Holding

A non‑signatory parent company cannot be bound by an arbitration agreement absent clear evidence of its consent, and the burden to prove such consent lies on the party seeking to implead the non‑signatory.

Summary

Reckitt Benckiser (India) Pvt Ltd entered into a supply agreement with Reynders Label Printing India Pvt Ltd on 1 May 2014, which contained an arbitration clause. The applicant sought to include Reynders Belgium (respondent No.2), the parent company, in the arbitration, alleging that its representative Frederik Reynders acted on its behalf and that the indemnity clause indicated consent. Respondent No.2 denied being a party, stating it had no involvement in negotiations, no authority, and was not a signatory. The Court examined Sections 11(5), 11(9) and 11(12)(a) of the Arbitration and Conciliation Act, 1996 and applied the group‑of‑companies doctrine from Chloro Controls and Cheran Properties, holding that the burden to prove a non‑signatory's consent rests on the party seeking to bind it. Finding no evidence of such consent, the Court dismissed the application against respondent No.2 and appointed a sole arbitrator for a domestic commercial arbitration between the applicant and respondent No.1, with no costs awarded.

Issues considered

Whether a non‑signatory parent company can be impleaded in arbitration under the group‑of‑companies doctrine.
What burden of proof is required to establish a non‑signatory's consent to an arbitration agreement.
Whether the arbitration proceeding is international or domestic commercial arbitration.
Interpretation of Sections 11(5), 11(9) and 11(12)(a) of the Arbitration and Conciliation Act, 1996 in relation to non‑signatories.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(12)(a), s. 11(5), s. 11(9)

Subjects

arbitrationnon‑signatorygroup of companies doctrineburden of proofdomestic commercial arbitrationArbitration and Conciliation Actconsent to arbitration

Judgment

966 [2019]
SUPREME COURT 8 S.C.R. 966
REPORTS [2019] 8 S.C.R.

A RECKITT BENCKISER (INDIA) PRIVATE LIMITED
v.
REYNDERS LABEL PRINTING INDIA PRIVATE LIMITED
AND ANR.
(Petition for Arbitration (Civil) No. 65 of 2016)
B
JULY 01, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 11(5), 11(9) and
11(12)(a) – Signatory and non-signatory parties to the arbitration
C agreement – According to the applicant, the respondents had
approached them with an offer to print labels – Pursuant thereto,
respondent no.1 and applicant entered into an agreement dated
01.05.2014 – It was averted that arbitration agreement was an
integral part of the agreement dated 01.05.2014 – Respondent no.2
was a non-signatory party to the agreement dated 01.05.2014 –
D Dispute arose between the parties – Respondent no.2 was impleaded
in the arbitration proceedings on the ground that respondent no.2
was the parent/holding Company of respondent no.1 – Respondent
no.2 refuted the assertions made by the applicant – Held: In the
instant case, burden is on the applicant to establish that respondent
E no.2 had an intention to consent to the arbitration agreement and
be party, may be for the limited purpose of enforcing the indemnity
clause in the agreement, which refers to respondent no.1 and the
supplier group against any claim of loss, damages and expenses,
howsoever incurred or suffered by the applicant and arising out of
or in connection with matter specified – That burden was not
F discharged by the applicant – Further, respondent no.2 was never
involved in the negotiation process concerning the agreement dated
01.05.2014 – Thus, respondent cannot be subjected to proposed
arbitrative proceedings.
Disposing of the application, the Court
G
HELD : 1. In the backdrop of the averments in the
application and the correspondence exchanged between the
parties adverted to by the applicant, it is obvious that the thrust
of the claim of the applicant is that one ‘FR’ was acting for and on
behalf of respondent No.2, as a result of which the respondent
H
966
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 967
PRINTING (I) PVT. LTD.

No.2 has assented to the arbitration agreement. This basis has A
been completely demolished by respondent No.2 by stating, on
affidavit, that ‘FR’ was in no way associated with respondent
No.2 and was only an employee of respondent No.1, who acted in
that capacity during the negotiations preceding the execution of
agreement. Thus, respondent No.2 was neither the signatory to
B
the arbitration agreement nor did have any causal connection
with the process of negotiations preceding the agreement or the
execution thereof, whatsoever. If the main plank of the applicant,
that ‘FR’ was acting for and on behalf of respondent No.2 and had
the authority of respondent No.2, collapses, then it must
necessarily follow that respondent No.2 was not a party to the C
stated agreement nor had it given assent to the arbitration
agreement and, in absence thereof, even if respondent No.2
happens to be a constituent of the group of companies of which
respondent No.1 is also a constituent, that will be of no avail.
For, the burden is on the applicant to establish that respondent
D
No.2 had an intention to consent to the arbitration agreement
and be party thereto, maybe for the limited purpose of enforcing
the indemnity clause 9 in the agreement, which refers to
respondent No.1 and the supplier group against any claim of loss,
damages and expenses, howsoever incurred or suffered by the
applicant and arising out of or in connection with matters specified E
therein. That burden has not been discharged by the applicant at
all. On this finding, it must necessarily follow that respondent
No.2 cannot be subjected to the proposed arbitration
proceedings. Considering the averments in the application under
consideration, it is not necessary for this Court to enquire into
F
the fact as to which other constituent of the group of companies,
of which the respondents form a part, had participated in the
negotiation process. [Para 9] [983-C-H; 984-A-B]
2. Suffice it to observe that respondent No.2 was never
involved in the negotiation process concerning the stated
agreement dated 1st May, 2014. On this finding, the application G
must fail as against respondent No.2 and as a consequence
whereof, the provisions for making reference to the sole
arbitrator, on the assumption that it is an international commercial
arbitration, cannot be taken forward. As respondent No.1 is a
H
968 SUPREME COURT REPORTS [2019] 8 S.C.R.

