Supreme Court Clarifies Limits on High Court Interference in Arbitration Under Article 227

1. Background of the Dispute and Procedural History

The controversy in Manash Kamal Bezboruah Vs Bokahola Tea Company Private Limited & Ors. (Supreme Court of India) centres on whether the Gauhati High Court was justified in exercising its supervisory powers under Article 227 of the Constitution of India to intervene in an ongoing arbitration and stay notices issued to certain entities alleged to be non‑signatories to the arbitration agreement.

The arbitral dispute traces back to the old partnership firm M/s Boloma Tea Company, constituted on 19.09.1948. A subsequent partnership deed dated 16.11.1976 introduced an arbitration arrangement in Clause 5, stipulating that any disputes among partners, if unresolved internally, would be referred to arbitration before a mutually agreed third party.

Over time, several corporate entities were incorporated, including:

  • M/s Bokahola Tea Company Pvt. Ltd. (Respondent No. 1)
  • M/s Kasojan Tea Company Pvt. Ltd. (Respondent No. 2)
  • M/s Bokahola Investment Pvt. Ltd. (Respondent No. 3)

The Appellant, an IAS officer, had obtained governmental permission in 1974 to become a sleeping partner in the firm and was allotted a share under the 1976 partnership deed.

In July 2012, the Appellant filed Title Suit No. 38 of 2012 before the Civil Judge (Senior Division), Jorhat, seeking, among other reliefs, rendition of accounts and redress of alleged mismanagement and financial irregularities in the affairs of the respondent companies.

During this suit:

  • Respondent No. 7 invoked Section 8 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking reference to arbitration.
  • The Trial Court, by order dated 07.08.2014, rejected the Section 8 request, noting that many defendants (including Respondent Nos. 1 to 3) were not signatories to the arbitration clause in the partnership deed and were necessary parties to the civil suit.
  • Relying on Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Another, (2003) 5 SCC 531, the Trial Court held that the suit could not be divided and partially referred to arbitration when some essential parties were not bound by the arbitration agreement.

This dismissal was affirmed by the Gauhati High Court on 01.11.2021 in CRP/185/2015.

Subsequently, Respondent No. 7 approached the Supreme Court through SLP(C) No. 10445 of 2022, later registered as Civil Appeal No. 13188 of 2024. By consent of the parties, the Supreme Court, by order dated 21.11.2024, referred the disputes to arbitration in terms of Clause 5 of the 1976 partnership deed and appointed Justice (Retd.) B.P. Katakey as Sole Arbitrator. Crucially:

Respondent Nos. 1 to 3 were parties to Civil Appeal No. 13188 of 2024, were served with notice, but did not contest the proceedings nor seek review/modification of the order dated 21.11.2024.

Pursuant to that order, the Tribunal issued notices and fixed the arbitration schedule on 23.01.2025, following which:

  • The Appellant filed his Statement of Claims on 09.03.2025.
  • Respondent Nos. 5 to 7 filed their Statement of Defence on 05.05.2025.

Thereafter, Respondent Nos. 1 to 3 filed separate applications before the Tribunal under Order VII Rule 11, Order I Rule 10(2) and Section 151 CPC, seeking deletion of their names from the arbitral proceedings on the ground that they were non‑signatories to the arbitration agreement.

The Tribunal treated these applications as jurisdictional objections in substance, i.e. as pleas under Section 16 of the Act.

2. Tribunal’s Framing of Issues and Rejection of Non‑Signatory Objections

On 09.06.2025, after considering the pleadings, the Tribunal framed a detailed set of issues, which, among others, expressly included:

  • Whether the arbitration proceedings against non‑signatories, including Respondent Nos. 1 to 3 and other respondents (5 to 15), were maintainable.
  • Whether the arbitration clause in Clause 5 was valid, binding and applicable to disputes involving various corporate respondents.
  • Whether the Appellant was entitled to rendition of accounts and comprehensive audit of the partnership and related companies.
  • Whether allegations of oppression and mismanagement in respondent companies fell within the scope of arbitration or were exclusively triable under the Companies Act, 2013.

By a further order dated 04.08.2025, the Tribunal rejected the deletion applications of Respondent Nos. 1 to 3. Referencing the Supreme Court’s consent order dated 21.11.2024, the Tribunal reasoned that:

  • The Supreme Court had already referred all parties to the dispute to arbitration.
  • In that backdrop, there was no occasion for the Tribunal to re‑open the question whether non‑signatories could be brought within the arbitral fold.
  • The law on the “Group of Companies” doctrine was well settled, and the Tribunal proceeded on the footing that non‑signatory companies could, in appropriate circumstances, be part of a single composite arbitration.

Thus, the Tribunal refused to delete Respondent Nos. 1 to 3 from the proceedings and retained jurisdiction to decide their status in the arbitration.

3. High Court’s Interference Under Article 227

Aggrieved, Respondent Nos. 1 to 3 approached the Gauhati High Court by way of Civil Revision Petition No. CRP/120/2025 under Article 227 of the Constitution of India, challenging the Tribunal’s order dated 04.08.2025.

The High Court: