Court: Supreme Court of India
Bench: Justice K.V. Viswanathan and Justice Vijay Bishnoi (judgment delivered by Vijay Bishnoi, J.)
Case Number: Civil Appeals arising out of SLP (Civil) Nos. 7233–7234 of 2026
Citation: 2026 INSC 701
Decided on: 14 July 2026
Appealed from: Interim order dated 02.09.2025 and order dated 28.01.2026 of the Gauhati High Court in CRP/120/2025
F — FACTS
1. M/s Boloma Tea Company (Respondent No. 5) was constituted as a partnership firm in 1948 by four members of the Bezboruah family. Over the years the firm was reconstituted several times, and related companies were incorporated: M/s Bokahola Tea Company Pvt. Ltd. (Respondent No. 1) and M/s Kasojan Tea Company Pvt. Ltd. (Respondent No. 2) in 1967, and M/s Bokahola Investment Pvt. Ltd. (Respondent No. 3) in 1995.
2. Under a fresh partnership deed dated 16.11.1976, the Appellant, who had joined the firm as a sleeping partner, held a 25% share. Clause 5 of this deed contained an arbitration clause: disputes among partners would first be referred to the other partners and, if unresolved, referred to arbitration before a mutually agreed third party.
3. In July 2012, the Appellant instituted Title Suit No. 38 of 2012 before the Civil Judge (Senior Division), Jorhat, seeking rendition of accounts and other reliefs relating to alleged mismanagement and financial irregularities. Respondent No. 7 applied under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the disputes to arbitration. The Trial Court rejected the application on 07.08.2014, relying on Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531, since several defendants, including Respondent Nos. 1 to 3, were not parties to the partnership deed. The Gauhati High Court upheld the rejection in revision on 01.11.2021.
4. Respondent No. 7 then approached the Supreme Court in Civil Appeal No. 13188 of 2024. By order dated 21.11.2024, the Supreme Court, with the consent of the parties, referred the disputes to arbitration under Clause 5 and appointed Justice (Retd.) B.P. Katakey, former Judge of the Gauhati High Court, as Sole Arbitrator. Respondent Nos. 1 to 3 were parties to that appeal and were served notices, but did not contest it.
5. Before the Tribunal, Respondent Nos. 1 to 3 filed applications seeking deletion of their names from the array of parties on the ground that they were non-signatories to the arbitration agreement. The Supreme Court noted that, being jurisdictional objections, these applications should be treated as applications under Section 16 of the Act. By order dated 04.08.2025, the Tribunal rejected the applications, holding that the Supreme Court's reference of all disputes to arbitration left no scope for it to reconsider whether non-signatories could be subjected to arbitration.
6. Respondent Nos. 1 to 3 challenged the Tribunal's order before the Gauhati High Court under Article 227 of the Constitution in CRP/120/2025. By interim order dated 02.09.2025, the High Court stayed the notices issued to them. By order dated 28.01.2026, it rejected the Appellant's preliminary objection to the maintainability of the revision petition, reasoning that its Article 227 jurisdiction was not ousted where a plea of patent lack of inherent jurisdiction and perversity had been raised.
7. The Appellant appealed to the Supreme Court, which on 16.02.2026 stayed both impugned orders and further proceedings before the High Court, and thereafter heard the appeals.
I — ISSUE
As framed by the Supreme Court (paragraph 21 of the judgment):
Whether the High Court was justified in passing the impugned order holding that a revision petition under Article 227 of the Constitution of India is maintainable against an order of the Arbitral Tribunal, here, an order rejecting a jurisdictional objection treated as an application under Section 16 of the Arbitration and Conciliation Act, 1996.
L — LAW
Statutory provisions considered:
1. Section 5, Arbitration and Conciliation Act, 1996 : a non-obstante provision limiting judicial intervention to what the Act expressly contemplates. The Court noted this reflects the legislative intent, following the UNCITRAL Model Law, to reduce excessive judicial interference.
2. Section 16 of the Act : gives effect to the doctrine of kompetenz-kompetenz, empowering the Arbitral Tribunal to rule on its own jurisdiction.
3. Section 34 of the Act : the mechanism for challenging an arbitral award after it is passed.
4. Article 227, Constitution of India : the High Courts’ supervisory jurisdiction over courts and tribunals within their territory, which forms part of the basic structure and cannot be abrogated or excluded by legislation.
