Prime Realtorsversus3D Megastructure Private Limited

                                                                          CARAPL-293-2026.doc


                      Shabnoor

                              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                  ORDINARY ORIGINAL CIVIL JURISDICTION
                                      IN IT’S COMMERCIAL DIVISION

                           COMMERCIAL ARBITRATION APPLICATION NO.293 OF 2026
SHABNOOR
AYUB                  Prime Realtors                             … Applicant
PATHAN
Digitally signed by
                                 V/s.
SHABNOOR AYUB
PATHAN                3D Megastructure Private Limited
Date: 2026.09.07
12:01:20 +0530        and Ors.                                   … Respondents

                      Mr. Rahul Soman, a/w Mr. Sachin Mahagavkar i/b
                      DSM Legal for Applicant.
                      Mr. Vaibhav Ugle a/w Mr. Mohan Waghmode, for
                      Respondent No.1.
                      Mr. Joel Carlos i/b Vikas Somawanshi, for Respondent
                      No.2.
                      Mr. Vikas Somwanshi for Respondent Nos. 3 to 5.


                                        CORAM                  : AMIT BORKAR, J.

                                        RESERVED ON            : SEPTEMBER 3, 2026.

                                        PRONOUNCED ON          : SEPTEMBER 7, 2026.


                      1.     By the present Commercial Arbitration Application filed
                      under Section 11 of the Arbitration and Conciliation Act, 1996, the
                      Applicant seeks appointment of an Arbitrator for deciding the
                      disputes between the Applicant and the Respondents arising under
                      Clause 28 of the Contractor Agreement dated 28th February 2025
                      executed between the Applicant and Respondent No.1. Respondent
                      No.1 was appointed for carrying out the Structural Glazing work
                      for the Applicant's project “Prime Square”, Kandivali (West),



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Mumbai. According to the Applicant, though advance payments of
in all Rs.1,32,70,000/- were made, the Respondents failed to
complete the work.

2.   The facts and circumstances because of which the present
Application has been filed are stated hereunder. In January 2025,
Respondent No.3 approached the Applicant and represented that
the Respondents had experience and knowledge in Structural
Glazing work. Respondent No.3 expressed his willingness to carry
out the Structural Glazing work for the Applicant's project “Prime
Square”. On 28th February 2025, the Applicant and Respondent
No.1 entered into a Contractor Agreement for carrying out the
Structural Glazing work of the said Project. Clause 28 of the
Agreement contains the Arbitration Clause. Before execution of the
Agreement, on 14th February 2025 and 27th February 2025, the
Applicant paid Rs.50,00,000/- and Rs.25,00,000/- respectively to
Respondent No.2 towards advance payment for the Structural
Glazing work, at the instance of Respondent No.3., on 05th March
2025, the Applicant paid a amount of Rs.29,40,000/- along with
TDS of Rs.1,80,000/-. Thus, the total amount paid as advance to
Respondent No.2 came to Rs.1,06,20,000/-. Respondent No.2
issued Invoice No. 3D/CPT/RA001 in favour of the Applicant.

3.   On 23rd May 2025, Respondent No.3 represented to the
Applicant that the vendor was not releasing the material because
payment had not been made. On the basis of this representation,
the Applicant paid a amount of Rs.20,00,000/- to Respondent
No.2. The total advance paid by the Applicant thereby increased to
Rs.1,26,20,000/-. On 12th June 2025, the first lot of material,



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namely glass panels, was delivered at the Project site. This was
after a delay of about three and a half months from the date of the
Agreement., on 20th June 2025, material consisting of glass
panels, base gutter and aluminium bracket was delivered at the
Project site. material was delivered on 17th July 2025 and again
on 21st July 2025. However, according to the Applicant, the
installation work was being carried out very slowly and was not
being done in the required manner. During July and August 2025,
Respondent     No.3    stopped       replying   to   the    repeated
communications made by the Applicant regarding delivery of
material., the work came to a complete stop. The Applicant was
therefore required to engage another contractor for completing the
work. According to the Applicant, this resulted in an additional
escalation cost of Rs.63,85,069/-. On 9th September 2025 and
11th October 2025, the Applicant, under protest, paid a total
amount of Rs.6,50,000/- to the labour contractor engaged by the
Respondents so that the work at the Project site would not be
disturbed. According to the Applicant, the said payment was the
responsibility of the Respondents under the Agreement., on 29th
January 2026, the Applicant's Advocate issued a Demand Notice to
the Respondents calling upon them to pay an amount of
Rs.4,45,72,335/- within 15 days. The Demand Notice was served
upon the Respondents. The Applicant relies upon the postal
receipts, tracking reports and email communications in support of
such service. On 4th March 2026, the Applicant's Advocate issued
a Notice invoking arbitration and seeking appointment of an
Arbitrator under Section 21 of the Arbitration and Conciliation Act,




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1996. By the said Notice, the Applicant proposed three names for
appointment as Sole Arbitrator. On 18th March 2026, the
Respondents, through their Advocate, replied to the said Notice.
The   Respondents    denied       having   executed   the     Contractor
Agreement. They denied the existence of Clause 28 of the
Agreement. They rejected the names proposed by the Applicant for
appointment    as   Arbitrator.     The    Respondents      objected     to
Respondent Nos.2 to 5 being joined as parties to the proposed
arbitration proceedings. In these circumstances, the Applicant filed
the present Application under Section 11 of the Arbitration and
Conciliation Act, 1996 on 13th April 2026, seeking appointment of
an Arbitrator for deciding the disputes between the parties.

