The Supreme Court recently delivered a significant judgment clarifying that an arbitral tribunal can proceed against a party even if they weren't served with a Section 21 notice or made party in a Section 11 application, provided they're bound by the arbitration agreement.

"A notice invoking arbitration under Section 21 of the ACA is mandatory...but merely because such notice wasn't issued to certain persons who are parties to the arbitration agreement doesn't denude the arbitral tribunal's jurisdiction to implead them."

The bench of Justices PS Narasimha and Manoj Misra emphasized that the crucial factor is whether the person is party to the arbitration agreement, not procedural formalities like notice service.

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Case Background

The dispute arose from an LLP agreement between Adavya Projects and Vishal Structurals (Respondent No.1). Respondent No.3 was designated as CEO of the LLP (Respondent No.2). When disputes emerged:

1. Arbitration was invoked via notice to Respondent No.1 only
2. Section 11 application named only Respondent No.1
3. Later, Respondents 2 & 3 were impleaded in arbitral proceedings
4. Tribunal and High Court held proceedings against them unsustainable

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The Court identified two core issues:

Section 21 Notice: While mandatory for commencement of arbitration, its non-service doesn't preclude impleadment if the party is bound by arbitration agreement.

Section 11 Application: The referral court's limited prima facie examination under Section 11(6A) doesn't restrict tribunal's jurisdiction to add parties later.

"The arbitral tribunal's jurisdiction over a person derives from their consent to the arbitration agreement...not from procedural steps like notice service."

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State of Goa v. Praveen Enterprises: Claims in Section 21 notice don't limit claims before tribunal

Cox and Kings Ltd. v. SAP India: Tribunal can determine if non-signatories are bound by arbitration agreement

The Court held Respondents 2 & 3 were bound by the LLP agreement's arbitration clause through their conduct, despite being non-signatories. It:

1. Set aside High Court's order
2. Directed impleadment of Respondents 2 & 3
3. Asked tribunal to expedite proceedings

Case Title: Adavya Projects Pvt. Ltd. v. M/s Vishal Structurals Pvt. Ltd. & Ors., Civil Appeal No. 5297 of 2025