1. Heard Sri B. Vamshidhar Reddy, learned counsel for the Applicant and Smt. D. Neeharika Reddy, learned Counsel for Respondent Nos. 1 to 3, and Ms. Keerthana Reddy, learned Counsel representing M/s. R.S. Associates appearing for Respondent No. 4.

2. The present Arbitration Application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter “the Act”) for the appointment of Arbitrator to adjudicate disputes between the parties.

3. The Applicant, M/s. Tubo Organized Wholesale Private Limited, is a company engaged in the business of wholesale, storage, supply, and retail of a variety of disposable food packaging tableware products. The Applicant was in search of a place to be used as a warehouse for storing products in course of its business. Subsequently, the Applicant came across a “To-let” board and approached Mr. Kanishk Gupta, Respondent No. 3, who is the partner in Respondent No. 1 and 2 firms.

4. Respondent No. 2, M/s. Charminar Foods, is a partnership firm and the absolute owner of the subject property i.e. All that piece and parcel of the premises admeasuring approximately 55000 sq.ft. of area namely Charminar Food on Plot bearing Plot No.11-15, Phase IV, IDA, Patancheru, Sanga Reddy District 502 319, Telangana, with parking space in front and back side of premises along with all rights, easements, privileges, appurtenances and immunities of whatsoever nature belonging to or in any way pertaining thereto and the said lease deed commenced on 01.09.2023 commencing from 01.09.2023 and expiring on 30.08.2028 and the said lease deed is annexed as schedule 2 to this agreement. The said property was leased out by Respondent No. 2 firm to Respondent No. 1, M/s. Pronto Properties vide unregistered Lease Deed dated 01.09.2023. Respondent Nos. 3 and 4, i.e. Mr. Kanishk Gupta and Mr. Ronak Gupta, who are brothers and also the partners of Respondent No. 2 firm.

5. The Applicant and Respondent No. 1 firm entered into an unregistered Sub-Lease Deed dated 01.11.2023 for the area admeasuring 39,000 square feet on Plot bearing Plot No. 11-15, Phase IV, IDA, Patancheru, Sangareddy district – 502319. Clause 21 of the said Sub-lease Deed deals with “Dispute Resolution & Jurisdiction”, it is relevant and extracted hereunder:

               21. Dispute Resolution & Jurisdiction

               21.1 All Disputes, differences or disagreements arising out of and in connection with or in relation to this agreement shall be finally decided by arbitration to be held in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for the time being in force.

               21.2 The venue, place, and seat of Arbitration shall be Hyderabad.

               21.3 The Courts in Hyderabad shall alone have jurisdiction to adjudicate on the subject matter of suit and judicial proceedings.

               21.4 The Arbitrator shall have summary powers.

               21.5 All disputes arising in respect of any interpretation or out of these presents shall be referred to a sole arbitrator of rank of retired High Court Judge.

               21.6 The Sole Arbitrator can be appointed either with mutual consent of parties or by way of either of parties moving an application under Section 11(6) of Arbitration and Conciliation Act.

               21.7 Both parties shall bear costs pertaining to arbitration (i.e. arbitration costs, procedural costs, venue costs, Arbitrator’s fees, administrative expenses thereof etc) in equal proportion and the said fees shall be payable as and when directed by the Arbitrator.

               21.8 Both parties shall bear their own costs (Advocate Professional Fees, Documentation Charges etc) during the Arbitration proceedings.

               21.9 In accordance with Arbitration rules prescribed under law, the losing party shall pay the prevailing party all costs (arbitration costs, Advocate Professional Fees, documentation charges, any other costs, fees etc incurred by prevailing party).

               21.10 The Arbitrator shall be entitled to award preference, pendent lite, post reference interest costs as deemed appropriate till the payment of claims of the prevailing party is made in full by the losing party.

6. According to the Applicant, there are disputes between the Applicant and the Respondents with regard to the property admeasuring 39,000 sft, (part of the subject property) covered under the said Sub-lease Deed dated 01.11.2023. Therefore, invoking arbitration clause, the Applicant issued Notice, dated 27.02.2025 addressed to Respondent Nos. 1 and 2, proposing names of three arbitrators i.e. (1) Sri Justice N.R.L. Nageswara Rao, Former Judge, Erstwhile High Court of Andhra Pradesh, (2) Sri Justice A. Rajasheker Reddy, Former Judge, High Court of Telangana, (3) Sri Justice P. Ramakrishnam Raju, Former Judge, Erstwhile High Court of Andhra Pradesh; one of whom is to be appointed as the Sole Arbitrator to resolve the disputes. Subsequently, another notice dated 03.04.2025 was sent through e-mail which was addressed to kanishkguptagroup@gmail.com. Despite receiving and acknowledging the notice, Respondent Nos. 1 and 2 failed to respond. Therefore, the Applicants filed the present application.

