Manash Kamal Bezboruah v. Bokahola Tea Company
“No Article 227 Detour: Rejection of a Section 16 Jurisdiction Plea Can Be Challenged Only Under Section 34 After the Award”
TL;DR
The Supreme Court held that the Gauhati High Court was not justified in entertaining a revision petition under Article 227 of the Constitution against an Arbitral Tribunal's order rejecting an application by three non-signatory companies to be deleted from the arbitration. The Tribunal had treated the application as a jurisdictional objection under Section 16 of the Arbitration and Conciliation Act, 1996. The Court reiterated that such an order is ordinarily open to challenge only under Section 34 after the final award, and that High Courts may interfere under Article 227 only in cases of "patent lack of inherent jurisdiction" where perversity "stares one in the face". Both impugned High Court orders were set aside and the revision petition dismissed, but the Tribunal was directed to decide independently whether the three companies are bound by the arbitration agreement, uninfluenced by this Court's decision, and to complete the arbitration expeditiously.
The Bottom Line
If an arbitral tribunal rejects your plea that you are not bound by the arbitration agreement, you cannot ordinarily run to the High Court under Article 227 mid-way. You have to take part in the arbitration and challenge the award under Section 34. The Supreme Court stopped a High Court stay on the arbitration, reminded parties who stay silent when a reference is made that they cannot reopen the point later, and left the question of whether the three companies are truly bound to be decided afresh by the Arbitral Tribunal.
Case Timeline
The journey from FIR to Supreme Court verdict
Partnership Deed with Arbitration Clause
A fresh partnership deed was executed in which the Appellant, who had become a sleeping partner with the Government's permission, was allotted a 25% share. Clause 5 provided for reference of disputes to arbitration of a mutually agreed third party.
Partnership Deed with Arbitration Clause
A fresh partnership deed was executed in which the Appellant, who had become a sleeping partner with the Government's permission, was allotted a 25% share. Clause 5 provided for reference of disputes to arbitration of a mutually agreed third party.
Title Suit No. 38 of 2012 Filed
The Appellant filed a suit before the Civil Judge (Senior Division), Jorhat, seeking rendition of accounts and reserving a right to claim damages for alleged mismanagement (filed in July 2012; exact day not stated in the judgment).
Title Suit No. 38 of 2012 Filed
The Appellant filed a suit before the Civil Judge (Senior Division), Jorhat, seeking rendition of accounts and reserving a right to claim damages for alleged mismanagement (filed in July 2012; exact day not stated in the judgment).
Section 8 Application Rejected by Trial Court
The Trial Court rejected the application for reference to arbitration, noting that several defendants including Respondent Nos. 1 to 3 were not parties to the partnership deed.
Section 8 Application Rejected by Trial Court
The Trial Court rejected the application for reference to arbitration, noting that several defendants including Respondent Nos. 1 to 3 were not parties to the partnership deed.
High Court Dismisses Revision Petition
The Gauhati High Court in CRP/185/2015 affirmed the Trial Court's rejection of the Section 8 application.
High Court Dismisses Revision Petition
The Gauhati High Court in CRP/185/2015 affirmed the Trial Court's rejection of the Section 8 application.
Supreme Court Refers Disputes to Arbitration
In Civil Appeal No. 13188 of 2024, with the consent of the parties, the Supreme Court referred the disputes to arbitration and appointed Justice (Retd.) B.P. Katakey as Sole Arbitrator. Respondent Nos. 1 to 3 were served but did not contest.
Supreme Court Refers Disputes to Arbitration
In Civil Appeal No. 13188 of 2024, with the consent of the parties, the Supreme Court referred the disputes to arbitration and appointed Justice (Retd.) B.P. Katakey as Sole Arbitrator. Respondent Nos. 1 to 3 were served but did not contest.
Tribunal Frames Issues
The Arbitral Tribunal framed issues for determination, including the maintainability of arbitration against non-signatories.
Tribunal Frames Issues
The Arbitral Tribunal framed issues for determination, including the maintainability of arbitration against non-signatories.
Tribunal Rejects Deletion Applications
The Tribunal rejected the applications of Respondent Nos. 1 to 3 seeking deletion of their names, holding that the Supreme Court's reference left no scope to reconsider the question.