4.    Learned Advocate for the Applicant submits that the
Applicant is seeking appointment of a fit and proper person as the
Sole Arbitrator to decide the disputes and differences between the
Applicant and the Respondents arising under Clause 28 of the
Contractor Agreement dated 28th February 2025. The Applicant
seeks costs of the present Application and such other reliefs as may
be required considering the facts and circumstances of the case.
Learned Advocate for the Applicant submits that the Contractor
Agreement dated 28th February 2025 was entered into between
the Applicant and Respondent No.1. The said Agreement contains
an Arbitration Clause, being Clause 28, and the Agreement has
been signed by the parties. Learned Advocate for the Applicant
submits that Respondent No.1 was appointed as the Contractor for
carrying out the Structural Glazing work for the Applicant's project
“Prime Square”, Kandivali (West), Mumbai. Under the Contractor



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Agreement dated 28th February 2025, the work was to be
completed within four months. Time was therefore important
under the Agreement.

5.   He submits that the Applicant paid an advance amount of
Rs.1,32,70,000/- to the Respondents. Even after receiving this
amount, the Respondents continued to assure the Applicant that
the material was ready. However, when the Applicant's partner
personally visited the Respondents' godown, the godown was
found to be empty. He submits that the material was brought to
the Project site in small quantities during June and July 2025 and
after substantial delay. The installation work was progressing very
slowly. By August 2025, the work had stopped. The Respondents
stopped replying to the communications sent by the Applicant.
Learned Advocate for the Applicant submits that because of the
above situation, the Applicant had to engage another contractor to
complete   the   work.   This   caused   an   additional    cost    of
Rs.63,85,069/-. The Applicant paid Rs.6,50,000/- to the labour
contractor engaged by the Respondents to prevent disruption at
the Project site. Learned Advocate for the Applicant submits that
the value of the work actually completed by the Respondents was
only Rs.1,13,22,218/-. There was therefore a shortfall of
Rs.19,47,782/- as against the amount paid by the Applicant.
According to the Applicant, after adding interest, escalation costs
and business losses, the total amount claimed is Rs.4,45,72,335/-.
The said amount was demanded by the Applicant in the Demand
Notice dated 29th January 2026. Learned Advocate for the
Applicant submits that although the Demand Notice was duly



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served upon the Respondents, the Respondents did not give any
reply to the same. The Applicant therefore invoked Clause 28 of
the Contractor Agreement by issuing the Notice dated 4th March
2026. He submits that Respondent No.1, namely 3D Megastructure
Pvt. Ltd., is the Contractor and is the signatory to the transaction.
Respondent No.1 executed the Contractor Agreement dated 28th
February 2025, which contains Clause 28 providing for arbitration.

6.    Learned Advocate for the Applicant submits that Respondent
No.2, MKK Ventures (India) LLP, is not a signatory to the
Agreement but is the entity in whose name the invoices were
issued and which received the payments. Respondent No.3
represented Respondent No.2 as a “sister concern” of Respondent
No.1. Respondent No.2 received the entire advance amount of
Rs.1,32,70,000/-    and     issued       Invoice   No.   3D/CPT/RA001.
According to the Applicant, Respondent No.2 has admitted receipt
of the said amount in its reply. Learned Advocate for the Applicant
submits that Respondent No.3, Ketan Khaire, is not a signatory to
the Agreement. He is, however, a Director of Respondent No.1 and
a Partner of Respondent No.2. He personally started and
negotiated the transaction and remained involved in the
transaction   throughout.     He     represented     the    expertise      of
Respondent No.1. He signed the Arbitration Agreement, gave
repeated assurances to the Applicant during the period of delay
and requested a advance of Rs.20,00,000/-. Learned Advocate for
the Applicant submits that Respondent No.4, Manisha Ketan
Khaire, is a non-signatory. She is a Director of Respondent No.1
and a Partner of Respondent No.2. She was looking after the day-



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to-day affairs of Respondent Nos.1 and 2. He submits that
Respondent No.5, Prakash Govind Rewale, is a non-signatory,
Director of Respondent No.1 and Partner of Respondent No.2. He
was looking after the day-to-day affairs of Respondent Nos.1 and
2. Learned Advocate for the Applicant submits that Clause 28 of
the Contractor Agreement contains an Arbitration Clause and
disputes have arisen between the parties. The Applicant has
therefore approached this Court under Section 11 of the
Arbitration and Conciliation Act, 1996 seeking appointment of a
Sole Arbitrator to decide the disputes and differences between the
Applicant and the Respondents.