A company having been established under the provisions of the
Indian Companies Act and having its registered office in India,
the applicant can pursue its remedy against respondent No.1 for
appointment of a sole arbitrator to conduct arbitration
proceedings, as a domestic commercial arbitration. [Para 10]
[984-B-D]
B
Chloro Controls India Private Limited v. Severn Trent
Water Purification Inc. and Ors. (2013) 1 SCC 641 :
[2012] 13 SCR 402 ; Cheran Properties Limited
v. Kasturi and Sons Limited and Ors. (2018) 16 SCC
413 : [2018] 4 SCR 1063 – relied on.
C
Godhra Electricity Co. Ltd. and Anr. v. State of Gujarat
and Anr. (1975) 1 SCC 199 : [1975] 2 SCR 42
– referred to.
Case Law Reference
D [2012] 13 SCR 402 relied on Para 1
[2018] 4 SCR 1063 relied on Para 1
[1975] 2 SCR 42 referred to Para 11
CIVIL ORIGINAL JURISDICTION : Petition for Arbitration
E (Civil) No. 65 of 2016.
Arvind P. Datar, Dhruv Mehta, Sr. Advs., Amar Gupta, R. Jawahar
Lal, Siddharth Bawa, Shyamal Anand, Ashwani Kumar, Advs. for the
petitioner.
Devdath Kamath, Sr. Adv., Tejas Karia, Ms. Ila Kapoor, Ms. Shruti
F Sabharwal, S. S. Shroff, Ms. Mitali Daryani, Advs. for the respondents.
The Judgment of the Court was delivered by
A. M. KHANWILKAR, J.
1. The singular question involved in this application filed under
G Sections 11(5), 11(9) and 11(12)(a) of the Arbitration and Conciliation
Act, 1996 (for short “the Act”) seeking appointment of a sole arbitrator,
is whether respondent No.2 - a company established under the laws of
Belgium, having its principal place of business at Nijverheldsstraat 3,
2530 Boechout, Belgium, could be impleaded in the proposed arbitration
proceedings despite the fact that it is a non-signatory party to the
H
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 969
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

agreement dated 1st May, 2014, executed between the applicant and A
respondent No.1 - a company established under the Companies Act,
2013 - merely because it (respondent No.2) is one of the group companies
of which respondent No.1 also is a constituent. The legal position as to
when a non-signatory to an arbitration agreement can be impleaded and
subjected to arbitration proceedings is no more res integra. In the case
B
of Chloro Controls India Private Limited Vs. Severn Trent Water
Purification Inc. and Ors.,1 a three-Judge Bench of this Court opined
that ordinarily, an arbitration takes place between the persons who have
been parties to both the arbitration agreement as well as the substantive
contract underlying it. Invoking the doctrine of “group of companies”, it
went on to observe that an arbitration agreement entered into by a C
company, being one within a group of corporate entities, can, in certain
circumstances, bind its non-signatory affiliates. That exposition has been
followed and applied by another three-Judge Bench of this Court in
Cheran Properties Limited Vs. Kasturi and Sons Limited and Ors.2
In paragraph 23 of this decision, the Court, after analysing the earlier
D
decisions and including the doctrine expounded in Chloro Controls India
Private Limited (supra), concluded as follows:
“23. As the law has evolved, it has recognised that modern business
transactions are often effectuated through multiple layers and
agreements. There may be transactions within a group of
companies. The circumstances in which they have entered into E
them may reflect an intention to bind both signatory and non-
signatory entities within the same group. In holding a non-signatory
bound by an arbitration agreement, the court approaches the matter
by attributing to the transactions a meaning consistent with the
business sense which was intended to be ascribed to them. F
Therefore, factors such as the relationship of a non-signatory to a
party which is a signatory to the agreement, the commonality of
subject-matter and the composite nature of the transaction weigh
in the balance. The group of companies doctrine is essentially
intended to facilitate the fulfilment of a mutually held intent between
the parties, where the circumstances indicate that the intent was G
to bind both signatories and non-signatories. The effort is to find
the true essence of the business arrangement and to unravel from

1
(2013) 1 SCC 641
2
(2018) 16 SCC 413 H
970 SUPREME COURT REPORTS [2019] 8 S.C.R.

A a layered structure of commercial arrangements, an intent to bind
someone who is not formally a signatory but has assumed the
obligation to be bound by the actions of a signatory.”
2. In the present case, it is not in dispute that the respondents are
constituents of a group of companies known as “Reynders Label Printing
B Group”. The constituent companies of the said group of companies can
be described in the form of a chart appended to the written submission
filed by respondent No.1 as Annexure R-1/1, which reads thus:
Reynders Label Printing Group

C

3. Keeping in mind the exposition in Chloro Controls (supra) and
D
Cheran Properties (supra), the crucial question is whether it is manifest
from the indisputable correspondence exchanged between the parties,
culminating in the agreement dated 1st May, 2014, that the transactions
between the applicant and respondent No.1 were essentially with the
group of companies and whether there was a clear intention of the parties
E to bind both the signatory as well as non-signatory parties (respondent
No.1 and respondent No.2, respectively). In other words, whether the
indisputable circumstances go to show that the mutual intention of the
parties was to bind both the signatory as well as the non-signatory parties,
namely, respondent No.1 and respondent No.2, respectively, qua the
existence of an arbitration agreement between the applicant and the
F
said respondents.
4. In the wake of the amended Section 11(6) read with Section
11(6A) of the Act, the enquiry by this Court must confine itself to the
examination of existence of an arbitration agreement. No more and no
less. For that, we must revert to the assertion made by the applicant in
G the present application. Be it noted that respondent No.1 has not filed
any counter affidavit to refute the assertions made by the applicant in
the application under consideration. Respondent No.1, however, through
its counsel has urged that respondent No.2 has no concern with the
subject agreement dated 1st May, 2014. That agreement is only between
H
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 971
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

the applicant and respondent No.1 and as a result thereof, it would give A
rise to a domestic commercial arbitration and not an international
commercial arbitration. Respondent No.1 has also made it amply clear
through its counsel that it will have no objection, whatsoever, if the Court
were to appoint a sole arbitrator for resolving the dispute between the
applicant and respondent No.1, who would conduct the arbitration
B
proceedings in accordance with the Act, in Delhi, as a domestic
commercial arbitration between the applicant and respondent No.1 alone.
5. Be that as it may, reverting to the averments in the application
under consideration, it is mentioned that the dispute arises out of the
agreement dated 1st May, 2014, executed between the applicant and
respondent No.1, but respondent No.2 has been impleaded because it is C
the parent/ holding company of respondent No.1. The agreement, in the
form of clause 13,3 contains an arbitration agreement between the parties.
In terms of clause 94 thereof, respondent No.2 has assumed the liability
to indemnify the applicant in case of any loss, damage etc., caused to
the applicant on account of acts and omissions of respondent No.1. D
3
“13. Dispute Resolution
13.1 Prior to the beginning of any arbitration process the parties hereby undertake to
attempt in good faith to resolve any dispute by way of negotiation between senior
executives of the parties who have authority to settle such dispute. A copy of any
Escalation Notice shall be given to the Regional Senior Vice President (or equivalent
person of seniority) of each party or their Affiliates (which copy shall state that it is an E
Escalation Notice pursuant to this Agreement). Provided, however, that the negotiations
shall be completed within thirty (30) days of the date of the Escalation Notice or within
such longer period as the parties may agree in writing prior to the expiration of the
initial thirty-day period.
13.2 In the event the dispute is not resolved within a period of 30 days from the
commencement of such dispute, the dispute shall be referred to arbitration and the
parties shall mutually appoint a Sole arbitrator who shall conduct the proceedings in F
accordance with Indian Arbitration Act, 1996 as amended from time to time or any re-
enactment thereof. The arbitration shall be held in Delhi and the proceedings shall be
conducted in English.
13.3 The existence of a dispute with respect to this Agreement between the parties
shall not relieve either party from performance of its obligations under this Agreement
that are not the subject of such dispute.”
4
“9. Indemnity G
9.1 The Supplier and the Supplier group shall indemnify RB against any claims, losses,
damages and expenses howsoever incurred or suffered by RB (and whether direct or
consequential or economic loss) arising out of or in connection with
(i) defective workmanship, quality or materials;
(ii) an infringement or alleged infringement of any intellectual property rights caused
by the use, manufacture, or supply of the products; and
H
972 SUPREME COURT REPORTS [2019] 8 S.C.R.

