Supreme Court of India

COX AND KINGS LTD.versusSAP INDIA PVT. LTD. & ANR.

Citation: 2023 INSC 1051
Decided: 6 December 2023
Bench: D Y CHANDRACHUD

Holding

The group of companies doctrine is a valid, consent‑based principle in Indian arbitration law, grounded in a harmonious reading of Section 2(1)(h) and Section 7 of the Arbitration and Conciliation Act, but it is not derived from the phrase "claiming through or under"; it should be applied via Section 7(4)(b) based on the parties' mutual intention and conduct, with jurisdictional questions left to the arbitral tribunal at the referral stage.

Summary

The Supreme Court examined whether the "group of companies" doctrine, which allows an arbitration agreement signed by one member of a corporate group to bind non‑signatory affiliates, is valid under Indian law and how it should be applied. The Court considered the interpretation of the phrase "claiming through or under" in Sections 8, 35 and 45 of the Arbitration and Conciliation Act, 1996, and whether that phrase incorporates the doctrine. It held that the doctrine is a consent‑based principle rooted in a harmonious reading of Section 2(1)(h) and Section 7 of the Act, but it is not derived from the "claiming through or under" language. The doctrine may be applied through Section 7(4)(b) by examining the parties' mutual intention, conduct, and the factual context of the transaction. The Court affirmed that non‑signatories can be bound where their participation in negotiation, performance or termination of the contract demonstrates implied consent, while rejecting the use of alter‑ego or veil‑piercing doctrines as a basis. Finally, the Court directed that the referral court should make only a prima‑facie determination of the arbitration agreement and leave jurisdictional questions to the arbitral tribunal, and ordered the matter to be placed before the regular bench for disposal.

Issues considered

Whether the phrase "claiming through or under" in Sections 8 and 45 of the Arbitration Act can be interpreted to include the group of companies doctrine
Whether the group of companies doctrine as developed in Chloro Controls and subsequent cases is valid under Indian law
Whether the doctrine should be read into Section 8 or can exist independently of any statutory provision
Whether the doctrine should be applied on the basis of a "single economic reality" or other factors
Whether the doctrine is a means of interpreting implied consent or intention to arbitrate
Whether principles of alter ego or piercing the corporate veil can alone justify applying the doctrine
Whether the Arbitration Act permits joinder of a non‑signatory as a party to an arbitration agreement
Whether Section 7 allows determination of intention to arbitrate based on the conduct of the parties

Legislation cited

Arbitration and Conciliation Act, 1996s. 11, s. 2(1)(h), s. 35, s. 45, s. 7, s. 73, s. 7(4)(b), s. 8, s. 9
Code of Civil Procedure, 1908s. 2
Companies Act, 2013s. 2(46), s. 2(87)
Indian Contract Act, 1872s. 10, s. 28, s. 2(b), s. 2(d), s. 9

Subjects

ArbitrationGroup of Companies DoctrineNon‑signatoryConsentParty AutonomyArbitration AgreementArbitration and Conciliation ActClaiming through or underCorporate VeilMulti‑party ArbitrationJurisdiction

Judgment

[2023] 15 S.C.R. 621 : 2023 INSC 1051

COX AND KINGS LTD.
v.
SAP INDIA PVT. LTD. & ANR.
(Arbitration Petition (Civil) No. 38 of 2020)
DECEMBER 06, 2023
[DR DHANANJAYA Y CHANDRACHUD, CJI,
HRISHIKESH ROY, PAMIDIGHANTAM SRI NARASIMHA,
J B PARDIWALA AND MANOJ MISRA, JJ.]
HEADNOTES
Issues for consideration:
The primary issue for consideration of the present Constitution
Bench of Five Judges was determination of the validity of the ‘Group of
companies doctrine’ in Indian arbitration jurisprudence and its applicability
to proceedings under the Arbitration and Conciliation Act, 1996. Earlier,
the Group of Companies doctrine had been adopted and applied in Indian
arbitration jurisprudence in Chloro Controls case, where a three Judge Bench
of the Supreme Court had read the said doctrine into the phrase “claiming
through or under” in Section 45 of the Arbitration and Conciliation Act, 1996.
The ‘Group of companies doctrine’ provides that an arbitration
agreement which is entered into by a company within a group of companies
may bind non-signatory aﬃliates, if the circumstances are such as to
demonstrate the mutual intention of the parties to bind both signatories and
non-signatories. This doctrine was called into question purportedly on the
ground that it interfered with the established legal principles such as party
autonomy, privity of contract, and separate legal personality.
Also, there were ancillary issues such as: (i) whether the Arbitration
and Conciliation Act, 1996 allows joinder of a non-signatory as a party
to an arbitration agreement; (ii) whether Section 7 of the Arbitration and
Conciliation Act, 1996 allows for determination of an intention to arbitrate
on the basis of the conduct of the parties; and (iii) interpretation of the phrase
“claiming through or under” appearing under Sections 8, 35 and 45 of the
Arbitration and Conciliation Act, 1996.
Ed. Note: Hon’ble Dr. Dhananjaya Y. Chandrachud, CJI pronounced judgment on behalf
of his Lordship, Hon’ble Mr. Justice Hrishikesh Roy, Hon’ble Mr. Justice J.B. Pardiwala
and Hon’ble Mr. Justice Manoj Misra. Hon’ble Mr. Justice Pamidighantam Sri Narasimha
pronounced a separate concurring judgment.
621
622 SUPREME COURT REPORTS [2023] 15 S.C.R.

Arbitration – Arbitration agreement – Consent as the basis for
arbitration:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): Consensus ad idem
between the parties forms the essential basis to constitute a valid arbitration
agreement – Since consent forms the cornerstone of arbitration, a non-
signatory cannot be forcibly made a “party” to an arbitration agreement as
doing so would violate the sacrosanct principles of privity of contract and
party autonomy. [Paras 60, 63]
Arbitration and Conciliation Act, 1996 – s.2(1)(h) r/w s.7 –
Deﬁnition of “parties”:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The deﬁnition of
“parties” under Section 2(1)(h) read with Section 7 of the Arbitration Act
includes both the signatory as well as non-signatory parties. [Para 165]
Arbitration – Parties to an arbitration Agreement – Method to
ﬁgure out:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The signature of a
party on the agreement is the most profound expression of the consent of a
person or entity to submit to the jurisdiction of an arbitral tribunal – However,
the corollary that persons or entities who have not signed the agreement are
not bound by it may not always be correct – The issue of who is a “party”
to an arbitration agreement is primarily an issue of consent. [Para 66]
Words and Phrases – Arbitration agreement – Term “non-
signatories” – Meaning of:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The term “non-
signatories”, instead of the traditional “third parties”, seems the most
suitable to describe situations where consent to arbitration is expressed
through means other than signature – A non-signatory is a person or entity
that is implicated in a dispute which is the subject matter of an arbitration,
although it has not formally entered into an arbitration agreement – Non-
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 623

signatories, by virtue of their relationship with the signatory parties and
active involvement in the performance of commercial obligations which
are intricately linked to the subject matter, are not actually strangers to the
dispute between the signatory parties. [Paras 66, 127]
Arbitration – Group of companies doctrine in Indian arbitration
jurisprudence – Relevance –Doctrines / Principles:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The group of
companies doctrine is a consent-based doctrine which has been applied,
for identifying the real intention of the parties to bind a non-signatory to an
arbitration agreement – The group of companies doctrine should be retained
in the Indian arbitration jurisprudence considering its utility in determining
the intention of the parties in the context of complex transactions involving
multiple parties and multiple agreements. [Paras 81, 165]
Corporate Law – Principle of corporate separateness – Separate
legal personality:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The entities within
a corporate group have separate legal personality, which cannot be ignored
save in exceptional circumstances such as fraud – The distinction between
a parent company and its subsidiary is fundamental, and cannot be easily
abridged by taking recourse to economic convenience – Legally, the rights
and liabilities of a parent company cannot be transferred to the subsidiary
company, and vice versa, unless, there is a strong legal basis for doing so –
The underlying basis for the application of the group of companies doctrine
rests on maintaining the corporate separateness of the group companies while
determining the common intention of the parties to bind the non-signatory
party to the arbitration agreement. [Paras 89, 165]
Arbitration – Group of companies doctrine – Adopting a pragmatic
approach to consent:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): Corporate structures
may take the form of groups based on equity, joint ventures, and informal
alliances – In the context of arbitration law, the challenge arises when
624 SUPREME COURT REPORTS [2023] 15 S.C.R.

only one member of the group signs the arbitration agreement, to the
exclusion of other members – Should the non-signatories be excluded
from the arbitration proceedings, even though they were implicated in
the dispute which forms the subject matter of arbitration? – As a response
to this challenge, arbitration law has developed and adopted the group
of companies doctrine, to allow or compel a non-signatory party to be
bound by an arbitration agreement – The group of companies doctrine
is applied to ascertain the intentions of the parties by analysing the
factual circumstances surrounding the contractual arrangements. [Paras
96 and 97]
Arbitration – Group of companies doctrine – International
perspectives – Precedents on applicability of the doctrine in France,
England, Switzerland, Singapore and the USA – Discussed:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The
international jurisdictions, in some form or the other, have moved
beyond the formalistic requirement of consent to bind a non-signatory
to an arbitration agreement – The issue of binding a non-signatory to an
arbitration agreement is more of a fact-speciﬁc aspect – In jurisdictions
such as France and Switzerland, there is a broad consensus that consent
or subjective intention of a non-signatory to arbitrate may be proved
by conduct – Such subjective intention could be derived from the
objective evidence in the form of participation of the nonsignatory in
the negotiation, performance, or termination of the underlying contract
containing the arbitration agreement – However, the group of companies
doctrine has not been universally accepted by all jurisdictions – In
jurisdictions such as France where the doctrine has gained acceptance,
group of companies is one of the several factors that a court or tribunal
considers to determine the mutual intention of all the parties to join the
nonsignatory to the arbitration agreement. [Para 58]
Arbitration – Group of companies doctrine, a fact based
doctrine:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The existence
of a group of companies is a factual element that the court or tribunal has
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 625

to consider when analysing the consent of the parties – It inevitably adds
an extra layer of criteria to an exercise which at its core is preponderant
on determining the consent of the parties in case of complex transactions
involving multiple parties and agreements. [Para 102]
Arbitration – Group of companies doctrine – Mutual intention of
all the parties to bind the non-signatory to the arbitration agreement
– The determination of mutual intention:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The primary test
to apply the group of companies doctrine is by determining the intention
of the parties on the basis of the underlying factual circumstances – The
application of the group of companies doctrine will serve to stymie satellite
litigation by non-signatory members of the corporate group, thereby
ensuring the eﬃcacy of the agreement between the parties – Avoiding
multiplicity of proceedings and fragmentation of disputes is certainly in
the interests of justice –However, it can never be the sole consideration
to invoke the group of companies doctrine. [Para 109]
Arbitration – Group of companies doctrine – Applicability –
Threshold standard of evidence:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): In Discovery
Enterprises case, the Supreme Court reﬁned and clariﬁed the cumulative
factors that the courts and tribunals should consider in deciding whether
a company within a group of companies is bound by the arbitration
agreement – All the cumulative factors laid down in Discovery Enterprises
case must be considered while determining the applicability of the group
of companies doctrine – However, the application of the above factors has
to be fact-speciﬁc, and onecannot tie the hands of the courts or tribunals
by laying down how much weightage they ought to give to the above
factors – The principle of single economic unit cannot be the sole basis
for invoking the group of companies doctrine. [Paras 110, 128 and 165]
Arbitration and Conciliation Act, 1996 – ss.8 and 45 – Phrase
“claiming through or under” as appearing under ss.8 and 45 of
the Arbitration Act – Party to arbitration agreement and Persons
626 SUPREME COURT REPORTS [2023] 15 S.C.R.