Tribunal Rejects Deletion Applications
The Tribunal rejected the applications of Respondent Nos. 1 to 3 seeking deletion of their names, holding that the Supreme Court's reference left no scope to reconsider the question.
High Court Stays Notices to Respondent Nos. 1 to 3
In CRP/120/2025 under Article 227, the High Court stayed the notices issued to the three companies until the returnable date while allowing the arbitration to continue.
High Court Stays Notices to Respondent Nos. 1 to 3
In CRP/120/2025 under Article 227, the High Court stayed the notices issued to the three companies until the returnable date while allowing the arbitration to continue.
High Court Holds Revision Maintainable
The High Court rejected the Appellant's preliminary objection and held that its Article 227 jurisdiction was not ousted where patent lack of inherent jurisdiction or perversity was alleged.
High Court Holds Revision Maintainable
The High Court rejected the Appellant's preliminary objection and held that its Article 227 jurisdiction was not ousted where patent lack of inherent jurisdiction or perversity was alleged.
Supreme Court Stays High Court Orders
The Supreme Court issued notice, condoned delay, and stayed both High Court orders and further proceedings in the High Court.
Supreme Court Stays High Court Orders
The Supreme Court issued notice, condoned delay, and stayed both High Court orders and further proceedings in the High Court.
Supreme Court Delivers Judgment
The Supreme Court set aside both High Court orders, dismissed the revision petition, and directed the Tribunal to decide the status of Respondent Nos. 1 to 3 independently and complete the arbitration expeditiously.
Supreme Court Delivers Judgment
The Supreme Court set aside both High Court orders, dismissed the revision petition, and directed the Tribunal to decide the status of Respondent Nos. 1 to 3 independently and complete the arbitration expeditiously.
The Story
M/s Boloma Tea Company (Respondent No. 5) was constituted as a partnership firm on 19 September 1948. Over the years the partnership deed was reconstituted. In 1967 M/s Bokahola Tea Company Pvt. Ltd. (Respondent No. 1) and M/s Kasojan Tea Company Pvt. Ltd. (Respondent No. 2) were incorporated, and M/s Bokahola Investment Pvt. Ltd. (Respondent No. 3) was incorporated on 9 June 1995. The Appellant, Manash Kamal Bezboruah, an IAS officer, obtained permission from the Government of India in 1974 to become a sleeping partner. A fresh partnership deed dated 16 November 1976 gave him a 25% share. Clause 5 of that deed provided that any dispute or difference, unless otherwise agreed, would first be referred to the other partners and, if unresolved, to the arbitration of a mutually agreed third party.
In July 2012 the Appellant filed Title Suit No. 38 of 2012 before the Civil Judge (Senior Division), Jorhat, seeking rendition of accounts of the respondent companies and reserving the right to claim damages for alleged mismanagement and financial irregularities. Respondent No. 7 applied under Section 8 of the Arbitration and Conciliation Act, 1996 for reference to arbitration. By order dated 7 August 2014 the Trial Court rejected the application, noting that several defendants, including Respondent Nos. 1 to 3, were not parties to the partnership deed and relying on Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya for the proposition that the suit could not be split up. The Gauhati High Court dismissed Respondent No. 7's revision petition (CRP/185/2015) on 1 November 2021.
Respondent No. 7 then went to the Supreme Court (Civil Appeal No. 13188 of 2024). By order dated 21 November 2024, with the consent of the parties, the Court referred the disputes to arbitration and appointed Justice (Retd.) B.P. Katakey as Sole Arbitrator. Respondent Nos. 1 to 3 were parties to that appeal and were served, but did not contest it.
In the arbitration, the Appellant filed his Statement of Claim and Respondent Nos. 5 to 7 filed their Statements of Defence. Respondent Nos. 1 to 3 filed applications under Order VII Rule 11 read with Order I Rule 10(2) and Section 151 CPC seeking deletion of their names as non-signatories. The Supreme Court treated these as jurisdictional objections under Section 16 of the Act. The Tribunal framed issues on 9 June 2025, including whether arbitration against the non-signatories was maintainable. By order dated 4 August 2025 it rejected the applications, holding that the Supreme Court's reference order left no scope to reconsider whether non-signatories could be subjected to arbitration.
