ADAVYA PROJECTS PVT. LTD. versus M/S VISHAL STRUCTURALS PVT. LTD. & ORS

Citation: [2025] 5 S.C.R. 243 · Decided: 16-04-2025 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

[2025] 5 S.C.R. 243 : 2025 INSC 507
Adavya Projects Pvt. Ltd. 
v. 
M/s Vishal Structurals Pvt. Ltd. & Ors.
(Civil Appeal No. 5297 of 2025)
17 April 2025
[Pamidighantam Sri Narasimha* and Manoj Misra, JJ.]
Issue for Consideration
Whether service of a Section 21 notice and joinder in a Section 11 
application are prerequisites to implead a person/entity as a party 
to the arbitral proceedings; What is the source of jurisdiction of an 
arbitral tribunal over a person/entity who is sought to be impleaded 
as a party to the arbitral proceedings; As a corollary, what is the 
relevant inquiry that the arbitral tribunal must undertake when 
determining its own jurisdiction under Section 16 of the Arbitration 
and Conciliation Act, 1996.
Headnotes†
Arbitration and Conciliation Act, 1996 – ss.11, 21 – Service of a 
s.21 notice and joinder in a s.11 application, if prerequisites to 
implead a person/entity as a party to the arbitral proceedings:
Held: A notice invoking arbitration u/s.21 is mandatory as it fixes 
the date of commencement of arbitration, which is essential for 
determining limitation periods and the applicable law, and it is 
a prerequisite to filing an application u/s.11 – However, merely 
because such a notice was not issued to certain persons who 
are parties to the arbitration agreement does not denude the 
arbitral tribunal of its jurisdiction to implead them as parties during 
the arbitral proceedings – The purpose of an application u/s.11 
is for the court to appoint an arbitrator, so as to enable dispute 
resolution through arbitration when the appointment procedure in 
the agreement fails – The court only undertakes a limited and prima 
facie examination into the existence of the arbitration agreement 
and its parties at this stage – Hence, merely because a court does 
not refer a certain party to arbitration in its order does not denude 
the jurisdiction of the arbitral tribunal from impleading them during 
the arbitral proceedings as the referral court’s view does not finally 
determine this issue. [Para 40(I), 40(II)]
* Author
244
[2025] 5 S.C.R.
Supreme Court Reports
Arbitration and Conciliation Act, 1996 – ss.16, 7 – Source of 
the Arbitral Tribunal’s jurisdiction and relevant enquiry u/s.16 – 
What is the source of jurisdiction of an arbitral tribunal over 
a person/entity sought to be impleaded as a party to the 
arbitral proceedings – What is the relevant inquiry that the 
arbitral tribunal must undertake when determining its own 
jurisdiction u/s.16:
Held: The source of the arbitral tribunal’s jurisdiction is derived from 
the consent of the parties to refer disputes to arbitration – Such 
consent must be gathered from the arbitration agreement – Once 
a person consents to refer disputes to arbitration, and enters into 
an arbitration agreement u/s.7, he is bound by the same – The 
implication of being a party to the arbitration agreement is that 
such person has contractually undertaken to resolve any disputes 
referenced in the arbitration agreement through the agreed upon 
method of dispute resolution, i.e., arbitration – It is under this 
contractual obligation that a person can be impleaded as a party 
to the arbitral proceedings, even if he was not served with a s.21 
notice and not referred to arbitration by the court u/s.11 – The 
relevant consideration to determine whether a person can be made 
a party before the arbitral tribunal is if such a person is a party to 
the arbitration agreement – The arbitral tribunal must determine this 
jurisdictional issue in an application u/s.16 by examining whether 
a non-signatory is a party to the arbitration agreement as per s.7 
of the ACA. [Paras 22, 23, 40(III)]
Arbitration and Conciliation Act, 1996 – s.16 – Appellant and the 
respondent no.1-Company entered into an agreement to form 
LLP-respondent no.2 – Respondent no.3 was designated as 
CEO of the LLP – Respondent nos.2 and 3 were not signatories 
to the LLP Agreement that contained the arbitration agreement 
in Clause 40 – Whether respondent nos. 2 and 3 are parties 
to the arbitration agreement and whether the arbitral tribunal 
can implead them as parties to the arbitration proceedings 
exercising jurisdiction u/s.16:
Held: Clause 40 of the LLP Agreement is expansive in its wording – 
The arbitration agreement covers the present disputes arising out 
of reconciliation of accounts in relation to the ITF Project, as this 
directly affects the rights and liabilities of the partners, the a

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