“claiming through or under” a party to the arbitration agreement
are diﬀerent:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): A person “claiming
through or under” is asserting their legal demand or cause of action in an
intermediate or derivative capacity – A person “claiming through or under”
has inferior or subordinate rights in comparison to the party from which
it is deriving its claim or right – Therefore, a person “claiming through or
under” cannot be a “party” to an arbitration agreement on its own terms
because it only stands in the shoes of the original signatory party – Under
the Arbitration Act, the concept of a “party” is distinct and diﬀerent from
the concept of “persons claiming through or under” a party to the arbitration
agreement – The persons “claiming through or under” can only assert a right
in a derivative capacity. [Paras 137, 165]
Words and Phrases – “Claiming through or under”; “claim”;
“through” and “claiming under”. [Para 137]
Arbitration and Conciliation Act, 1996 – s.9 – Power of the Courts
to issue directions u/s.9:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The group of
companies doctrine is based on determining the mutual intention to join
the non-signatory as a “veritable” party to the arbitration agreement – Once
a tribunal comes to the determination that a non-signatory is a party to
the arbitration agreement, such non-signatory party can apply for interim
measures under s.9 of the Arbitration and Conciliation Act, 1996. [Para 153]
Arbitration and Conciliation Act, 1996 – ss.8 and 11 – Standard of
determination at the referral stage – Stage of applicability of the group
of companies doctrine under the Arbitration Act:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): When a non-
signatory person or entity is arrayed as a party at Section 8 or Section
11 stage, the referral court should prima facie determine the validity or
existence of the arbitration agreement, as the case may be, and leave it for
the arbitral tribunal to decide whether the non-signatory is bound by the
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 627

arbitration agreement – At the referral stage, the referral court should leave
it for the arbitral tribunal to decide whether the non-signatory is bound by
the arbitration agreement. [Paras 163, 165]
Arbitration and Conciliation Act, 1996 – s.7 – Requirement of a
written arbitration agreement u/s.7 – Eﬀect:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The requirement
of a written arbitration agreement u/s.7 does not exclude the possibility of
binding non-signatory parties. [Para 165]
Arbitration – Group of companies doctrine – Whether the
principle of alter ego or piercing the corporate veil can be the basis for
application of the group of companies doctrine:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The principle of
alter ego disregards the corporate separateness and the intentions of the
parties in view of the overriding considerations of equity and good faith –
In contrast, the group of companies doctrine facilitates the identiﬁcation of
the intention of the parties to determine the true parties to the arbitration
agreement without disturbing the legal personality of the entity in question
– The principle of alter ego or piercing the corporate veil cannot be the basis
for the application of the group of companies doctrine. [Paras 104, 165]
Arbitration – Group of companies doctrine – Factors to be
considered for application of the doctrine – Conduct of the non-
signatory parties – Relevance:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The participation
of the non-signatory in the performance of the underlying contract is the
most important factor to be considered by the courts and tribunals – The
intention of the parties to be bound by an arbitration agreement can be gauged
from the circumstances that surround the participation of the non-signatory
party in the negotiation, performance, and termination of the underlying
contract containing such agreement – The non-signatory’s participation in
the negotiation, performance, or termination of the contract can give rise
to the implied consent of it being bound by the contract – Conduct of the
628 SUPREME COURT REPORTS [2023] 15 S.C.R.

non-signatory parties could be an indicator of their consent to be bound by
the arbitration agreement. [Paras 118, 125 and 165]
Arbitration – Arbitration and Conciliation Act, 1996 – s.2(1)(h)
and s.7 – Group of companies doctrine – Has independent existence:
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The group of
companies doctrine has an independent existence as a principle of law
which stems from a harmonious reading of s.2(1)(h) along with s.7 of the
Arbitration Act. [Para 165]
Arbitration and Conciliation Act, 1996 – Group of Companies
doctrine – In Chloro Controls case, a three Judge Bench of Supreme
Court read the said doctrine into the phrase “claiming through or
under” in s.45 of the Arbitration Act – Challenge to.
Held (per Dr. Dhananjaya Y Chandrachud, CJI) (for himself,
Hrishikesh Roy, J B Pardiwala and Manoj Misra, JJ.): The approach of
the Supreme Court in Chloro Controls case to the extent that it traced the
group of companies doctrine to the phrase “claiming through or under” is
erroneous and against the well-established principles of contract law and
corporate law. [Para 165]
Arbitration – Group of companies doctrine – Applicability –
Non-signatory, if party to arbitration agreement – Determination –
Arbitration and Conciliation Act, 1996 – s.7(4)(b).
Held (per Pamidighantam Sri Narasimha, J.) (Concurring with
Dr. Dhananjaya Y Chandrachud, CJI): An agreement to refer disputes
to arbitration must be in a written form, as against an oral agreement, but
need not be signed by the parties – Under s.7(4)(b), a court or arbitral
tribunal will determine whether a non-signatory is a party to an arbitration
agreement by interpreting the express language employed by the parties in
the record of agreement, coupled with surrounding circumstances of the
formation, performance, and discharge of the contract – While interpreting
and constructing the contract, courts or tribunals may adopt well-established
principles, which aid and assist proper adjudication and determination – The
Group of Companies doctrine is one such principle. [Para 56]
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 629

Arbitration – Group of companies doctrine – Arbitration
agreement – Ascertaining the intention of the non-signatory.
Held (per Pamidighantam Sri Narasimha, J.) (Concurring with Dr.
Dhananjaya Y Chandrachud, CJI): The Group of Companies doctrine
is also premised on ascertaining the intention of the non-signatory to be
party to an arbitration agreement – The doctrine requires the intention
to be gathered from additional factors such as direct relationship with
the signatory parties, commonality of subject-matter, composite nature
of the transaction, and performance of the contract. [Para 56]
Arbitration and Conciliation Act, 1996 – s.7(4)(b) – Inquiry by
a court or arbitral tribunal under s.7(4)(b) and Group of companies
doctrine.
Held (per Pamidighantam Sri Narasimha, J.) (Concurring with
Dr. Dhananjaya Y Chandrachud, CJI): Since the purpose of inquiry by a
court or arbitral tribunal u/s.7(4)(b) and the Group of Companies doctrine
is the same, the doctrine can be subsumed within s.7(4)(b) to enable a court
or arbitral tribunal to determine the true intention and consent of the non-
signatory parties to refer the matter to arbitration – The doctrine is subsumed
within the statutory regime of s.7(4)(b) for the purpose of certainty and
systematic development of law. [Para 56]
Arbitration and Conciliation Act, 1996 – ss.2(1)(h), 7, 8 and 45
– Expression “claiming through or under” in ss.8 and 45 – Diﬀerence
from expression ‘party’ in s.2(1)(h) and 7.
Held (per Pamidighantam Sri Narasimha, J.) (Concurring with
Dr. Dhananjaya Y Chandrachud, CJI): The expression “claiming
through or under” in ss.8 and 45 is intended to provide a derivative
right; and it does not enable a non-signatory to become a party to the
arbitration agreement – The decision in Chloro Controls tracing the
Group of Companies doctrine through the phrase “claiming through
or under” in ss.8 and 45 is erroneous – The expression ‘party’ in s.2(1)
(h) and s.7 is distinct from “persons claiming through or under them”.
[Para 56]
630 SUPREME COURT REPORTS [2023] 15 S.C.R.

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121; Roussel-Uclaf v. G D Searle and Co Ltd. [1978] 1 Lloyd’s Rep; The
632 SUPREME COURT REPORTS [2023] 15 S.C.R.

Mayoralty and Commonalty & Citizens of the City of London v. Ashok
Sancheti, [2008] EWCA Civ 1283; Blackpool and Fylde Aero Club Ltd. v.
Blackpool Borough Council, [1990] 1 WLR 1195; Dallah Real Estate and
Tourism Holding Company v. The Ministry of Religious Aﬀairs, Government
of Pakistan [2010] UKSC 46; Manuchar Steel Hong Kong Limited v. Star
Paciﬁc Line Pte Ltd. [2014] SGHC 181; G E Energy Power Conversion
France SAS v. Outokumpu Stainless, 140 S. Ct. 1637 (2020); American
Fuel Corp v. Utah Energy Development Co, Inc, 122 F.3d 130, 134 (2d
Cir 1997); American Bureau, Shipping v. Tencara Shipyard, 170 F.3d 349,
353 (2d Cir 1999); Sunkist Soft Drinks, Inc v. Sunkist Growers, Inc, 10
F.3d 753, 757 (11th Cir 1993) and Grigson v. Creative Artists Agency, LLC,
210 F.3d 524 (2000); United Steelworkers of America v. Warrior and Gulf
Navigation, (1960) 363 US 574, 582; Fiona Trust and Holding Company
v. Privalov [2007] UKHL 40; Salomon v. Salomon [1897] AC 22; D H N
Food Distributors Ltd v. Tower Hamlets London Borough Council [1976]
1 WLR 852; Bank of Tokyo v. Karoon, (1986) 3 All ER 468; Schiﬀahrts–
gesellschaft Detlev von Appen v Voest Alpine Intertrading, [1997] EWCA
Civ 1420; Through Transport Mutual Insurance Association (Eurasia) Ltd
v. New India Assurance Co Ltd. [2005] EWHC 455 (Comm); West Tankers
Inc. v. Allianz Spa, [2012] EWCA Civ 27; Tanning Research Laboratories
Inc v. O’Brien, [1990] HCA 8; Rinehart v. Hancock Prospecting Pty Ltd.
[2019] HCA 13 – referred to.
Law Commission of India, ‘Amendments to the Arbitration and
Conciliation Act 1996’, Report No. 246 (August 2014); Bernard Hanotiau
and Leonardo Ohlrogge, ‘40th Year Anniversary of the Dow Chemical Award’
40(2) ASA Bulletin 300-308; Yves Derains, ‘Is there a Group of Companies
Doctrine?’ in Bernard Hanotiau and Eric Schwartz (eds) in Dossier of the
ICC Institute of World Business Law, Volume 7, 131-145;Audley William
Sheppard, ‘Third Party Non-Signatories in English Arbitration Law’ in
Stavros Brekoulakis, Julian Lew, et al (eds) The Evolution and Future of
International Arbitration (Kluwer Law International, 2016) 183-198; Chitty
on Contracts, Hugh Beale (ed), (32nd edn, Sweet and Maxwell, 2015) para
2-169 and para 1-104; Andrijana Misovic, ‘Binding non-signatories to
arbitrate: the United States approach’ (2021) 37(3) Arbitration International
749-768; Bernard Hanotiau, ‘May an Arbitration Clause be Extended to
Non-signatories: Individuals, States or Other Companies of the Group?’
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 633

in Complex Arbitrations: Multi-party, multi-contract, Multi-issue – A
comparative study’ Bernard Hanotiau (eds) (2nd edn, 2020) 95, 194; Gary
Born, International Arbitration Law and Practice (3rd ed, 2021);Pollock
and Mulla, The Indian Contract and Speciﬁc Reliefs Act (14th edn, 2016)
235; Stavros Brekoulakis, ‘Rethinking Consent in International Commercial
Arbitration: A General Theory for Non-signatories’ (2017) 8 Journal of
International Dispute Settlement 610, 621; UNCITRAL Model Law on
International Commercial Arbitration, Recommendation regarding the
interpretation of article II, paragraph 2, and article VII, paragraph 1, of
the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, done in New York, 10 June 1958, (adopted by the UNCITRAL on
7 July 2006) 39; Redfern and Hunter on International Arbitration (7 th edn,
Oxford University Press, 2023) para 2.23; Jayati Sarkar, ‘Business Groups
in India’ in Asli Coplan, Takashi Hikino, and James Lincoln (eds) The Oxford
Handbook of Business Groups (2010) 299; Bernard Hanotiau, ‘Consent
to Arbitration: Do We Share a Common Vision?’ (2011) 27(4) Arbitration
International 539, 554; Stavros Brekoulakis, ‘Parties in International
Arbitration: Consent v. Commercial Reality’ in Stavros Brekoulakis,
Julian DM Lew, et al (eds) in ‘The Evolution and Future of International
Arbitration’ (2016) 119, 120; UNCITRAL, ‘Settlement of Commercial
Disputes: Possible uniform rules on certain issues concerning settlement of
commercial disputes: conciliation, interim measures of protection, written
form of arbitration agreement: Report of the Secretary General’ A/CN.9/
WG.II/WP.108/Add.1 (26 January 2000); Stavros Brekoulakis, ‘Parties
in International Arbitration: Consent v. Commercial Reality’ in Stavros
Brekoulakis, Julian DM Lew, et al (eds) ‘The Evolution and Future of
International Arbitration’ (2016) 119, 137, 148; UNIDROIT Principles of
International Commercial Contracts, 2016, Article 4.3; Stavros Brekoulakis,
‘Rethinking Consent in International Commercial Arbitration: A General
Theory for Non-signatories’ (2017) 8 Journal of International Dispute
Settlement 610, 621; Karim Youssef, ‘The Limits of Consent: The Right
or Obligation to Arbitrate of Non-Signatories in Group of Companies’ in
Multiparty Arbitration: Dossiers of the ICC Institute of Worlds Business
Law, Volume 7 (2010) 71, 79; Russel on Arbitration (23rd edn, 2007) 99 para
3-018; Vicky Priskich, ‘Binding non-signatories to arbitration agreements
– who are person ‘claiming through or under’ a party?’ (2019) 35(3)
634 SUPREME COURT REPORTS [2023] 15 S.C.R.