Respondent Nos. 1 to 3 filed Civil Revision Petition CRP/120/2025 under Article 227 before the Gauhati High Court. By interim order dated 2 September 2025 the High Court stayed the notices issued to them, while allowing the arbitration to continue, and by order dated 28 January 2026 it rejected the Appellant's objection to the maintainability of the revision, relying on Deep Industries Ltd. v. ONGC and Punjab State Power Corporation Ltd. v. Emta Coal Ltd. The Appellant appealed to the Supreme Court, which on 16 February 2026 stayed both High Court orders and further proceedings in the High Court.
Legal Issues
Click each question to reveal the Supreme Court's answer
Arguments
The battle of arguments before the Supreme Court
Petitioner
Vihaan Kumar
Respondent Nos. 1 to 3 are veritable parties to the dispute
Mr. Abir Phukan, for the Appellant, submitted that Respondent Nos. 1 to 3 are veritable parties on account of inter-party relations, commonality of subject matter and their incorporation through borrowings from the partnership firm. Relying on Cox and Kings Ltd. v. SAP India Pvt. Ltd., he argued that non-signatories can be referred to arbitration where there is a direct relationship, commonality of subject matter, composite transactions and conduct showing an intention to bind them.
The respondents are estopped by their silence before the Supreme Court
Respondent Nos. 1 to 3 were served in Civil Appeal No. 13188 of 2024 but chose not to appear or object, and so were estopped from challenging the arbitral reference made by the consent order dated 21 November 2024.
Article 227 interference was an abuse of process
The Appellant argued that the High Court's use of Article 227 to stay the arbitration was an abuse of process. Relying on the 101st Report of the Law Commission of India, he submitted that allowing appeals against rejection of a Section 16 challenge defeats the statutory scheme, the proper remedy being a Section 34 application to set aside the award. Patent lack of inherent jurisdiction must "stare one in the face", and minimal interference at the interim stage is imperative.
The High Court passed a mechanical order
The High Court, without any specific reasoning on perversity or inherent lack of jurisdiction in the Tribunal's order of 4 August 2025, mechanically held the revision petition maintainable, though the Tribunal had already framed issues that were pending adjudication.
Respondent
State of Haryana
The Appellant's earlier stand shows no intention to refer them to arbitration
Mrs. Madhavi Diwan, Senior Counsel for Respondent Nos. 1 to 3, submitted that in the earlier civil proceedings the Appellant had himself argued that these respondents were not parties to the arbitration agreement and had secured favourable orders on that premise. He therefore could not approbate and reprobate by now claiming they are veritable parties.
The consent order bound only those who consented
The respondents contended they do not meet the "veritable party" test laid down in Cox and Kings and showed no mutual intention to be bound. The consent order dated 21 November 2024 was only intended to bind parties who came forward and consented, and Respondent No. 7 had no authority or Board Resolution to consent for them.
The Tribunal's order fell within the narrow band of perversity
Assumption of jurisdiction over non-signatories merely because they did not appear before the Supreme Court was said to fall within the "narrow band of perversity", justifying High Court interference under Article 227 for patent lack of inherent jurisdiction.
Court's Analysis
How the Court reasoned its decision
The Court framed the sole question as whether the High Court was justified in holding an Article 227 revision maintainable against an Arbitral Tribunal order (para 21). It began with the statutory scheme: the Arbitration and Conciliation Act is a code in itself, Section 5 limits judicial intervention, Section 16 embodies kompetenz-kompetenz, and the ordinary route for challenge is Section 34 (para 22). It accepted that the High Court's Article 227 supervisory jurisdiction forms part of the basic structure and cannot be taken away by Section 5, but stressed that the Act's objective is expeditious resolution with minimal court intervention (para 25). It traced the line of authority from SBP & Co. v. Patel Engineering (parties must ordinarily wait until the award), through Deep Industries (interference limited to orders patently lacking inherent jurisdiction) and Punjab State Power Corporation v. Emta Coal (perversity must stare one in the face; High Courts should dismiss such petitions promptly and may impose heavy costs), to the recent Tarini Prasad Mohanty (the threshold for writ interference is higher where the statute provides a remedy and expects minimal interference) (paras 26-29). From these it concluded that High Courts must act with extreme circumspection and, before entertaining such a revision, should record a prima facie finding of patent lack of inherent jurisdiction after hearing the other side (para 30). Applying this, the Court noted that the Tribunal had relied on the consent order of 21 November 2024; that under Cox and Kings the determination of whether a non-signatory is a veritable party is a complex inquiry best left to the Tribunal; and that the Tribunal therefore had competence to decide the question (para 31). It also criticised Respondent Nos. 1 to 3 for not seeking modification or review of the Supreme Court's order despite being parties to that appeal, observing that the practice produced another round of avoidable litigation (para 32). It set aside the High Court orders but, because issues on the non-signatory question were already framed, left the Tribunal to decide the status of Respondent Nos. 1 to 3 independently (paras 33-34).
