Written By: Apoorv Agarwal
Case Background: Tavasya SSF (C/o Tavasya Capital Managers LLP) v. Ministry of External Affairs & Anr. [ARB.P. 1589/2025]
Bench: Justice Harish Vaidyanathan Shankar
Date of Decision: 20.04.2026
The dispute arose from an EPC Agreement dated 31.03.2017, which was originally entered into between the Ministry of External Affairs and a joint venture comprising M/s. C&C Constructions Limited (“C&C”) and M/s. Engineering Projects (India) Limited (“EPIL”).
Following a transfer of assets under a Sale Certificate dated 06.08.2024, the PetitionerTavasya SSF, claimed to have acquired C&C’s “interest in the joint ventures” and sought to invoke the arbitration clause contained in the EPC Agreement entered between MEA and Joint Venture of C&C-EPI.
Objections raised by the Respondents’
Learned Additional Solicitor General appearing for Respondent No. 1 (Ministry of External Affairs), advanced three primary grounds opposing the constitution of the Arbitral Tribunal:
First, lack of privity of contract: The EPC Agreement defined “parties” as C&C and EPI, whereas the Petitioner was neither named nor privy to the original EPC Agreement.
Second, limited effect of the Sale Certificate: The Certificate purportedly did not vest contractual rights in the Petitioner to claim status as a successor to the erstwhile JV partner. At best, any acquired rights would remain confined to claims inter se the JV partners and could not be enforced against Respondent No. 1.
Third, absence of consent: Since Respondent No. 2 had raised serious objections to invocation of the arbitration clause, the element of consent that is central to arbitral reference was found to be absent, rendering the arbitration clause “unenforceable”
Learned Senior Counsel appearing for Respondent No. 2, supplemented these submissions, contending that the Petitioner was “a complete alien to the transaction” and that the original Agreement did not permit assignment of any contractual rights.
Submissions made by the Petitioner’s
Learned counsel for the Petitioner, placed strong reliance on the narrow scope of judicial scrutiny under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”). He argued that this Court functions essentially as a “Referral Court” and cannot undertake an elaborate adjudicatory exercise akin to conducting a mini-trial.
Crucially, the Petitioner drew attention to:
- The recitalunder the EPC Agreement describing parties which explicitly stated that the expression “Constructor” shall include “its successors and permitted assigns”
- Clause 27.12 of the EPC Agreement which read as “This Agreement shall be binding upon, and inure to the benefit of the Parties and their respective successors and permitted assigns”
- The Sale Certificate which recorded transfer of “all investments held by C&C Constructions Limited including the interest in the joint ventures”
Issue under adjudication:
- Whether the purchaser of the rights of a JV partner can invoke arbitration clause unilaterally without the consent of the other JV partner?
Analysis of theHon’ble Court:
Justice Harish Vaidynathan Shankar, after considering the rival submissions, emphasized on the settled legal position that the jurisdiction under Section 11 of the Act is “extremely limited and circumscribed.” The Court affirmed the judgment passed by Supreme Court’s recent decision in Andhra Pradesh Power Generation Corporation Limited (APGENCO) v. Tecpro Systems Limited [(2026) 3 SCC 491]that was relied upon by the Petitioner, which reads as under:
“The enquiry under Section 11 is confined to a prima facie determination of the existence of an arbitration agreement and no further. The referral court is required to undertake only a prima facie determination…and refrain from entering into contentious factual or legal issues related to authority, capacity, arbitrability, maintainability, or merits of claims.”
The Court also relied upon the Constitution Bench decision in Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re [(2024) 6 SCC 1] and Cox & Kings Ltd. v. SAP India (P) Ltd. [(2024) 4 SCC 1] for the proposition that the issue of whether a non-signatory is bound by an arbitration agreement should be left for the Arbitral Tribunal to decide under Section 16 of the Act.
Applying these principles, the Court held:
“In the present case, this Court is prima facie of the opinion that the Sale Certificate expressly records transfer, inter alia, of the ‘interest in the joint ventures’ held by C&C. Consequently, at this threshold stage, a prima facie basis exists for the Petitioner to assert rights flowing from the position earlier held by C&C as a constituent of the JV.”
The Court expressly noted that the expression “interest in the joint ventures”, when read conjointly with Clause 27.12 and the recital describing parties, lent support to the prima facie view that even a purchaser of the rights of a JV partner (i.e., a transferee of the JV interest) can invoke the arbitration clause, even if it has not been formally replaced or substituted as a JV partner in the original agreement.
Conclusion
The Delhi High Court’s decision reinforces the well-settled principle that the referral court under Section 11 of the Act has a very limited power which is restricted to determining the existence of the arbitration clause in the Agreement on the basis of which the Section 11 Petition is filed, the other issues pertaining to the consent of the JV partner, arbitrability of the dispute and other issues involving disputed question of facts are left for the arbitral tribunal to decide under Section 16 of the Act.
In particular, the judgment clarifies that a purchaser of a JV partner’s rights can invoke arbitration even without being formally replaced as a JV partner and without the consent of the JV partner. The judgment also serves as a reminder to drafters of commercial contracts that including “successors and assigns” clauses within arbitration agreements can have significant consequences when assets or interests are subsequently transferred.