7.   Learned Advocate for Respondent No.2 and Respondent
Nos.3 to 5 submits that the present Application, to the extent it
seeks appointment of an Arbitrator against Respondent No.2, is
misconceived and cannot be maintained either on facts or in law. It
therefore deserves to be dismissed at the threshold. Respondent
No.2 is neither a signatory nor a party to the Contractor
Agreement dated 28th February 2025 executed between the
Applicant and Respondent No.1. Respondent No.2 has never
entered into any contractual arrangement with the Applicant
containing an arbitration clause or otherwise agreeing to refer any
dispute to arbitration. Learned Advocate for Respondent Nos.2 to 5
submits that the entire case made in the present Application arises
from the alleged breaches of the Contractor Agreement dated 28th
February 2025. Respondent No.2 neither negotiated nor executed
nor signed the said Agreement. Respondent No.2 was not
entrusted with carrying out any part of the contractual work. It did



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not take any obligation under the Agreement and never
represented to be a contracting party. Learned Advocate for
Respondent Nos.2 to 5 submits that the Applicant has not
produced any document showing that Respondent No.2 agreed to
be bound by the terms of the Contractor Agreement or by the
Arbitration Clause contained in it. There is no assignment,
novation, accession, assumption of obligations or any written or
oral agreement by which Respondent No.2 accepted any
contractual liability towards the Applicant.

8.    Learned Advocate for Respondent Nos.2 to 5 submits that
the only apparent reason for joining Respondent No.2 in the
present proceedings is that some payments were made by the
Applicant into the bank account of Respondent No.2. Mere
payment into the account of Respondent No.2 does not create a
contractual relationship between the Applicant and Respondent
No.2. It does not show that Respondent No.2 agreed to arbitration.
The Applicant has not shown any legal basis under which merely
receiving money can make a non-signatory liable under an
Arbitration Agreement executed by other parties. Learned
Advocate for Respondent Nos.2 to 5 submits that the Applicant has
nowhere stated that Respondent No.2 carried out the contractual
work, issued invoices under the Contractor Agreement, raised
running account bills, took part in the contractual negotiations,
communicated with the Applicant as a contracting party or
accepted any obligation under the Contractor Agreement. In the
absence of such basic pleadings, the joining of Respondent No.2 as
a party is without proper basis and is liable to be rejected. Learned



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Advocate for Respondent Nos.2 to 5 submits that the Supreme
Court in Cox & Kings Ltd. v. SAP India Pvt. Ltd. has held that a
non-signatory can be referred to arbitration only in exceptional
circumstances and after satisfying the held legal requirements,
including a clear intention of the parties to bind the non-signatory.
Mere commercial dealings, financial transactions, routing of
payments or business association are not sufficient to apply the
Group of Companies doctrine or any other held exception. Learned
Advocate for Respondent Nos.2 to 5 submits that the present
Application does not contain the necessary facts required for
making a non-signatory a party to the arbitration. There are no
pleadings showing any common intention to arbitrate, assumption
of contractual obligations, acceptance of contractual benefits under
the Arbitration Agreement or any composite transaction which
could bring the case within the limited exceptions held by law.
According to the Respondents, the Applicant has only relied upon
the banking transactions to draw an inference against the
Respondents. Such an inference, according to the Respondents, is
not legally permissible.

9.    Learned Advocate for Respondent Nos.2 to 5 submits that
the Applicant has not disclosed any cause of action against
Respondent No.2 arising from the Contractor Agreement dated
28th February 2025. The entire Application proceeds on the basis
that the contractual obligations were undertaken by Respondent
No.1. Even from the Applicant's own case, there is no statement
that Respondent No.2 executed the Agreement, carried out the
contractual work, issued any Work Orders, submitted running



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account bills, participated in the contractual negotiations or
accepted any obligations under the Agreement. In the absence of
such pleadings, the joining of Respondent No.2 is misconceived
and should be rejected at the threshold. Learned Advocate for
Respondent Nos.2 to 5 submits that the statements made in
paragraphs 1 to 7 of the Application concern the Applicant,
Respondent No.1 and the execution of the Contractor Agreement
dated 28th February 2025. Respondent No.2 is neither a signatory
nor a party to that Agreement. Therefore, those statements do not
concern Respondent No.2. Except to the extent anything has been
admitted,    all   allegations,    statements,   inferences      and
interpretations made therein, insofar as they seek to place any
liability upon Respondent No.2, are denied.