the High court has not recorded any specific finding as to perversity or any patent lack of inherent jurisdiction in the order dated 04.08.2025 passed by the Tribunal
Para 24
Identifies the central defect in the High Court's approach: it entertained the revision without a finding that the gateway test for Article 227 interference was met.
such restriction cannot curtail or oust the constitutional jurisdiction of the High Courts under Article 227 of the Constitution of India.
Para 25
Affirms that Section 5 of the Arbitration Act does not take away Article 227 jurisdiction, so the question is one of restraint in exercise rather than absence of power.
A patent lack of inherent jurisdiction requires no argument whatsoever — it must be the perversity of the order that must stare one in the face.
Para 28
Restates the narrow test from Punjab State Power Corporation v. Emta Coal that must be met before the High Court can interfere with a Section 16 ruling.
Orders passed by the Tribunal on an application under Section 16 of the Act are ordinarily amenable to challenge only under Section 34 of the Act upon the conclusion of the arbitral proceedings and the passing of the final award.
Para 30
States the general rule on the remedy against rejection of a Section 16 plea.
it should record a prima facie finding regarding the patent lack of inherent jurisdiction and that too after providing an opportunity of hearing to the rival party/parties.
Para 30
Gives High Courts a procedural safeguard to follow before entertaining Article 227 petitions against Section 16 orders.
Respondent Nos. 1 to 3 cannot now come before us with a dispute which they could have been raised at an earlier occasion.
Para 32
Warns parties served in a referral proceeding that silence followed by later challenge results in avoidable multiple rounds of litigation.
The Verdict
Relief Granted
The High Court's stay on the notices to the three companies stood removed and the arbitration was cleared to proceed. Respondent Nos. 1 to 3 were not left without a forum: the Tribunal must decide on merits whether they are bound by the arbitration agreement, with the final award open to challenge under Section 34.
Directions Issued
- The High Court's interim order dated 02.09.2025 and order dated 28.01.2026 were set aside
- The Civil Revision Petition (CRP/120/2025) before the High Court was dismissed
- The remedy against rejection of the Section 16 application lies under Section 34 of the Act after the final award
- The Arbitral Tribunal shall decide the status of Respondent Nos. 1 to 3 with respect to the arbitration proceedings independently, uninfluenced by this Court's decision
- The Tribunal shall complete the arbitration proceedings expeditiously in accordance with law
- Pending applications, if any, stood disposed of
Key Legal Principles Established
An order of an Arbitral Tribunal rejecting a Section 16 jurisdictional objection is ordinarily challengeable only under Section 34 after the final award.
Section 5 of the Arbitration and Conciliation Act does not oust the High Court's supervisory jurisdiction under Article 227, but it must be exercised with extreme circumspection in arbitral matters.
High Court interference under Article 227 is confined to cases of patent lack of inherent jurisdiction, where the perversity of the order stares one in the face.
Before entertaining an Article 227 petition against a Section 16 order, the High Court should record a prima facie finding of patent lack of inherent jurisdiction after hearing the other side.
Whether a non-signatory is a veritable party to an arbitration agreement is a complex question left to the Arbitral Tribunal under the doctrine of kompetenz-kompetenz, the referral court ruling only prima facie on the existence of the agreement.
A party served in proceedings where arbitration is referred, and who does not contest or seek modification or review, cannot ordinarily reopen the question later through further rounds of litigation.