A Respondent No.2 is an integral party to the stated agreement which
contains an arbitration agreement in the form of clause 13.2. The applicant
has relied upon e-mails exchanged which, according to the applicant,
provide the record of an arbitration agreement within the meaning of
Section 7(4)(b) of the Act. According to the applicant, the respondents
had approached the applicant with an offer to print labels for the applicant,
B
including for booklets and leaflets and labels required for Mucinex,
exported to USA. The ‘Drug Facts’ and other details which were to be
printed on the back-label were in accordance with the laws of USA and
the respondents were aware of the fact that Mucinex supply is meant
for USA market. The applicant relied upon the minutes of the meeting
C held on 29th May, 2013, between the officials of the applicant and the
officials of respondent No.1. Pursuant thereto, the respondents made a
presentation to the applicant about their capability to print labels for the
applicant, including the booklet and leaflet labels as desired and made
several representations about the quality of their product. The applicant
asserts that the respondents had held exhaustive negotiations in relation
D
to the execution of agreement whereby the respondents were to provide
packaging material to the applicant and its affiliates. Based on negotiations,
the applicant, by e-mail dated 23rd April, 2014, circulated a draft of the
agreement along with the code of conduct and anti-bribery policy of the
applicant. The applicant asserts that the respondents replied to the same
E through Mr. Frederik Reynders (promoter of respondent No.2 which is
the parent company of respondent No.1) by his e-mail of 23rd April,
2014 at 12:00 PM. The said e-mail sent by Mr. Frederik Reynders was
responded to by the applicant on 23rd April, 2014 at 12:10 PM. Further,
Mr. Frederik Reynders, by his e-mail of 23rd April, 2014 at 4:09 PM,
attached a copy of the draft with some attached comments from the
F
headquarters of the respondents in Belgium (respondent No.2 herein).
According to the applicant, the comments related to clause 9 of the draft
agreement relating to the indemnity of respondent Nos.1 & 2. It is then

(iii) negligent performance or failure or delay in performance of the terms of this
Agreement by this Supplier.
G 9.2 Supplier shall indemnify and hold harmless RB and their respective officers, directors,
agents, and employees against any and all claims:
i. Arising out of an alleged breach of the terms and conditions of other provision of this
Agreement.
ii. based upon any allegations that the material produced by RB using Product was
defective (including, but not limited to, manufacturing or refining defects);
H These provisions shall survive termination or expiry of this Agreement.”
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 973
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

stated that in the same e-mail, Mr. Frederik Reynders gave a counter A
proposal, concerning clause 9.1 of the draft agreement, of providing a
document of insurance to inform the applicant about their maximum
coverage. On this basis, it is asserted that respondent No.2 was aware
of the fact that indemnity is being extended to the applicant and that
respondent No.2 was the disclosed principal on whose behalf the
B
respondent No.1 was executing the agreement. It is further asserted
that the arbitration agreement was an integral part of the agreement
executed between the applicant and respondent No.1, on its behalf and
on behalf of its disclosed principal, namely, respondent No.2. The
applicant has then asserted that respondent No.1 addressed an e-mail
dated 6th June, 2014, to the applicant enclosing a signed copy of the C
agreement and further stating that hard copy would be delivered to the
applicant. The relevant averments in the application referred to above
have been articulated in paragraphs 7.7 to 7.12, which read thus:
“7.7 The Applicant states that the Respondents had approached it
with its offer to print labels for the applicant, including booklet and D
leaflet labels (required for Mucinex exported to USA). The Drug
Facts and other details which were to be printed on the back label
were in accordance with the laws of USA and the Respondents
were aware of the fact that the Mucinex supply is meant for
USA market. True typed copy of the Minutes of Meeting held on
November 22, 2013 between the officials with the respondent E
No.1 are annexed as ANNEXURE A-2 (at pages 133 to 134).
7.8 The Respondents subsequently made a presentation about
their capability to print labels for the Applicant, including booklet
and leaflet labels (required for Mucinex exported to USA). During
personal meeting and in the presentation, the Respondents F
represented that they are the market leaders in label printing across
the globe and they provide creativity and innovation for self-
adhesive labels. Further, the Respondents represented that
Reynders label printing in India offers tailor made solutions to fit
all needs of the Respondent including perfect adhesion on vials G
conforming to ISO 15010), every single label is printed as per
specifications) and numbering of each label, to ensure quality
control. The Respondents offered to print booklet & leaflet labels
“to put extra information on a packaging where the available
space for text or images is rather limited”. The Respondents
H
974 SUPREME COURT REPORTS [2019] 8 S.C.R.

A further specifically emphasised that such booklet labels contain a
multi-page booklet, glued at the back, having application in
pharmaceutical industry. For the purpose of adhering and
maintaining strict quality control measures, the Respondents
represented that inspection of printed labels is conducted through
a system consisting of “500 100% camera controlled inspection
B
system, online numbering on back side and units for offline
numbering”. Further, in relation to quality assurance, the
Respondents represented to the Applicant that they provide
standard quality assurance and in addition, they also provide quality
check by camera control. True typed copy of the Presentation
C dated NIL made by the Respondents is annexed as ANNEXURE
A-3 (at pages 135 to 156).
7.9 In the interregnum, the Applicant entered into a Supply
Agreement dated April 16, 2014 with its affiliate in India viz., RB
Healthcare. True typed copy of the Supply Agreement executed
D between the Applicant and RB Healthcare dated 16.04.2014 is
annexed as ANNEXURE A-4 (at pages 157 to 189).
7.10 The Applicant and Respondents held detailed negotiations in
relation to execution of an agreement, whereby the Respondents
were to provide packaging material to the Applicant and its
E affiliates. Based on negotiations, the Applicant by email dated
April 23, 2014, circulated a draft of the Agreement along with the
Code of Conduct and Anti-Bribery policy, of the Applicant. True
typed copy of the email 23.04.2014 addressed by the Applicant to
the Respondents is annexed as ANNEXURE A-5 (at pages 190
to 191). The applicant also requested the Respondents to attach a
F copy of the executed specifications of Mucinex labels and signed
copy of the pricing/costing agreement for Mucinex Labels. It is
relevant to state that Clause 9 of the draft Agreement, specifically
stated “The Supplier and the Supplier group shall indemnify
RB against any claims, losses, damages and expenses
G howsoever incurred or suffered by RB (and whether direct or
consequential or economic loss) arising out of or in connection
with……negligence performance or failure or delay in
performance of the terms of this agreement by the Supplier”.
7.11 In response, the Respondents through Mr. Frederik
H Reynders (promoter of Respondent No.2 which is a parent
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 975
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

