1.2, 1.3, 1.4, 1.5, Clause 2, Clauses 3.2, 3.3, and Clause 5.
44. It is also argued that in the Section 21 notice, ASF is not a party. SPCPL raised a demand notice under Section 8 of IBC, against AISPL, which was rejected by the NCLT on 5th August, 2022. Even at the stage of the petition under Section 11 of the 1996 Act, impleadment of ASF was not sought. SPCPL adopted a new procedure before the arbitral tribunal by filing a SoC without impleading the other two companies. Notice was issued on 23rd May, 2023, by the ld. Sole Arbitrator to the said two companies, asking for filing their respective SoD(s). Consequently, an I.A. was filed seeking deletion of AISPL, which was decided on 17th October, 2023. Therefore, there has been no delay in approaching the Court.
45. Mr. Lodha further submits that AISPL is not a signatory to the Settlement Agreement. The Novation Agreement has taken care of AISPL’s role, and after the new company came into the picture, AISPL could not have been implicated in this manner. Reliance is placed on the decision in Arupri Logistics (supra) regarding the power of the ld. Arbitral Tribunal to implead third parties. Paragraph 92 of the said decision is only in the context when there are statutory rules governing arbitral proceedings or the agreement itself provides for rules governing the conduct of the arbitral proceedings. The decision in Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd., (2017 SCC OnLine Del 7228, Paragraph 30) is relied upon to argue that arbitral tribunals cannot assume jurisdiction on their own since notice under Section 21 of the 1996 Act is mandatory even in respect of such third parties.
46. Ld. Counsel Mr. Lodha has additionally placed reliance on the following decisions:
* Sudhir Gopi vs. IGNOU (2017 SCC OnLine Del 8345)
* M/s Arupri Logistics Pvt Ltd v. Shri Vilas Gupta & Ors. (2023 SCC OnLine Del 4297)
* Abhibus Services India Pvt. Limited and Others v. Pallavan Transport Consultancies Services Ltd. Represented by its Managing Director and Others (2022 SCC OnLine Mad 796)
* M. Mythrai v. T. Ramesh & Ors., (2021 SCC OnLine Mad 13704)
* V.G. Santhosam and Others v. Shanthi Gnanasakaran and Others, (2020 SCC OnLine Mad 560)
* Amit Guglani and Another v. L and T Housing Finance Ltd. Through Managing Director and Another, (2023 SCC OnLine Del 5206)
* Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd. (2017 SCC OnLine Del 7228)
* Shriram Transport Finance Company Limited V. Narender Singh [(2022) 6 HCC (Del) 275]
* Haldiram Manufacturing Co. Ltd. v. SRF International (2007 SCC OnLine Del 457)
* Extramarks Education India Private Limited v. Shri Ram School (2022 SCC OnLine Del 3123)
* Union of India v. Bharat Enterprise (2023 SCC OnLine SC 369)
* Bharat Coking Coal Ltd. v. Annapurna Construction, (2003) 8 SCC 154
* Kerala State Electricity Board and Ors. v. Kurien E. Kalathil and Ors. (2018) 4 SCC 793
* Girnar Traders v. State of Maharashtra, (2007) 7 SCC 555
* Jarnail Singh v. Lachhmi Narain Gupta, (2022) 10 SCC 487
* State of Maharashtra v. Murao Malojirao Ghopade (1996 SCC OnLine Bom 1645)
Submissions on behalf of ld. Counsels Mr. Saurav Agrawal & Ms. Aakanksha Kaul for SPCPL.
47. Mr. Saurav Agarwal, ld. Counsel appearing for SPCPL, submits on a query from the Court that his client would have no objection if the claim filed by SPCPL is treated as a counterclaim to the BCSPL’s claim petition. Additionally, he submits that the two additional parties would be covered by the GoCD, wherein connected parties to the BCSPL can be made Respondents in the matter for a comprehensive adjudication of the dispute. He further submits that when AISPL and ABPL were impleaded as Respondents in the SoC filed by SPCPL, these Respondents objected by filing an application under Section 16 of the 1996 Act, which has now been adjudicated vide order dated 17th October, 2023, by the ld. Sole Arbitrator. The ld. Sole Arbitrator has permitted their impleadment on a prima facie basis. Thus, he submits that all necessary procedural requirements have been complied with, although there may be differences in terminology used by the ld. Sole Arbitrator.
48. On behalf of SPCPL, Ms. Akanksha Kaul, ld. Counsel, submits that the order dated 22nd July, 2022, gave permission to both the newly impleaded Respondents to raise these contentions before the ld. Sole Arbitrator. Additionally, ASF has issued a Letter of Comfort in favor of SPCPL. Further, in reply to the Section 21 notice issued by BCSPL, SPCPL made it clear that claims are being raised against AISPL. She relies on the reply dated 4th March, 2022, which states:
“4. That in view of the aforesaid facts and circumstances, BCSPL and AISPL are, jointly and severally, liable to pay the following monies, admittedly and undisputedly outstanding and payable to SPCPL, in terms of Clause 4 read with Annexure A of the Settlement Agreement:

a. Rs.1,48,17,623/-;
b. Rs. 2,94,01,513 towards the retention money;
c. Certified Final Bill amount of Rs. 74,33,683; and
d. Rs. 43,29,106.38 towards the cost of material transfer.
