Arbitration and Conciliation Act, 1996
Section 11—Reference of dispute to arbitration—Loan agreement—First and second are the parties to the loan agreement and there cannot be any doubt with regard to the loan agreement being valid and binding between the petitioner and first and second respondent—Court in Section 11 jurisdiction is only required to see the existence of the arbitration—Parties are not disputing existence of arbitration clause but only objection taken by respondents is that third to fifth respondent are not signatories of loan agreement—Third to fifth respondent are a veritable party to the loan agreement as they are connected with the loan documents and form part of the loan transaction as in one way or the other, they have assured the petitioner regarding the execution of the loan documents and provided a security to the petitioner towards the loan transaction—Whether the third to fifth respondent can be bound by the loan agreement and can be impleaded as parties to the arbitral proceedings is left open for the Arbitral Tribunal to decide—Arbitral Tribunal will also decide whether holding company of petitioner is a proper and necessary party to the arbitral proceedings—Parties are referred to arbitration for adjudication of their dispute arising from the loan agreement—Petition allowed.
[Paras 15 to 19]