Non-signatories may be referred to arbitration if their conduct demonstrates a prima facie intent to be bound.

The Petitioner, a Project Implementation Agency, was appointed by Respondent No. 1 (MoRD) under the Deen Dayal Upadhyaya Grameen Kaushalya Yojna to improve educational standards in Jammu and Kashmir

A Memorandum of Understanding (MoU) dated April 2, 2016, containing an arbitration clause, was executed only between the Petitioner and Respondent No. 2 (NIRD)

Although the MoU was signed in Hyderabad (and the project implemented in J&K), the stamp paper was generated in Delhi

Respondent No. 1 later transferred the project’s administration from Respondent No. 2 to Respondent No. 3

The Petitioner filed this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator for unpaid dues, impleading Respondents 1 and 3 despite them being non-signatories to the MoU

1. Whether the High Court of Delhi has territorial jurisdiction to entertain the petition given that the MoU was executed in Hyderabad and the project was in J&K

2. Whether non-signatories (Respondents 1 and 3) can be referred to arbitration based on their conduct and relationship with the signatory

3. Whether the petition is barred by limitation given the disputes originated in 2017–2018

Where an arbitration agreement is silent on the "seat," territorial jurisdiction is determined via Section 2(1)(e) of the Arbitration Act read with Sections 16–20 of the CPC, focusing on where the cause of action arises or where the respondent resides

Under the "Group of Companies" and "Veritable Party" doctrines, non-signatories may be bound if their conduct, involvement in negotiations, performance, or termination of the contract signifies an intent to be bound

This is supported by Cox & Kings Ltd. v. SAP India (P) Ltd. regarding the definition of "parties" under Section 2(1)(h)

Section 18 of the Limitation Act, 1963, provides that a written acknowledgment of liability starts a fresh period of limitation

The Court found that although the MoU was signed in Hyderabad, Respondent No. 1 (MoRD), headquartered in Delhi, exercised "imperative" administrative and financial control over the project, including the power to terminate and audit

This established a material part of the cause of action in Delhi

Regarding non-signatories, the Court observed that Respondent No. 1 was the primary sanctioning/funding authority and Respondent No. 3 currently held the project funds; their active participation in meetings and correspondence regarding payments made them prima facie "veritable parties" to the arbitration

On limitation, the Court noted that Respondents repeatedly acknowledged the Petitioner’s eligibility for payment in communications spanning 2018 to 2025 (e.g., the minutes of the meeting on Oct 12, 2021), which constituted valid acknowledgments of debt under Section 18 of the Limitation Act

The petition was found not to be ex-facie time-barred

The Court appointed a Sole Arbitrator to adjudicate the disputes. However, it left the final determination regarding the liability of non-signatories and the specific issue of limitation open for the Arbitral Tribunal to decide upon a full review of evidence