10.   Learned Advocate for Respondent Nos.2 to 5 submits that
the contents of paragraph 8 of the Application are denied to the
extent that they concern or seek to involve Respondent No.2.
Respondent No.2 was never concerned with the contractual
payment schedule, mobilisation advance, purchase of material or
performance of the contractual obligations under the Contractor
Agreement. The Applicant cannot make Respondent No.2
contractually liable merely because certain amounts were paid into
its bank account. Mere receipt of money does not establish a
contractual relationship between the Applicant and Respondent
No.2. It does not make Respondent No.2 a party to the Arbitration
Agreement. Learned Advocate for Respondent Nos.2 to 5 submits
that the power of this Court under Section 11 of the Arbitration
and Conciliation Act, 1996 can be exercised only against persons



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who are bound by a valid and enforceable Arbitration Agreement.
The Applicant has not produced or disclosed any Arbitration
Agreement executed by or binding upon Respondent Nos.2 to 5.
There     is   no   agreement,   assignment,   novation,    accession,
assumption of contractual obligations or any other held legal basis
by which Respondent Nos.2 to 5 can be treated as parties to the
Arbitration Agreement contained in the Contractor Agreement
dated 28th February 2025.

11.     Learned Advocate for Respondent Nos.2 to 5 submits that
Respondent Nos.2 to 5 are admittedly not signatories to the
Contractor Agreement dated 28th February 2025. They did not
negotiate or execute the said Agreement and never undertook or
accepted any contractual obligation under it. Respondent No.4, in
particular, never agreed, either expressly or impliedly, to refer any
dispute to arbitration. Learned Advocate for Respondent Nos.2 to 5
submits that the Supreme Court has consistently held that a non-
signatory can be referred to arbitration only in exceptional
circumstances held by law. Mere business association, common
management, commercial dealings, participation in meetings or
involvement in a project does not by make a non-signatory bound
by an Arbitration Agreement. According to the Respondents, the
Applicant has failed to satisfy any of the legal requirements for
making a non-signatory bound by the Arbitration Agreement.

12.     Learned Advocate for Respondent Nos.2 to 5 submits that
the Applicant has tried to give an impression that Respondent No.4
was responsible for carrying out the Project. The said allegation is
denied. Respondent No.4 was never entrusted with carrying out



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the work under the Contractor Agreement. She never accepted any
contractual obligation towards the Applicant. Therefore, she
cannot be made liable for disputes which, according to the
Respondents, arise only from the contractual relationship between
the Applicant and Respondent No.1.

REASONS AND FINDINGS:

13.   I have considered the submissions made by the learned
Advocate for the Applicant and the learned Advocate appearing for
Respondent No.2 and Respondent Nos.3 to 5. At this stage, the
Court has to see whether there is prima facie an Arbitration
Agreement and whether the disputes can be referred to arbitration.
The Court has to see whether the objections raised by the
Respondents who have not signed the Agreement are such that the
arbitration cannot proceed against them.

14.   From the material before the Court, the first fact which
appears is that there is a Contractor Agreement dated 28th
February 2025 between the Applicant and Respondent No.1. The
Applicant relies upon Clause 28 of that Agreement as the
Arbitration Clause. The Respondents have not shown any material
at this stage to say that there was no such Agreement between the
Applicant and Respondent No.1. The Applicant has produced the
Agreement and has relied upon the signatures appearing on it.
Therefore, as regards Respondent No.1, there is prima facie
sufficient material to show that an Arbitration Agreement exists.

15.   The Applicant's case is that Respondent No.1 was appointed
for carrying out the Structural Glazing work of the project “Prime



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Square”, Kandivali (West), Mumbai. According to the Applicant,
the work was to be completed within four months. The Applicant
says that substantial advance amounts were paid to the
Respondents. Even after receiving these amounts, according to the
Applicant, the work was not completed. The material was supplied
after considerable delay. The installation work was proceeding
stopped. The Applicant then appointed another contractor and
claims Rs.63,85,069/- towards the additional escalation cost. The
Applicant claims Rs.6,50,000/- paid to the labour contractor and
other amounts. The total amount claimed by the Applicant is
Rs.4,45,72,335/-.

16.    Whether the Applicant is in fact entitled to receive these
amounts is a matter to be decided on the merits. Whether the
Respondents committed breach of the Agreement, whether the
work actually completed was worth Rs.1,13,22,218/-, whether the
Applicant was justified in appointing another contractor and
whether the claims for escalation, interest and business loss can be
recovered are matters which require evidence. These questions
cannot be finally decided in the present Section 11 proceedings
only by looking at the different statements made by the parties.

