Nuziveedu Seeds Limited vs M/s. Kishoridevi Krishak Producer Company Ltd. & Ors.

“Ms. Srithija Reddy, learned counsel represents Ms. Rubaina S. Khatoon, learned counsel for the applicant. The applicant is the first part of the Agreement for Production, Processing and Packaging of Seeds dated 29.03.2025 entered with respondent No.1-company, called the second part. The applicant has engaged respondent No.1 for production, processing and packaging of the seeds on behalf of the applicant as per the terms and conditions mentioned in the agreement. The agreement provides a dispute resolution clause 12.2, which is extracted hereunder:

“12.2.

Subject to the aforesaid, the parties hereto agree that in the event of there being any disputes with regards to the Agreement or interpretation of any of the terms of this Agreement, the same shall be referred to the Arbitration in terms thereof. The provisions of the Arbitration and Conciliation Act, 1996 and the rules made thereunder shall apply to the proceedings. The Arbitration proceedings shall be presided by a sole arbitrator mutually agreed upon by both parties and the venue of arbitration shall be in Hyderabad only.”

In respect of the disputes arising under the agreement, the applicant has issued notice dated 19.12.2025, under Section 21 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’), upon respondent No.1 and two other entities, which are respondent Nos.2 and 3, with a categorical averment that respondent No.1 has not complied with the instructions and has not delivered the agreed quantity as per the agreement. A written request was made as per clause 14 in the form of a demand notice dated 03.11.2025. The applicant stated that it has reliably learnt that its seed stock is at two warehouse facilities i.e., Gogreen Warehouses Private Limited, located at Kumher, Bharatpur, Rajasthan-respondent No.3 and Vivek Enterprises-respondent No.2, which is the proprietorship firm of the Managing Director of respondent No.1-Company. The applicant has specifically alleged that respondent No.1 is diverting the seed stock to third-party competitor companies and individuals. Therefore, the applicant has invoked Section 9 of the Act against respondent No.1-company along with respondent Nos.2 and 3 by way of filing C.O.P.No.171 of 2025 before the Principal Special Court in the Cadre of District Judge for Trial and Disposal of Commercial Disputes, City Civil Court, Hyderabad, seeking urgent interim protection in relation to the same subject matter. The learned Special Court granted interim protection on 11.11.2025 in favour of the applicant restraining the respondents, its directors, officers, agents and employees from transferring, alienating, consuming, processing, pledging, hypothecating or disposing of the applicant’s wheat raw seeds, processed seeds or any material derived therefrom, which has been extended from time to time. After invocation of the arbitration clause 12, since only respondent No.3 has submitted reply not agreeing to arbitration, the applicant has invoked the jurisdiction of this Court under Sections 11(4)(b) and 6(a) and (b) of the Act for appointment of an independent arbitrator.

Notice has been effected upon all the respondents vide USR No.67217 of 2026.

On the previous date i.e., 19.06.2026, the matter was adjourned to enable the respondents to enter appearance, since service of notice has been completed. However, no one has entered appearance on behalf of the respondents even today.

In this background, learned counsel for the applicant submits that this Court may proceed to appoint an independent arbitrator to adjudicate the dispute arising under the agreement between the applicant and respondent No.1-company and also respondent Nos.2 and 3, which though are non-signatories to the agreement, the surrounding circumstances like direct relationship with the signatory party, commonality of the subject matter and the underlying transaction with the non-signatories by respondent No.1 in performance of the promises under the agreement in question, require them to be impleaded as parties to the instant Arbitration Application.

Learned counsel for the applicant has relied upon the decision of the Apex Court in Adavya Projects Private Limited v. Vishal Structurals Private Limited and others ((2025) 9 SCC 686) and contended that the determination of whether certain persons are parties to the arbitration agreement and whether they can be made party to the arbitration proceedings, should be left to the Arbitral Tribunal. This Court, in exercise of power under Section 11 of the Act, can return a prima facie finding on this issue, but the same does not bind the Arbitral Tribunal, which must decide the issue based on evidence and the legal principles, such as those laid down by the Apex Court in Ajay Madhusudan Patel v. Jyotrindra S. Patel ((2025) 2 SCC 147). On the principle of kompetenz-kompetenz, the Arbitral Tribunal can determine this issue taking into account the existence and validity of the agreement, the scope of the dispute and other surrounding facts and circumstances whether the non-signatories to the agreement are necessary parties for adjudication of the dispute by the learned Arbitral Tribunal. It is, therefore, submitted that this Court may proceed to appoint an independent arbitrator to adjudicate the dispute between the parties leaving it open to the Arbitral Tribunal to come to a finding on merits whether respondent Nos.2 and 3, though non-signatories, can be made parties to the arbitration proceedings.

Having considered the submissions of the learned counsel for the applicant, the relevant facts and circumstances on record and the decision rendered by the Apex Court in Adavya Projects Private Limited (supra) and other decisions referred to therein, this Court is of the prima facie view that there exists a dispute between the parties under the Agreement for Production, Processing and Packaging of Seeds dated 29.03.2025, in respect of which the applicant has invoked the jurisdiction of this Court after invoking clause 12 of the said agreement in terms of Section 21 of the Act. The averments made in the instant Arbitration Application and in the notice invoking the arbitration clause prima facie show that respondent Nos.2 and 3, though non-signatories to the agreement have relationship with the signatory party (respondent No.1-company) and the surrounding circumstances show involvement of these respondents in respect of the performance by respondent No.1 and the obligations arising under the agreement in question.

Therefore, this Court, in view of the legal position laid down by the Apex Court in the decisions referred to herein above, leaves it open for the learned Arbitral Tribunal to determine the issue as to whether respondent Nos.2 and 3 can be made as parties to the arbitration proceedings, keeping in mind the principles laid down by the Apex Court in Adavya Projects Private Limited (supra) and the decisions on the said point by the Apex Court.

Therefore, this Court proposes to appoint Sri Justice Pradeep P. Bhatt, former Judge of Gujarat High Court (Resident of A-16, Venus Ultima, Behind Vrindavan Bunglow's 7 & 8, Near Hansh Villa Residency, Opp. Shell Petrol Pump, Zydus Hospital Road, Thaltej, Ahmedabad-380015; Mobile No.9471700428), as an independent Arbitrator to adjudicate the dispute between the parties. It is made clear that all questions of law and fact are left open to be raised before the learned Arbitrator in respect of the dispute arising under the Agreement for Production, Processing and Packaging of Seeds dated 29.03.2025 between the parties.

The proposed Arbitrator is requested to submit his consent and a declaration in terms of Section 12(1) read with Schedule VI of the Act.

Registry is directed to communicate this order to the proposed Arbitrator.

Let the matter be listed after two weeks with the response, if any, of the proposed Arbitrator."