Key Takeaways
What different people should know from this case
- If you are a business or individual named in an arbitration and you think you are not bound by the arbitration agreement, you must raise that before the arbitrator first.
- You usually cannot go to the High Court mid-way to stop an arbitration. The usual challenge comes after the award, under Section 34.
- If a court is considering sending a dispute to arbitration and you are a party to that case, speak up then. Staying silent can weaken your later objections.
- Courts want arbitration to be fast, so repeated court challenges that delay the process are discouraged.
- Being left out of the arbitration agreement does not by itself decide the matter. The arbitrator must still examine whether your conduct and relationship with the dispute bind you.
Legal Framework
Applicable laws and provisions
Constitutional Provisions
Article 227
Constitution of India
“Power of superintendence of every High Court over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction.”
Relevance: The respondents invoked Article 227 to challenge the Tribunal's order. The Court held the power is not ousted by the Arbitration Act but must be used with extreme circumspection, only where there is patent lack of inherent jurisdiction.
Statutory Provisions
Section 5
Arbitration and Conciliation Act, 1996
“Extent of judicial intervention: notwithstanding anything contained in any other law, no judicial authority shall intervene except where so provided in Part I.”
Relevance: The Court relied on this non-obstante provision to underline the policy of minimal judicial interference in arbitration.
Section 16
Arbitration and Conciliation Act, 1996
“The Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement.”
Relevance: The deletion applications of Respondent Nos. 1 to 3 were treated as jurisdictional objections under Section 16, embodying the doctrine of kompetenz-kompetenz.
Section 34
Arbitration and Conciliation Act, 1996
“Application for setting aside an arbitral award.”
Relevance: The Court held that the remedy against rejection of a Section 16 application lies under Section 34 after the final award.
Section 8
Arbitration and Conciliation Act, 1996
“Power to refer parties to arbitration where there is an arbitration agreement.”
Relevance: The original Section 8 application in the civil suit was rejected by the Trial Court and High Court before the Supreme Court referred the disputes to arbitration by consent.
Order VII Rule 11 and Order I Rule 10(2)
Code of Civil Procedure, 1908
“Provisions on rejection of plaint and striking out or adding parties.”
Relevance: The three companies used applications under these provisions to seek deletion from the arbitration; the Court treated them as Section 16 objections.
Related Cases & Precedents
Cox and Kings Ltd. v. SAP India Pvt. Ltd. & Anr.
followed2024 (4) SCC 1
Constitution Bench ruling on binding non-signatories to arbitration agreements; the referral court rules only prima facie on existence of the agreement and leaves the veritable-party inquiry to the tribunal.
SBP & Co. v. Patel Engineering Ltd. & Anr.
followed(2005) 8 SCC 618
Constitution Bench disapproved High Courts correcting tribunal orders under Articles 226 or 227 during arbitration; parties must wait until the award unless Section 37 provides an appeal.
Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd. & Anr.
followed(2020) 15 SCC 706
Held that Article 227 survives the non obstante clause of Section 5 but interference is restricted to orders patently lacking inherent jurisdiction.
Punjab State Power Corporation Limited v. Emta Coal Limited & Anr.
followed(2020) 17 SCC 93
Three-Judge Bench clarified that patent lack of inherent jurisdiction requires perversity that stares one in the face, and directed High Courts to dismiss unmeritorious Article 227 petitions promptly.
Tarini Prasad Mohanty v. Sunflag Iron and Steel Company Limited
followed2026 INSC 566
Recent decision stressing that the threshold for writ interference is higher where the Arbitration Act provides a remedy under Section 34 and expects minimal interference.
Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya & Anr.
cited(2003) 5 SCC 531
Relied on by the Trial Court in 2014 to hold that a suit could not be split where some defendants were non-signatories to the arbitration agreement.
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Kannada
Manash Kamal Bezboruah v. Bokahola Tea Company - Kannada Explanation
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Manash Kamal Bezboruah v. Bokahola Tea Company - Tamil Explanation
Telugu
Manash Kamal Bezboruah v. Bokahola Tea Company - Telugu Explanation
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Manash Kamal Bezboruah v. Bokahola Tea Company - Hindi Explanation
English
Manash Kamal Bezboruah v. Bokahola Tea Company - English Explanation
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