Non-Signatory Can Be a Necessary Party: Delhi HC Impleads IIM Jammu in Arbitration Matter

The Delhi High Court has held that a non-signatory beneficiary institution can be impleaded as a necessary party in arbitration-related proceedings if its role in the execution and performance of the contract is substantial and direct.

Allowing an application filed by the Indian Institute of Management Jammu, the Court ruled that its extensive involvement in the construction of its permanent campus rendered its presence essential for the effective adjudication of disputes arising between the contractor and the Central Public Works Department (CPWD).

The order was passed in proceedings initiated by M/s Ramacivil India Construction Pvt. Ltd. under Section 9 of the Arbitration and Conciliation Act, 1996, against CPWD. IIM Jammu sought impleadment as a respondent, contending that although it was not a signatory to the arbitration agreement, it was the principal beneficiary of the project, had financed the entire construction, and was deeply involved in day-to-day supervision and decision-making throughout the execution of the works.

Sh. Sandeep Sharma, Sr. Adv. and Mr. Praveen Kumar Jain, Adv., Counsels for IIM Jammu argued that CPWD functioned merely as an executing agency and agent, while IIM Jammu remained the real party in interest. Reliance was placed on the Memorandum of Understanding executed between CPWD and IIM Jammu, relevant clauses of the Notice Inviting Tender, and provisions of the Indian Contract Act to assert a principal-agent relationship. It was further contended that the contractor itself had approached IIM Jammu officials to intervene and mediate once disputes arose, clearly acknowledging its central role in the transaction.

Opposing the application, Mr. Avinash Trivedi, counsel for Ramacivil argued that impleadment would violate the foundational principle of arbitration, namely party autonomy, as IIM Jammu was not a signatory to the arbitration agreement. It was submitted that there was no privity of contract between the contractor and IIM Jammu and that allowing impleadment would unfairly expose the contractor to potential counterclaims by a non-contracting party.

Significantly, Mr. Vikram Jetly, CGSC for CPWD did not oppose the application and supported IIM Jammu’s plea for impleadment.

After examining the record, the Court reiterated that the decisive issue was not the absence of a signature on the arbitration agreement but whether the non-signatory could be regarded as a “veritable party” to the transaction.

Relying on the Supreme Court’s ruling in Cox and Kings Ltd. v. SAP India Pvt. Ltd., the Court noted that non-signatories may be bound by arbitration agreements where their conduct demonstrates a clear intention to be part of the underlying contractual relationship.

Applying the principles governing the group of companies doctrine and non-signatory inclusion, the Court found that IIM Jammu had played an active and continuous role in the performance of the contract. It supervised construction, chaired coordination meetings, financed the project, and stood to ultimately benefit or suffer from the outcome of the dispute. The Court also noted that the Notice Inviting Tender expressly empowered IIM Jammu to oversee execution, reinforcing its substantive involvement.

Holding that CPWD acted as an agent of IIM Jammu and that the institute’s presence was indispensable for complete and effective adjudication, the Court allowed the impleadment application. The amended memo of parties was directed to be filed, and timelines were fixed for pleadings, paving the way for further proceedings with IIM Jammu formally on record.

Case Title: M/S Ramacivil India Construction Pvt. Ltd. v. CPWD

Order Date: January 23, 2026

Bench: JOINT REGISTRAR (JUDICIAL) SH. DEEPAK DABAS (DHJS)