Order Rejecting Impleadment of Non-Signatories as Veritable Parties is Appealable under Section 37(2)(a)

The Petitioner (More) and Respondent No. 1 (Rajpurohit) formed a partnership firm, M/s Shree Estate Ventures ("Shree"), in 2004.

Arbitration was invoked in 2012 regarding allegations that Rajpurohit defrauded More by siphoning funds from Shree to his wife (Neema) and their separate firm (Sakshi).

In November 2024, More filed a third amendment application seeking to implead Neema and Sakshi as "veritable parties" to the arbitration.

The Arbitral Tribunal rejected the impleadment via an order dated September 4, 2025, finding no evidence of the alleged fraud and noting the application was a belated attempt to change the cause of action.

1. Whether the denial of a prayer for impleading a third party as a "veritable party" is appealable under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996.

2. Whether, on the facts of the case, the Arbitral Tribunal's order denying impleadment was perverse or deserved interference.

Section 16 of the Arbitration and Conciliation Act, 1996, which empowers a tribunal to rule on its own jurisdiction.

Under Section 37(2)(a), an appeal lies against an order "accepting the plea" that the tribunal lacks jurisdiction.

The Supreme Court precedent in ASF Buildtech Private Limited v. Shapoorji Pallonji & Company (2025), which held that tribunal determinations on impleadment are amenable to challenge under Section 16 and subsequently Section 37.

Reasoning of the Delhi High Court in Era Infra Engineering Limited v. NHAI (2026), stating that a refusal to proceed against a party sought to be made a "veritable party" is essentially a ruling on jurisdiction.

The Court reasoned that since Section 16 allows a tribunal to decide if a non-signatory is a "veritable party," a rejection of such impleadment constitutes an "acceptance" of a plea that the tribunal lacks jurisdiction over those specific parties.

The Court found the Tribunal’s decision was not perverse, noting that the disputed fund transfers (dating back to 2010) were already accounted for by Rajpurohit in his Written Statement, and he accepted accountability for them within the partnership's accounting.

The Court observed that mere fund transfers to a spouse or a related firm do not automatically create "privity" or make those third parties "veritable parties" to the original arbitration agreement.

The twelve-year delay in seeking impleadment, justified only by a vague reference to the Covid-19 pandemic, supported the Tribunal's decision to reject the amendment as an afterthought.

The Court affirmed the Arbitral Tribunal's decision, concluding that Neema and Sakshi were not necessary or veritable parties and that the Petitioner’s attempt to implead them after nearly fifteen years of litigation did not warrant judicial interference; the Petition was disposed of without interference, with costs to be determined by the Arbitral Tribunal in the final award.