Acquisition of leasehold rights alone does not bind an assignee to the underlying arbitration agreement.

The Applicants were appointed as developers under a registered Assignment of Development Agreement dated 12 November 2007 executed by Respondent No. 2, with Respondent Nos. 3 and 4 as confirming parties.

The Agreement contained an arbitration clause in Clause 39.

The Applicants claimed to have paid approximately ₹5.21 crore, obtained municipal permissions, entered into permanent alternate accommodation agreements with tenants, and continued redevelopment-related activities.

Respondent Nos. 3 and 4 issued a termination notice dated 18 December 2015, which the Applicants disputed.

The Applicants further relied on subsequent negotiations, a payment of ₹10 lakh in 2017, municipal permissions, and dealings with tenants to assert that their rights continued.

On 13 August 2024, Respondent Nos. 2 to 4 assigned rights in the property to Respondent No. 1.

The Applicants invoked arbitration on 30 April 2026.

Respondent No. 1 denied being bound by the arbitration agreement, while Respondent Nos. 2 to 4 contended that the claims were barred by limitation.

The Applicants therefore sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.

Whether Respondent No. 1, who was not a signatory to the Assignment of Development Agreement, became a party to the arbitration agreement merely by acquiring leasehold or other rights in the property and proposing its redevelopment.

Whether the Applicants’ claims against Respondent Nos. 2 to 4 were barred by limitation and whether that issue should be finally determined by the Court at the Section 11 stage.

Whether an arbitrator should be appointed to adjudicate the disputes between the Applicants and Respondent Nos. 2 to 4 under Clause 39 of the Agreement.

Section 11 of the Arbitration and Conciliation Act, 1996 requires the referral court to conduct a limited examination concerning the existence of an arbitration agreement; it is not required to conduct a full trial or finally determine disputed merits.

Under Ajay Madhusudan Patel v. Jyotrindra S. Patel, (2025) 2 SCC 147, the court must prima facie examine whether an arbitration agreement exists and, in cases involving non-signatories, whether there is a sufficient basis to treat the alleged non-signatory as a party.

Under Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1, complex questions concerning whether a non-signatory is a party to the arbitration agreement may ordinarily be determined by the arbitral tribunal under Section 16, provided there is a prima facie basis for reference.

Mere acquisition of an interest in property does not amount to an assignment of the underlying development agreement or its arbitration clause; assignment, express incorporation, acceptance of contractual obligations, novation, or unequivocal conduct adopting the agreement is required.

Under SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1, the Section 11 court should generally limit its limitation inquiry to whether the Section 11 application itself is within time and should leave intricate questions concerning limitation of the substantive claims to the arbitral tribunal.

Clause 39 expressly referred to disputes “between the parties hereto” and contemplated nomination of an arbitrator by those parties.

Respondent No. 1 was not an executant of the 2007 Agreement.

The material before the Court showed only an assignment of leasehold or property rights, not an assignment of the Development Agreement, acceptance of the Applicants’ contractual rights and obligations, or written adoption of Clause 39 by Respondent No. 1.

Respondent No. 1’s proposed redevelopment and knowledge of the Applicants’ claims could establish the existence of a dispute but could not, without consent or contractual adoption, establish an arbitration agreement.

In contrast, the arbitration agreement between the Applicants and Respondent Nos. 2 to 4 was undisputed.

Although termination occurred in 2015 and arbitration was invoked only in 2026, the Applicants relied on subsequent negotiations, the 2017 payment, municipal permissions, and continuing redevelopment conduct.

These matters required factual examination and could not be conclusively decided at the Section 11 stage; the limitation objection was therefore left open for determination under Section 16.

Mr. Amrut Joshi, Advocate, was appointed as the sole arbitrator, subject to the statutory disclosures and requirements under Sections 11(8) and 12 of the Act.

All questions of limitation, jurisdiction, merits, claims, and counterclaims were left open for determination by the arbitral tribunal under Section 16.

The application against Respondent No. 1 was rejected because Respondent No. 1 was not shown to be a party to the arbitration agreement merely by acquiring leasehold rights or proposing redevelopment of the property.

There was no order as to costs.