Arbitration International 375-386; Black’s Law Dictionary (5 th edn, 1979)
224; P Ramanatha Aiyar’s, The Law Lexicon (1997) 330, 331; Black’s Law
Dictionary (5th edn, 1979) 1328; Ronald Dworkin, Law’s Empire (Belknap
Press, Harvard University Press 1986) 229 – referred to.
In the judgment of Pamidighantam Sri Narasimha, J.
Chloro Controls India (P) Ltd. v. Severn Trent Water Puriﬁcation
Inc., (2013) 1 SCC 641:[2013] 1 SCR 698 – held erroneous.
Cox and Kings Ltd v. SAP India Pvt Ltd. (2022) 8 SCC 1; Vidya Drolia
v. Durga Trading Corporation, (2021) 2 SCC 1 : [2020] 11 SCR 1001;
Gemini Bay Transcription Pvt Ltd v. Integrated Sales Service Ltd. (2022)
1 SCC 753; Jugal Kishore Rameshwardas v. Goolbai Hormusji [1955] 2
SCR 857; Caravel Shipping Services (P) Ltd v. Premier Sea Foods Exim
(P) Ltd. (2019) 11 SCC 461 : [2018] 14 SCR 289; Rickmers Verwaltung
Gmbh v. Indian Oil Corporation Ltd. (1999) 1 SCC 1 : [1998] 3 Suppl.
SCR 42; MTNL v. Canara Bank, (2020) 12 SCC 767 : [2019] 11 SCR 660;
Babanrao Rajaram Pund v. Samarth Builders and Developers, (2022) 9
SCC 691; KK Modi v. KN Modi, (1998) 3 SCC 573 : [1998] 1 SCR 601;
Bihar State Mineral Development Corporation v. Encon Builders (I) Pvt
Ltd. (2003) 7 SCC 418 : [2003] 2 Suppl. SCR 812; Shakti Bhog Foods
v. Kola Shipping Ltd. (2009) 2 SCC 134 : [2008] 13 SCR 925; Smita
Conductors v. Euro Alloys, (2001) 7 SCC 728 : [2001] 2 Suppl. SCR 477;
Unissi (India) Pvt Ltd v. Post Graduate Institute of Medical Education
and Research (2009) 1 SCC 107 : [2008] 14 SCR 108; Powertech World
Wide Ltd v. Delvin international General Trading LLC (2012) 1 SCC 361
: [2011] 13 SCR 122; Govind Rubber v. Louids Dreyfus Commodities
Asia Pvt Ltd. (2015) 13 SCC 477: [2014] 12 SCR 488; Nimet Resources
Inc v. Essar Steels Ltd, (2000) 7 SCC 497; Bangalore Electricity Supply
Company Ltd (BESCOM) v. E.S. Solar Power Pvt Ltd. (2021) 6 SCC 718;
Food Corporation of India v. Abhijit Paul 2022 SCC OnLine SC 1605;
Bank of India v. K. Mohandas (2009) 5 SCC 313 : [2009] 5 SCR 118;
Godhra Electricity Co Ltd v. State of Gujarat (1975) 1 SCC 199 : [1975]
2 SCR 42; McDermott International Inc v. Burn Standard Co Ltd. (2006)
11 SCC 181 : [2006] 2 Suppl. SCR 409; ONGC v. Saw Pipes Ltd. (2003)
5 SCC 705 : [2003] 3 SCR 691; Roop Kumar v. Mohan Thedani (2003)
6 SCC 595 : [2003] 3 SCR 292; Sukanya Holdings v. Jayesh H Pandya
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 635

(2003) 5 SCC 531 : [2003] 3 SCR 558; Indowind Energy Ltd v. Wescare
(India) Ltd. (2010) 5 SCC 306 : [2010] 5 SCR 284; Duro Felguera, S.A.
v. Gangavaram Port Ltd. (2017) 9 SCC 729 : [2017] 10 SCR 285; Cheran
Properties Ltd v. Kasturi and Sons Ltd. (2018) 16 SCC 413 : [2018] 4
SCR 1063; Ameet Lalchand Shah v. Rishabh Enterprises (2018) 15 SCC
678 : [2018] 6 SCR 1001; ONGC v. Discovery Enterprises Pvt Ltd. (2022)
8 SCC 42; Reckitt Benckiser (India) Pvt Ltd v. Reynders Label Printing
India Pvt Ltd. (2019) 7 SCC 62 : [2019] 8 SCR 966; MTNL v. Canara
Bank (2020) 12 SCC 767: [2019] 11 SCR 660 – referred to.
Dow Chemical v. Isover Saint Gobain. ICC Case No. 4131, 23
September 1982; Dallah Real Estate and Tourism Holding Co. v. Ministry
of Religious Aﬀairs, Government of Pakistan Case No. 9-28533, dated
17 February 2011 (Paris Cour d’Appel), [2010] UKSC 46; Malakoﬀ
Corporation Berhad and TLEMCEN Desalination Investment Company
v. Algerian Energy Company SA and Hyﬂux Limited, Case No. 21-07296,
dated 13 June 2023 (Paris Cour d’Appel); Peterson Farms Inc v. C&M
Farming Ltd. [2004] EWHC 121 (Comm); Mayor and Commonalty &
Citizens of the City of London v. Ashok Sancheti, [2008] EWCA Civ 1283;
Bank of Tokyo Ltd v. Karoon, [1987] AC 45; Kabab-Ji SAL (Lebanon) v.
Kout Food Group (Kuwait), [2021] UKSC 48; Manuchar Steel Hong Kong
Ltd v. Star Paciﬁc Line Pte Ltd. [2014] SGHC 181; GE Energy Power
Conversion France SAS Corp., FKA Converteam SAS v. Outokumpu
Stainless USA, LLC, et al., Case No. 18-1048 (1 June 2020); McBro
Planning & Dev. Co. v. Triangle Elec. Constr. Co. Inc., 741 F.2d 342 (11th
Cir. 1984); Nauru Phosphate Royalties, Inc. v. Drago Daic Interests, Inc.
138 F.3d 160 (5th Cir. 1998); Sarhank Group v. Oracle Corp, 404 F. 3d
657 (2nd Cir. 2005) – referred to.
Lewison, The Interpretation of Contracts (6th edn, Sweet and
Maxwell 2016) para 2.01, 27; Gary Born, International Commercial
Arbitration, vol 1 (3rd edn, Kluwer Law International 2021) 1531; Bernard
Hanotiau, ‘Chapter 14: Group of Companies in International Arbitration’
in Loukas A. Mistelis and Julian D.M. Lew (ed), Pervasive Problems in
International Arbitration, vol 15 (Kluwer Law International 2006), 286;
Bernard Hanotiau, ‘Consent to Arbitration: Do We Share a Common
Vision?’ (2011) 27(4) Arbitration International 539 – referred to.
636 SUPREME COURT REPORTS [2023] 15 S.C.R.

OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL ORIGINAL/APPELLATE JURISDICTION: Arbitration
Petition (Civil) No. 38 of 2020.

Petition for Appointment of the Arbitral Tribunal under Section 11(6),
Section 11(12)(a) of the Arbitration and Conciliation Act, 1996.
With
SLP (C) Nos. 8607 and 5833 of 2022.
Appearances:
Nakul Dewan, Sanjoy Ghose, Sr. Advs., Hiroo Advani, Divyakant
Lahoti, Ms. Madhur Jhavar, Ms. Vindhya Mehra, Parikshit Ahuja,
Ms. Praveena Bisht, Kartik Lahoti, Ms. Garima Verma, Rahul Maheshwari,
Ms. Shivangi Malhotra, Navdeep Dahiya, Ms. Sanjana Khatri, Ms. Ria
Garg, Manav Nagpal, Karandeep Dahiya, Jeevan Ballav Panda, Ms. Shalini
Sati Prasad, Satish Padhi, Ms. Meher Tandon, Gaurav Sharma, Ms. Dhriti
Mehta, Rohan Naik, Ms. Nooreen Sarna, Neil Chatterjee, Ms. Tansi Fotedar,
Sathvik Chandrashekhar, Rohan Mandal, M/s. Khaitan & Co., Nagarkatti
Kartik Uday, Advs. for the Petitioner.
Tushar Mehta, SG, Darius J. Khambata, Ritin Rai, Ms. Meenakshi
Arora, Sr. Advs., Rajat Nair, Kartikey Agarwal, Parantap Singh, Rohit,
Rohan Batra, Ms. Sonali Malik, Harsh Vardhan Arora, Tushar Hathiramani,
Rishabh Bhargava, Dhruv Sethi, Ms. Vidhi Shah, Farhad Sorabjee, Dheeraj
Nair, Manish Jha, Kumar Kislay, Pratik Pawar, Siddhesh Pradhan, Ms.
Shanaya Cyrus Irani, Ms. Aishna Jain, Yashvardhan, Ms. Smita Kant, Apoorv
Shukla, Puneet Chahar, Ms. Prabhleen A. Shukla, Ms. Ishita Farsaiya, Ms.
Kritika Nagpal, Chandratanay Chaube, Tushar Arora, Anirudh Krishnan,
Balaji Srinivasan, Shiva Krishnamurti, Ms. Gauri Pasricha, Devamshu
Behl, Rohan Dewan, Advs. for the Respondents.
Kapil Sibal, Dr. A.M. Singhvi, A.N. Haksar, Sr. Advs., Ajay Bhargava,
Mrs. Vanita Bhargava, Aseem Chaturvedi, Ms. Trishala Trivedi, Milind
Sharma, Ms. Manisha Singh, M/s. Khaitan & Co., Ujjwal A. Rana,
Himanshu Mehta for M/s. Gagrat and Co, Pallav Mongia, Debesh Panda,
Pratyush Miglani, Omar Ahmad, Pranav Mago, Udbhav Gady, Ms.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 637

Chandrika Sharma, Sri Aditya Kumar, Kanishk Aggarwal, Vas Dev Verma,
George Pothan Poothicote, Ms. Manisha Singh, Ms. Jyoti Singh, Ashu
Pathak, Arunava Mukherjee, Advs. for the Intervenors.

JUDGMENT / ORDER OF THE SUPREME COURT

JUDGMENT
DR. DHANANJAYA Y CHANDRACHUD, CJI
Table of Contents*
A. The reference .............................................................................4
B. Submissions ...............................................................................7
C. Legal background ....................................................................16
i. India........ ..............................................................................16
a. Chloro Controls.................................................................20
b. Development of Law after Chloro Controls .....................24
ii. France – The Dow Chemicals case .....................................29
iii. Switzerland .........................................................................33
iv. England ..............................................................................34
v. Singapore .............................................................................37
vi. United States of America ....................................................38
D. Arbitration Agreement .............................................................41
i. Consent as the basis for arbitration ......................................41
ii. Parties to Arbitration Agreement .........................................45
E. Group of Companies Doctrine .................................................56
i. Separate legal personality .....................................................56
ii. Adopting a pragmatic approach to consent .........................61
iii. Group of companies doctrine – a fact based doctrine ........66
*Ed. Note: The pagination as per the original Judgment.
638 SUPREME COURT REPORTS [2023] 15 S.C.R.

iv. The determination of mutual intention ...............................70
v. Threshold standard ...............................................................80
F. The group of companies doctrine has independent
existence ..............................................................................85
i. Party and Persons “claiming through or under” are
diﬀerent ..............................................................................88
ii. The approach adopted by this Court in Chloro
Controls is Incorrect ................................................................92
iii. Power of the Courts to issue directions under
Section....... ..............................................................................97
G. The standard of determination at the referral stage –
Sections 8 and 11 .....................................................................98
H. Conclusions ...........................................................................104
A. The reference
1. More than a century ago, James Joyce published Ulysses. Joyce
experimented with the narrative technique by extensively using a stream
of consciousness. In its modernist narrative technique, Ulysses is feted
by literary critics and novelists as a literary masterpiece. Novelists such
as Vladimir Nabokov and T S Elliot eulogized it as a divine work of art.
However, others such as Virginia Woolf and Aldous Huxley criticized the
novel for being technical and boring. Despite the varied criticism, the legacy
of Ulysses endures particularly because its experimental narrative technique
challenged the conventional literary style. Similar is the case of the group of
companies doctrine – a modern theory which challenges the conventional
notions of arbitration law. It is celebrated by some, reviled by many others.
Yet, its legacy continues.
2. Five judges of this Court are called upon to determine the validity of
the ‘Group of Companies’ doctrine in the jurisprudence of Indian arbitration.