17.    The objection raised by the Respondents that Respondent
No.2    has   not   signed   the   Contractor   Agreement    requires
consideration. The Respondents submit that Respondent No.2 did
not negotiate or execute the Agreement, did not undertake the
contractual work and never agreed that any dispute would be
referred to arbitration. It is submitted that merely because money
was received in the bank account of Respondent No.2, Respondent



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No.2 cannot become a party to the Arbitration Agreement. This
submission cannot be rejected without examining the same. A
person who has not signed the Agreement cannot automatically be
treated as a party merely because such person has some
connection with the transaction. The conduct of that person and
the surrounding circumstances have to be seen.However, the
Applicant's case is not based only on the bank payments. The
Applicant states that Respondent No.3 represented Respondent
No.2 as a “sister concern” of Respondent No.1. The Applicant relies
upon the fact that Respondent No.2 received the advance amounts
and issued Invoice No. 3D/CPT/RA001. The Applicant states that
Respondent No.2 has admitted receipt of the amount in its reply.
The Applicant relies upon the role of Respondent No.3, who is
stated to be a Director of Respondent No.1 and Partner of
Respondent No.2 and who is alleged to have negotiated and
conducted the transaction. Therefore, the material relied upon by
the Applicant shows certain facts and circumstances which require
consideration. Whether these circumstances are finally enough to
show consent to arbitration is a separate question. At this stage, it
would not be proper to reject the Applicant's case only because
Respondent No.2 has not signed the Agreement. The law as it
stands does not say that signature is the only way by which a
person can become bound by an Arbitration Agreement.

18.   The Supreme Court in Cox & Kings Ltd. v. SAP India (P) Ltd.
(2024) 1 SCC 1 has held what the Court has to examine when a
matter is brought for reference to arbitration. Paragraph 166
states:



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      “the Court only has to determine the prima facie existence of
      an arbitration agreement.”
19.   Therefore, if the Court cannot finally decide the issue at this
stage, the issue can be left to the Arbitral Tribunal. The Court
should    avoid   unnecessary     interference   in   the   arbitration
proceedings. The reason for following this approach is held in the
passage referred to in paragraph 166. The Supreme Court relied
upon Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.(2005) 7
SCC 234 and observed:

      “74. … Even if the Court takes the view that the arbitral
      agreement is not vitiated or that it is not valid, inoperative or
      unenforceable, based upon purely a prima facie view,
      nothing prevents the arbitrator from trying the issue fully
      and rendering a final decision thereupon. If the arbitrator
      finds the agreement valid, there is no problem as the
      arbitration will proceed and the award will be made.
      However, if the arbitrator finds the agreement invalid,
      inoperative or void, this means that the party who wanted to
      proceed for arbitration was given an opportunity of
      proceeding to arbitration, and the arbitrator after fully trying
      the issue has found that there is no scope for arbitration.”
20.   In view of this legal position, the submission of Respondent
No.2 that this Court must finally decide at this stage whether
Respondent No.2 is bound by the Arbitration Agreement cannot be
accepted in the manner in which it is made. At this stage, the
Court has to make only a prima facie examination. A full trial on
this issue is not required at this stage.

21.   Paragraph 168 of Cox & Kings deals with a non-signatory
who is joined in a petition under Section 11. The Supreme Court




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has held that the Court has to make a prima facie examination
about the existence and validity of the Arbitration Agreement., the
question whether the non-signatory is actually bound by the
Arbitration Agreement can be left to the Arbitral Tribunal. The
position is held in paragraph 169 of Cox & Kings. The Supreme
Court has held that deciding whether a non-signatory is a party to
an Arbitration Agreement may require consideration of “the factual
evidence and application of legal doctrine”. The Tribunal can
therefore consider “the factual, circumstantial, and legal aspects of
the matter” and decide whether its jurisdiction extends to the non-
signatory. The Tribunal must give the non-signatory an opportunity
to raise objections regarding its jurisdiction.

22.    The objections raised by Respondent No.2 concern the
reason for making payments into its bank account, the invoice
issued by it, the representations allegedly made by Respondent
No.3, the relationship between Respondent Nos.1 and 2 and the
actual conduct of the persons concerned. These matters may
require examination of the complete documents and evidence.
Therefore, they cannot properly be finally decided in the present
Section 11 proceedings. The Respondents have relied upon the fact
that Respondent Nos.2 to 5 have not signed the Agreement. They
have submitted that there is no assignment, novation, accession or
assumption of contractual obligations. To the extent the
Respondents submit that merely being connected with a
contracting party is not sufficient, that submission is correct.
However, the absence of a separate document of assignment or
novation does not by end the matter. Paragraphs 170.1 to 170.3 of



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Cox & Kings make it clear that “parties” may include both
signatories and non-signatories. The conduct of a non-signatory
can be considered for finding out whether there was consent.

23.   Paragraph 170.2 states:

      “Conduct of the non-signatory parties could be an indicator
      of their consent to be bound by the arbitration agreement;”
24.   Therefore, it cannot be accepted that the signature on the
Contractor Agreement is in every case the only material which can
be considered for deciding whether a non-signatory is bound by
the Arbitration Agreement. At the same time, the submission that
merely receiving money makes Respondent No.2 a party to the
Arbitration Agreement cannot be accepted. Receipt of money alone
would not establish consent to arbitration. In the present case,
however, the Applicant relies upon other circumstances. It relies
upon the invoice issued by Respondent No.2, the alleged
representation regarding its relationship with Respondent No.1
and the conduct of Respondent No.3. Whether all these
circumstances are finally sufficient to satisfy the legal requirement
can be decided after the evidence is considered.

