Bombay High Court Vacates Disclosure Order Against Non-Signatory | Foreign Award Cannot Be Enforced Against Party Not Involved in Arbitration Proceedings
Sanchayita Lahkar
The High Court of Bombay Single Bench of Justice Somasekhar Sundaresan has held that enforcement of a foreign arbitral award under Part II of the Arbitration and Conciliation Act, 1996 cannot be maintained against a party who was not part of the arbitration proceedings. The Court has directed deletion of a respondent from an enforcement petition, finding that such inclusion was without jurisdiction. The Court concluded that where an arbitral award is not made between the parties, the Court does not possess the jurisdiction to pass interim reliefs, including disclosure or attachment of assets, against such a party. Consequently, all interim directions previously issued against the said respondent, including those for disclosure of assets, were vacated. The Court further clarified that such interim orders, being passed in ignorance of the respondent’s non-participation in the arbitral proceedings, were liable to be recalled. The matter is now scheduled to proceed only against the remaining respondent who was a party to the arbitration.
The matter arose under the jurisdiction of the Commercial Division of the Bombay High Court in a petition seeking enforcement of a foreign arbitral award. The petitioner had entered into an agreement dated October 23, 2020, with Respondent No.1, which contained an arbitration clause. The arbitration proceedings were held and an award was passed in favour of the petitioner.
The enforcement petition sought implementation of the foreign award in India under Part II of the Arbitration and Conciliation Act, 1996. Alongside, two Interim Applications bearing No.2099 of 2025 and No.2097 of 2025 were filed. These applications prayed for (i) deletion of Respondent No.2 from the array of parties and (ii) vacation of an earlier order dated March 12, 2025, which had directed disclosure of assets.
The petitioner, however, sought to continue enforcement against both Respondent No.1 and Respondent No.2. The argument was based on a "guarantee certificate" purportedly executed by Respondent No.2. This certificate declared that Respondent No.2, a shareholder in Respondent No.1, guaranteed payments up to USD 10 million in the event of default by Respondent No.1. Notably, this certificate contained no arbitration clause and made no reference to the arbitration agreement existing between the petitioner and Respondent No.1.
The March 12, 2025, order directing disclosure of assets had been passed on an ex parte basis. When the matter was next heard on April 3, 2025, Respondents entered appearance through counsel but did not raise objections regarding Respondent No.2’s non-participation in the arbitration proceedings. This inaction formed part of the petitioner’s objection to the maintainability of the interim applications.
The petitioner argued that since objections were not raised during the April 3, 2025 hearing, Respondent No.2 had waived its rights or was estopped from seeking recall. Reliance was placed on the judgment in Sri Budhia Swain & Ors v. Gopinath Deb & Ors, contending that issues which could have been raised earlier should not be entertained subsequently, particularly in a motion to vacate a court order.
Respondent No.2, through its counsel, denied being a party to the arbitration agreement or proceedings. They submitted that even though the petitioner had made attempts to join them in the arbitration proceedings, those efforts had been explicitly rejected by the arbitral institution. The petitioner had submitted an affidavit acknowledging that the arbitral tribunal’s case manager had not permitted Respondent No.2 to be joined as a party to the arbitral process.
The court examined the statutory framework under Sections 46 and 48 of the Arbitration and Conciliation Act, 1996, which governs the enforcement of foreign arbitral awards in India. The petitioner was relying on the guarantee to link Respondent No.2 to the obligations arising out of the award.
Justice Somasekhar Sundaresan examined the statutory provisions and recorded the following: "A plain reading of Section 46 of the Act... would show that a foreign award would be treated as binding for all purposes 'on the persons as between whom it was made'." The Court clarified that for an award to be enforceable against a person, that person must have been involved in the arbitration proceedings.
Addressing Section 48(1)(b), the Court stated: "Respondent No. 2 was not even a party to the arbitral proceedings, much less a party... entitled to notice of the appointment of the arbitrator or was unable to present his case."
The Court referred to the affidavit filed by the petitioner acknowledging that the attempt to include Respondent No.2 in the arbitration proceedings had failed. "Therefore, what is evident is that Respondent No.2 is not a person against whom the arbitral award is made."
Justice Sundaresan rejected the petitioner’s reliance on the guarantee certificate, stating: "The guarantee certificate does not have an arbitration clause. It also does not have any incorporation of an arbitration agreement by reference..."
On the petitioner’s argument that rejection by the case manager could not be equated with rejection by the arbitral tribunal, the Court held: "The case manager is an officer of the arbitral tribunal... the Petitioner ought to have taken recourse... to overrule the case manager."
The Court stated that there was no award made against Respondent No.2: "The consequence would be that the arbitral award sought to be enforced is not an award made between the Petitioner and Respondent No. 2."
The Court further remarked: "If the foundational jurisdictional fact of the arbitral award being an award made as between the Petitioner and Respondent No. 2 is absent, the order dated March 12, 2025 would be one that was passed without jurisdiction."
Regarding the guarantee certificate, the Court noted: "There is no specific role played by Respondent No. 2 that was adjudicated in the arbitral proceedings."
On the relevance of the Budhia Swain case, the Court distinguished the facts: "The absence of jurisdiction or the passing of a judgment in ignorance of a necessary fact are examples of the need to recall as articulated in the very same judgement."
"Since Section 46 and Section 48 of the Act delineate the jurisdiction and reach of this Court in respect of a foreign award, it would follow that the direction to disclose assets or a direction to attach them would be void if made against a person who is not a party against whom the award is made."
Justice Somasekhar Sundaresan concluded that it was inappropriate to retain Respondent No.2 as a party. He stated: "I have no hesitation in allowing both the Interim Applications. The order directing disclosures by Respondent No.2 (who was rejected as a proposed party in the arbitral proceedings) stands vacated."
The Court further directed: "The Petitioner shall carry out the deletion of Respondent No.2 within four weeks of the upload of this order on the website of this Court."
Regarding further proceedings, the Court recorded: "Learned Counsel for the Petitioner seeks a short date to consider further reliefs against Respondent No.1 in terms of securing the amount owed under the arbitral award. Stand over for further consideration of such additional reliefs sought against Respondent No.1 to July 18, 2025."
Advocates Representing the Parties:
For the Petitioners: Ms. Kshama Loya, along with Sanskriti Sharma and Oindrila Mukherjee, instructed by Link Legal.
For the Respondents: Mr. Karl Tamboli, along with Gajendra Maheshwari, Siddharth Punj, Eshika Chandan, and Deval Yadav, instructed by Lodha & Lodha Associates.
Case Title: Ningbo Aux Imp and Exp Co Ltd v. Amstrad Consumer India Pvt Ltd & Anr
Case Number: Commercial Arbitration Petition (L) No. 29646 of 2024
Bench: Justice Somasekhar Sundaresan