*Ed. Note: The pagination as per the original Judgment.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 639
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

The doctrine provides that an arbitration agreement which is entered into by
a company within a group of companies may bind non-signatory aﬃliates,
if the circumstances are such as to demonstrate the mutual intention of the
parties to bind both signatories and non-signatories. This doctrine is called
into question purportedly on the ground that it interferes with the established
legal principles such as party autonomy, privity of contract, and separate
legal personality. The challenge before this Court is to ﬁgure out whether
there can be a reconciliation between the group of companies doctrine and
well settled legal principles of corporate law and contract law.
3. A Bench of three Judges of this Court, while considering an
application under Section 11(6) of the Arbitration Act and Conciliation
19961, sought to reexamine the validity of the group of companies doctrine
in the Indian context on the ground that it is premised more on economic
eﬃciency rather than law. The Bench of three judges (speaking through the
majority opinion authored by Chief Justice N. V. Ramana (as he was then),
and the concurring opinion by Justice Surya Kant) doubted the correctness
of the application of the doctrine by the Indian courts.
4. Chief Justice Ramana criticised the approach of a three-Judge Bench
of this Court in Chloro Controls India (P) Ltd v. Severn Trent Water
Puriﬁcation Inc2 of relying upon the phrase “claiming through or under” in
Section 45 of the Arbitration Act to adopt the group of companies doctrine.
He noted that the subsequent decisions of this Court established the doctrine
in Sections 8 and 35 without adequately examining the interpretation of
the phrase “claiming through or under” appearing in those provisions.
These decisions include: Cheran Properties Ltd v. Kasturi and Sons
Ltd3, Mahanagar Telephone Nigam Ltd. v. Canara Bank4, and Oil and
Natural Gas Corporation Ltd v. Discovery Enterprises Pvt. Ltd. 5 He
also observed that economic concepts such as tight group structure and
single economic unit alone cannot be utilized to bind a non-signatory to an
arbitration agreement in the absence of an express consent. Consequently, he

1 “Arbitration Act”
2 (2013) 1 SCC 641
3 (2018) 16 SCC 413
4 (2020) 12 SCC 767
5 (2022) 8 SCC 42
640 SUPREME COURT REPORTS [2023] 15 S.C.R.

referred the matter to the larger Bench to seek clarity on the interpretation
of the phrase “claiming through or under” appearing under Sections 8, 35,
and 45 of the Arbitration Act by formulating the following two questions:
a. Whether the phrase ‘claiming through or under’ in Sections 8
and 116 could be interpreted to include the ‘Group of Companies’
doctrine; and
b. Whether the ‘Group of Companies’ doctrine as expounded by
Chloro Controls Case (supra) and subsequent judgments is valid
in law.
5. In a concurring opinion, Justice Surya Kant observed that the
decisions of this Court before Chloro Controls (supra), rendered in
Sukanya Holdings (P) Ltd v. Jayesh H Pandya7 and Indowind Energy
Ltd v. Wescare (I) Ltd,8 adopted a “rigid” and “restrictive” approach by
placing undue emphasis on formal consent. Justice Surya Kant traced the
evolution of the group of companies doctrine to observe it had gained a
ﬁrm footing in Indian jurisprudence. However, he opined that that this
Court adopted inconsistent approaches while applying the doctrine in India,
which needed to be clariﬁed by a larger Bench. Accordingly, he highlighted
the following questions of law for determination by the larger Bench:
a. Whether the Group of Companies Doctrine should be read into
Section 8 of the Act or whether it can exist in Indian jurisprudence
independent of any statutory provision;
b. Whether the Group of Companies Doctrine should continue to be
invoked on the basis of the principle of ‘single economic reality’;
c. Whether the Group of Companies Doctrine should be construed
as a means of interpreting implied consent or intent to arbitrate
between the parties; and

6 The reference to Section 11 seems inadvertent as the phrase “claiming through or
under” is not found in the said provision. Rather, Section 11 ought to be read as Section
45 where the phrase “claiming through or under” appears.
7 (2003) 5 SCC 531
8 (2010) 5 SCC 306
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 641
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

d. Whether the principles of alter ego and/or piercing the corporate
veil can alone justify pressing the Group of Companies Doctrine
into operation even in the absence of implied consent.
6. We are not reproducing the factual matrix of the case, as we have
been called upon to settle the broader legal issues raised in the reference. In
the process, we will answer the above legal issues, as well as other ancillary
issues that have been raised before us by counsel.
B. Submissions
7. Mr Hiroo Advani, learned counsel appearing for the petitioner in
Arbitration Petition No. 38 of 2020, made the following submissions:
a. The basis for the application of the group of companies doctrine
is the tacit or implied consent by the non-signatory to be bound by
the arbitration agreement;
b. The deﬁnition of “party” under Section 2(1)(h) of the Arbitration Act
cannot be restricted to the signatories to an arbitration agreement.
The deﬁnition should be read expansively to also include non-
signatories depending upon the facts and circumstances;
c. Section 7 of the Arbitration Act provides that the deﬁned legal
relationship between the parties may be non-contractual as well.
Moreover, Section 7(4)(b) indicates that a non-signatory could
be bound by an arbitration agreement if in the course of a written
communication, it has demonstrated an intention to be bound by
the agreement; and
d. The group of companies doctrine should ideally be applied by the
arbitral tribunal. At the stage of referral, the court should merely take
a prima facie view and leave it for the arbitral tribunal to determine
the necessity of joining the non-signatories to the arbitration
agreement.
8. Mr Darius J Khambata, learned senior counsel appearing for the
respondents in SLP (C) No. 8607 of 2022, made the following submissions:
a. The applicability of the group of companies doctrine must be
examined from the touchstone of whether a non-signatory could be
642 SUPREME COURT REPORTS [2023] 15 S.C.R.

made a party to the arbitration agreement. The expression “claiming
through or under” a party cannot be the basis to apply the doctrine;
b. The doctrine is a consensual theory premised on the existence
of a dispute arising from a deﬁned legal relationship and mutual
intention of the parties to be bound by the arbitration agreement.
The intention of the non-signatory has to be ascertained from the
cumulative factors laid down in Chloro Controls (supra);
c. The following requirements must be met for the application of
the group of companies doctrine to bind the non-signatory as a
“veritable” party to the arbitration agreement:
i. mutual intention of all the parties, both signatories and non-
signatories, to be bound by the arbitration agreement;
ii. absolute and unqualiﬁed acceptance by the non-signatory party
to the arbitration agreement; and
iii. such acceptance must either be expressed or implied. In the
context of a non-signatory, such acceptance will be implied and
manifested in the negotiation, performance, or termination of the
contract;
d. Mutual consent of the parties to refer disputes arising out of their
deﬁned legal relationship to arbitration is the essential ingredient
of an arbitration agreement. It would be against the concept of
party autonomy to bind a non-signatory to an arbitration agreement
without ascertaining their consent;
e. The concept of “party” to an arbitration agreement is distinct
from the concept of “person claiming through or under” a party.
The latter expression conveys the notion of a derivative cause of
action where the non-signatory steps into the shoes of the party
rather than claiming an independent right under the agreement.
The typical scenarios where a person claims through or under a
party are assignment, subrogation, and novation; and
f. Concepts such as ‘tight group structure’ and ‘single economic
unit’ cannot be the sole basis to invoke the group of companies
doctrine. This doctrine cannot be applied to bind a non-signatory
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 643
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

merely on account of it being under the ownership, control, or
supervision of the signatory party;
9. Dr A M Singhvi, learned senior counsel appearing for the
interveners in IA No. 92757 of 2022, made the following submissions:
a. The group of companies doctrine constitutes a true and genuine
eﬀectuation of the real intent of the parties to subject both the signatory
and non-signatory parties to the arbitration agreement;
b. The doctrine is a reasonable and natural extension of the principle
of piercing the corporate veil. The application of the doctrine is also
justiﬁed in aﬃxing responsibility when the requisite and suﬃcient
degree of common ownership and control exists;
c. The intention of the parties cannot be the only basis to join a non-
signatory party to an arbitration agreement. The court can also consider
non-consensual doctrines such as piercing the corporate veil, alter ego,
or tight group structure; and
d. The Arbitration Act does not prohibit or inhibit the adoption of the
group of companies doctrine in Indian arbitration jurisprudence. On
the contrary, Section 7 of the Arbitration Act provides an expansive
concept of an arbitration agreement. Moreover, the legislature
speciﬁcally amended Section 8 of the Arbitration Act by inserting
the words “any person claiming through or under” to recognize and
codify the reality of non-signatories acting through or under the
signatory parties.
10. Mr Kapil Sibal, learned senior counsel appearing for the intervener
in IA No. 56615 of 2023, made the following submissions:
a. A non-signatory can be impleaded in an arbitration proceeding
provided: (i) there is a deﬁned legal relationship between the non-
signatory and the parties to the arbitration agreement; and (ii) the non-
signatory consented to be bound by the arbitration agreement in terms
of Section 7 of the Arbitration Act;
b. The onus to prove the intention of the non-signatory to be bound by
the arbitration agreement lies on the party seeking to implead the non-
signatory;
644 SUPREME COURT REPORTS [2023] 15 S.C.R.

c. In view of the requirement under Section 7 of the Arbitration Act, an
arbitration agreement has to be in writing and there cannot be an oral
agreement to arbitrate. Regardless, the intention of the non-signatory to
be bound by the arbitration agreement can be gathered from conduct;
d. Arbitration is in the realm of private law, and a matter of choice
and intent of the parties. Therefore, factors such as economic
convenience, justice, or equity cannot be grounds for binding
non-signatories to an arbitration agreement; and
e. The cumulative factors laid down by this Court in Discovery
Enterprises (supra) cannot be considered in isolation, and must
be applied holistically to determine the applicability of the group
of companies doctrine in a given factual matrix.
11. Mr Nakul Dewan, learned senior counsel appearing for the
respondent in SLP (C) No. 8607 of 2022, made the following submissions:
a. The group of companies doctrine and single economic entity
doctrine are purely economic concepts without any basis in either
contract law or company law. Therefore, they cannot be applied
to determine the intention of non-signatories to be bound by an
arbitration agreement;
b. The decision of a party to not sign the arbitration agreement may
form the basis to demonstrate an intent not to be bound by it;
c. The mere factum of multiple agreements or that the non-signatory
was involved in the negotiation of the contract cannot form the
basis to bind it to the arbitration agreement;
d. The phrase “claiming through or under” which ﬁnds mention
under Sections 8 and 45 of the Arbitration Act cannot be the
basis for the application of the group of companies doctrine; and
e. The determination of the intention of parties to a contract should
relate only to the intention held at the time of entering into the
contract, which can be gathered objectively from the text of the
contract. However, Chloro Controls (supra) which considers
consequential or subsequent agreements to determine the mutual
intention of the parties is incorrect.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 645
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

12. Mr Ritin Rai, learned senior counsel appearing for the respondent
in Arbitration Petition No. 38 of 2020, made the following submissions:
a. Section 7 of the Arbitration Act requires the arbitration agreement to
be in writing. Therefore, an arbitration agreement cannot be created
on the basis of implied consent of the non-signatory;
b. Complex multi-party contracts are outcomes of detailed negotiations
entered into after parties have fully applied their mind. To impute
intention to parties in contradiction to the express terms of the
agreement would defeat the purpose of the parties’ memorializing
their understanding in a negotiated, written document;
c. An arbitration agreement which sets out the executing parties and
the arbitral procedure agreed among them cannot be read to expand
its reach to third parties;
d. The group of companies doctrine cannot be traced to the phrase
“claiming through or under” as provided under Sections 8 and 45
of the Arbitration Act; and
e. Chloro Controls (supra) erroneously failed to consider whether
an implied consent derived from the conduct of a non-signatory
satisﬁed the requirement of a clear intention to arbitrate. Moreover,
Chloro Controls (supra) wrongly held that the courts have the
discretion to refer non-signatory parties to arbitration under Sections
8 or 45 of the Arbitration Act in exceptional cases. The introduction
of such a discretion brings in uncertainty in the arbitration practice
in India.
13. Mr Tushar Mehta, learned Solicitor General appearing on behalf
of the Union of India, made the following submissions:
a. Since India follows the UNCITRAL Model Law, concepts of
‘commercial element’ and ‘business prudence’ have to be considered
while interpreting the provisions of the Arbitration Act;
b. The group of companies doctrine is inbuilt in the overall scheme
of the Arbitration Act. Section 7 uses the broad phrase “deﬁned
relationship whether contractual or otherwise” to convey that an
arbitration agreement is not restricted to a conventional agreement;
646 SUPREME COURT REPORTS [2023] 15 S.C.R.

c. The insertion of the words “claiming through or under” in Section
8 of the Arbitration Act is merely in furtherance of the legislative
intent to confer locus on yet another category of persons to insist that
the judicial authority must refer the dispute before it to arbitration;
and
d. If the referral court under Sections 8 and 11 cannot prima facie
determine the issue of joinder of a non-signatory to the arbitration
agreement on the basis of the group of companies doctrine, it can
refer the issue to be decided by the arbitral tribunal.
14. Mr Sanjoy Ghose, learned senior counsel appearing on behalf of
the petitioner in SLP (C) No. 8607 of 2022, made the following submissions:
a. Section 2(1)(h) uses the term “party” and not “signatory” to account
for situations where a non-signatory enters the shoes of a signatory
party either by succession, operation of law, assignment, or death;
and
b. The group of companies doctrine contravenes the provisions of
corporate law by ﬁxing liability on an entity that is not a party to
an arbitration agreement. Mere participation in the negotiation or
performance of the contract cannot bind a non-signatory to the
arbitration agreement in the absence of express consent.
15. Mr Pallav Mongia, learned advocate on behalf of the interveners
in IA No. 58168 of 2023, submitted that Section 2(1)(h) of the Arbitration
Act does not restrict the deﬁnition of parties to “signatories”. Rather, the
deﬁnition has to be inferred from Section 7. Section 7(4) expands the
deﬁnition of parties to non-signatories.
16. Ms Meenakshi Arora, learned senior counsel on behalf of the
respondent in SLP (C) No. 8607 of 2022, argued for de-tagging of SLP (C)
No. 8607 of 2022 from the lead matter, that is Arbitration Petition No. 38
of 2020, as the former deals with power of the courts to issue directions
under Section 9 of the Arbitration Act against third parties. Further, the
learned senior counsel submitted that the courts can take aid of the group
of companies doctrine to issue interim directions against non-signatories
to the arbitration agreement.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 647
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