of Respondent No.1) by his email responded on April 23, A
2014 at 12:00 pm. True typed copy of the email dated April 23,
2014 addressed by Mr. Frederik Reynders to the Applicant is
annexed as ANNEXURE A-6 (at page 192). The said email
sent by Mr. Frederik Reynders was responded by the
Applicant on April 23, 2014 at 12:10 pm. True typed copy of
B
the email dated April 23, 2014 addressed by the Applicant to Mr.
Frederik Reynders is annexed as ANNEXUXRE A-7 (at page
193). Further, Mr. Frederik Reynders by his email of April
23, 2014 at 04.09 pm attached a copy of the draft Agreement
with “some comments of our HQ in Belgium (Respondent
No.2 herein)”. True typed copy of the email dated April 23, C
2014 with the commented Agreement sent by Mr. Frederik
Reynders to the Applicant is annexed as ANNEXURE A-8 (at
page 194). The comments related to Clause 9 of the draft
Agreement relating to Indemnity extended by the Respondent
Nos.1 and 2. In the same email, Mr. Reynders also stated
D
that for Clause 9.1 of the draft Agreement, “I will provide
you with an document of our Insurance to inform you about
our maximum coverage”. From the above, it is clear that
Respondent No.2 was aware of the fact that indemnity is being
extended to the Applicant and the fact that Respondent No.2 is
the disclosed principal, on whose behalf the Respondent No.1 is E
executing the Agreement. In this regard, it is relevant to state that
the arbitration agreement is an integral part of the Agreement
executed between the Applicant and the Respondent No.1. Hence,
the arbitration agreement also has been executed by Respondent
No.1 on its behalf and on behalf of its disclosed principal i.e. the
F
Respondent No.2.
7.12 After further discussions, the Respondent No.1, on
its behalf of and on behalf of its parent and disclosed
principal – Reynders Belgium) of Respondent No.2,
executed the Agreement on May 1, 2014 and sent the same
to the Applicant. In this context it is stated that the Respondent G
No.1 had addressed an email dated June 6, 2014 to the Applicant
enclosing the signed copy of the Agreement and further stating
that hard copy shall be delivered to the Applicant. True typed
copy of the email dated June 6, 2014 sent by the Respondent
No.1 to the Applicant is annexed as ANNEXURE A-9 (at page H
976 SUPREME COURT REPORTS [2019] 8 S.C.R.

A 195). The Agreement was subsequently executed by the Applicant
and a hard copy, was sent to the Respondents.”
(emphasis supplied)
6. We deem it apposite to reproduce the correspondence, referred
to in the aforesaid paragraphs of the application under consideration, for
B examining the case made out by the applicant as to whether respondent
No.2 can be said to have assented or had an intention to become party
to the arbitration agreement by its conduct, without being a signatory to
the agreement dated 1st May, 2014. Annexures-5 to 9 referred to by the
applicant read thus:
C “ANNEXURE A-5
From : Joshi, Sonu [mail to:Sonu.Joshi@rb.com]
Sent : woensdag 23 april 2014 10:38
To : Frederic Reynders
D
Subject: Commercial Agreement sigh-off-RB & Reynders
Dear Frederik,
As per our Global procurement policies and procedures, it is
mandatory for RB to sign-off a commercial agreement, document
E on code of conduct and Anti-Bribery policies with all of our
suppliers. Accordingly, please find the following documents for
immediate sign-off.
1. Code of Conduct
2. Anti-Bribery and
F
3. Commercial agreement (Packing material Supply Agreement)
Along with the above, please attach a copy of the signed-off specs
of Mucinex labels and the signed copy of our pricing/costing
agreement on the Mucinex labels.
Please go through the commercial agreement, provide all relevant
G
details i.e. Company Name, Address, Supply/Mfg. location, Details
of Products manufactured/supplied, Agreed payment terms etc.
and send us the duly signed (by the authorized signatory) &
company stamped copy along with the signed & stamped copies
of the Code of Conduct and Anti Bribery policies.
H
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 977
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

