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Issues: (i) Whether a valid arbitration agreement existed between the parties under the Arbitration and Conciliation Act, 1996; (ii) whether CANFINA, though a non-signatory, could be impleaded in the arbitral proceedings.
Issue (i): Whether a valid arbitration agreement existed between the parties under the Arbitration and Conciliation Act, 1996.
Analysis: An arbitration agreement need not be in a formal bilateral contract if the intention to arbitrate is evidenced in writing through correspondence, proceedings, and pleadings. The record showed a common understanding to refer the disputes to arbitration, including the recorded consent before the High Court and the subsequent exchange of claims and defences before the arbitrator. The appellant, having consented to arbitration and participated in the proceedings, was precluded from denying the existence of a written arbitration agreement.
Conclusion: A valid arbitration agreement existed between the parties, and the objection to its absence was rejected.
Issue (ii): Whether CANFINA, though a non-signatory, could be impleaded in the arbitral proceedings.
Analysis: A non-signatory may be bound where the conduct of the parties and the nature of the transaction show a common intention to arbitrate together, particularly in a composite transaction involving closely linked dealings. The bonds transaction originated with CANFINA, was transferred to Canara Bank, and the dispute could not be effectively resolved without all three entities. CANFINA had also participated throughout the proceedings, supporting its joinder as a necessary and proper party.
Conclusion: CANFINA was rightly held to be a proper party to the arbitration and was directed to be joined in the arbitral proceedings.
Final Conclusion: The appeals succeeded only to the extent of securing joinder of CANFINA in the pending arbitration, while the challenge to the existence of the arbitration agreement failed.
Ratio Decidendi: An arbitration agreement may be established by written correspondence, recorded consent, and pleadings showing consensus ad idem, and a non-signatory may be joined in arbitration where the transaction is composite and the parties intended that all connected entities be bound by the arbitral process.
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