INTRODUCTION
In Hemant D. Shah HUF & Anr. v. Chittaranjan D. Shah HUF & Ors., 2026 INSC 1111, the Supreme Court of India examined whether persons who are not signatories to an arbitration agreement can nevertheless be included in arbitration proceedings where the outcome may substantially affect their rights. The Judgment was delivered on 12 October 2026 by a Bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran.
The decision addresses an important aspect of Arbitration Law: the determination of parties who are genuinely connected with a dispute, notwithstanding the absence of their signatures on the Arbitration Agreement. The Court emphasised that the question cannot be answered through a rigid formula and must be examined in light of the facts and circumstances of each case.
BRIEF FACTS
The dispute concerned a commercial property measuring 3,500 square feet at Manish Commercial Centre, Worli, Mumbai. The Property originally belonged to a Partnership Firm, M/s Prospective Traders, constituted in 1977 by three Family Trusts.
The Partnership was reconstituted on 9 December 1985, when the Appellants and the First and Second Respondents were inducted as Partners. This Partnership Deed contained an Arbitration Clause.
A subsequent Partnership Deed was executed on 30 December 1987, under which the original Partners retired. The central controversy, however, concerned a Deed of Retirement dated 3 July 1995, under which the Appellants were purportedly shown as having retired from the Partnership. The Appellants alleged that this document was forged and maintained that they had never retired.
According to the subsequent chain of events, the Second Respondent retired in 2005, following which the business continued as a Proprietorship with the First Respondent. The Third and Fourth Respondents were subsequently inducted into the business through further Partnership arrangements in 2009.
The Appellants maintained that the original Partnership continued to subsist and that the disputed property remained an asset of that Partnership. The Third and Fourth Respondents, on the other hand, relied on the subsequent arrangements and distanced themselves from the 1985 Partnership Deed containing the Arbitration Clause.
While considering the Application under Section 11 of the Arbitration and Conciliation Act, 1996, the High Court declined to include the Third and Fourth Respondents in the Arbitration. It held that they were not signatories to the Arbitration Agreement and did not fall within the recognised exceptions considered by the Court. The Appellants challenged this decision before the Supreme Court.
ISSUES OF LAW
The principal issue was whether the Third and Fourth Respondents could be treated as “veritable parties” to the dispute and included in the Arbitration despite not having signed the Arbitration Agreement dated 9 December 1985.
The Court also considered the extent to which a Referral Court could examine the status of Non-Signatories at the stage of appointing an Arbitrator, while preserving the Arbitral Tribunal’s authority to determine the issue conclusively.
ANALYSIS OF THE JUDGMENT
The Supreme Court referred to Cox & Kings Ltd. v. SAP India Pvt. Ltd., (2024) 4 SCC 1, which examined the binding of non-signatories to arbitration agreements. The Court noted that the absence of a signature does not invariably exclude a person from Arbitration. The relationship between the Parties, their conduct and their involvement in the contractual arrangement may be relevant in determining whether they intended to be bound.
The Court also relied on Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd., (2026) 3 SCC 711, concerning the role of the referral court in examining whether a Non-Signatory is genuinely a party to the dispute.
Applying these principles, the Supreme Court observed that the rights of the Third and Fourth Respondents were directly connected with the disputed Property’s ownership. The validity of the subsequent partnership arrangements depended, in turn, on whether the Appellants had validly retired from the original Partnership in 1995.
If the disputed Retirement Deed were ultimately found invalid, the Parties’ rights could be affected by the continued subsistence of the 1985 Partnership. This would have consequences for the Third and Fourth Respondents, whose claimed interests arose through subsequent partnership arrangements.
The Court therefore held that, on a prima facie assessment, the Third and Fourth Respondents were veritable parties to the dispute and should be included in the Arbitration, notwithstanding that they had not signed the 1985 Partnership Deed.
Importantly, the Court did not conclusively determine their status or resolve the underlying ownership dispute. It expressly left open the questions of limitation and whether the Appellants were estopped from including the Third and Fourth Respondents because they had not been joined in earlier Arbitration Proceedings despite knowledge of the Retirement Deed.
SARTHAK KALRA
Senior Legal Associate
The Indian Lawyer & Allied Services
Editors Comments
The decision addresses an important aspect of Arbitration Law: the determination of parties who are genuinely connected with a dispute, notwithstanding the absence of their signatures on the Arbitration Agreement. CONCLUSION
The Judgment in Hemant D. Shah HUF reinforces the principle that the inclusion of Non-Signatories in arbitration depends on the substance of the dispute and the Parties’ relationship with the underlying contractual arrangement, rather than the mere presence or absence of a signature.
At the same time, the decision preserves the distinction between a referral court’s prima facie assessment and the Arbitral Tribunal’s final determination. By modifying the High Court’s Order only to the extent of recognising the Third and Fourth Respondents as veritable parties at this stage, the Supreme Court ensured that their interests could be considered in the Arbitration without prejudging the issues that remain to be decided.
Sushila Ram Varma
Advocate and Chief Consultant
The Indian Lawyer & Allied Services
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