Rejection Of Impleadment Is A Jurisdictional Determination, Appealable Under Section 37 Arbitration Act: Delhi High Court

The Delhi High Court has recently held that rejection of an impleadment application by an arbitral tribunal amounts to a jurisdictional determination under Sections 16(2) and 16(3) of the Arbitration and Conciliation Act, 1996, and is therefore appealable under Section 37 of the Act.

Justice Avneesh Jhingan observed that while deciding whether a non-signatory can be added to arbitration proceedings, the tribunal necessarily rules on its own jurisdiction.

“The court on an application for impleadment passes a procedural order but the tribunal in arbitration determines whether it has jurisdiction vis-a-vis the rights and liabilities of a non-signatory to the agreement. While deciding the impleadment of a non-signatory the tribunal deals with the issue of jurisdiction and this falls within the ambit of Section 16(2) and 16(3) of the Act.”

The Court further clarified that the form of the request is not decisive.

“The word used in Section 16 of the Act is 'plea' and not 'application'. There is no restriction in Section 16 that a plea of lack of jurisdiction or exceeding jurisdiction can be raised only by a particular party.”

Holding that such a decision is appealable, the court said:

“The rejection of the application for impleadment of a non-signatory to the CA falls within the ambit of Sections 16(2) & (3) and is appealable under Section 37 of the Act.”

The ruling came while allowing an appeal filed by ERA Infra Engineering Limited and setting aside an arbitral tribunal order dated July 30, 2025, which had refused to implead the company in arbitration proceedings arising out of a dispute with the National Highways Authority of India (NHAI).

The dispute related to a highway project awarded to a consortium that included ERA Infra. A special purpose vehicle was later incorporated to execute the project and entered into the concession agreement with the NHAI. After the agreement was terminated in 2019, arbitration was invoked by the SPV.

ERA Infra sought to be heard in the proceedings, contending that although it was not a signatory to the concession agreement, it was a member of the consortium to which the project had been awarded, had execution responsibilities under the EPC agreement, and had equity and contractual obligations in relation to the project.

The tribunal rejected the request, holding that the concession agreement was between NHAI and the SPV and that a non-signatory could not ordinarily be impleaded. ERA Infra challenged the order under Section 37.

Rejecting NHAI's objection to the maintainability of the appeal, the High Court held that when a tribunal refuses to implead a party on the ground that it is not bound by the agreement, it effectively accepts a plea that it lacks jurisdiction over that party, bringing the order within Sections 16(2) and 16(3) of the Act.

On the merits, the court noted that the project had been awarded to the consortium, the SPV was incorporated pursuant to the bid conditions, the EPC agreement was executed with ERA Infra, and the concession agreement required consortium members to hold equity and remain involved in the project.

These circumstances, the court held, showed a direct and substantive connection between ERA Infra, the SPV and the concession agreement.

Allowing the impleadment, the court observed:

“There cannot be a blanket proposition that a non-signatory to an agreement cannot be impleaded as a party in arbitral proceedings. The tribunal is vested with the jurisdiction to implead a non-signatory connected with or bound by the agreement. The intricate connection between NHAI, the SPV, the consortium and its member including the appellant is prima facie established. Consequently the appellant is a proper and necessary party and is ordered to be impleaded.”

The court set aside the tribunal's order and directed that ERA Infra Engineering Limited be impleaded, while clarifying that the observations were only for deciding the impleadment issue and that the arbitral tribunal would decide the disputes independently on merits.

For Appellant (ERA Infra Engineering Limited): Senior Advocates Mr. Sudhir Nandrajog and Mr. Kirtiman Singh, with Advocates Mr. Kushil Anand, Mr. Manthan Dixit, Mr. Maullick and Ms. Ankita.

For Respondents (NHAI & Anr.): Standing Counsel Mr. Santosh Kumar, with Advocates Mr. Siddharth Mehta and Mr. Ritik Dwivedi.