Highlights:

Corporate Brief

• RBI circular on Investments by Foreign Portfolio Investors in Corporate Debt Securities through the General Route – Relaxations.
• Reserve Bank of India (Digital Lending) Directions, 2025.
• Draft Reserve Bank of India (Investment in AIF) Directions, 2025.
• RBI draft circular on ‘Updation/ Periodic Updation of KYC– Revised Instructions’.
• RBI draft circular on Inoperative Accounts/ Unclaimed Deposits in Banks – Revised Instructions (Amendment) 2025.
• RBI circular on Reporting on FIRMS portal – Issuance of Partly Paid Units by Investment Vehicles.
• Payments Regulatory Board Regulations, 2025.

 RERA Brief

• Circular dated 04.05.2025 issued by Telangana Real Estate Regulatory Authority (“TG RERA”) to set out procedure of filing applications for setting aside ex-parte Orders.
• Notice dated 07.05.2025 issued by Punjab Real Estate Regulatory Authority (“Punjab RERA”) to set out directions for application for extension in registration period.
• Order dated 22.05.2025 issued by Rajasthan Real Estate Regulatory Authority (“Rajasthan RERA”) regulating advertisements published by Promoters and Real Estate Agents.
• Office order dated 23.05.2025 issued by Rajasthan RERA to issue promoter related compliances.
• Office memorandum dated 24.05.2025 issued by Uttar Pradesh Real Estate Regulatory Authority (“UP RERA”) regulating the advertisement, marketing, booking, selling of real estate projects.

Intellectual Property Rights Brief 

• Delhi High Court passed ‘dynamic+’ injunction order protecting personality rights of Sadhguru Jaggi Vasudev
• Delhi High Court grants ad interim injunction against unauthorized use of ‘Andaz Apna Apna’ film’s Intellectual Property
• Draft Rules to amend the Copyright Rules, 2013

NCLT Brief  

• Bank of India vs Sri. Nangli Rice Mills Pvt. Ltd

Litigation Brief:  

• Mahnoor Fatima Imran & Ors. Vs. M/s Visweswara Infrastructure Pvt. Ltd & Ors., Special Leave Petition (C) No. 1866 of 2024 
• ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co. Pvt. Ltd

Corporate Brief:

Investments by Foreign Portfolio Investors in Corporate Debt Securities through the General Route – Relaxations.

Circular No. RBI/2025-26/35 dated 05.2025 of RBI: 

The Reserve Bank of India (“RBI”) has issued the said circular to provide relaxations in respect of investments by Foreign Portfolio Investors (“FPIs”) in corporate debt securities through the general route.

Under the said circular, the requirement for investments by FPIs in corporate debt securities to comply with the short-term investment limit and the concentration limit has been withdrawn, and the amendment to this effect has been made under Master Direction – Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025.

Reserve Bank of India (Digital Lending) Directions, 2025.

Circular No. RBI/2025-26/36 dated 08.05.2025 of RBI:

RBI has issued the Reserve Bank of India (Digital Lending) Directions, 2025. These directions consolidate the earlier instructions along with certain new measures for arrangements involving Lending Service Providers (“LSPs”) partnering with multiple regulated entities, and for the creation of a directory of digital lending apps.

These directions are applicable to all digital lending activities undertaken by Commercial banks, Primary (Urban) Co-operative Banks, State Co-operative Banks, Central Co-operative Banks, Non-Banking-Financial Companies (including Housing Finance Companies), and All-India Financial Institutions (collectively “REs”).

The said directions may be accessed on:

https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12848&Mode=0.

Draft Reserve Bank of India (Investment in AIF) Directions, 2025.

Press Release No. RBI/2025-26/366 dated 19.05.2025 of RBI:

RBI has issued the said draft directions to prescribe guidelines in respect of the investment by the REs in Alternative Investment Funds (“AIFs”).

