On May 2, 2025, the Supreme Court of India expressed concerns regarding the Arbitration and Conciliation (Amendment) Bill, 2024, particularly its omission of provisions allowing the impleadment of non-signatory parties in arbitration proceedings. The Court emphasized that this oversight could hinder effective dispute resolution, especially in complex commercial arrangements involving multiple related entities.

The Court highlighted that, under established legal doctrines such as the “group of companies” and “composite transaction” principles, non-signatories can be bound by arbitration agreements if their involvement in the contractual relationship is substantial. This perspective aligns with previous judgments, including the Cox and Kings Ltd. v. SAP India Pvt. Ltd. case, where the Supreme Court recognized that non-signatories could be compelled to arbitrate based on their conduct and relationship with the signatories.

In the specific case before the Court, involving the AMP Group, JRS Group, and SRG Group, the SRG Group, despite not being a signatory to the Family Arrangement Agreement (FAA), was found to have played a significant role in the negotiation and execution of the agreement. The Court determined that SRG’s active participation made it a necessary party to the arbitration proceedings, underscoring the importance of considering the conduct and involvement of non-signatories in such matters.

The Supreme Court urged the Union Government to revise the Arbitration Bill to incorporate provisions that acknowledge and facilitate the inclusion of non-signatory parties in arbitration proceedings. Such amendments would align the legislation with contemporary commercial practices and judicial precedents, ensuring more comprehensive and effective dispute resolution mechanisms.

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