Linked contracts may give a non-signatory bank prima facie standing to seek arbitration protection, Bombay High Court says

The Bank had occupied premises owned by Respondent No. 4, the TG Trust, as a tenant and vacated them in connection with redevelopment under a tripartite Memorandum of Understanding (MOU) with the Trust and Respondent No. 1, the Developer.

The MOU required the Developer to bear the rent for the Bank’s temporary alternate premises and contemplated the Bank’s re-induction into the redeveloped property; the Developer paid ₹25 lakh towards the alternate premises’ security deposit but did not reimburse the Bank’s subsequent rent payments

The Bank was not a signatory to the 2014 Development Agreement between the Trust and Developer, which contained an arbitration clause, and the MOU contained no arbitration clause

The Bank applied under Section 9 of the Arbitration and Conciliation Act, 1996 for interim protection pending arbitration. The Developer and Trust disputed the Bank’s privity to the arbitration agreement

1. Whether the non-signatory Bank had a sufficient prima facie basis to be treated as a party to, or as claiming through or under a party to, the arbitration agreement in the Development Agreement, despite the MOU containing no arbitration clause

2. Whether interim measures under Section 9 were warranted, and what protection should be granted pending the arbitral tribunal’s determination of jurisdiction and the merits

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the court to grant appropriate interim measures to preserve and protect the subject matter pending arbitration; the court’s assessment at this stage does not finally determine arbitral jurisdiction.

Under Section 16, the arbitral tribunal may rule on its own jurisdiction, including whether a non-signatory is a party to the arbitration agreement.

The Court relied on Cox and Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1, and Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd., 2025 SCC OnLine SC 806, in considering factors relevant to non-signatory participation, including mutual intention, the parties’ relationships, commonality of subject matter, the composite nature of transactions, and contractual performance

Sections 11 and 17 were relevant respectively to constitution of the tribunal and its power to consider interim relief once constituted

The Court found a strong prima facie connection between the Development Agreement and the MOU: the former authorised the Developer to negotiate with the Bank concerning its occupation, while the tripartite MOU addressed the Bank’s relocation and return as part of the redevelopment arrangement

The Bank’s long occupation, the Developer’s security-deposit payment, and the MOU’s express reference to the Development Agreement supported treating the transactions as a composite bargain, rather than treating the Bank as an unrelated third party

However, the Court reserved the final question of arbitral jurisdiction for the tribunal under Section 16. It declined to order a monetary deposit, but considered the Bank’s interest in the redeveloped premises at risk and granted protective measures pending the tribunal’s consideration

It directed the Developer to reserve, from its 60% sale component, at least 3,926 sq. ft. in any redevelopment and not to alienate, encumber, or create third-party interests in that area; the protection would stand vacated if the Bank failed to invoke arbitration and file a Section 11 application within three months of upload of the order

The Trust was directed to apply for an extension of time for redevelopment within the same period, and the Trust and Developer were directed to provide the Bank an inspection of the property

No deposit was ordered; the Section 9 petition was disposed of with no order as to costs.