17. The arguments advanced by advocates on both sides of the aisle
indicate that this Constitution Bench has been primarily called upon
to determine the validity of the group of companies doctrine in Indian
arbitration jurisprudence. However, there are other broad ancillary issues
which have been raised by the learned counsel. These include: (i) whether the
Arbitration Act allows joinder of a non-signatory as a party to an arbitration
agreement; and, (ii) whether Section 7 of the Arbitration Act allows for
determination of an intention to arbitrate on the basis of the conduct of
the parties. This Bench will address the issues arising out of the order of
reference as well as the above-mentioned ancillary issues in due course.
C. Legal background
i. India
18. Before the enactment of the Arbitration Act, the law on
arbitration was substantially contained in the Arbitration Act of 1940, 9 the
Arbitration (Protocol and Convention) Act of 1937, and the Foreign Awards
(Recognition and Enforcement) Act of 1961. In 1978, the Law Commission
of India suggested substantive amendments to the 1940 Act. Moreover,
the United Nations Commission on International Trade Law10 adopted the
Model Law on International Commercial Arbitration in 1985.11 The General
Assembly of the United Nations recommended all the Member States to
adopt the UNCITRAL Model Law in their domestic legislation with a view
to uniformize the law of arbitral procedures.12 The Arbitration Act was
enacted to consolidate and amend the law relating to arbitration. It brought
the law relating to domestic and international commercial arbitration in
consonance with the UNCITRAL Model Law, the New York Convention,
and the Geneva Convention.
19. Section 2(1)(h) of the Arbitration Act deﬁnes a “party” to mean “a
party to an arbitration agreement.” An “arbitration agreement” is deﬁned

9 “1940 Act”
10 “UNCITRAL”
11 “UNCITRAL Model Law”
12 UN General Assembly, Fortieth Session, ‘Model Law on International Commercial
Arbitration of the United Nations Commission on International Trade Law’ 40/72
(1985)
648 SUPREME COURT REPORTS [2023] 15 S.C.R.

under Section 2(1)(b) to mean “an agreement referred to in Section 7.”
Section 7 lays down the essential elements of a valid and binding arbitration
agreement. It deﬁnes an arbitration agreement as an agreement by the parties
to submit to arbitration all or certain disputes which have arisen or which
may arise between them in respect of a deﬁned legal relationship, whether
contractual or not. The provision also mandates that an arbitration agreement
shall be in writing. An arbitration agreement is in writing if it is contained in:
(a) a document signed by the parties;
(b) an exchange of letters, telexes, telegrams, or other means of
telecommunication including communication through electronic means
which provide a record of the agreement; or
(c) an exchange of statements of claim and defense in which the
existence of the agreement in alleged by one party and not denied by
the other.
Section 7(5) further stipulates that the reference in a contract to a
document containing an arbitration clause constitutes an arbitration
agreement if two conditions are satisﬁed. These conditions are ﬁrst,
that the contract is in writing; and second, that the reference is such
as to make the arbitration clause part of the contract.
20. An arbitration agreement, being a creature of contract,13 is based
on the consent of parties to submit their disputes to an alternate dispute
resolution mechanism. Generally, a party to an arbitration agreement is
determined on the basis of persons or entities who are signatories to the
arbitration agreement or the underlying contract containing the arbitration
agreement. However, over the past two decades the law on joinder of non-
signatory parties has evolved substantially. The evolution could roughly be
classiﬁed into two stages: before Chloro Controls (supra) and after Chloro
Controls (supra).
21. In the pre Chloro Controls (supra) era, this Court construed
“parties” by limiting it only to the signatories to the arbitration agreement. In
Sukanya Holdings (supra) the applicant ﬁled an application under Section

13 Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd,
(2022) 1 SCC 75
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 649
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

8 of the Arbitration Act before the High Court and sought to enforce the
arbitration agreement against both the signatories and non-signatories to the
agreement. The High Court rejected the application on the ground that the
non-signatories were not parties to the arbitration agreement. In appeal, this
Court upheld the decision of the High Court by observing that there is no
provision under the Arbitration Act stipulating what is required to be done
where some parties to the suit are not parties to the arbitration agreement.
In Sumitomo Corporation v. CDC Financial Services (Mauritius) Ltd,14
this Court, while dealing with an international commercial arbitration held
that a “party” to an arbitration agreement means a party to the judicial
proceedings. This was expressly held to be erroneous in Chloro Controls
(supra), where it was held that “party” has to be construed in view of Section
2(1)(h) to mean a party to an arbitration agreement.
22. The interpretation of the expression “party” as deﬁned under
Section 2(1)(h) came up for the consideration of this Court in Indowind
Energy Ltd (supra). In that case, an agreement of sale was entered into
by the ﬁrst and second respondents. The agreement described the second
respondent as the ‘buyer’ and promoter of Indowind, the non-signatory. After
a dispute arose, the ﬁrst respondent instituted an application under Section
11(6) of the Arbitration Act against the second respondent and Indowind.
Indowind resisted the impleadment on the ground that it was not a party
to the underlying sale agreement and, therefore, had not consented to be
bound by the arbitration clause. The issue before this Court was whether
the arbitration agreement contained in the sale agreement was binding on
Indowind. This Court refused to join Indowind to the arbitration agreement
on the ground that (i) Indowind was not a signatory to the sale agreement;
(ii) Indowind and the promoter company were two independent companies
with a separate and distinct legal existence; and (iii) the fact that Indowind
did not sign the sale agreement indicated that it was the mutual intention of
all the parties to not make it a party to the arbitration agreement.
23. The pre Chloro Controls (supra) position was characterized by
three underlying precepts: (i) arbitration could be invoked at the instance
of a signatory to the arbitration agreement only in respect to disputes with

14 (2008) 4 SCC 91
650 SUPREME COURT REPORTS [2023] 15 S.C.R.

another signatory party;15 (ii) the court would adopt a strict interpretation
of the provisions of the Arbitration Act, particularly the unamended Section
8 which only allowed reference of “parties” to an arbitration agreement;
and (iii) there was an emphasis on formal consent of the parties, thereby
excluding any scope for implied consent of the non-signatories to be bound
by an arbitration agreement. This position of law underwent a signiﬁcant
change when a Bench of three Judges of this Court in Chloro Controls
(supra) allowed joinder of non-signatory parties to the arbitration agreement
on the basis of the group of companies doctrine.
a. Chloro Controls
24. In Chloro Controls (supra) this Court was called upon to
determine an arbitral reference in case of multi-party agreements where
performance of the ancillary agreements was substantially dependent upon
eﬀective execution of the principal agreement. In that case, a foreign entity
and an Indian entity incorporated a joint venture company to market and
distribute chlorination equipment. With respect to the joint venture, the
related companies of both the Indian and foreign entity were also involved.
Consequently, the parties concluded several ancillary agreements such as
a Shareholders’ Agreement which contained an arbitration clause. All the
contracting parties were not signatories to all the agreements, including the
Shareholders’ Agreement. When disputes arose between the parties, the
foreign entities sought to terminate the joint venture. The Indian entity ﬁled
an application before the High Court seeking a declaration to restrain the
foreign entities from repudiating their obligations under the agreements. In
response, the foreign entities applied for referring the disputes to arbitration
in view of the fact that the agreements were binding on the non-signatories
because of the composite nature of the transaction. A Single Judge of the
High Court granted the application of the Indian entity, which was set aside
by the Division Bench of the High Court. The primary issue before this Court
pertained to the ambit and scope of Section 45 of the Arbitration Act. This
Court framed the issue in the following terms:
“1.3. Whether in a case where multiple agreements are signed between
diﬀerent parties and where some contain an arbitration clause and

15 S N Prasad v. Monnet Finance Ltd, (2011) 1 SCC 320
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 651
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

others do not and further the parties are not identically common in
proceedings before the court (in a suit) and the arbitration agreement,
a reference of disputes as a whole or in part can be made to the Arbitral
Tribunal, more particularly, where the parties to an action are claiming
under or through a party to the arbitration agreement”
25. Section 45 of the Arbitration Act in its unamended form read as
follows:
“45. Power of judicial authority to refer parties to arbitration.—
Notwithstanding anything contained in Part I or in the Code of Civil
Procedure, 1908 (5 of 1908), a judicial authority, when seized of
an action in a matter in respect of which the parties have made an
agreement referred to in Section 44, shall, at the request of one of
the parties or any person claiming through or under him, refer
the parties to arbitration, that the said agreement is null and void,
inoperative or incapable of being performed.”
(emphasis supplied)
In view of the language of Section 45, this Court held that the
expression “any person” reﬂects a legislative intent of enlarging the scope
beyond “parties” who are signatories to the arbitration agreement to include
non-signatories. However, the court noted that such non-signatory parties are
required to claim “through or under the signatory party.” Thus, this Court
accepted that arbitration is possible between a signatory to an arbitration
agreement and a third party or non-signatory claiming through a party.
26. The next issue before this Court was to determine whether there
was any legal relationship between the signatory and the non-signatory for
the latter to “claim through or under” the former. The court noted that the
group of companies doctrine has been developed by courts and tribunals in
the international context to bind a non-signatory aﬃliate or sister concern
within the same corporate group as the signatory party, to an arbitration
agreement provided there was a mutual intention of all the parties. This court
emphasized that the “intention of the parties” is the underlying principle for
the application of the group of companies doctrine. It observed:
“72. This evolves the principle that a non-signatory party could be
subjected to arbitration provided these transactions were with group of
652 SUPREME COURT REPORTS [2023] 15 S.C.R.

companies and there was a clear intention of the parties to bind both,
the signatory as well as the non-signatory parties. In other words,
“intention of the parties” is a very signiﬁcant feature which must
be established before the scope of arbitration can be said to include
the signatory as well as the non-signatory parties.”
(emphasis supplied)
27. The court held that a non-signatory could be subjected to arbitration
“without their prior consent” in “exceptional cases” on the basis of four
determinative factors:
(i) A direct relationship to the party which is a signatory to the
arbitration agreement;
(ii) A direct commonality of the subject-matter and the agreement
between the parties being a composite transaction;
(iii) The transaction being of a composite nature where performance
of the mother agreement may not be feasible without the aid,
execution, and performance of supplementary or ancillary
agreements for achieving the common object and collectively
have a bearing on the dispute; and
(iv) A composite reference of such parties will serve the ends of justice.
28. In Chloro Controls (supra), this Court acknowledged that cases
of composite transactions involving multi-party agreement give rise to
peculiar challenges where non-signatories may be implicated in the dispute
because of their legal relationship and involvement in the performance of
contractual obligations. To remedy such situations, it was held that the group
of companies doctrine could be applied to systematically evaluate the facts
and circumstances to determine “a clear intention of the parties to bind both,
the signatory as well as the non-signatory parties” to the arbitration agreement.
29. Chloro Controls (supra) was dealing with a situation where the
success of the joint venture agreement was dependent upon the fulﬁlment of
all the ancillary agreements. In this context, this Court observed that all the
ancillary agreements were relatable to the parent agreement and the ancillary
agreements were intrinsically linked with each other, to the extent that they
could not be severed. This in the view of the court indicated the intention of
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 653
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

the parties to refer all disputes arising out of the parent agreement and ancillary
agreements to the arbitral tribunal.
30. Furthermore, this Court explained the phrase “legal relationship”
to mean the relationship of the signatory party with the person claiming
under or through them. It observed that all the agreements were signed by
“some parties or their holding companies or the companies into which the
signatory company had merged.” Although these companies did not put
pen to paper for all the agreements, they were descendants in interest or
subsidiaries of the signatory parties and therefore would be covered under
the expression “claiming through or under” the parties to the agreement.
In this context the Court observed that being part of the same corporate
group, the interests of the non-signatory companies were not adverse to the
interest of the principal company and the joint venture company. Therefore,
the group of companies doctrine formed the basis for a non-signatory to
claim through or under the signatory. Chloro Controls (supra) laid down
the ratio that a non-signatory person or entity could be made a party to an
arbitration agreement, as “claiming through or under” a signatory party, if
the circumstances demonstrate the mutual intention of the parties on the basis
of the composite nature of the transaction, direct commonality of subject-
matter, and direct relationship of the non-signatory to the signatory parties.
b. Development of Law after Chloro Controls
31. In the aftermath of Chloro Controls (supra), the Law Commission
of India published a Report in 2014 recommending amendments to the
Arbitration Act. The Commission observed that the phrase “claiming
through or under” as used and understood in Section 45 is absent in the
corresponding provision of Section 8. To cure this anomaly, it was suggested
that the deﬁnition of “party” under Section 2(1)(h) be amended to also
include the expression “a person claiming through or under such party.”16 In
2016, the legislature amended Section 8 to bring it in line with Section 45
of the Arbitration Act. The unamended Section 8(1) provided that a party to
an arbitration agreement could make an application seeking a reference to
arbitration. The amended Section 8(1) provided that “a party to an arbitration

