Safiya Malik

The High Court of Himachal Pradesh Single Bench of Justice Ajay Mohan Goel dismissed a writ petition by a project owner seeking to be added to arbitral proceedings between a government works department and a contractor arising from a construction contract. The Court held that a likely financial or other consequential impact on a non-signatory was not, by itself, enough to justify impleadment unless the Supreme Court’s strict indicators—such as involvement showing consent through participation in negotiation, performance, or termination of the contract—were satisfied. Justice Goel observed: “Merely because the petitioner had a substantial interest in the subject matter of the contract, the same was not a ground to implead it as a party in the arbitration proceedings going on between the parties before the learned Arbitrator. This Court holds that the petitioner had no direct or indirect role to play in the execution of the contract between CPWD and the Contractor.”

The petition was filed by a statutory educational institution challenging an order passed by a sole arbitrator rejecting its application for impleadment in arbitral proceedings. The arbitration was initiated by a private contractor against a central government department in relation to construction works executed for an institutional campus project.

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The petitioner had entered into a Memorandum of Understanding with the government department for execution of construction works as a deposit work. Separately, the department entered into an independent construction contract with the private contractor, containing an arbitration clause. Disputes arose between the contractor and the department, leading to invocation of arbitration. During pendency of the arbitral proceedings, the petitioner sought impleadment, contending that it had a substantial financial and institutional interest in the project and would ultimately bear the financial burden of any adverse award.

The contractor opposed impleadment on the ground that the petitioner was neither a signatory nor involved in the negotiation, execution, or termination of the construction contract. The arbitrator rejected the impleadment application, holding that apprehended financial consequences did not justify impleadment of a non-signatory. The present writ petition challenged that order.

The Court observed that “there is a contract entered into between the petitioner and CPWD” and that there was also “a contract entered into between CPWD and respondent No.2/contractor for the execution of said work”, but clarified that “these are two completely distinct and independent contracts.”

It recorded that “the contractor/private respondent herein is not a signatory” to the Memorandum of Understanding between the petitioner and the department, and equally, “the petitioner is neither a party nor a signatory” to the construction contract between the department and the contractor.

Quoting the Supreme Court in Cox & Kings the Court noted that “The intention of the parties can be ascertained from circumstances like (a) preliminary negotiation between the parties; (b) practices, which the parties have established between themselves, (c) The conduct of the parties subsequent to the conclusion of the contract; (d) the nature and purpose of the contract; (e) the meaning commonly given to terms and expressions in the trade concerned, and (f) usages.”

Applying these tests, the Court observed that “there is no participation whatsoever of the present petitioner in the execution of the contract between CPWD and the Contractor.” It further recorded that the petitioner “played no role either in the course of the negotiation of the terms of the contract nor it has any role in the performance of the contract.”

Addressing the petitioner’s apprehension of financial liability, the Court stated that “this mere apprehension of the petitioner is no ground to implead it as a party in the arbitral proceedings.” It also noted that “the claimant before the learned Arbitrator has not claimed any relief against the present petitioner.”

The Court found no infirmity in the arbitrator’s reasoning, observing that “the petitioner had not pleaded any of the requirements, as postulated by the Hon’ble Supreme Court… under which a non-signatory can be impleaded in arbitral proceedings.”

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The Court held that: “Accordingly, in light of the above observations, as this Court does not finds any perversity in the order under challenge or any merit in the present petition, the same is dismissed. No order as to costs. Pending miscellaneous application(s), if any also stand disposed of accordingly.”

Advocates Representing the Parties

For the Petitioner: M/s Akhil Mittal, Abhinav Purohit and Abhishek Kaundal, Advocates

For the Respondents: Mr. Balram Sharma, Deputy Solicitor General of India; Mr. Vikram Chaudhari, Senior Advocate, with Mr. Arvind Sharma, Advocate

Case Title: Indian Institute of Technology, Mandi v. Central Public Works Department & Another
Neutral Citation: 2025: HHC:45660
Case Number: CWP No. 9200 of 2025
Bench: Justice Ajay Mohan Goel