The key proposals under the said draft directions are:

• A single RE’s contribution to any AIF scheme shall be capped at 10 percent of its corpus. Collectively, a ceiling of 15 per cent shall apply for investment by all REs in an AIF scheme.
• Investments by a RE upto five per cent of the corpus of an AIF scheme shall be allowed without any restriction.
• If the investment by any RE exceeds five per cent of the corpus of the scheme, and if the scheme has a downstream debt investment in a debtor company of the RE (excluding equity shares, compulsorily convertible preference shares and compulsorily convertible debentures), then the RE shall be required to make 100 per cent provisions to the extent of its proportionate exposure.
• RBI may exempt certain AIFs, in consultation with the Government, that have been set up for strategic purposes.
• The revised directions will be applicable prospectively. Existing investments or commitments will follow the extant norms.

The draft directions may be accessed on:

https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4646.

Draft circular on ‘Updation/ Periodic Updation of KYC– Revised Instructions’.

Press Release No. RBI/2025-26/402 dated 23.05.2025 of the RBI:

Observing a large pendency in periodic updation of Know Your Customer (“KYC”) records and the challenges faced by customers in periodic updation of their KYC, RBI has released draft directions to amend the Master Direction – Know Your Customer (KYC) Direction, 2016.

The proposed change includes allowing banks to use their business correspondents (BC) to facilitate the process of KYC and KYC updation and providing at least three advance intimations to their customers for KYC updation which shall contain easy-to-understand instructions, escalation mechanism for seeking help, if required, and the consequences, if any, of failure to update their KYC in time.

Draft circular on ‘Inoperative Accounts/ Unclaimed Deposits in Banks – Revised Instructions (Amendment) 2025’.

Press Release No. RBI/2025-26/403 dated 23.05.2025 of RBI:

As per the extant instructions of RBI, the credit balance in any deposit account maintained with banks, which have not been operated upon for ten years or more, or any amount remaining unclaimed for ten years or more are required to be transferred by banks to Depositor Education and Awareness (“DEA”) Fund maintained by RBI, in accordance with the DEA Fund Scheme, 2014.

In line with the change proposed in the KYC directions, RBI has proposed to allow authorised Business Correspondent of the banks to be utilised for activation of inoperative accounts under the ‘Inoperative Accounts /Unclaimed Deposits in Banks- Revised Instructions’.

Reporting on FIRMS portal – Issuance of Partly Paid Units by Investment Vehicles.

Circular No. RBI/2025-26/40 dated 23.05.2025 of RBI:

 In terms of Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, an investment vehicle which has issued its units to a person resident outside India has to file Form InVI within 30 days from the date of issue of such units.

As per the RBI circular, investment vehicles must report issuances of partly paid units as well in Form InVI. Issuances made before the date of this circular shall be reported within 180 days from such date, and those made on or after the date of this circular shall be reported within 30 days of issuance.

Payments Regulatory Board Regulations, 2025.

Notification No. CO.DPSS.BD.No.S168/02-01-012/2025-2026 dated 20.05.2025 of the RBI: 

In pursuance of powers conferred under the Payment and Settlement Systems Act, 2007 (“PSS Act”), and in supersession of the Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008, RBI has notified the Payments Regulatory Board Regulations, 2025.

Under the PSS Act, a Payments Regulatory Board (“Board”) for the regulation and supervision of payment and settlement systems was constituted. Under the new framework, the composition of the Board has been changed from the erstwhile framework.

The said regulations may be accessed on:

https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BPSSR2008FDCA9885A88E45D29C680794D63E84AD.PDF

 RERA Brief:

Circular dated 04.05.2025 issued by TG RERA to set out procedure of filing applications for setting aside ex-parte Orders.

Vide this Order dated 04.05.2025, TG RERA laid down directions to govern the process of recalling ex parte orders and restoring complaints dismissed for default. As per the said order dated 04.05.2025:

1. “Any party to a complaint proceeding in which an ex parte order has been passed by the TG RERA or the Adjudicating Officer, or any complainant whose complaint has been dismissed for default due to non-appearance or non-prosecution, may seek appropriate relief by filing an application for recall or restoration.
2. An application for setting aside of ex parte order or for restoration of complaint shall be submitted on payment of standard fee of Rs. 5000/- (Rupees Five Thousand only) in each case, payable through demand draft in favour of “TG RERA Funds”.
3. Upon receipt of the application, notice shall be issued to the opposite party, before allowing the application.
4. The applicant shall satisfy the TG RERA that the notice of the hearing was not duly served; the applicant had no knowledge of the date of hearing, or; the applicant was prevented by sufficient cause from appearing on the scheduled date.
5. No application shall be entertained in respect of any order against which an appeal has already been preferred under the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”).”

