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Only party to arbitration agreement can be part of arbitration proceeding

Petitioner who is not a party to agreement containing an arbitration clause cannot be party to arbitration proceedings between the parties to arbitration agreement

The grievance projected by the Petitioner in Trust House Constructions Vs. State of J&K and Ors. - the High Court of Jammu and Kashmir is that, while the arbitration proceedings between Respondent Nos. 2 and 4 were going on before the Arbitral Tribunal, the Petitioner who was vitally interested in the aforesaid proceedings having executed the balance work on behalf of Respondent No. 4, moved an application before the Arbitral Tribunal seeking its impleadment, but its application was turned down by the Arbitral Tribunal vide order dated 24.10.2009, impugned in this petition. The Petitioner assails the order impugned primarily on the ground that, the Petitioner has a vital interest in the arbitration proceedings pending before the Arbitral Tribunal and its presence in the arbitration proceedings would facilitate effective adjudication of the lis before the Arbitral Tribunal. 

Admittedly, the work in question was allotted by Respondent No. 2 in favour of Respondent No. 4 and there is no privity of contract between the Petitioner and Respondent No. 2. The subject matter of adjudication before the Arbitrator is with respect to the contract executed between Respondent No. 2 and Respondent No. 4. It is this contract which contains arbitration clause for adjudicating upon the disputes between the parties to the contract. The Arbitral Tribunal was right in coming to the conclusion that the application of the Petitioner for impleadment/intervention in arbitration proceedings is not maintainable. The mandate of Arbitral Tribunal is only to adjudicate upon the disputes between the parties to the arbitration agreement which arise out of the contract agreement containing the arbitration clause, executed between the parties. The Petitioner may have an independent claim against Respondent No. 4 for which it needs to work out its remedies but surely it has no locus to be party in the arbitration proceedings pending before the Arbitral Tribunal between Respondent Nos. 2 and 4 who alone are the parties to the arbitration agreement. 

The question as to party to the arbitration proceedings was examined by the Supreme Court, though in the context of Section 11 of the Arbitration and Conciliation Act, 1996 in the case of Indowind Energy Ltd. v. Wescare (I) Ltd. and Anr. On the analogy of the aforesaid judgment, Petitioner who is not a party to the agreement containing an arbitration clause cannot be party to the arbitration proceedings between the parties to the arbitration agreement. There is no merit in instant petition and the same is therefore, dismissed. The Petitioner, however, is left free to work out its remedies against Respondent No. 4.

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