Non-signatories Cannot Attend Arbitration Proceedings, Rules India’s Supreme Court

The Supreme Court has held that persons who are not signatories to an arbitration agreement cannot be permitted to attend arbitral proceedings, as doing so would breach the confidentiality mandated under Section 42A of the Arbitration and Conciliation Act, 1996.

 

A Bench of Justices PS Narasimha and AS Chandurkar observed that arbitral proceedings are strictly between the parties to the agreement and the arbitrator, and the award binds only the parties and those claiming under them (Section 35). Allowing strangers to attend would be “a course unknown to law.”

 

“The legislative intent behind maintaining confidentiality of information is clear,” the Court said. “Permitting a stranger to remain present and observe the proceedings would breach Section 42A of the Act.”

 

The ruling came in an appeal against Delhi High Court orders that had allowed non-signatories to attend arbitration hearings, access records, and revive earlier intervention pleas. The dispute arose from a family settlement between Pawan Gupta and Kamal Gupta, formalised in July 2019. Rahul Gupta, son of Kamal Gupta, was not a party to the agreement but sought to participate in related arbitration proceedings.

 

While the Delhi High Court initially rejected Rahul Gupta’s intervention in March 2024, it later, in August and November 2024, permitted him and several companies to attend the hearings.

 

Setting aside those orders, the apex court held that once an arbitrator is appointed under Section 11(6), the court becomes functus officio and cannot pass further directions relating to the arbitration. It also ruled that Section 151 of the Code of Civil Procedure could not be invoked, as the Arbitration Act is a self-contained code, and Section 5 limits judicial interference.

 

The Court imposed costs of ₹3 lakh on the respondents, payable to the Supreme Court Advocates-on-Record Association.

 

 For any enquiries please fill out this form, or contact info@thelawreporters.com  Follow  The Law Reporters on WhatsApp Channels