 

The said Circular dated 04.05.2025 has come into operations with immediate effect and link to the same is as follows:

https://rera.telangana.gov.in/Home/ShowPdf?pdffilename=BU_080525123602458.pdf

Notice dated 07.05.2025 issued by Punjab RERA to set out directions for application for extension in registration period.

Vide this Notice dated 07.05.2025, the Punjab RERA has directed that the promoter shall submit all NOCs mentioned in the license to develop colony or any other equivalent approval/ document with the application for extension in registration period of the real estate project under section 6 & section 8 of the RERA Act w.e.f. 01.07.2025.

Office order dated 22.05.2025 issued by Rajasthan RERA regulating advertisements published by Promoters and Real Estate Agents.

Vide this order dated 22.05.2025, the Rajasthan RERA has mandated that any advertisement or prospectus issued or published by a promoter must prominently display the website address of the Rajasthan RERA and include the registration number obtained from the Rajasthan RERA, along with other incidental details. The Rajasthan RERA issued directions in the interest of enhancing transparency, promoting consumer awareness, and protecting the rights of homebuyers. Vide this order, Rajasthan RERA has laid down the parameters related to

1. Font Size Standardization;
2. Placement and Visibility; and
3. Display of QR code

The said Order also specifies that the failure to comply with the above directions shall be construed as violation/contravention and penalty of not less than Rs. 10,000 and upto Rs. 50,000 per violation may be imposed upon the promoters and real estate agents.

Office order dated 23.05.2025 issued by Rajasthan RERA to issue promoter related compliances. 

Vide the said order dated 23.05.2025, the Rajasthan RERA has issued the following directions for promoter related compliances:

1. The promoter is required to mandatorily upload the structural drawings duly sealed and signed by a qualified engineer at the time of submission of online application for registration.
2. The consideration of exemption applications and issuance of exemption certificate of the projects is dispensed with immediate effect. Henceforth, no fresh application for exemption shall be entertained.
3. The IT Cell shall create a separate module on online web portal for closure of the separate retention account so that the promoter may file an online application as per requirement of Regulation 11(8) of the RERA Regulation, 2024.

Office memorandum dated 21.05.2025 issued by UP RERA, regulating the advertisement, marketing, booking, selling of real estate projects.

Vide Office memorandum dated 21.05.2025, UP RERA has issued guidelines related to real estate project’s advertisement and marketing which include inter-alia the following:

1. In every promotional material (print, electronic and social media), application form, allotment letter, brochure, BBA etc. along with the following has to be prominently mentioned on the right top corner of the promotional material – QR Code given in the Registration Certificate (Form C), RERA Registration Number, UP RERA website, and Project Collection Bank Account No. Project Launch Date.
2. In relation to providing digital connectivity infrastructure services, facilities of minimum 02 internet service providers should be made available as per the guidelines of Telecom Regulatory Commission of India (TRAI) and action for obtaining rating should be ensured.
3. Within 15 days of the expiry of each quarter, the Quarterly Progress Report (QPR) of that quarter should be updated on the UP RERA portal.

The link to the said office order dated 21.05.2025 is as follows:

https://www.up-rera.in/pdf/Order-FormC.pdf

Intellectual Property Rights Brief

Delhi HC passed ‘dynamic+’ injunction order protecting personality rights of Sadhguru Jaggi Vasudev

Sadhguru Jagdish Vasudev & Anr. Vs Igor Isakov & Ors.

