Delhi High Court Allows IIM Jammu's Impleadment In Arbitration-Linked Dispute Over Jagti Campus Construction

The Delhi High Court recently allowed IIM Jammu to be impleaded in arbitration-related proceedings over the construction of its permanent campus at Jagti, despite the institute not being a signatory to the arbitration agreement.

The order, pronounced by Joint Registrar Deepak Dabas, held that the institute is a necessary party because it is the ultimate beneficiary of the premises and of all acts or omissions of the contractor. He held,

"I am of the considered view that IIM Jammu is entitled of being impleaded as a party in the present matter as the premises in question have been constructed for applicant/IIM Jammu. IIM Jammu is beneficiary of the premises in question and all the payment for construction of premises has been made/is to be made by IIM Jammu. IIM Jammu is the ultimate beneficiary/sufferer of all the acts/omissions of petitioner,".

The arbitration arose from a contract between Ramacivil India Construction Pvt. Ltd. and the Central Public Works Department (CPWD) for the construction of IIM Jammu's campus in Jagti. IIM Jammu sought impleadment, claiming it had made the payments and was directly affected by the construction work.

Senior Advocate Sandeep Sharma, on behalf of the institute, submitted that they were a 'necessary party' because the premises were built specifically for them and they made all payments to Ramacivil India. Additionally, relying on the Memorandum of Understanding with the CPWD and the tender documents, he submitted that the CPWD was acting as its agent and that it had supervised even minute details of construction.

Ramacivil India opposed this, arguing there was no 'privity of contract' with IIM Jammu. They submitted that according to the law, "party" means only a signatory to the agreement.

After examining the tender documents and the MoU, the High Court rejected the Ramacivil stance, applying the principles laid down by Supreme Court in Cox and Kings (2023). The Court focused on the factor of "participation of the non-signatory in the performance of the underlying contract" and concluded that IIM Jammu was in fact the "ultimate beneficiary/sufferer of all the acts/omissions of petitioner".

Accordingly, the court allowed IIM Jammu's impleadment and directed that it be added as Respondent No. 2. It also ordered the filing of an amended memo of parties and granted time for replies and rejoinders.

For Ramacivil India Construction Pvt. Ltd.: Avinash Trivedi, Rahul Aggarwal

For CPWD: Vikram Jetly, Shreya Jetly, Laavanya Kaushik

For IIM Jammu: Sandeep Sharma (Senior Advocate), Praveen Kumar Jain, Rashmi Kumari, Anamika Aggarwal, Yash Chauhan. Aditya Rathi, Abhinav Raghav, Anchal Yadav