7. It is apt to note that as per the aforesaid clause No. 21, both the parties have agreed for appointment of a Sole Arbitrator, who must be of the rank of Retired High Court Judge. The arbitration agreement between the parties, clearly states that in the event of disputes, differences, or disagreements arising out of and in connection with or in relation to the said agreement, the matter shall be finally decided by arbitration, to be held in accordance with the procedure laid down under the Act, 1996.

8. On perusal of facts of the present case, prima facie, it is evident that there are disputes between the Applicant and Respondent Nos. 1 to 3n which are arbitrable in nature. However, Respondent No. 4, Mr. Ronak Gupta has raised a preliminary objection that he is a non-signatory to the Sub-Lease Deed dated 01.11.2023. Further, he is not even a party to the alleged arbitration agreement. Furthermore, a Notice invoking arbitration in terms of Section 21 of the Act, was never issued to Respondent No. 4. Moreover, the issue as to whether a non-signatory can be referred to arbitration is a matter which squarely falls within the competence of the Arbitral Tribunal under Section 16 of the Act, and does not arise for adjudication by this Court under Section 11 of the Act.

9. On the contrary, the Applicant places reliance on the order of this Court in M/sSV Properties v. G. Chalapathi Rao (Arbitration Application Nos. 75 & 76 of 2020) to contend that a non-signatory can be made a party to the arbitration proceedings. With regard to the objection as to non-issuance of a Noticeinvoking arbitration under Section 21 of the Act to Respondent No. 4, the Applicant places reliance on the principle laid down by the Apex Court in Adavya Projects Pvt. Ltd. v. M/s Vishal Structurals Pvt. Ltd. & Ors. (2025 INSC 507) to contend that merely because such a Notice is not issued to certain persons who are parties to the arbitration agreement does not denude the Arbitral Tribunal of its jurisdiction to implead them as parties during the arbitral proceedings.

10. I have perused the facts of the present case, objections raised by Respondent No. 4, and the precedents cited by the Applicant. There is no doubt that it is a settled law that even non-signatories to an arbitration agreement can be made party to the arbitration proceedings. In order to determine the intention of the non-signatory to be bound by the arbitration agreement; certain factors such as the conduct of non-signatory, mutual intent of parties, relationship of a non-signatory with a signatory, commonality of subject-matter, composite nature of transactions, and performance of contract should be taken into consideration.

11. However, in the present case, Respondent No. 4 specifically contends that the issue as to whether a non-signatory can be made party to arbitrationagreement should be decided by the Arbitral Tribunal exercising powers under Section16 of the Act, and not by the Referral Court under Section 11 of the Act. In this regard, reference is being made to the judgment of a Three-Judge Bench of the Hon’ble Supreme Court in Ajay Madhusudan Patel v. Jyotindra S. Patel ((2025) 2 SCC 147.), wherein the limited scope of jurisdiction afforded under Section 11(6) of the Act was reiterated. It was observed that the conduct of the non-signatory party along with the other attending circumstances may lead the Referral Court to draw a legitimate inference that it is a veritable party to the arbitration agreement.

12. In the aforementioned case, the Hon’ble Supreme Court also observed that a dual test needs to be satisfied for compelling a non-signatory party to be a party to arbitration proceedings, namely: (a) Non-signatory should be shown to have agreed to the underlying contract, and (b) Non-signatory should be shown to have agreed to be bound by the arbitration agreement. While determining the said issue, it was observed that prima facie several disputed questions of fact had to be examined. It was reiterated that Section 11(6) of the Act, 1996 confers limited jurisdiction, and thus, Courts should not conduct a mini trial or delve into contested/disputed questions of fact. Therefore, considering the complexity involved in the determination of the question as to whether the non-signatory was a veritable party to the arbitration agreement or not, the Hon’ble Supreme Court held that the Arbitral Tribunal would be the appropriate forum to decide the said question after taking into consideration the evidence adduced by the parties. The relevant portion is extracted hereunder:

               91. A detailed examination of numerous disputed questions of fact are imperative in deciding whether the SRG Group participated in the negotiation and performance of the underlying contract and can be bound by the arbitration agreement. At the cost of repetition, we may state that under our limited jurisdiction afforded under Section 11(6) of the 1996 Act we should not conduct a mini trial and delve into contested or disputed questions of fact. This has been categorically laid down in several decisions of this Court including Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1] and Krish Spg. [SBI General Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1] Further, it is also the case of the SRG Group that a dual test needs to be satisfied before it is compelled to be a party to the present arbitration proceedings i.e.:

               (a) SRG Group should be shown to have agreed to the underlying contract, and

               (b) SRG Group should also be shown to have agreed to be bound by the arbitration agreement.

               We are of the considered view that the same requires a much more detailed examination of the evidence that may be adduced by the parties which can only be gone into by the Arbitral Tribunal.

               92. Therefore, considering the complexity involved in the determination of the question whether the SRG Group is a veritable party to the arbitration agreement or not, we are of the view that it would be appropriate for the Arbitral Tribunal to take a call on the question after taking into consideration the evidence that may be adduced by the parties before it and the application of the legal doctrine as elaborated in the decision in Cox & Kings [Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1].