For any information or clarifications, please contact me. A
th
Request you to email/send us all the documents latest by 30
April 2014 and if earlier it would be really appreciated.
Regards,
Sonu Dev Joshi B
Manager Procurement –Packing Material
RB
Plot – 48, Institutional Area, Sector-32, Gurgaon – 122001
Direct-91-124-4028197; Mobile +91 85273-99487 C
www.reckittbenckiser.com
ANNEXURE A-6
On 23-Apr-2014, at 12:00 pm., “Frederik Reynders”
<fre@reynders.com> wrote: D
Dear Sonu,
We will provide you with all complete documents before 30th.
A lead time of 14 days is highly requested and recommended a
leaflet label after receival of PO till delivery at RB factory in E
Baddi.
Please confirm.
Best regards,
Frederik Reynders F
Reynders_Label Printing India Pvt. Ltd.
www.reynders.com
ANNEXURE A-7
From : Joshi, Sonu [mail to: Sonu.Joshi@rb.com] G
Sent : woensdag 23 april 2014 12:10
To : Frederic Reynders
Cc : Kari Vandenbussche
H
978 SUPREME COURT REPORTS [2019] 8 S.C.R.

A Subject: Re: Commercial Agreement sign-off – RB & Reynders
Hi Frederik
Thanks.
We (me and you) will discuss on the lead-times, align on some
B buffer days and publish the official lead times to BADDI planning
team.
The unofficial or real/crash/squeeze lead time must remain
between the three of us.
Regards
C
Sonu Dev Joshi
Manager-PM Procuremen
RB
ANNEXURE A-8
D
From : Frederic Reynders [mail to:fre@reynders.com]
Sent : Wednesday, April 23, 2014 4:09 PM
To : Joshi, Sonu
Cc : Kari Vandenbussche
E
Subject: RE: Commercial Agreement sign-off – RB & Reynders
Dear Sonu,
Please find attached the contract with some comments of our
HQ in Belgium. We will discuss & agree on a realistic and
F necessary lead time between the 3 of us.
For 9.1. I will provide you with an document of our insurance to
inform you about our maximum coverage.
Waiting for your feedback. Feel free to call in case of any
G questions.
Frederik Reynders
Reynders_Label Printing India Pvt. Ltd.
www.reynders.com
H
RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 979
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

ANNEXURE A-9 A
From : Kari Vandenbussche [mail to:fre@reynders.com]
Sent : Friday, June 06, 2014 4:38 PM
To : Joshi, Sonu
Cc : Frederic Reynders B
Subject: FW: Commercial Agreement sign-off – RB & Reynders
Dear Mr. Sonu Joshi,
Attached you find the signed agreement with Company stamp,
hard copies will be delivered today at your R&B office in Gurgaon. C
Best regards,
Kari Vandenbussche
Site Manager
Plot no. F 686 – Chopanki Ind. Area D
Chopanki 301019 – Bhiwadi – Rajasthan
T + 91 987 1024 467
M + 91 987 102 4467
E
F + 91 149 330 5403
www.reynders.com”
(emphasis supplied)
7. Respondent No.2 has filed its counter affidavit and emphatically
refuted the assertions made by the applicant that respondent No.2 is the F
parent or holding company of respondent No.1. It is stated that respondent
No.1 and respondent No.2 both are part of Reynders Label Printing
Group. This group is an internationally operating group of seven printing
companies and each of these companies has its own separate legal entities
and operates in different offices independently. Further, these companies G
only share a common parent entity, namely, Reynesco NV which is also
the holding company of both respondent companies. First, respondent
No.2 had no presence or operation whatsoever in India and was not
involved in the negotiation, execution and/or performance of the
agreement. There is no privity of contract between the applicant and
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980 SUPREME COURT REPORTS [2019] 8 S.C.R.

A respondent No.2. Second, respondent No.2 in its counter affidavit has
clearly stated that Mr. Frederik Reynders was not the promoter of
respondent No.2. However, Mr. Frederik Reynders was an employee
of respondent No.1. The signatory to the stated agreement, Mr. Kari
Vandenbussche, had neither exercised any managerial functions for
respondent No.2, nor was he an authorized representative or a director
B
of respondent No.2 with any authority to appoint the said respondent.
The relevant extract of the counter affidavit reads thus:
“THE ANSWERING RESPONDENT DID NOT
PARTICIPATE IN THE NEGOTIATIONS PERTAINING
THE AGREEMENT
C
15. It is incorrect to state that the answering Respondent
was at any point in time involved in the negotiations with
respect to the Agreement. The answering Respondent did
not make any presentation or representations to the
Applicant. From the documents annexed by the Applicant,
D there is nothing to show that the answering Respondent
ever made any presentation to the Applicant or was present
at any meeting prior to the date of the alleged Agreement.
16. Contrary to what has been alleged by the Applicant, the
answering Respondent did not provide any comments on
E the draft of the Agreement. The answering Respondent
submits that it is not aware of the e-mail dated 23.04.2014,
as alleged by the Applicant. Respondent No.1 did not
forward e-mail dated 23.04.2014 or any such e-mail to the
answering Respondent seeking comments of the answering
F Respondent on the draft of the Agreement. The reference
to HQ in Belgium is not a reference to the answering
Respondent. As explained above, the answering
Respondent is but one of seven subsidiaries of the holding
company Reynesco NV.