Delhi High Court|CS(COMM) 578/2025

Facts

On May 30, 2025, the Delhi High Court granted an ad interim injunction in a suit filed by Sadhguru and the Isha Foundation. The Plaintiffs sought to prevent the Defendants from infringing Sadhguru’s personality and publicity rights. The infringement included, creation of fake news and interviews to promote investment platforms and NFTs., usage of Sadhguru’s image and voice to falsely endorse products and books and infringing YouTube Videos disseminating spiritual content using AI-generated versions of Sadhguru’s voice and image.

Observation

The Court found that this was, prima facie, a clear case of personality rights infringement whereby modern technology and AI tools were used to unauthorizedly morph and infringe Sadhguru’s personality rights. The court emphasized that misrepresenting Sadhguru’s spiritual endorsement severely damages his reputation and public trust, extending the present matter’s gravity beyond economic concerns to broader issues like public welfare and integrity of public discourse.

Order

The court passed a ‘dynamic+’ injunction order and restrained the Defendants from using and exploiting Sadhguru’s personality rights, including through AI or any other technology, format, or platform, for commercial or personal gain without his express written authorization.

The matter is next listed on 14-10-2025.

Delhi High Court grants ad interim injunction against unauthorized use of ‘Andaz Apna Apna’ film’s Intellectual Property

Vinay Pictures vs. Good Hope & Ors.

Delhi High Court|CS(COMM) 475/2025

Facts

On 14 May 2025, the Delhi High Court granted an ex‑parte ad‑interim injunction restraining the Defendants from using any content derived from the film and Plaintiff’s registered trademark “Andaz Apna Apna” including images, videos, AI-generated material and merchandise such as mugs, T-shirts, posters, cards, toys, stickers, domain names, social handles, hashtags, and any IP that is identical or deceptively similar and/or are adapted from, or derivative of the Plaintiff’s film “Andaz Apna Apna”.

Observation

The Court found that over 26 known Defendants (while the remaining remained as John Doe), were engaged in unauthorised use of the IP leading to infringement and passing off causing irreparable harm, dilute the value of the IP, mislead consumers, and constitute unfair competition and tarnishment.

Order

• The Court granted an interim injunction against the Defendants for use of the Plaintiff’s IP without authorization.
• The e-commerce platforms were also directed to provide all the available details of the John Doe Defendants.
• The Plaintiff has been allowed to add further parties or websites under the injunction via a future application against the John Doe parties. 

Draft Rules to amend the Copyright Rules, 2013

The Ministry of Commerce and Industry released a notification dated 04.06.2025 and notified the draft rules exercising powers conferred under section 78 of the Copyright Act, 1957 to amend the Copyrights Rules, 2013.

These rules may be called the draft Copyright (Amendment) Rules, 2025. In the Copyright Rules, 2013, S83(A) shall be inserted in Chapter XVIII, after Rule 83 namely 83(A) provides the Manner of Payment of Licence Fee as Notwithstanding anything contained in any other provision under these Rules, the owner or licensor of a literary work, musical work, and sound recording shall establish and maintain an online payment mechanism for the collection of license fee payable by a licensee for communication to the public of such work.

All payments of such license fee shall be processed exclusively through said online system, and no alternative method of payment shall be permitted or accepted for this purpose.

Comments and suggestions are invited to be submitted by July 4, 2025.

NCLT Brief

Bank of India vs Sri. Nangli Rice Mills Pvt. Ltd

Citation:  2025 SCC OnLine SC 1229

Facts:

Nangli Rice Mills Pvt Ltd (“Borrower”) had availed credit facility from the Bank of India (“Appellant Bank”) by hypothecating stocks of paddy and other assets. Pursuant thereto, a Credit Facility Agreement was executed between the Borrower and the Appellant Bank. While the said loan was still outstanding, the Borrower executed an Advance/Pledge Agreement with Punjab National Bank (“Respondent Bank”) by pledging the warehouse receipts of certain goods including stocks of paddy and rice in favour of the Respondent Bank as security. Subsequently, the Borrower defaulted on repayment of the loan amount sanctioned by the Appellant Bank. Thereafter, on inspecting the stocks hypothecated in its favours, the Appellant Bank discovered pledge tags of the Respondent Bank on the said security. Several correspondences were exchanged between the Appellant Bank and the Respondent Bank, wherein each party asserted its claim in priority to the other, over the stocks of the Borrower. In the meantime, the Appellant Bank classified the Borrowers loan account as Non-Performing Asset (NPA) and issued a demand notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”). The Appellant Bank also preferred an application under Section 14 of the SARFAESI Act seeking assistance of the District Magistrate (“DM”) for taking physical possession of the secured assets of the Borrower with the aid of the police. The Respondent Bank objected to the said application by contending that certain stocks had already been pledged in its favour. While the DM rejected the Appellant Banks application, in appeal, the High Court of Punjab and Haryana at Chandigarh (“High Court”), directed the Appellant Bank to approach the Debt Recovery Tribunal (“DRT”).

The DRT allowed the Appellant Banks securitisation application by permitting it to sell the stocks of rice and paddy hypothecated in its favour for the purpose of realizing the outstanding dues.  However, in appeal, the Debt Recovery Appellate Tribunal (“DRAT”) remanded the matter back to DRT. On remand, the DRT held that it has no jurisdiction to adjudicate the dispute since the controversy pertained to the competing claims between two banks over the same secured assets. Further, it held that since the dispute in respect of the secured asset is inter-se between two banks, the same must be adjudicated by way of arbitration in terms of Section 11 of the SARFAESI Act by approaching the competent authority for seeking appointment of arbitrator by way of an application under Section 11 of the Arbitration and Conciliation Act, 1996. The said view was upheld by the High Court. Aggrieved by this, the Appellant Bank filed a special leave petition before the Supreme Court.

Issues:

1. What is the scope of Section 11 of the SARFAESI Act?

1. Whether the existence of a written arbitration agreement between the parties is required for the purpose of resolution of disputes under Section 11 of the SARFAESI Act?

1. Whether Section 11 of the SARFAESI Act, 2002 is mandatory or directory in nature? 

Findings of the case: 

The Hon’ble Supreme Court examined the scope and purport of Section 11 of the SARFAESI Act and rendered the following findings: 

• Twin Conditions to be met for Section 11 to be applicable 

Section 11 of the SARFAESI Act provides for statutory arbitration when the following twin conditions are fulfilled; first, the dispute is between any bank or financial institution or asset reconstruction company or qualified buyer and secondly, the dispute relates to securitisation or reconstruction or non-payment of any amount due including interest. The object underlying Section 11, in so far as it mandates arbitration or conciliation and ousts the jurisdiction of DRT’s under Section 17 of the SARFAESI Act for adjudication of disputes between the aforementioned entities is to ensure that ancillary or collateral disputes that may arise between competing secured creditors do not hinder the larger purpose of the SARFAESI Act of facilitating recoveries of dues from the borrowers expeditiously by enforcement of secured assets or other means provided thereunder.

• Disputes inter-se creditors arising out of default of the borrower covered under Section 11

The expression “non-payment of any amount due, including interest” used in Section 11 of the SARFAESI Act, is of wide import and encompasses various scenarios of ‘disputes’ connected to unpaid amounts, including those arising due to third-party defaults, such as indirect defaults of the borrowers. The said provision does not stipulate that the “amount due” must be owed directly between the two banks, financial institutions, ARCs etc.

• Disputes of lender-borrower nature excluded under Section 11

The provision of Section 11 will not apply in case of a dispute between two banks, financial institutions, asset reconstruction companies or qualified buyers etc., when the jural relation between the two is of a lender and borrower. The use of the phrase “any person” in the definition of ‘borrower’ in Section 2(f) of the SARFAESI Act, makes it abundantly clear that even a bank, financial institution or asset reconstruction company or qualified buyer can be considered a borrower, if they receive financial assistance from a bank or financial institution etc by providing or creating a security interest. Thus, a lender-turned borrower would also fall within the scope of a “borrower” under the SARFAESI Act and shall be governed by the same statutory framework as any ordinary borrower. 