Precedents relied upon by the Court:
SBP & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618 (CB) – High Courts should not interfere with tribunal orders under Articles 226/227 during arbitration; challenges lie under Section 34 after the award, unless appealable under Section 37.
Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706 – Article 227 jurisdiction survives Section 5 but must be exercised only in exceptional cases of patent lack of inherent jurisdiction.
Punjab State Power Corp. Ltd. v. Emta Coal Ltd., (2020) 17 SCC 93 – "Patent lack of inherent jurisdiction" means a defect so obvious that it requires no elaborate argument; otherwise, Article 227 petitions should be dismissed.
Tarini Prasad Mohanty v. Sunflag Iron & Steel Co. Ltd., 2026 INSC 566 – Writ jurisdiction should be exercised sparingly where the Arbitration Act provides an adequate remedy; distinguished maintainability from entertainability.
Cox and Kings Ltd. v. SAP India Pvt. Ltd., (2024) 4 SCC 1 (CB) – Whether a non-signatory is bound by an arbitration agreement is primarily for the arbitral tribunal to determine under the doctrine of kompetenz-kompetenz.
Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531 – Earlier held that suits involving signatories and non-signatories could not be split; cited only as procedural background.
A — ANALYSIS
1. The Act as a self-contained code. The Court began by observing that the Act is a code in itself, and that this carries definite legal consequences, chief among them is the non-obstante clause in Section 5, which limits judicial intervention to what the Act expressly permits.
2. The constitutional balance. The Court acknowledged that Article 227 forms part of the basic structure and cannot be ousted by Section 5. At the same time, the Act’s object is the expeditious resolution of disputes with minimal judicial interference. The two propositions coexist: the jurisdiction exists, but its exercise during ongoing arbitration must be confined to exceptional cases.
3. The governing standard. Drawing the precedents together, the Court held it is settled law that a High Court must exercise extreme circumspection when invoking Article 227 against a Tribunal’s rejection of a Section 16 application. Absent a manifest jurisdictional defect, interlocutory interference is unwarranted and contrary to the legislative policy. Orders on Section 16 applications are ordinarily amenable to challenge only under Section 34, after the conclusion of proceedings and the passing of the final award. Before entertaining such a revision petition, the High Court should record a prima facie finding regarding the patent lack of inherent jurisdiction, and only after providing an opportunity of hearing to the rival parties.
4. Application to the High Court’s orders. The Court noted that while passing the order dated 28.01.2026, the High Court had not recorded any specific finding of perversity or patent lack of inherent jurisdiction in the Tribunal’s order dated 04.08.2025. The High Court’s approach therefore did not satisfy the standard set in Deep Industries and Punjab State Power Corporation.
5. The non-signatory question belongs to the Tribunal. Applying Cox and Kings, the Court held that determining whether Respondent Nos. 1 to 3 are veritable parties to the arbitration agreement, notwithstanding their non-signatory status, is a matter within the Tribunal’s competence under Section 16. The Tribunal possessed the absolute competence to decide that question, and its order ought not to have been challenged through an Article 227 petition.
6. The conduct of Respondent Nos. 1 to 3. The Court observed that these Respondents were parties to Civil Appeal No. 13188 of 2024 but did not contest it. If they believed the 21.11.2024 consent order caused them prejudice, the proper course was to seek modification or review of that order — which they never did. Instead, their challenge produced another avoidable round of litigation. The Court stated that such practices must be avoided, as multiple judicial interventions create unnecessary delay and ultimately destroy the object with which the Act was introduced.
C — CONCLUSION
1. The Supreme Court held that the High Court was not justified in entertaining the challenge under Article 227 and staying the arbitral proceedings. The remedy against the rejection of a Section 16 application lies strictly under Section 34 of the Act, after the pronouncement of the final award.
2. Both impugned orders of the Gauhati High Court (dated 02.09.2025 and 28.01.2026) were set aside, and the revision petition (CRP/120/2025) pending before the High Court was dismissed.
3. Since the Tribunal had already framed issues on the jurisdictional objections of Respondent Nos. 1 to 3 concerning their non-signatory status, the Supreme Court directed the Tribunal to decide their status in the arbitration proceedings independently, uninfluenced by the Supreme Court’s decision, and to complete the arbitration proceedings expeditiously in accordance with law.
4. The appeals were disposed of in these terms, along with any pending applications.