13. The Hon’ble Supreme Court in Cox & Kings Ltd. v. SAP India (P) Ltd. ((2024) 4 SCC 1.) ,examined the scope of inquiry under Section 11 of the Act, 1996 when it comes to impleading non-signatories in the arbitration proceedings was specifically dealt with. The relevant portion is extracted hereunder:

               169. In case of joinder of non-signatory parties to an arbitration agreement, the following two scenarios will prominently emerge: first, where a signatory party to an arbitration agreement seeks joinder of a non-signatory party to the arbitration agreement; and second, where a non-signatory party itself seeks invocation of an arbitration agreement. In both the scenarios, the referral court will be required to prima facie rule on the existence of the arbitration agreement and whether the non-signatory is a veritable party to the arbitration agreement. In view of the complexity of such a determination, the referral court should leave it for the Arbitral Tribunal to decide whether the non-signatory party is indeed aparty to the arbitration agreement on the basis of the factual evidence and application of legal doctrine. The Tribunal can delve into the factual, circumstantial, and legal aspects of the matter to decide whether its jurisdiction extends to the non-signatory party. In the process, the Tribunal should comply with the requirements of principles of natural justice such as giving opportunity to the non-signatory to raise objections with regard to the jurisdiction of the Arbitral Tribunal. This interpretation also gives true effect to the doctrine of competence-competence by leaving the issue of determination of true parties to an arbitration agreement to be decided by the Arbitral Tribunal under Section 16.

14. Therefore, it is clear that the Referral Court under Section 11 of the Act, 1996 should confine the enquiry to prima facie examine the existence of an arbitration agreement. The Referral Court may also determine as to whether a non-signatory is a veritable party to the arbitration agreement or not. However, in the event of complexity, the Court should leave it to the Arbitral Tribunal to decide the same on the basis of factual evidenceand legal aspects. In the present case, it appears prima facie that there are complex and disputed questions of fact, which need to be first resolved by appreciating factual evidence. This Court is conscious that at the referral stage a mini trial should not be conducted. In light of the same, the Arbitral Tribunal is competent to decide the said question on appreciation of facts and evidence.

15. With respect to the contention of Respondent No. 4 that a Notice invoking arbitration under Section 21 of the Act, 1996 was not issued to him by the Applicant, reference is being made to the judgmentof the Hon’ble Supreme Court in Bhagheeratha Engg. Ltd. v. State of Kerala ((2026) 5 SCC 758), whereinit wasobserved that the object of Section 21 of the Act, is only for the purpose of commencement of arbitral proceedings. Section 21 of the Act, 1996 is concerned only with determining the commencement of the dispute for the purpose of reckoning limitation. There is no mandatory prerequisite for issuance of a Section 21 of the Act, 1996 notice prior to the commencement of arbitration. Issuance of a Section 21 notice may come to the aid of parties and the arbitrator in determining the limitation for the claim. Failure to issue a Section 21 notice would not be fatal to a party in arbitration if the claim is otherwise valid and the disputes arbitrable.

16. Further, on perusal of Adavya Projects Pvt. Ltd. (supra), it is evident that merely not issuing a Notice invoking arbitration under Section 21 of the Act does not denude the Arbitral Tribunal of its jurisdiction to implead them as parties during arbitral proceedings. Therefore, it is clear that issuing a Notice invoking arbitration under Section 21 of the Act is not mandatory, and would not be fatal to the arbitral proceedings.

17. However, in the present case, to apply the aforesaid principle, it is pertinent to primarily determine if the non-signatory i.e. Respondent No. 4 is a party to the arbitration agreement or not. The said issue can be decided only after thorough evaluation of disputed facts and evidence thereto. Therefore, the Arbitral Tribunal would be the competent forum to decide the same in view of Section 16 of the Act.

18. For the sake of reiteration, the aforesaid discussion would reveal that there are disputes between the Applicant and Respondent Nos. 1 to 3with regard to the schedule premises covered under the Sub-Lease Deed dated 01.11.2023. The same are arbitrable in nature. Also, the question as to whether Respondent No. 4, being a non-signatory is party to the arbitration agreement or not, is to be decided by the Arbitral Tribunal as a preliminary issue, if raised.

19. In the light of the aforesaid discussion, the present Arbitration Application is allowed. Accordingly, Sri Justice A. Venkateshwara Reddy, Former Judge, High Court of Telangana, Hyderabad, Nitish Castle, Flat No.502, Narasimhapuri Colony, Besides Sai Sanjeevani Hospital, Kothapet, Hyderabad, Mobile No.8143517740, is appointed as the Sole Arbitrator to adjudicate disputes between the parties. The parties are at liberty to take all the pleas and defences before the learned Sole Arbitrator and it is for the Arbitrator to consider and decide the same. The Arbitral Tribunal shall proceed to adjudicate the claims of the Applicant only after the preliminary objections (if any) are decided.

Consequently, miscellaneous Petitions, pending if any, in this Arbitration Application, shall stand closed.