• No requirement for a written arbitration agreement 

The expression “as if the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration” occurring in Section 11 of the SARFAESI Act, creates a legal fiction regarding the existence of an arbitration agreement between the parties falling under the said provision notwithstanding whether such agreement actually exists or not. There is no need for an explicit written agreement to arbitrate between the parties in order to attract Section 11 of the SARFAESI Act.

• Mandatory nature of Section 11

The use of the term “shall’’ used in Section 11 denotes that the provision is mandatory in nature, thereby compelling recourse to arbitration in all disputes of the nature specified in the said provision. The parties cannot bypass or subvert it by seeking recourse elsewhere.

Conclusion: 

In view of the aforesaid findings, the Supreme Court upheld the decision of the High Court and directed the Appellant Bank and the Respondent Bank to resolve their dispute by way of arbitration in terms of Section 11 of the SARFAESI Act. Accordingly, the appeal was dismissed.

Litigation Brief

CASE ANALYSIS: Mahnoor Fatima Imran & Ors. Vs. M/s Visweswara Infrastructure Pvt. Ltd & Ors., Special Leave Petition (C) No. 1866 of 2024

Decided by double bench consisting of Hon’ble Justice K. Vinod Chandran and Hon’ble Justice Sudhanshu Dhulia, on 07.05.2025.

Factual Matrix: 

• The case pertains to a writ petition seeking restraint against the Telangana State Industrial Infrastructure Corporation Ltd. (TSIIC) from entering or demolishing structures on 53 acres of land located in Survey No. 83/2 of Raidurg Panmaktha, Ranga Reddy District, Telangana.
• The land in dispute is part of a larger extent of 525.31 acres originally owned by 11 individuals. A General Power of Attorney (‘GPA’) was executed in 1974 in favour of Sri Venkateswara Enterprises.
• Under the Andhra Pradesh Land Reforms Act, 1973, 99.07 acres were declared surplus and vested in the State in 1975. Additional declarations under the Urban Land Ceiling Act, 1976 led to 470.33 acres being allotted to Hyderabad Urban Development Authority (HUDA).
• A sale agreement dated 19.03.1982 was executed between the GPA holder and M/s Bhavana Co-operative Housing Society for 125.35 acres. This agreement was later “validated” in 2006 but held to be fraudulent by the District Registrar in 2015.
• Bhavana Society filed a suit for specific performance which was dismissed for default in 2001; the restoration application also failed in 2004.
• The Land Tribunal, on remand, ordered the release of 99.07 acres to the declarants in 1990. The 53-acre portion was claimed to fall within this.

Issues:

1. Whether the writ petitioner holds a valid title and rightful possession over the 53 acres of land.
2. Whether the sale agreement dated March 19, 1982, and subsequent sale deeds originating from it, confer a valid title over the writ petitioner, given the prior vesting of the land in the state.
3. Whether the interim orders of the High Court amount enough evidence as to establishing actual and physical possession of the writ petitioners.
4. Whether the Land Tribunal’s order was right in reverting 99.07 acres to the original declarants, given the statutory vesting of land with the State under the Land Reforms Act 

Court’s observation and findings:

• The Court observed that the learned Single Judge did not decide the question as to title but only raised concern regarding the asserted title and possession by the writ petitioners.
• The court relied on its earlier decision in the State of A.P. and Ors. v. N. Audikesava Reddy and Ors. and Omprakash Verma v. State of A.P. establishing that 13 acres of the total land had vested in APIIC (now TSIIC) and this vesting had attained finality.
• Citing Suraj Lamp & Industries v. State of Haryana (2012) 1 SCC 656, the Court reiterated that GPA/SA/will-based transactions do not confer ownership rights or valid title. The Court found that the writ petitioners had not established a valid title, and their claim stemmed from a sale agreement (1982), which was not a registered document and thus not a proper deed of conveyance.
• The Court raised suspicions of fraud by pointing out differences between the 1982 original agreement and the revalidated one, such as varying extents and unclear recitals about consideration payment.
• It was noted that possession of 99.07 acres (including the 53 acres) by the GPA of the original declarants was suspected to have been handed over in 1990, after the land had already been vested in the State in 1975.
• The court also pointed out that mere presence of interim order does not goes on to establish actual title and physical possession.
• Submission by state invoking section 9-A of the Land Reform Act against 99.07 acres, and that the Land Ceiling Act only permits retention of 1000 sq. m. per declarant, was noted by the court, along with the fact that Omprakash Verma v. State of A.P. pointed to an exemption for 5 acres.
• It was concluded that the writ petitioner lacked a valid title, and the claim of rightful possession was also devoid of any lawful ground.

