Arbitration jurisdiction ends after arbitrator appointment: non-signatories cannot attend hearings and fresh ancillary directions are impermissible.

A non-signatory has no statutory right to remain present in arbitral proceedings between signatories, because the Arbitration and Conciliation Act binds only parties to the arbitration agreement and persons claiming under them; allowing such presence also conflicts with the confidentiality requirement under Section 42A. After appointing a sole arbitrator under Section 11(6) and disposing of the proceeding, the court becomes functus officio and cannot entertain fresh ancillary applications or issue further directions in the same matter. Inherent powers under Section 151 CPC cannot enlarge that limited jurisdiction. The impugned order was set aside and the parties were left to proceed under the earlier appointment order.

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Issues: (i) Whether a non-signatory to the arbitration agreement could be permitted to remain present in the arbitral proceedings. (ii) Whether, after appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, the Court could entertain fresh ancillary applications and issue further directions in the disposed of proceedings.

Issue (i): Whether a non-signatory to the arbitration agreement could be permitted to remain present in the arbitral proceedings.

Analysis: The arbitral award under Section 35 of the Arbitration and Conciliation Act, 1996 binds only the parties to the arbitration agreement and persons claiming under them. A non-signatory is not a party within the meaning of Section 2(h) and has no legal right under the Act to be present in arbitral hearings between signatories. Permitting a stranger to remain present in the proceedings would also offend the confidentiality obligation under Section 42A and has no statutory basis in Part I of the Act.

Conclusion: The permission granted to the non-signatory to remain present in the arbitral proceedings was without jurisdiction and could not be sustained.

Issue (ii): Whether, after appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, the Court could entertain fresh ancillary applications and issue further directions in the disposed of proceedings.

Analysis: Once the Court appointed the sole arbitrator and disposed of the Section 11(6) proceedings, it became functus officio. The Arbitration and Conciliation Act, 1996 is a self-contained code, and Section 5 limits judicial intervention to matters expressly provided. A fresh application in disposed proceedings seeking further directions concerning the arbitral process could not be entertained, and Section 151 of the Code of Civil Procedure, 1908 could not be invoked to enlarge that jurisdiction.

Conclusion: The Court had no jurisdiction to entertain the subsequent applications or to issue the impugned ancillary directions in the disposed of Section 11 proceedings.

Final Conclusion: The impugned order was set aside, the appeals were allowed, and the parties were left to work out their rights in accordance with the earlier order appointing the arbitrator.

Ratio Decidendi: After appointment of an arbitrator under Section 11(6), the Court becomes functus officio in that proceeding and cannot, by invoking inherent powers, permit non-signatories to participate in the arbitration or issue ancillary directions not authorised by the Arbitration and Conciliation Act, 1996.

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