Mere Status As Ultimate Beneficiary Does Not Warrant Impleadment Of Non-Signatory In Arbitration: Delhi HC

The Delhi High Court has reiterated that arbitration is founded on consent and party autonomy, holding that an entity cannot be impleaded in arbitral proceedings merely because it is the ultimate beneficiary of a project.

The Court set aside orders that had added IIM Jammu as a party to arbitration-related proceedings arising from disputes between Ramacivil India Construction Pvt. Ltd. and the Central Public Works Department (CPWD) over construction of the permanent campus of IIM Jammu at Jagti, Jammu.

Justice Harish Vaidyanathan Shankar held that IIM Jammu was not a signatory to the contract or the arbitration agreement between Ramacivil and CPWD. The Court held that the circumstances relied upon by IIM Jammu, including its status as the ultimate beneficiary, its funding of the project and its participation in review meetings and supervision of the works, did not justify its impleadment.

The Court observed: “This Court is unable to accept that the status of an 'ultimate beneficiary' can constitute the governing test for impleadment in arbitral proceedings. Arbitration, being fundamentally consensual in nature, cannot be enlarged to include entities merely because they derive a benefit or possess an institutional interest in the project.”

The Court further observed: “Acceptance of the submissions advanced on behalf of IIM Jammu would result in far-reaching consequences. If the mere status of being a principal entity or beneficiary of a project were held sufficient to justify impleadment, then in every arbitration arising from layered or delegated governmental projects, principal institutions at multiple levels would necessarily have to be impleaded, thereby disturbing the settled principle of party autonomy which forms the bedrock of the A&C Act.”

The dispute arose from a contract awarded by CPWD to Ramacivil on October 16, 2020 for construction of the permanent campus of IIM Jammu at Jagti. Disputes subsequently arose between Ramacivil and CPWD concerning execution of works, pending dues, delays, defects, rectification works and contractual obligations.

During proceedings before the High Court relating to constitution of the arbitral tribunal and interim reliefs, IIM Jammu sought impleadment, contending that it was the ultimate beneficiary of the project, had funded it through CPWD and had participated in review meetings and supervision of the works. On January 23, 2026, the Joint Registrar allowed the impleadment applications.

Ramacivil challenged those orders through chamber appeals. IIM Jammu opposed the appeals, arguing that they were filed with a delay of one day and that the Delhi High Court (Original Side) Rules excluded the applicability of Section 5 of the Limitation Act.

Rejecting the objection, the Court condoned the delay and observed:

“Mere prescription of a period of limitation does not, by itself, amount to exclusion of the power to condone delay.”

On merits, the Court held that the contracts giving rise to the disputes had been executed exclusively between Ramacivil and CPWD and that IIM Jammu remained a non-signatory to the agreement.

It further held that the contractual framework recognised CPWD as the nodal authority responsible for supervision, communication, and contractual enforcement vis-à-vis the contractor, while the role assigned to IIM Jammu remained advisory and supervisory to a limited extent.

Holding that the impleadment orders suffered from “fundamental infirmities”, the Court ruled that there was no material to demonstrate that IIM Jammu was either a signatory to, or otherwise bound by, the arbitration agreement. It consequently allowed the chamber appeals and set aside the impleadment orders.

The Court also allowed Ramacivil's petition seeking the constitution of the arbitral tribunal, directed CPWD to nominate its arbitrator within 15 days, and directed the nominee arbitrators to appoint the presiding arbitrator within the following 15 days. All rights and contentions of the parties were left open to be decided by the arbitral tribunal on their merits.

For Ramacivil India Construction Pvt. Ltd.: Senior Advocates Anurag Ahluwalia and Rajshekhar Rao with Advocates Avinash Trivedi, Dipanshu Gaba, Ritika Trivedi, Rahul Aggarwal, Anurag Kaushik, Jatin Arora, Rhythem Nagpal, Rishank Gola, Aryan Sangwan, Praveen Kumar Jain, Rashmi Kumari, Yash Chauhan, Aditya Rathi and Harshil Wason.

For CPWD and IIM Jammu: Advocates Vikram Jetly, Laavanya Kaushik, Shreya Jetly and Khyaati Bansal.