Final order:

• The judgment of a single judge was restored, and the petition seeking an order against dispossession was disposed of with observation and reservations.
• Pending applications, if any, shall stand disposed of.

ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co. Pvt. Ltd.

Civil Appeal No. 5823 of 2025 | Decided on 2 May 2025

1. Introduction

This case involves the question of whether an arbitral tribunal has the authority to implead or join a non-signatory party to an arbitration agreement. The appeal arises out of a judgment by the Delhi High Court affirming the tribunal’s decision to include ASF Buildtech Pvt. Ltd. (ABPL), a non-signatory, as a respondent based on the ‘Group of Companies’ doctrine.

2. Facts

Shapoorji Pallonji & Co. Pvt. Ltd. (SPCPL) entered into a Works Contract with Black Canyon SEZ Pvt. Ltd. (BCSPL), later filing counterclaims against BCSPL, ASF Buildtech Pvt. Ltd. (ABPL), and ASF Insignia SEZ Pvt. Ltd. (AISPL). SPCPL argued that all three entities were part of the ASF Group, functioning as one unit. The Arbitral Tribunal dismissed applications by ABPL and AISPL to exclude themselves from proceedings, prompting appeals which were dismissed by the High Court.

3. Issue

Whether the arbitral tribunal had jurisdiction under the Arbitration and Conciliation Act, 1996 to implead a non-signatory like ABPL to the arbitration agreement post-referral stage, based on the Group of Companies doctrine.

4. Court’s Observations and Findings

The Supreme Court examined divergent High Court decisions and reaffirmed the doctrine of Kompetenz-Kompetenz under Section 16 of the Arbitration and Conciliation Act, 1996 (“Act”), concluding that the arbitral tribunal had jurisdiction to determine its own competence, including the authority to implead non-signatories.

It referred extensively to decisions such as Chloro Controls India Private Limited v. Severn Trent Water Purification Inc : (2013) 1 SCC 641) and Cox and Kings Ltd. v. SAP India Pvt. Ltd. & Anr., 2023 SCC Online SC 1634, confirming that when a non-signatory is functionally involved which indicates intent to be bound by the agreement, they can be impleaded.

The Court observed that the ASF Group including ABPL, AISPL, and BCSPL operated as a single economic unit. It was held that ABPL’s inclusion was necessary for a complete and effective adjudication. The Court further ruled that absence of a Section 21 notice does not defeat arbitral jurisdiction over a non-signatory.

5. Directions Issued

The appeal was dismissed. The Court affirmed the Arbitral Tribunal’s authority to join non-signatories and the High Court’s finding that ABPL was properly impleaded based on conduct and group structure. The Court emphasized that joinder must be based on factual involvement and encouraged future legislative clarification on tribunal powers regarding non-signatories.

6. Final Order

Justices J.B. Pardiwala in the conclusion gave the following remarks regarding the need for change in the legislative framework in India and the Arbitration and Conciliation Bill, 2024:

“It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plaque the arbitration regime of India. The Department of Legal Affairs has now, once again proposed to replace the existing legislation on arbitration with the Arbitration and Conciliation Bill, 2024. Unfortunately, even the new Bill has taken no steps whatsoever, for ameliorating the position of law as regards the power of impleadment or joinder of an arbitral tribunal. What is expressly missing in the Act, 1996 is still missing in the Arbitration and Conciliation Bill, 2024, despite a catena of decisions of this Court as-well as the various High Courts, highlighting the need for statutory recognition of such power in order to obviate all possibilities of confusion.”

 

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