25.   The Respondents have submitted that there are no pleadings
showing any common intention to arbitrate or assumption of
contractual obligations. However, the Applicant has pleaded that
Respondent No.2 received the contractual payments and issued the
invoice. The Applicant has pleaded the active role of Respondent
No.3 in negotiating and conducting the transaction. Therefore, at
this stage, it cannot be said that the Applicant's case has no factual




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basis. Whether these facts are sufficient to bind the non-signatories
is a separate question. This difference is important at the stage of
reference.   The     Supreme    Court    has    considered     written
communications in paragraph 186 of Cox & Kings. It has held that
the consent of a non-signatory may be gathered from its conduct
shown in written correspondence. Such correspondence may
include correspondence with third parties if it shows conduct
pursuant to the contract containing the Arbitration Agreement.
The Supreme Court has stated:

      “even in the absence of a signature, the non-signatory's
      consent to arbitration can be gathered from its written
      correspondence (even with third parties) that shows its
      conduct pursuant to the contract containing the arbitration
      agreement.”
26.   This principle does not mean that every person or company
receiving money in a transaction automatically becomes a party to
the Arbitration Agreement. Such a conclusion cannot be taken
from Cox & Kings. At this stage, the Court can consider the
conduct and surrounding material on a prima facie basis and see
whether the issue requires fuller consideration by the Arbitral
Tribunal. The same consideration applies to Respondent No.3. The
Applicant states that Respondent No.3 is a Director of Respondent
No.1 and Partner of Respondent No.2. It is stated that he initiated
and negotiated the transaction, made representations regarding
the work and material, gave assurances during the delay and
requested a advance of Rs.20,00,000/-. The Applicant states that
Respondent    No.3    signed   the    Arbitration   Agreement.      The
Respondents dispute the liability and status of the non-signatory



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persons. These competing cases cannot be finally decided merely
from the pleadings without examining the supporting material.

27.   So far as Respondent Nos.4 and 5 are concerned, the
Applicant mainly relies upon their position as Director and Partner
and their alleged involvement in the day-to-day affairs of
Respondent Nos.1 and 2. The Respondents deny that such position
or involvement made them parties to the Contractor Agreement.
They deny that they personally accepted any contractual obligation
towards the Applicant.

28.   A person does not become personally liable under a contract
merely because that person is a Director, Partner or is involved in
management of a separate legal entity. The separate legal identity
of the concerned companies and firms has to be respected. This is
consistent with paragraph 170.5 of Cox & Kings, which requires
corporate separateness to be maintained while considering the
Group of Companies doctrine. Paragraph 170.6 states:

      “The principle of alter ego or piercing the corporate veil
      cannot be the basis for the application of the Group of
      Companies doctrine;”
29.   Therefore, the fact that Respondent Nos.4 and 5 are
Directors or Partners, or that they are alleged to have looked after
the day-to-day affairs, by is not sufficient to treat them as parties
to the Arbitration Agreement. There must be some material
showing their consent or some other held legal basis by which they
can prima facie be bound by the Arbitration Agreement.




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30.   On the material placed before the Court, the case against
Respondent Nos.4 and 5 is different from the case against
Respondent Nos.2 and 3. In the case of Respondent No.2, there is
the pleaded receipt of the advance amount and issuance of the
invoice. In the case of Respondent No.3, there is the pleaded role
in negotiating and conducting the transaction and the other acts
relied upon by the Applicant. In the case of Respondent Nos.4 and
5, the main basis is their position in the concerned entities and
their alleged role in management. This is not sufficient.

31.   The difference between a “party” to an Arbitration
Agreement and a person “claiming through or under” a party has
been considered in paragraph 170.4 of Cox & Kings. Paragraph
170.9 states that persons “claiming through or under” can assert a
right only in a derivative capacity. Therefore, the actual basis on
which a non-signatory is sought to be bound has to be seen. A
corporate relationship by is not sufficient.

32.   Paragraph 170.8 of Cox & Kings is relevant. The Supreme
Court has held that all the cumulative factors laid down in ONGC
Ltd. v. Discovery Enterprises (P) Ltd . have to be considered. The
fact that companies form one economic unit cannot by be the only
reason for applying the Group of Companies doctrine. Therefore,
merely because Respondent Nos.1 and 2 are stated to be “sister
concerns” or are said to have common management, that fact
alone cannot decide whether the non-signatories are bound by the
Arbitration Agreement. However, at this stage, the Court is not
required to finally decide the whole question relating to the Group
of Companies doctrine. Paragraph 170.11 of Cox & Kings



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recognises that the doctrine may be useful in complicated
transactions involving several parties and several agreements.
Paragraph 170.12 states that at the referral stage the Court should
leave it to the Arbitral Tribunal to decide whether the non-
signatory is bound by the Arbitration Agreement.

