Confirming Party Lacks Locus to Invoke Arbitration if Agreement Confines Rights to Vendor and Vendee

The Petitioner (Atlas Electric) entered into an Agreement to Sell dated 10.11.2021 regarding an industrial plot in Haryana

In this agreement, Respondent No. 2 was the 'First Party/Seller', Respondent No. 1 was the 'Second Party/Buyer', and the Petitioner was described as the 'Confirming Party'

The recitals stated that the Petitioner, originally the intended purchaser, had nominated Respondent No. 1 as its "Nominee/Financial Partner" to purchase the property

When disputes arose regarding the conclusion of the transaction, the Petitioner filed a Section 9 petition for interim relief—subsequently obtaining a status quo order on 17.07.2025—and a Section 11 petition for the appointment of an arbitrator

Respondent No. 2 challenged the maintainability of these petitions, arguing the Petitioner lacked locus standi

1. Whether a ‘Confirming Party’ to an agreement, who has nominated a third party to fulfill the purchase, has the locus standi to invoke the arbitration clause if they are not explicitly mentioned in said clause.

2. Whether the mere status of being a signatory to a contract entitles a party to invoke arbitration even if the contract identifies them as having transferred their interest to another party.

The Court primarily applied the principles of contract interpretation under the Arbitration and Conciliation Act, 1996, focusing on the intention of the parties as expressed in the arbitration agreement

It examined Clause 15 of the Agreement, which stipulated that arbitration could be triggered if the "Second Party/Vendee/Buyer" or the "First Party/Vendor/Seller" failed to perform

The court also considered the precedent Ansal Properties Infrastructure Ltd. Anr. v. Dowager Maharanis Residential Accommodation Welfare Amenities Trust Anr., which discusses the rights of confirming parties but distinguished it based on the specific language of the arbitration clause

The Court analyzed the Agreement's structure, noting that once the Petitioner nominated Respondent No. 1 as the buyer, it effectively assigned and transferred all "rights, title, and interest" to said respondent

Upon a holistic reading of the Agreement, the Court found that the Petitioner ceased to retain any substantive role in the transaction

Regarding the Arbitration Clause (Clause 15), the Court observed that it expressly identified the "First Party" and "Second Party" as the entities entitled to seek specific performance via arbitration, while conspicuously omitting the "Confirming Party"

The Court rejected the Petitioner's argument that "signatory status" alone grants a right to arbitrate, holding that the judicial task is to discern the parties' actual intention

Since the parties consciously excluded the Confirming Party from the arbitral mechanism in the text of the clause, the Petitioner could not claim locus based on a dispute existing between the seller and the nominee

The Court ruled that the Section 9 petition was not maintainable and consequently vacated any interim relief previously granted

Similarly, the Section 11 petition for the appointment of an arbitrator was dismissed for the same lack of standing. All pending applications were disposed of accordingly