16 Law Commission of India, ‘Amendments to the Arbitration and Conciliation Act
1996’, Report No. 246 (August 2014)
654 SUPREME COURT REPORTS [2023] 15 S.C.R.

agreement or any person claiming through or under him” could seek a
reference to arbitration. However, the legislature did not bring about any
change in the language of Section 2(1)(h) or Section 7 of the Arbitration Act.
Since Chloro Controls (supra) and the amendment to Section 8, subsequent
decisions of this Court have referred to the group of companies doctrine to
join non-signatories persons or entities to arbitration agreements.
32. In Cheran Properties (supra), the issue before this Court was
whether the arbitral award could be enforced under Section 35 of the
Arbitration Act against a non-signatory, who was a nominee of one of
the signatories to the arbitration agreement and a direct beneﬁciary of the
underlying contract between the signatories. Section 35 of the Arbitration
Act postulates that an arbitral award “shall be ﬁnal and binding on the
parties and persons claiming under them respectively.” This Court observed
that the expression “persons claiming under them” refers to every person
whose capacity or position is derived from and is same as a party to the
proceedings. It held that the non-signatory, being a nominee of one of the
signatory parties, was bound by the arbitral award as it was claiming under
the signatory.
33. This Court in Cheran Properties (supra) interpreted the group of
companies doctrine to hold that its true purport is to enforce the common
intention of the parties where the circumstances indicate that both the
signatories and non-signatories were intended to be bound. One of us (D Y
Chandrachud J) explained the evolution of the group of companies doctrine
in the Indian context in the following terms:
“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 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. 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
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 655
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

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 to bind both signatories
and non-signatories. The eﬀort is to ﬁnd the true essence of the
business arrangement and to unravel from 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.”
(emphasis supplied)
34. The decision in Cheran Properties (supra) holds that the group
of companies doctrine is applied to bind a non-signatory party upon a
construction of the arbitration agreement, circumstances which exist at the
time of entering into the contract, and the performance of the underlying
contract. Nevertheless, it must be noted that Cheran Properties (supra)
did not apply the group of companies doctrine to make the non-signatory
a party to the arbitration agreement. Rather, this Court made the arbitral
award binding on a non-signatory under Section 35 on the ground that it was
claiming under a party which was a signatory to the arbitration agreement.
35. In Ameet Lalchand Shah v. Rishabh Enterprises,17 a two-Judge
Bench of this Court was dealing with an arbitral dispute arising out of four
interconnected agreements executed towards a single commercial project.
The issue was whether the four agreements were interconnected to refer all
the parties to arbitration. In that case, all the parties were not signatories to
the main agreement containing the arbitration clause. This Court relied on
Chloro Controls (supra) to hold that a non-signatory, which is a party to
an interconnected agreement, would be bound by the arbitration clause in
the principal agreement. It observed that in view of the composite nature
of the transaction, the disputes between the parties to various agreements
could be resolved eﬀectively by referring all of them to arbitration.
36. Over time, this Court has identiﬁed certain additional factors for
the invocation of the group of companies doctrine. In Reckitt Benckiser

17 (2018) 15 SCC 678
656 SUPREME COURT REPORTS [2023] 15 S.C.R.

(India) Private Limited v. Reynders Label Printing India Private
Limited,18 a two-Judge Bench of this Court was dealing with an application
under Section 11(6) of the Arbitration Act seeking the appointment of an
arbitrator. This Court prima facie observed that the parties belonged to the
same group of companies. Subsequently, the issue before this Court was
whether there was a clear intention of the parties to bind both the signatory
and non-signatory parties based on their participation in the negotiation of
the underlying contract. The court held that the non-signatory party, even
though a constituent part of the corporate group, did not have “any causal
connection with the process of negotiations preceding the agreement or the
execution thereof, whatsoever.” Thus, the participation of the non-signatory
party in the negotiation and performance of the underlying contract was
held to be the key determinant of the intention of the parties to be bound
by an arbitration agreement.
37. In Canara Bank (supra), this Court emphasized that the group
of companies doctrine could be invoked on the basis of the principle of
“single economic unit”. In that case, the facts were that Canbank Financial
Services Ltd19, a wholly owned subsidiary of Canara Bank, subscribed to
the bonds ﬂoated by MTNL. CANFINA subsequently transferred the bonds
to Canara Bank. Eventually, MTNL cancelled the bonds which gave rise
to the dispute between the parties. Canara Bank ﬁled a writ petition before
the Delhi High Court challenging the cancellation of bonds by MTNL. The
High Court referred the parties to arbitration, but Canara Bank challenged the
impleadment of CANFINA. This Court dismissed Canara Bank’s objection
on the ground that CANFINA was a necessary and proper party to the arbitral
proceedings, being the original purchaser to the bonds. While dealing with
the contours of the group of companies doctrine, this Court noted that the
doctrine could also be invoked “in cases where there is a tight group structure
with strong organizational and ﬁnancial links, so as to constitute a single
economic unit, or a single economic reality.”
38. The last in the series of decisions dealing with the group of companies
doctrine is a three-Judge Bench decision of this Court in Discovery Enterprises

18 (2019) 7 SCC 62
19 “CANFINA”
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 657
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

(supra). In that case, ONGC entered into a contract with Discovery Enterprises
for operating a shipping vessel. After a dispute arose between the parties, ONGC
invoked the arbitration clause in the contract against Discovery Enterprises and
Jindal Drilling and Industries Ltd., a sister company of Discovery Enterprises.
The arbitral tribunal refused to proceed with the claim against Jindal Drilling
and Industries Ltd. on the ground that it was not a signatory to the arbitration
agreement. In an appeal ﬁled by ONGC under Section 37 of the Arbitration Act,
the High Court upheld the decision of the tribunal. The High Court’s decision
was challenged before this Court under Article 136 of the Constitution. This
Court cited Chloro Controls (supra) and the subsequent decisions with approval
to emphasize that the group of companies doctrine can be applied to bind a
company within a group which is not a signatory to the arbitration agreement.
The Court held that in addition to the cumulative factors laid down in Chloro
Controls (supra), the performance of the contract was also an essential factor to
be considered by the courts and tribunals to bind a non-signatory to the arbitration
agreement. Ultimately, this Court set aside the decision of the arbitral tribunal
on the ground that it failed to address the plea raised by ONGC, and remanded
the matter back to the tribunal to decide afresh.
ii. France – The Dow Chemicals case
39. The application of the group of companies doctrine in arbitration
law mainly originated from the decisions rendered by international arbitral
tribunals. Before proceeding to analyze the contours of the doctrine, it is
necessary to understand its origin and development in the international
context. Such an analysis is particularly relevant because any authoritative
determination by this Court with regard to the group of companies doctrine
ought to be in tune with the internationally accepted principles on the vexed
issue of joining non-signatories to arbitration agreements.
40. The origin of the doctrine is primarily attributed to a number
of arbitration awards rendered mainly in France. The most prominent
among them remains an interim award delivered more than four decades
ago by an ICC tribunal in Case No. 4131,20 more popularly known as the
Dow Chemicals case. In that case, Dow Chemical (Venezuela) entered

20 Dow Chemical v. Isover Saint Gobain, Interim Award, ICC Case No. 4131, 23
September 1982
658 SUPREME COURT REPORTS [2023] 15 S.C.R.

into a contract with a French company, which later assigned the rights
to Isover Saint Gobain, for distribution of thermal isolation products in
France. Dow Chemical (Venezuela) subsequently assigned the contract
to Dow Chemical AG, which was a subsidiary of Dow Chemical
Company – the holding company. Thereafter, Dow Chemical Europe,
a subsidiary of Dow Chemical AG, entered into a similar contract
with three companies, which subsequently assigned the contract to
Isover Saint Gobain. Both contracts provided that the deliveries of
products to the distributors will be made by Dow Chemical France, or
any other subsidiary of Dow Chemical Company. Several suits were
instituted against the companies of the Dow Chemical group before the
French courts. In response, the four companies of the Dow Chemical
group (the two formal parties to the contract – Dow Chemical AG and
Dow Chemical Europe, and the two non-signatories – Dow Chemical
Company and Dow Chemical France) instituted arbitral proceedings
against Isover Saint Gobain before the ICC tribunal.
41. The primary issue before the ICC tribunal was to determine
its own jurisdiction over the non-signatory parties. The tribunal sought
to determine whether there existed a common intention of the parties
to be bound by the arbitration agreement. The tribunal established the
common intention of the parties by analyzing the factual circumstances
underpinning the negotiation, performance, and termination of the
contracts. The tribunal held that Dow Chemical France “was a party”
to the two contracts, and consequently to the arbitration agreements
contained in them, because it played a preponderant role in the
negotiation, performance, and termination of the contract. As for Dow
Chemical Company, the tribunal held that the holding company had
ownership of the trademarks under which the products were marketed in
France and had absolute control over its subsidiaries who were involved
in the negotiation, performance, and termination of the two contracts.
The tribunal also relied on the fact that Isover Saint Gobain applied
for the joinder of the holding company into the court proceedings in
France before the Court of Appeal of Paris.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 659
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42. After concluding that the non-signatories were also a party to
the arbitration agreement, the tribunal proceeded to analyze the factual
circumstances of the signatory and non-signatory belonging to the same group
of companies. At the outset, the tribunal observed that a group of companies
constitutes one and the same economic reality. However, the tribunal
emphasized that a non-signatory may be bound by the arbitration agreement
entered into by another entity of the same group if the non-signatory appears
to be a veritable party to the contracts on the basis of their involvement in
the negotiation, performance, and termination of the contracts. The relevant
observation is extracted below:
“Considering, in particular, that the arbitration clause expressly accepted
by certain of the companies of the group should bind the other companies
which, by virtue of their role in their conclusion, performance, or
termination of the contracts containing said clause, and in accordance
with the mutual intention of all parties to the proceedings, appear to
have been veritable parties to these contracts or to have been principally
concerned by them and the disputes to which they may give rise.”
43. In Dow Chemical (supra), the arbitral tribunal did not base its
decision to extend the arbitration agreement to non-signatories solely on
the fact that both the signatory and non-signatory parties were members of
the same group. The tribunal emphasized the importance of determining the
true parties to the arbitration agreement on the basis of their participation in
the negotiation, performance, and termination of the agreement. The Dow
Chemical case has been regarded as being instrumental in the transition from a
restrictive interpretation of consent focusing only on its express manifestation
to a more ﬂexible approach attaching necessary relevance to implied consent
to be bound by the arbitration agreement.21
44. In a series of subsequent rulings, the Court of Appeal of Paris
acknowledged the extension of an arbitration agreement to non-signatories
provided there was common intention of all the parties. According to the Court
of Appeal, the common intention may be ascertained from the active role
played by the non-signatories in the performance of the contract containing

21 Bernard Hanotiau and Leonardo Ohlrogge, ‘40th Year Anniversary of the Dow
Chemical Award’ 40(2) ASA Bulletin 300-308.
660 SUPREME COURT REPORTS [2023] 15 S.C.R.

the arbitration agreement, which gives rise to the presumption that the non-
signatory had knowledge of the arbitration agreement.22
45. The French law has been succinctly summarized in an unpublished
ICC award in case No. 11405 of 2001 in the following terms:
“[t]here is no general rule, in French international arbitration law, that
would provide that non-signatory parties members of a same group of
companies would be bound by an arbitration clause, whether always
or in determined circumstances. What is relevant is whether all parties
intended non-signatory parties to be bound by the arbitration clause.
Not only the signatory parties, but also the non-signatory parties should
have intended (or led the other parties to reasonably believe that they
intended) to be bound by the arbitration clause.”23
Hence our understanding of the position in French law is that an
arbitration agreement can be extended to non-signatory parties if all the
parties to the arbitration agreement had a common intention to be bound by
the agreement. The subjective intention of the parties is to be inferred on the
basis of their objective conduct during the negotiation, performance, and
termination of the underlying contract containing the arbitration agreement.
iii. Switzerland
46. Section 178(1) of the Swiss Private International Law Act 1987
states that an “arbitration agreement must be made in writing or any other
means of communication allowing it to be evidenced by text.” In 2003,
the Swiss Federal Supreme Court held that once there is a valid arbitration
clause according to Section 178(1) of the Swiss Act, the issue whether it
also extends to non-signatories may be decided by the courts or the arbitral
tribunals. As a matter of general rule, the Swiss courts have extended an
arbitration agreement to non-signatories typically in cases of assignment of
a claim, assumption of debt or delegation of a contract.24

