Ultimate institutional beneficiary and project funder cannot be impleaded in arbitration absent privity of contract.

The Petitioner, a construction company, entered into an agreement with the Central Public Works Department (CPWD) for the construction of an academic block at the Indian Institute of Management (IIM), Jammu.

Disputes arose regarding the execution of works, leading the Petitioner to file petitions under Sections 9 and 11 of the Arbitration and Conciliation Act, 1996.

On 23.01.2025, the Joint Registrar allowed applications for the impleadment of IIM Jammu as a party to the proceedings, reasoning that IIM Jammu was the "ultimate beneficiary," funding authority, and had supervised the project.

The Petitioner challenged these impleadment orders via Chamber Appeals, contending there was no privity of contract between the Petitioner and IIM Jammu.

Whether a non-signatory entity can be impleaded in arbitration proceedings solely on the basis of being the "ultimate beneficiary" or the project's principal funding entity.

Whether the limited supervisory and quality assurance role exercised by a principal entity (IIM Jammu) under a tripartite context constitutes contractual privity or consent to be bound by an arbitration agreement.

The Court primarily applied Section 7 of the Arbitration and Conciliation Act, 1996, which defines an arbitration agreement as a written strictly-defined legal relationship between the parties.

It relied on the principle of party autonomy and the doctrine of privity, noting that only parties who consented to be bound are subject to the agreement.

The Court followed *Duro Felguera, S.A. v. Gangavaram Port Ltd.*, which mandates that Courts under Section 11 must confine their examination to the existence of an arbitration agreement between specific parties.

Furthermore, it applied the "Group of Companies" doctrine and joinder principles as elucidated in *Cox and Kings Limited v. Sap India Private Limited* and *Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd.*, asserting that a non-signatory can only be bound if there is clear evidence of a mutual intention to be bound or "veritable" party status.

The Court reasoned that the contract was executed exclusively between the Petitioner and the CPWD, and IIM Jammu remained a non-signatory.

It rejected the "ultimate beneficiary" test, noting that in public works, principal institutions frequently delegate execution to specialized agencies; allowing impleadment of all beneficiaries would "unsettle the carefully structured regime of party autonomy".

Upon examining Clause 36 of the Tender, the Court found that IIM Jammu's supervisory role was restricted; any deficiencies were to be communicated through CPWD engineers, thereby maintaining a "structural demarcation" and no direct contractual control by IIM Jammu.

The Court further clarified that the Petitioner’s letter seeking IIM Jammu’s assistance in mediation did not confer legal status as a contracting party, but was merely a request for facilitation.

Consequently, there was no "positive, direct and substantial involvement" that would override the lack of privity.

The Court allowed the Chamber Appeals and set aside the Joint Registrar’s orders dated 23.01.2025.

The impleadment of IIM Jammu was declared legally unsustainable in the absence of privity or a signed agreement.

The Court directed the matters to be listed for further proceedings on 18.03.2026.