The Himachal Pradesh High Court has refused to interfere with an arbitral tribunal’s decision that denied Indian Institute of Technology (IIT) Mandi a seat at the arbitration table in an ongoing dispute between a private contractor and the Central Public Works Department (CPWD). The court made it clear that financial exposure alone does not give a third party the right to join arbitration proceedings.
The ruling came in a writ petition filed by IIT Mandi challenging an order passed by a sole arbitrator, which had rejected the institute’s request to be impleaded as a party in the arbitration.
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Background of the Case
The dispute traces back to a Memorandum of Understanding (MoU) signed in 2011 between IIT Mandi and CPWD. Under this arrangement, CPWD was entrusted with executing large-scale construction work for the IIT Mandi campus at Kamand, Himachal Pradesh.
To carry out the project, CPWD later entered into a separate construction contract with a private infrastructure company. Differences arose between CPWD and the contractor regarding execution of the work, prompting the contractor to invoke the arbitration clause contained in its contract with CPWD.
An arbitral tribunal was constituted to hear claims worth several hundred crores raised by the contractor against CPWD. During the proceedings, IIT Mandi moved an application seeking to be added as a respondent, arguing that any adverse award against CPWD would ultimately affect IIT Mandi financially.
IIT Mandi contended that it had a “substantial interest” in the outcome of the arbitration because the project was being executed for its benefit and funded by it. The institute argued that if CPWD lost the arbitration, the liability would eventually fall on IIT Mandi.
It also claimed that principles laid down by the Supreme Court now permit non-signatories to be joined in arbitration proceedings in appropriate cases. According to IIT Mandi, denying it participation would amount to a breach of natural justice.
The sole arbitrator rejected IIT Mandi’s request, holding that the arbitration agreement existed strictly between the contractor and CPWD. The tribunal noted that IIT Mandi was neither a signatory to the construction contract nor had it participated in its negotiation or execution.
“The possibility of financial consequences alone is not sufficient to implead a non-signatory in arbitral proceedings,” the tribunal observed, adding that civil court principles of adding parties do not automatically apply to arbitration.
The arbitrator also found no material to show that IIT Mandi had intended to be bound by the arbitration clause at the time the contract was executed.
High Court’s Observations
Justice Ajay Mohan Goel, after examining the contracts and the law on non-signatory arbitration, agreed with the tribunal’s reasoning. The court emphasized that there were two independent agreements - one between IIT Mandi and CPWD, and another between CPWD and the contractor.
The court noted that IIT Mandi had no direct role in the execution of the contractor’s agreement and that the contractor had not claimed any relief against IIT Mandi.
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“The mere fact that a party may ultimately bear financial consequences does not automatically make it a necessary party to an arbitration,” the court observed, endorsing the tribunal’s reliance on Supreme Court precedents.
Justice Goel further held that there was nothing on record to suggest that CPWD would not adequately protect IIT Mandi’s interests in the arbitration.
Decision
Finding no legal infirmity in the arbitrator’s order, the Himachal Pradesh High Court dismissed IIT Mandi’s petition. The court upheld the view that IIT Mandi could not be impleaded as a party in the ongoing arbitration between CPWD and the contractor.
With this, the arbitral proceedings will continue only between the original contracting parties, leaving IIT Mandi outside the arbitration framework.
Case Title: IIT Mandi vs Central Public Works Department & Anr.
Case No.: CWP No. 9200 of 2025
Case Type: Writ Petition (Arbitration Impleadment)
Decision Date: 29 December 2025