22 Paris Court of Appeal, 7 December 1994, V 2000 (formerly Jaguar France) v. Project
XS, Rev. Arb. (1996) 67.
23 Yves Derains, ‘Is there a Group of Companies Doctrine?’ in Bernard Hanotiau and
Eric Schwartz (eds) in Dossier of the ICC Institute of World Business Law, Volume 7,
131-145.
24 A, B, C v. D and State of Libya, 4A_636/2018
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47. In a decision rendered in 1996, the Swiss Federal Supreme Court
held that the fact that a non-signatory party belonged to the same group
of companies as the signatory party to the arbitration agreement was not
a suﬃcient justiﬁcation for binding the non-signatory to the arbitration
agreement.25 However, the Swiss Courts are not averse to extending an
arbitration agreement to non-signatory parties if there is an independent
and formally valid manifestation of consent of the non-signatory party to
the arbitration agreement.
48. In Swiss law, the consent of the parties to be bound by an arbitration
agreement may be express or implied by conduct. In a 2008 decision, the
Swiss Federal Court held that certain behavior or conduct may substitute
compliance with a formal requirement of an arbitration agreement.26 To
determine the implied consent, it was held that the courts or tribunals may
take into consideration the fact whether the non-signatory party was involved
in the negotiation and performance of the contract, and thereby expressed its
willingness to be bound by the arbitration agreement.27 Thus, the subjective
element of willingness to be bound by an arbitration agreement ought to
be expressed through an objective element in the form of negotiation or
performance of the contract.
iv. England
49. The English courts have generally taken a conservative approach
to binding non-signatory parties to arbitration agreements. Section 82(2) of
the English Arbitration Act 1996 deﬁnes a “party to arbitration agreement”
to include “any person claiming under or through a party to the agreement.”
The English law envisages that even non-signatory parties may be bound by
an arbitration agreement but only if they are claiming under or through the
original party to the agreement. The English courts have adopted an approach
which favors a strict adherence to the doctrine of privity. Under English law,
an arbitration agreement is extended to non-signatory parties on the basis
of traditional contractual principles and doctrines such as agency, novation,

25 Saudi Butec Ltd et Al Fouzan Trading v. Saudi Arabian Saipem Ltd, unpublished
ICC Interim Award of 25 October 1994, conﬁrmed by DFT on 29 January 1996, ASA
Bulletin (1996) Vol 3 p 496.
26 Decision 4A_376/2008 of 5 December 2008.
27 X v. Y Engineering S.p.A. and Y S.p.A., 4A_450/2013, ASA Bull., 160 (2015).
662 SUPREME COURT REPORTS [2023] 15 S.C.R.

assignment, operation of law, and merger and succession.28 However, the
English law has explicitly rejected other doctrines such as piercing the
corporate veil, equitable estoppel, and group of companies as a basis for
extending an arbitration agreement to non-signatory parties.
50. In Peterson Farms INC v. C & M Farming Limited,29 a claim
for damages was brought against Peterson Farms by the respondent C &
M Farming for damages suﬀered by several C & M group entities, some
of them being non-signatories to the arbitration agreement. The arbitral
tribunal applied the group of companies doctrine to hold that C & M Farming
contracted on behalf of the entire C & M group entities, and therefore was
entitled to claim all the damages suﬀered by the C & M group entities arising
out of the contractual relationship with Peterson. In appeal, the Commercial
Court held that the chosen proper law of the Agreement - Arkansas law – is
similar to the English law which excludes the application of the group of
companies doctrine. Thus, the English law does not favor the application
of the group of companies doctrine for extending an arbitration agreement
to non-signatory parties.
51. The English precedents have also dealt with the meaning of the
phrase “claiming through or under”, which was referred to by this Court in
Chloro Controls (supra). In Roussel-Uclaf v. G D Searle and Co Ltd30, the
issue before the Court of Chancery Division was whether a wholly owned
subsidiary company could claim to be a party to an arbitration agreement
between the parent company and a third party. The Court was called upon
to interpret Section 1 of the Arbitration Act of 1975 which allowed any
party to an arbitration agreement “or any person claiming through or under
him” to apply to a court to stay proceedings where an arbitration agreement
existed. It was held that the subsidiary can claim the beneﬁt of the arbitration
agreement because the parent company and the subsidiary were “so closely
related” that it could be said that the subsidiary was “claiming through or

28 Audley William Sheppard, ‘Third Party Non-Signatories in English Arbitration Law’ in
Stavros Brekoulakis, Julian Lew, et al (eds) The Evolution and Future of International
Arbitration (Kluwer Law International, 2016) 183-198.
29 [2004] EWHC 121 (Comm)
30 [1978] 1 Lloyd’s Rep
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under” the parent company. In City of London v. Sancheti,31 the Court
of Appeal overturned Roussel-Uclaf (supra) on the ground that an entity
cannot be considered to be claiming through or under merely because there
is a “legal or commercial connection” between them.
52. Section 5 of the English Arbitration Act, 1996 requires an
arbitration agreement to be in writing. Further, Section 5(2)(a) provides
that it is not necessary for the parties to sign the arbitration agreement. In
such situations, the critical question that arises before the English courts is
whether a non-signatory party is bound by an arbitration agreement. The
English law position is that “contracts are not to be lightly implied” and
the court “must be able to conclude with conﬁdence both that the parties
intended to create contractual relations and that the agreement was to the
eﬀect contended for.”32 However, in limited situations, a contract is implied
if the parties conducted themselves in a manner as if they have formally
entered into a contract.33
53. In Dallah Real Estate and Tourism Holding Company v. The
Ministry of Religious Aﬀairs, Government of Pakistan34, the Government
of Pakistan entered into a Memorandum of Understanding with Dallah
Real Estate and Tourism Holding Company35 for construction of housing
facilities in Mecca, Saudi Arabia. Subsequently, an agreement was executed
between Dallah and the Awami Hajj Trust, which was established by the
Government through an Ordinance. However, the trust ceased to exist as a
legal entity because the Ordinance was not laid before Parliament and no
further ordinance was promulgated. Dallah commenced arbitral proceedings
against the Government. The UK Supreme Court had to determine whether
there was a common intention on behalf of the Government and Dallah
to make the former a party to the agreement. The Court observed that the
“common intention of the parties means their subjective intention derived

31 The Mayoralty and Commonalty & Citizens of the City of London v. Ashok Sancheti,
[2008] EWCA Civ 1283
32 Blackpool and Fylde Aero Club Ltd. v. Blackpool Borough Council, [1990] 1 WLR
1195
33 Chitty on Contracts, Hugh Beale (ed), (32nd edn, Sweet and Maxwell, 2015) para
2-169.
34 [2010] UKSC 46
35 “Dallah”
664 SUPREME COURT REPORTS [2023] 15 S.C.R.

from the objective evidence.” It was held that there was no evidence to
conclude that the Government’s behavior showed that it always considered
itself to be a true party to the agreement.
v. Singapore
54. In Manuchar Steel Hong Kong Limited v. Star Paciﬁc Line Pte
Ltd,36 the Singapore High Court expressly rejected the group of companies
doctrine to bind non-signatories to arbitration agreement. The High Court
reasoned that the group of companies doctrine was: ﬁrst, anathema to the
logic of consensual basis of an agreement to arbitrate; and second, ordering
of companies within a broader group did not mean one could dispense with
separate legal entity. The Singapore High Court relied on position of law
taken in Peterson Farms INC (supra) to observe that enforceable obligations
cannot be imposed on “strangers” to an arbitration agreement.
vi. United States of America
55. The Federal Arbitration Act is silent on the aspect of the joinder
of non-signatory parties to the arbitration agreement. Nevertheless, the
US courts have often used the general principles of contract law such
as incorporation by reference, assumption, agency, veil piercing or alter
ego, and estoppel for binding non-signatories to arbitration agreements. 37
Although the United States follow a pro-arbitration policy, an important issue
that often comes up for deliberation is whether the domestic doctrines could
be applied for binding non-signatories in cases of international arbitration.
56. In G E Energy Power Conversion France SAS v. Outokumpu
Stainless,38 the issue before the United States Supreme Court was whether
the New York Convention precludes a non-signatory to an international
arbitration agreement from compelling arbitration by invoking domestic
doctrines such as equitable estoppel. In that case, the Eleventh Circuit
Court refused to apply the domestic doctrine of equitable estoppel on the
ground that it conﬂicts with the signature requirements under the New York

36 [2014] SGHC 181
37 Andrijana Misovic, ‘Binding non-signatories to arbitrate: the United States approach’
(2021) 37(3) Arbitration International 749-768.
38 140 S. Ct. 1637 (2020)
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Convention. The Circuit Court observed that Article II of the New York
Convention contains a strict requirement that the parties “actually sign” the
arbitration agreement in order to compel the parties to arbitration. The US
Supreme Court held that the Article II of the New York Convention does
not restrict the contracting states from applying domestic law to refer parties
to arbitration agreements. Moreover, it was observed that “the provisions
of Article II contemplate the use of domestic doctrines to ﬁll gaps in the
Convention.” Thus, it was held that the New York Convention does not set
out a comprehensive regime to preclude the use of domestic law to enforce
arbitration agreements.
57. Unlike the English courts, the US Courts have used non-consensual
doctrines to extend arbitration agreements to non-signatory parties. For
instance, the US Courts have pierced the corporate veil and held the alter
ego liable in exceptional circumstances where the parent company exercised
complete control over the subsidiary with respect to the transaction at
issue.39 Similarly, the doctrine of arbitral estoppel has been developed by
the US Courts to bind non-signatory parties to an arbitration agreement.
The doctrine of arbitral estoppel suggests that a party is estopped from
denying its obligation to arbitrate when it received a ‘direct beneﬁt’ from a
contract containing an arbitration agreement.40 The second type of arbitral
estoppel developed by the US courts places emphasis on the substantial
interdependent relationship between the signatory and non-signatory party.41
In a situation where claims of concerted misconduct were raised against both
the signatory and non-signatory to the contract, the courts have resorted to
the doctrine of equitable estoppel to further the policy of pro-arbitration. 42
58. The above discussion shows that international jurisdictions, in
some form or the other, have moved beyond the formalistic requirement of
consent to bind a non-signatory to an arbitration agreement. The primary
conclusion is that the issue of binding a non-signatory to an arbitration

39 American Fuel Corp v. Utah Energy Development Co, Inc, 122 F.3d 130, 134 (2d Cir
1997)
40 American Bureau, Shipping v. Tencara Shipyard, 170 F.3d 349, 353 (2d Cir 1999)
41 Sunkist Soft Drinks, Inc v. Sunkist Growers, Inc, 10 F.3d 753, 757 (11th Cir 1993)
42 Grigson v. Creative Artists Agency, LLC, 210 F.3d 524 (2000)
666 SUPREME COURT REPORTS [2023] 15 S.C.R.

agreement is more of a fact-speciﬁc aspect.43 In jurisdictions such as France
and Switzerland, there is a broad consensus that consent or subjective
intention of a non-signatory to arbitrate may be proved by conduct. Such
subjective intention could be derived from the objective evidence in the
form of participation of the non-signatory in the negotiation, performance, or
termination of the underlying contract containing the arbitration agreement.
However, the group of companies doctrine has not been universally accepted
by all jurisdictions.
In jurisdictions such as France where the doctrine has gained
acceptance, group of companies is one of the several factors that a court or
tribunal considers to determine the mutual intention of all the parties to join
the non-signatory to the arbitration agreement. Keeping in mind the above
background, we now move on to analyze the applicability of the group of
companies doctrine in the Indian context.
Arbitration Agreement
i. Consent as the basis for arbitration
59. Arbitration is an alternative dispute resolution mechanism where
parties consensually decide to submit a dispute between them to an arbitral
tribunal to the exclusion of domestic courts.44 Arbitration provides a
neutral, eﬃcient, and expert process for dispute resolution at a single
forum whose decision is ﬁnal and binding on the parties. The principle of
party autonomy underpins the arbitration process as it allows the parties
to dispense with technical formalities and agree upon substantive and
procedural laws and rules applicable to the merits of the dispute.45 Party
autonomy allows the parties to choose the seat of arbitration, number of
arbitrators, procedure for appointment of arbitrators, rules governing the
arbitral procedure, and the institution which will administer the arbitration.
An arbitration proceeding is broadly divided into two stages: The ﬁrst