In addition to the aforesaid amounts, BCSPL and AISPL are also liable to pay monies towards TDS and cement consumption.
That in terms of Clause 61.1 of the Works Contract, not only disputes and differences but also “claims of any nature whatsoever arises out of, in connection with, or in relation to the Contract Agreement” are to be referred to arbitration. Thus, the claims of my client towards the admitted and undisputed outstanding amounts as well as towards damages and compensation for breach of contract, TDS, and cement consumption are liable to be referred to arbitration. However, in view of the comfort letter and the conduct of AISPL, in any proceedings that SPCPL initiates for recovery of the aforesaid amounts, AISPL would be a proper and necessary party.
That even otherwise SPCPL has not caused any delay in the demobilization of the entire Work Site. Any delay that may have been caused is entirely attributable to hindrances created by BCSPL. Furthermore, SPCPL has not caused any delay in the reconciliation process/exercise and any delay that may have been caused in the reconciliation process/exercise is entirely attributable to BCSPL.
That it is clarified that in terms of the Settlement Agreement the liability of BCSPL to make payments to SPCPL is not contingent on the latter demobilizing from the site. Thus, your client cannot seek to avoid making payment on the ground that the demobilization was allegedly delayed. By failing to make payments in terms of the Settlement Agreement, your client has breached the terms of the said Agreement. For such breach, SPCPL is entitled to damages and compensation from your Client.
That without prejudice to the aforesaid contentions, my client proposes that the Parties (i.e., SPCPL, BCSPL & AISPL) appoint Hon’ble Mr. Justice C.K.Prasad as the sole arbitrator. SPCPL is not agreeable to the appointment of the sole name proposed by you.”

49. Ld. Counsel for SPCPL further submitted that AISPL was a necessary and proper party in the arbitral proceedings, and no challenge was raised to the order dated 23rd May, 2023, passed by the ld. Arbitral Tribunal. Additionally, she notes that in the reply to the Section 21 notice, SPCPL clearly stated that it has monetary claims against AISPL as well.
50. Mr. Saurav Agarwal, ld. Counsel appearing along with Ms. Akanksha Kaul, rebuts the submissions made by AISPL, ABPL and BCSPL by relying on the decisions in Gaya Prasad v. Smt. Jamvanti Devi (AIR 1998 Patna 53), and Punnakkal Suresh v. Saraswathi (2018 SCC OnLine Ker 3494) to argue that the fundamental principle is that in a counterclaim, new parties can be impleaded as the counterclaimant is the dominus litis. The submission that such an impleadment is not permissible in a counterclaim is contrary to settled legal principles. Reliance is place on the decisions in AV Murugan v. K. Maheshwari (2019 SCC OnLine Mad 39139), Gaya Prasad (supra), and Punnakkal Suresh (supra).
51. It is further argued that the focus on notice invoking arbitration under Section 21 of the 1996 Act is misplaced, as Section 21 of the 1996 Act merely signifies the completion of arbitral proceedings. Once the commencement has happened, SPCPL is free to proceed according to law and file its counterclaim or counterstatement of claim, irrespective of the nomenclature.
52. In relation to the demand notice issued under the provisions of the IBC, it is submitted that an order passed under Section 8 of the IBC, adopts different standards and cannot be used to decide whether any person is a necessary or proper party.
53. Reliance is place on the decision in MTNL v. Canara Bank [(2020) 12 SCC 767], to argue that an arbitral tribunal can invoke GoCD. Without flexibility given to the arbitral tribunal, disputes cannot be adjudicated effectively by the tribunal. Paragraph 10.3 of the said decision is relied upon. It is pointed out that the overruling of the decision in MTNL (supra) is on a different issue. Further, reliance is placed upon the decision in Cox and Kings (supra) (paragraphs 85 & 103) to submit that if commercial circumstances or the conduct of parties require such an impleadment, it would be permissible.
54. Ld. Counsels for the parties further argue that though there may be a difference between the GoCD and the consideration of a party as an ‘alter ego’, in this case, the conduct of the parties shows that AISPL is a proper and necessary party. Reliance is placed on the following documents:
* Letter of Comfort dated 17th April, 2018 by AISPL.
* Settlement Agreement wherein Clause 5 uses the abbreviation ASF.
* Use of the terminology “ASF” in various correspondences.
55. In relation to AISPL’s contention that the arbitral tribunal cannot pierce the corporate veil, it is argued that the decision of this Court in Sudhir Gopi (supra) is not good law as it is based on Indowind Energy Ltd. v. Wescare (India) Ltd., (2010) 5 SCC 306, which has been subsequently overruled in Cheran Properties Ltd. v. Kasturi and Sons Ltd., (2018) 16 SCC 413. Finally, it is submitted that ASF relates to one individual under whose control and management all these companies are, making the impleadment of these companies necessary and proper. Reference is made to an email dated 2nd June, 2021, where