33.   The Respondents have submitted that the Applicant has not
shown any cause of action against Respondent No.2. This
submission by cannot result in dismissal of the present Application.
The Applicant has stated that Respondent No.2 received
substantial payments and issued an invoice. Whether these facts
ultimately create contractual liability is a matter for the Tribunal to
decide. At the referral stage, the Court has mainly to see whether
there is prima facie an Arbitration Agreement and whether the
disputes can be referred to arbitration. The dispute raised by the
Applicant is mainly regarding failure to complete the Structural
Glazing work and the consequences which, according to the
Applicant, followed from that failure. These disputes arise from the
transaction covered by the Contractor Agreement. No material has
been shown to indicate that these disputes are of such a nature
that they cannot be referred to arbitration. The main issue before
the Court is therefore regarding the persons who are bound by the
Arbitration Agreement. The Applicant has relied upon the fact that
the Demand Notice was not replied to by the Respondents. This
may have some relevance when the merits are considered. But
silence by cannot be treated as an admission of liability. In the
same way, the Applicant's allegation that the Respondents failed to
complete the work cannot at this stage be treated as a final



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finding. Whether there was breach, what caused the delay and
whether the amounts claimed are payable will have to be decided
by the Arbitral Tribunal.

34.   The claim of Rs.4,45,72,335/- cannot at this stage be treated
as admitted or proved. The Applicant has held the claim by
referring to the amount paid, the value of the work allegedly
completed, escalation costs, labour payments, interest and
business losses. The Respondents are entitled to dispute each part
of the claim. The Tribunal can examine the Agreement, invoices,
payment records, correspondence, work records and other relevant
evidence and decide the claim in accordance with law. I therefore
find that, so far as Respondent No.1 is concerned, the existence of
the Arbitration Agreement is sufficiently established on a prima
facie basis. There is a written Contractor Agreement dated 28th
February 2025 containing Clause 28. The disputes raised by the
Applicant arise from that contractual relationship. There is
therefore no reason at this stage to refuse reference of the disputes
between the Applicant and Respondent No.1 to arbitration.

35.   As regards Respondent No.2, I am unable to accept the
submission that the Application must fail only because Respondent
No.2 has not signed the Contractor Agreement. At the same time, I
am not recording any final finding that Respondent No.2 is
conclusively bound by Clause 28. The material placed by the
Applicant gives rise to a prima facie issue which requires
consideration. In view of the law stated in Cox & Kings, the proper
course is to leave the final decision as to whether Respondent No.2
is bound by the Arbitration Agreement to the Arbitral Tribunal.



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36.   The same approach applies to Respondent No.3, though the
factual basis relied upon is different. The Applicant has pleaded
the participation of Respondent No.3 in the negotiation and
conduct of the transaction. This conduct requires consideration.
Whether such conduct amounts to consent to the Arbitration
Agreement cannot be finally decided only on the pleadings. The
Arbitral Tribunal can consider the evidence and decide the issue
under Section 16 of the Arbitration and Conciliation Act, 1996.

37.   So far as Respondent Nos.4 and 5 are concerned, however,
the material presently placed before the Court shows their
relationship with Respondent Nos.1 and 2 and their alleged
involvement in management. These facts, by themselves, do not
show prima facie consent to the Arbitration Agreement. The
judgment in Cox & Kings does not permit the separate identity of
the concerned entities to be ignored merely because a person holds
a managerial position. I therefore find that, on the present
material, there is no sufficient prima facie basis to treat
Respondent Nos.4 and 5 as parties to the Arbitration Agreement.
This finding does not mean that Respondent Nos.4 and 5 can never
have any connection with the dispute or that no independent claim
can ever be made against them if the law otherwise permits such
claim. The finding is limited to the present Section 11 Application.
On the material presently available, they cannot be treated as
parties to the Arbitration Agreement.

38.   The Respondents have relied upon the general principle that
a person who is not a party to an Arbitration Agreement should
not be referred to arbitration. The principle, as a general



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proposition, is correct. However, after the judgment in Cox &
Kings, whether a non-signatory is actually bound by an Arbitration
Agreement cannot in every case be finally decided at the referral
stage. The Court has to make a prima facie assessment. If the
question requires a fuller examination of facts and law, it can be
left to the Arbitral Tribunal. This approach gives effect to the
principle of competence-competence. Section 16 of the Arbitration
and Conciliation Act, 1996 permits the Arbitral Tribunal to decide
its own jurisdiction. This includes objections regarding the
existence or validity of the Arbitration Agreement and the question
as to which persons are bound by it. The concerned non-signatory
must be given proper opportunity to raise its objection and the
Tribunal has to decide the same in accordance with law and
principles of natural justice. On considering the submissions of
both sides as a whole, I therefore find that the Applicant has made
out a prima facie case for referring the disputes arising from the
Contractor Agreement dated 28th February 2025 to arbitration.
Clause 28 of the Agreement is prima facie an Arbitration Clause
and is operative between the Applicant and Respondent No.1. The
objections raised do not give any sufficient reason at this stage to
refuse reference of the disputes between them.

