Third party buyers cannot be dragged into arbitration.
Judgment dated 16.10.2025 of the High Court of Bombay in W.P.No.2068 of 2025 of Luxempire Realty Private Limited Vs. Eminence Landmarks LLP and others
Doctrine of “Group of Companies” and Impleadment of Third Party / Non-signatory to arbitration
On 25.2.2017, respondent no.1 advanced loan of Rs.25 crores to M/s. Gagan for purchase and development of the land. Respondent no.1 was guaranteed minimum return of Rs.54 crores by 31.3.2020. The said agreement has arbitration clause.
On 1.9.2017, the respondent no.9 had purchased Plot No.262 from Classic City.
In September, 2023, the respondent no.1 invoked arbitration owing to the defaults in payment of guaranteed sums. On 30.11.2023, The arbitral proceedings were initiated against respondent nos.2 to 8.
On 22.12.2023, the District Court, Pune, granted ex parte interim relief under section 9 restraining respondent no.9 from creating third party rights in the said land.
On 16.1.2024, the respondent no.9, although non-signatory to the agreement, was added to the arbitral proceedings.
On 22.3.2024, section 9 application was dismissed. This order had become final.
On 29.3.2024, the petitioner purchased the property for Rs.128 crores.
On 12.11.2024, the respondent no.1 filed application to implead the petitioner to the arbitral proceedings.
On 20.1.2025, the Arbitrator allowed the application on the ground that the petitioner had purchased property from respondent no.9 during arbitral proceedings and with full notice of charge of respondent no.1.
HELD that the petitioner being a third party purchaser cannot be forced into arbitration. It is not bound by the seller’s arbitral obligations.
