Non-signatory arbitration requires prima facie consent to be bound; mere commercial linkage cannot sustain a Section 11 referral.

In Section 11 referral proceedings, a court may involve a non-signatory only if it is prima facie satisfied that the person is a veritable party to the arbitration agreement. The court must examine the contract, surrounding dealings, and any material showing real intention to bind the non-signatory; mere commercial association, back-to-back arrangements, emails, or an assignment between other parties is insufficient. On the facts, the respondent's arrangement was only with the contractor, while the principal contract was with the appellant and no written consent to subletting or assignment was shown. The referral to arbitration was therefore set aside and the Section 11 application dismissed.

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Issues: Whether the High Court was justified in referring the parties to arbitration under Section 11 on the footing that the respondent, a non-signatory to the principal contract, was bound by the arbitration agreement and entitled to invoke it against the appellant.

Analysis: The referral court under Section 11 is required to examine, on a prima facie basis, whether an arbitration agreement exists and whether a non-signatory can be treated as a veritable party to that agreement. That exercise is limited, but it is not illusory; the court must inspect the dealings and surrounding documents to see whether there is any real intention to bind the non-signatory to the principal contract. Mere commercial association, back-to-back arrangements, emails, or an assignment between the contractor and the respondent do not by themselves establish privity with the owner or create an arbitration agreement between them. The material showed that the appellant had contracted only with AGC, that the respondent's arrangement was only with AGC, and that the contract itself prohibited subletting or assignment without prior written consent of the owner, which was not shown. On these facts, the respondent failed even prima facie to show that it was a veritable party to the arbitration agreement between the appellant and AGC.

Conclusion: The High Court ought not to have referred the dispute to arbitration. The absence of even a prima facie arbitration agreement between the appellant and the respondent meant that the Section 11 application could not be sustained, and the appeal succeeds in favour of the appellant.

Final Conclusion: The referral order was set aside and the proceeding seeking appointment of an arbitrator was dismissed, leaving the respondent free to pursue any other remedy available in law.

Ratio Decidendi: In proceedings under Section 11 of the Arbitration and Conciliation Act, 1996, a referral court may refer a dispute involving a non-signatory only if it is prima facie satisfied that the non-signatory is a veritable party to the arbitration agreement; a mere commercial or derivative connection is insufficient without indicia of consent or intention to be bound.

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