### Referral Court May Delegate Determination of Non-Signatory’s Joinder to Arbitral Tribunal in Complex Family Disputes

The petitioners (Group A) and respondents (Group B) are members of the Sureka family who sought to behaviorally segregate control of 34 family-held companies

A draft family settlement was discussed in 2022 but remained unsigned

Subsequently, the parties executed a Memorandum of Understanding (MoU) dated 04.05.2024, which contained an arbitration clause (Clause 7)

While Respondent Nos. 1, 2, and 3 (the parents and their HUF) did not sign the MoU, Respondent No. 3 signed as a witness

Following disputes involving allegations of asset alienation and criminal complaints, the petitioners invoked arbitration

The non-signatory respondents resisted, arguing they were not bound by the MoU

Petitioners contended that the non-signatories acted upon the MoU by resigning from directorships and executing gift deeds in line with the settlement

Whether non-signatories to a Memorandum of Understanding (MoU) containing an arbitration clause can be referred to arbitration based on their conduct and involvement in a composite family settlement

Whether the Referral Court or the Arbitral Tribunal should decide the joinder of non-signatory parties in complex factual disputes

The court primarily applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of an arbitrator

It relied on the Constitution Bench decision in *Cox & Kings Ltd. v. SAP India (P) Ltd.*, which established that "parties" under Section 2(1)(h) include non-signatories whose conduct indicates consent to be bound

The court further applied the "implied powers" doctrine from *ASF Buildtech (P) Ltd. v. Shapoorji Pallonji & Co. (P) Ltd.*, affirming that Arbitral Tribunals possess the power to implead non-signatories

It also referenced *Ajay Madhusudan Patel v. Jyotrindra S. Patel* regarding the appropriateness of leaving complex factual determinations of party status to the Tribunal

The Court observed that while Respondent Nos. 1, 2, and 3 were non-signatories, Respondent No. 3 witnessed the MoU, and the family was not "oblivious" to the arrangement

There was prima facie evidence that the MoU was acted upon, as Respondent No. 3 resigned from a specific company (Mauria Udyog) assigned to the petitioners, and Respondent No. 2 executed gift deeds to transfer shares in accordance with the MoU’s objectives

The "Group of Companies" doctrine and the conduct of parties serve as indicators of consent to arbitrate

Given the "complex nature" of the family dispute and the interlinked transactions between the 2022 draft and the 2024 MoU, the Court determined that a mini-trial at the referral stage was inappropriate

Following the mandate in *Cox & Kings*, the Court held that the Arbitral Tribunal is best suited to weigh evidence and apply legal doctrines to decide which non-signatories are "veritable parties" to the proceedings

The Court held that since a prima facie arbitration agreement exists, the specific question of whether the non-signatory respondents (1, 2, and 3) are bound by said agreement is left to the Arbitral Tribunal to decide based on evidence and the principles laid down in *Cox & Kings*

The arbitration will be conducted under the aegis of the Delhi International Arbitration Centre (DIAC)