39.   I find that the objections of Respondent No.2 and
Respondent No.3 involve questions regarding their conduct, the
documents, the surrounding circumstances and the applicable
legal principles. These questions cannot properly be finally decided
in the present proceedings. In view of paragraphs 168, 169 and
170.12 of Cox & Kings, the final decision as to whether they are



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bound by the Arbitration Agreement should be left to the Arbitral
Tribunal. The Arbitral Tribunal will therefore consider the
Contractor Agreement, the payments made, the invoice issued by
Respondent No.2, the correspondence between the parties, the
conduct of the persons concerned and all other relevant material.
The Tribunal will consider the objections raised by the non-
signatory Respondents. It will then decide whether, on facts and in
law, Respondent Nos.2 and 3 are bound by Clause 28.

40.   So far as the actual monetary claims are concerned, I am not
recording any final finding in favour of either side. The Applicant
will have to establish its entitlement to the amount claimed. The
Respondents will be entitled to raise all their contractual, factual
and legal defences before the Tribunal. The findings in the present
order shall not be treated as a final finding regarding breach,
delay, quantum, escalation cost, labour payments, interest or
business losses claimed by the Applicant. I therefore find that the
Applicant has crossed the threshold required for appointment of an
Arbitrator in respect of the disputes arising from the Contractor
Agreement dated 28th February 2025. The question whether
Respondent Nos.2 and 3 are bound by the Arbitration Agreement
is left to the Arbitral Tribunal for determination after considering
the complete material and giving them proper opportunity of
hearing. However, Respondent Nos.4 and 5 cannot, on the present
material, be treated as parties to the Arbitration Agreement merely
because of their alleged corporate or managerial connection with
Respondent Nos.1 and 2.




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41.   In these circumstances, the Application is liable to be
allowed to the aforesaid extent. The necessary directions regarding
appointment of the Sole Arbitrator and the manner in which the
reference shall proceed are therefore required to be passed
separately in the operative part of the order.

42.   In view of the aforesaid, the present Application filed under
Section 11 of the Act, is disposed of by passing the following
order:

      A)    Mr.Shadab Jan, an advocate of this Court, is hereby
      appointed as the Sole Arbitrator to to adjudicate the
      disputes and differences arising between the Applicant
      and Respondent No.1 in connection with the Contractor
      Agreement dated 28th February 2025, including the
      disputes arising under Clause 28 thereof;

      Office Address:- 1701, One Infinity, Cawasji Patel Street,
      Fort, Mumbai – 400001.

      Email ID:[email protected]

      B)    A copy of this Order will be communicated to the
      Learned Sole Arbitrator by the Advocates for the
      Applicant within a period of one week from today. The
      Applicant shall provide the contact and communication
      particulars of the parties to the Arbitral Tribunal along
      with a copy of this Order;

      C)    The Learned Sole Arbitrator is requested to forward
      the statutory Statement of Disclosure under Section




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      11(8) read with Section 12(1) of the Act to the
      Advocates for the Applicant so as to enable them to file
      the same in the Registry of this Court. The Registry of
      this Court shall retain the said Statement on the file of
      this Applicant and a copy of the same shall be furnished
      by the Advocates for the Applicant to the Advocates for
      the Respondent;

      D)   The Learned Sole Arbitrator is requested to forward
      the statutory Statement of Disclosure under Section
      11(8) read with Section 12(1) of the Act to the parties
      within a period of two weeks from receipt of a copy of
      this Order;

      E)   The parties shall appear before the Learned Sole
      Arbitrator on such date and at such place as indicated, to
      obtain appropriate directions with regard to conduct of
      the arbitration including fixing a schedule for pleadings,
      examination of witnesses, if any, schedule of hearings etc.
      At such meeting, the parties shall provide a valid and
      functional email address along with mobile and landline
      numbers of the respective Advocates of the parties to the
      Arbitral Tribunal.     Communications to such email
      addresses shall constitute valid service of correspondence
      in connection with the arbitration;

43.   All arbitral costs and fees of the Arbitral Tribunal shall be
borne by the parties equally in the first instance, and shall be
subject to any final Award that may be passed by the Tribunal in




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relation to costs.

44.    The learned Sole Arbitrator shall, at the appropriate stage
and in accordance with law, consider and decide the objection as
to whether Respondent Nos.2 and 3 are bound by the Arbitration
Agreement contained in Clause 28 of the Contractor Agreement
dated 28th February 2025 and whether the Tribunal has
jurisdiction over them. The said issue shall be decided in
accordance with Section 16 of the Arbitration and Conciliation Act,
1996 and after giving the concerned Respondents full opportunity
of hearing.

45.   Respondent Nos.4 and 5 are not referred to arbitration under
the present Application. The Applicant shall be at liberty to pursue
such remedies as may be available in law against Respondent
Nos.4 and 5, if otherwise permissible.

46.   The Application stands disposed of in the aforesaid terms.

47.   There shall be no order as to costs.


                                             (AMIT BORKAR, J.)




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