G 17. The answering Respondent submits that it was not party to
any negotiations pertaining to the Agreement. The signatory to
the Agreement, Mr. Karl Vandenbussche, and Mr. Frederik
Reynders, who is alleged to have carried out the
negotiations with respect to the Agreement, were not
representing (or purporting to represent) or acting in any
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RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 981
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

way for the answering Respondent, and they had no A
authority to bind the answering Respondent.
18. The answering Respondent has no connection to the present
dispute not having been a party in any capacity to the negotiation,
execution, or enforcement of the Agreement.
RESPONDENT NO.1 HAD NO AUTHORITY TO BIND B
THE ANSWERING RESPONDENT AND DID NOT
EXECUTE THE AGREEMENT ON BEHALF OF THE
ANSWERING RESPONDENT.
19. The signatory to the Agreement is Mr. Karl
Vandenbussche, who at no point time exercised any C
managerial functions for the answering Respondent. Mr.
Vandenbussche has never been an authorized
representative or a director of the answering Respondent,
having any authority to bind the answering Respondent.
20. Further, Mr. Frederik Reynders, who is alleged to have D
carried out the negotiations with respect to the Agreement,
has incorrectly been described as the promoter of the
answering Respondent. Mr. Frederik Reynders was not and
has never been an employee, officer or representative of
the answering Respondent. E
21. The Applicant contends that the fact that Mr. Frederik
Reynders was acting on behalf of the answering Respondent and
the answering Respondent is the parent company of Respondent
No.1 binds the answering Respondent to the Agreement and
consequently the arbitration Agreement. It is submitted that F
the answering Respondent is not the parent company of
Reynders India and at no point in time was Mr. Frederik
Reynders ever employed by the answering Respondent or
for that matter Reynesco NV. Clearly, Mr. Frederik Reynders
was not acting for the answering Respondent, and had no authority
to bind the answering Respondent. From the communication and G
documents annexed by the Applicant, there is nothing to show
that Mr. Vandenbussche or Mr. Frederik Reynders represented
themselves to be the agents of the answering Respondent or
authorized persons acting for the answering Respondent.
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982 SUPREME COURT REPORTS [2019] 8 S.C.R.

A 22. It is submitted that the answering Respondent has no connection
to the present dispute not having been a party in any capacity to
the negotiation, execution, or enforcement of the Agreement.
Therefore, the Applicant’s submission that the Agreement was
executed by Respondent No.1 on behalf of Respondent No.2, is
incorrect. As demonstrated above, the answering Respondent was
B
never a participant in the negotiations between the Applicant and
Respondent No.1.”
(emphasis supplied)
8. The applicant has filed a rejoinder affidavit in which it is vaguely
C stated that Mr. Frederik Reynders, during the stage of negotiation of the
agreement, was taking directions from the representatives of respondent
No.2. In paragraphs 10 to 12 of the said affidavit, in response to the
stand taken by respondent No.2, the applicant has stated thus:
“10. The contents of Para 15 are wrong and denied. It is a matter
D of record (Annexure – A3 at Page 135 of the Application) that
the Respondents had approached the Applicant at the time of
negotiation of Agreement under the common banner of ‘Reynders
Label Printing’ and in that capacity had made a presentation to
the Applicant. In fact, the Respondents market themselves as a
label printing company, the printing being executed through various
E sites around the world.
11. The contents of Para 16-18 are incorrect and denied. It is a
matter of record that Respondent No.2 had actively participated
in the negotiation of the Agreement. It is a matter of record
(Annexure A-8 at Page 194 of Application) that Respondent No.1
F was taking directions from Respondent No.2 during the stage of
negotiations of the Agreement. In fact, Respondent No.2
through Mr. Kristof Vandenbroucke had shared comments
on the Agreement. The same Mr. Kristof Vandenbroucke
subsequently participated in the escalation meeting held
G in Amsterdam for amicable resolution of the disputes that
have arisen between the parties. Without prejudice to the same,
it is submitted that it is inconsequential whether or not Respondent
No.2 participated in negotiations of the Agreement. As elaborated
in the Preliminary Submissions, there is irrefutable evidence that
Respondent No.2 has assented to the Agreement.
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RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 983
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

12. The contents of Para 19-22 are wrong and denied. It is a A
matter of record (Annexure A-8 at Page 194 of the
Application) that Mr. Frederik Reynders, during the stage
of negotiations of the Agreement, was taking directions
from representatives of Respondent No.2. In any case, as
demonstrated hereinabove, Respondent No.2 has admitted to its
B
liability under the Indemnity Clause, its limited objection being the
extent of its liability thereunder. Additionally, Respondent No.2
had participated in the escalation meetings held in Amsterdam
under the Arbitration Clause. Clearly the paragraphs under reply
are an afterthought.”
(emphasis supplied) C

9. In the backdrop of the averments in the application and the
correspondence exchanged between the parties adverted to by the
applicant, it is obvious that the thrust of the claim of the applicant is that
Mr. Frederik Reynders was acting for and on behalf of respondent No.2,
as a result of which the respondent No.2 has assented to the arbitration D
agreement. This basis has been completely demolished by respondent
No.2 by stating, on affidavit, that Mr. Frederik Reynders was in no way
associated with respondent No.2 and was only an employee of respondent
No.1, who acted in that capacity during the negotiations preceding the
execution of agreement. Thus, respondent No.2 was neither the signatory E
to the arbitration agreement nor did have any causal connection with the
process of negotiations preceding the agreement or the execution thereof,
whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders
was acting for and on behalf of respondent No.2 and had the authority
of respondent No.2, collapses, then it must necessarily follow that
respondent No.2 was not a party to the stated agreement nor had it F
given assent to the arbitration agreement and, in absence thereof, even
if respondent No.2 happens to be a constituent of the group of companies
of which respondent No.1 is also a constituent, that will be of no avail.
For, the burden is on the applicant to establish that respondent No.2 had
an intention to consent to the arbitration agreement and be party thereto, G
maybe for the limited purpose of enforcing the indemnity clause 9 in the
agreement, which refers to respondent No.1 and the supplier group
against any claim of loss, damages and expenses, howsoever incurred
or suffered by the applicant and arising out of or in connection with
matters specified therein. That burden has not been discharged by the
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984 SUPREME COURT REPORTS [2019] 8 S.C.R.

A applicant at all. On this finding, it must necessarily follow that respondent
No.2 cannot be subjected to the proposed arbitration proceedings.
Considering the averments in the application under consideration, it is
not necessary for us to enquire into the fact as to which other constituent
of the group of companies, of which the respondents form a part, had
participated in the negotiation process.
B
10. Suffice it to observe that respondent No.2 was never involved
in the negotiation process concerning the stated agreement dated 1st
May, 2014. On this finding, the application must fail as against respondent
No.2 and as a consequence whereof, the provisions for making reference
to the sole arbitrator, on the assumption that it is an international
C commercial arbitration, cannot be taken forward. As respondent No.1 is
a company having been established under the provisions of the Indian
Companies Act and having its registered office in India, the applicant
can pursue its remedy against respondent No.1 for appointment of a
sole arbitrator to conduct arbitration proceedings, as a domestic
D commercial arbitration.
11. Indeed, the applicant had vehemently relied upon the
circumstances and correspondence post-contract but that cannot be the
basis to answer the matter in issue. The respondent No.2 has justly
relied upon the exposition in Godhra Electricity Co. Ltd. and Anr. Vs.
E State of Gujarat and Anr., 5 to buttress the argument that post-
negotiations in law would not bind the respondent No.2 qua the arbitration
agreement limited between applicant and respondent No.1. In any case,
even this plea is based on the assumption that Mr. Frederik Reynders
was associated with and had authority to transact on behalf of respondent
No.2, which assertion has been refuted and rebutted by respondent No.2.
F It is clearly stated that Mr. Frederik Reynders was neither connected to
nor had any authority of respondent No.2, but was only an employee of
respondent No.1 and acted only in that capacity.
12. For the view that we have taken, it is unnecessary to dilate on
other contentions. Suffice it to observe that the application must fail
G against respondent No.2 and on that conclusion, no relief can be granted
to the applicant who has invoked the jurisdiction of this Court on the
assumption that it is a case of international commercial arbitration. Despite
that, respondent No.1 through counsel has urged that as the subject

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RECKITT BENCKISER (I) PVT. LTD. v. REYNDERS LABEL 985
PRINTING (I) PVT. LTD. [A. M. KHANWILKAR, J.]

agreement between the applicant and respondent No.1 contains an A
arbitration clause (clause 13) and since disputes have arisen between
them, the respondent No.1 would agree to the appointment of a sole
arbitrator by this Court for conducting arbitration proceedings between
the applicant and respondent No.1, as domestic commercial arbitration.
This stand has been reiterated in the written submissions filed on behalf
B
of respondent No.1, filed after the conclusion of the oral arguments.
Resultantly, even though no relief can be granted to the applicant as
against respondent No.2, we proceed to pass the following order in the
interest of justice.
13. The arbitration application is dismissed as against respondent
No.2. However, we appoint Mr. Justice Badar Durrez Ahmed (Former C
Chief Justice, Jammu & Kashmir High Court) as the sole arbitrator to
conduct domestic commercial arbitration at New Delhi, between the
applicant and respondent No.1 on the terms and conditions as specified
in the Act of 1996.
14. Application stands disposed of in the above terms. No costs. D
All pending interim applications are also disposed of.

Ankit Gyan Application disposed of.

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F

G

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