43 Bernard Hanotiau, ‘May an Arbitration Clause be Extended to Non-signatories:
Individuals, States or Other Companies of the Group?’ in Complex Arbitrations: Multi-
party, multi-contract, Multi-issue – A comparative study’ Bernard Hanotiau (eds) (2nd
edn, 2020) 95, 194.
44 Gary Born, International Arbitration Law and Practice (3rd ed, 2021) 2.
45 Bharat Aluminium Company v Kaiser Aluminium Technical Services, (2016) 4 SCC
126
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stage commences with an arbitration agreement and ends with the making
of an arbitral award. The second stage pertains to the enforcement of the
arbitral award.46
60. Consent forms the cornerstone of arbitration. An arbitration
agreement records the consent of the parties to submit their disputes to
arbitration. A two-Judge Bench of this Court in Bihar State Mineral
Development Corporation v. Encon Builders (I) Pvt. Ltd.47 laid down
four essential elements of an arbitration agreement:
(i) There must be a present or a future diﬀerence in connection with
some contemplated aﬀair
(ii) The parties must intend to settle such diﬀerence by a private
tribunal
(iii) The parties must agree in writing to be bound by the decision of
such tribunal.
(iv) The parties must be ad idem.
61. An arbitration agreement is a contractual undertaking by two or
more parties to resolve their disputes by the process of arbitration, even if the
disputes themselves are not based on contractual obligations. An arbitration
agreement is a conclusive proof that the parties have consented to submit
their dispute to an arbitral tribunal to the exclusion of domestic courts. The
basis for an arbitration agreement is generally traced to the contractual
freedom of parties to codify their intention to consensually submit their
disputes to an alternative dispute resolution process.
62. According to Section 10 of the Code of Civil Procedure of 1908,
the courts have jurisdiction to try all suits of a civil nature except suits whose
cognizance is expressly or impliedly barred. The said provision gives a right
to any person to ﬁle a civil suit before a court of competent jurisdiction.
Moreover, Section 28 of the Indian Contract Act of 187248 provides that any
agreement restraining a party from enforcing their rights under a contract

46 Satish Kumar v. Surinder Kumar, (1969) 2 SCR 244
47 (2003) 7 SCC 418
48 “Contract Act”
668 SUPREME COURT REPORTS [2023] 15 S.C.R.

before courts or tribunals is void to that extent. However, the provision
speciﬁcally saves a contract by which two or more persons agree that any
dispute, which may arise between them, in respect of any subject or class
of subjects shall be referred to arbitration. Thus, arbitration agreements
are granted a statutory exception under Section 28 of the Contract Act. In
Dhulabhai v. State of Madhya Pradesh a Constitution Bench of this Court
held that the jurisdiction of civil courts may be excluded by an express
provision of law or by clear intendment arising from such law.49 In Chloro
Controls (supra), this Court observed that Section 45 of the Arbitration Act
shall prevail over the provisions of the Code of Civil Procedure, 1908 in
case of a valid arbitration agreement. Considering the fact that an arbitration
agreement excludes the jurisdiction of civil courts, such an agreement ought
to be valid and enforceable.
63. An arbitration agreement must satisfy the principles of contract
law laid down under the Contract Act, in addition to satisfying other
requirements stipulated under Section 7 of the Arbitration Act, to qualify as
a valid agreement.50 Section 2(e) of the Contract Act deﬁnes an agreement as
every promise and every set of promises forming the consideration for each
other. An agreement enforceable by law is a contract. An agreement should
satisfy the mandate of Section 10 of the Contract Act to be enforceable by
law. Section 10 provides that all agreements are contracts if they are made by
the free consent of parties competent to contract, for a lawful consideration
and with a lawful object. According to Section 13, two or more persons are
said to consent when they agree upon the same thing in the same sense.
Thus, consensus ad idem between the parties forms the essential basis to
constitute a valid arbitration agreement.
64. Being a creature of a contract, an arbitration agreement is also
bound by the general principles of contract law, including the doctrine of
privity. The doctrine of privity means that a contract cannot confer rights
or impose liabilities on any person except the parties to the contract. This
doctrine has two aspects: ﬁrst, only the parties to the contract are entitled
under it or bound by it; and second, the parties to the contract cannot impose a

49 (1968) 3 SCR 662
50 Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1
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liability on a third party. As a corollary, a third party cannot acquire rights and
entitlements under a contract. In M C Chacko v. State Bank of Travancore,
this Court held it as a settled principle of law that a person who is not party
to a contract cannot enforce the terms of the contract, subject to certain well-
recognised exceptions such as trust, family arrangement, and assignment.51
The principle that only the parties to an arbitration agreement are either
bound or beneﬁted by such an agreement is fundamental to arbitration.52
This principle is uniformly reﬂected in international arbitration conventions
as well as the Arbitration Act. For instance, Section 7 of the UNCITRAL
Model Law deﬁnes an arbitration agreement as “an agreement by the parties
to submit to arbitration all or certain disputes which have arisen or which
may arise between them in respect of a deﬁned legal relationship, whether
contractual or not.” (emphasis supplied)
65. It is a generally accepted legal proposition that arbitration is a
matter of contract and a party cannot be required to submit to arbitration
any dispute which they have not agreed so to submit.53 Since consent forms
the cornerstone of arbitration, a non-signatory cannot be forcibly made a
“party” to an arbitration agreement as doing so would violate the sacrosanct
principles of privity of contract and party autonomy. However, In case
of multi-party contracts, the courts and tribunals are often called upon to
determine the parties to an arbitration agreement.
ii. Parties to Arbitration Agreement
66. The general method to ﬁgure out the parties to an arbitration
agreement is to look for the entities who are named in the recitals and have
signed the agreement. The signature of a party on the agreement is the
most profound expression of the consent of a person or entity to submit to
the jurisdiction of an arbitral tribunal. However, the corollary that persons
or entities who have not signed the agreement are not bound by it may
not always be correct. A written contract does not necessarily require that
parties put their signatures to the document embodying the terms of the

51 (1969) 2 SCC 343
52 Gary Born (n 44) 1518.
53 United Steelworkers of America v. Warrior and Gulf Navigation, (1960) 363 US 574,
582
670 SUPREME COURT REPORTS [2023] 15 S.C.R.

agreement.54 Therefore, the term “non-signatories”, instead of the traditional
“third parties”, seems the most suitable to describe situations where consent
to arbitration is expressed through means other than signature. A non-
signatory is a person or entity that is implicated in a dispute which is the
subject matter of an arbitration, although it has not formally entered into
an arbitration agreement.55 The important determination is whether such a
non-signatory intended to eﬀect legal relations with the signatory parties
and be bound by the arbitration agreement. There may arise situations where
persons or entities who have not formally signed the arbitration agreement
or the underlying contract containing the arbitration agreement may intend
to be bound by the terms of the agreement. In other words, the issue of who
is a “party” to an arbitration agreement is primarily an issue of consent.
67. Section 2 of the Contract Act provides that when a person signiﬁes
their willingness to do or to abstain from doing anything, with a view to
obtaining the assent of that other to such act or abstinence, is said to make
a proposal. The proposal is said to be accepted when the person to whom
the proposal is made signiﬁes their assent. A proposal becomes promise
upon acceptance. Every promise and every set of promises, forming the
consideration for each other, is an agreement. Importantly, Section 9
provides that a promise is said to be express if the proposal or acceptance
of any promise is made in words, while a promise is said to be implied if
such proposal or acceptance is “made otherwise than in words.” Thus, a
contract may either be express or implied.
68. Chitty on Contracts explains the diﬀerence between express and
implied contracts as follows:
“Contracts may either be express or implied. The diﬀerence is not
one of legal eﬀect but simply of the way in which the consent of the
parties is manifested. Contracts are express when their terms are
stated in words by the parties. They are often said to be implied
when their terms are not so stated, as, for example, when a passenger

54 Pollock and Mulla, The Indian Contract and Speciﬁc Reliefs Act (14th edn, 2016) 235.
55 Stavros Brekoulakis, ‘Rethinking Consent in International Commercial Arbitration:
A General Theory for Non-signatories’ (2017) 8 Journal of International Dispute
Settlement 610.
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is permitted to board a bus: from the conduct of the parties the law
implies a promise by the passenger to pay the fare, and a promise by the
operator of the bus to carry him safely to his destination.[…] Express
and implied contracts are both contracts in the true sense of the
term, for they both arise from the agreement of the parties, though
in one case the agreement is manifested in words and in the other
case by conduct. Since, as we have seen, agreement is not a mental
state but an act, an inference from conduct, and since many of the terms
of an express contract are often implied, it follows that the distinction
between express and implied contracts has little importance.” 56
69. The above exposition gives rise to the inference that in case of
an implied contract, the question revolves around the determination of
the consent of the parties to be bound by the terms of the contract. Such
determination is manifested through the acts or conduct. The theory of
implied contract by conduct has also been accepted by this Court. In Haji
Mohammed Ishaq v. Mohamad Iqbal,57 the plaintiﬀ supplied tobacco
to the defendant. Although there was no express agreement between the
parties, the defendant accepted the goods, but allegedly failed to clear the
outstanding dues despite repeated demands raised by the plaintiﬀ. A Bench
of three Judges of this Court observed that the conduct of the defendants in
accepting the goods and not repudiating any of the demand letters raised by
the plaintiﬀ “clearly showed that a direct contract which in law is called an
implied contract by conduct was brough about between them.” Under the
Indian contract law, it is posited that actions or conduct can be an indicator
of consent of a party to be bound by a contract. This also applies to an
arbitration agreement considering the fact that it is a creature of contract.
However, an arbitration agreement also has to meet the requirements laid
down under the Arbitration Act to be valid and enforceable.
70. Section 2(h) of the Arbitration Act deﬁnes a “party” to mean a
party to an arbitration agreement. Section 7 deﬁnes an arbitration agreement
to mean an agreement by the parties to submit to arbitration all or certain

56 Chitty on Contracts, Hugh Beale (ed) (32nd edn, Sweet and Maxwell, 2015) para
1-104.
57 (1978) 2 SCC 493
672 SUPREME COURT REPORTS [2023] 15 S.C.R.

disputes which have arisen or which may arise between them in respect of a
“deﬁned legal relationship.” Section 7 requires that an arbitration agreement
has to be in writing. Section 7 indicates the circumstances in which it is
regarded as an agreement in writing. Such an agreement may be embodied
in a document, an exchange of communications, including in the electronic
form, or in a statement of claim which is not traversed in the defence. In
Vidya Drolia v. Durga Trading Corporation,58 this Court observed that a
legal relationship means a relationship which gives rise to legal obligations
and duties, and confers a right. Such a right may be contractual or non-
contractual. In case of a non-contractual legal relationship, the cause of
action arises in tort, restitution, breach of statutory duty, or some other non-
contractual cause of action. Thus, the legislative intent underlying Section
7 suggests that any legal relationship, including relationships where there
is no contract between the persons or entities, but whose actions or conduct
has given rise to a relationship, could form a subject matter of an arbitration
agreement under Section 7. This approach is in line with the observations of
Lord Hoﬀman in Fiona Trust and Holding Company v. Privalov where
it was observed that “the construction of an arbitration clause should start
from the assumption that the parties, as rational businessmen, are likely to
have intended any dispute arising out of the relationship into which they
have entered or purported to enter to be decided by the same tribunal.”59
(emphasis supplied)
71. Section 7(3) requires an arbitration agreement to be in writing.
Section 7(4) lays down three circumstances to elaborate when an arbitration
agreement can be said to be in writing. According to the ﬁrst circumstance
laid down under Section 7(4)(a), an arbitration agreement is in writing if it
is signed by the parties. This circumstance refers to a situation where the
parties have formally executed and expressly assumed the status of parties
by attesting their signatures to the arbitration agreement or the underlying
contract containing the arbitration agreement. In such situations, the courts
or tribunals only need to refer to the signature page or the recitals to ﬁgure
out the parties to the arbitration agreement.

58 (2021) 2 SCC 1
59 [2007] UKHL 40
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 673
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

72. Section 7(4)(b) provides the second circumstance, according to
which an arbitration agreement is in writing if it is contained in an exchange
of letters, telex, telegrams or other means of telecommunication including
communication through electronic means which provide a record of the
agreement. According to this provision, the existence of an arbitration
agreement can be inferred from various documents duly approved by
the parties.60 Section 7(4)(b) dispenses with the conventional sense of an
agreement as a document with signatories. Rather, it emphasizes on the
manifestation of the consent of persons or entities through their actions of
exchanging documents. However, the important aspect of the said provision
lies in the fact that the parties should be able to record their agreement
through a documentary record of evidence. In Great Oﬀshore Ltd. v.
Iranian Oﬀshore Engineering and Construction Company, this Court
observed that Section 7(4)(b) requires the court to ask whether a record
of agreement is found in the exchange of letters, telex, telegrams, or other
means of telecommunication.61 Thus, the act of agreeing by the persons
or entities has to be inferred or derived by the courts or tribunals from the
relevant documents and communication, neither of which can be equated
with a conventional contract.
73. The third circumstance is provided under Section 7(4)(c), according
to which an arbitration agreement is in writing if it is contained in an
exchange of statements of claim and defence in which the existence of the
agreement is alleged by one party and not denied by the other. A two-Judge
Bench of this Court clariﬁed in S N Prasad v. Monnet Finance Limited62
that there will be an “exchange of statements of claim and defence” for the
purposes of Section 7(4)(c) if there is an assertion of the existence of an
arbitration agreement in any suit, petition or application ﬁled before any
court or tribunal, and if there is no denial of it in the defence, counter, or
written statement. Thus, in the third circumstance the court proceeds on
the assumption that the conduct of the person or entity in not denying the
existence of an arbitration agreement leads to the conclusive proof of its

60 Shakti Bhog Foods Limited v. Kola Shipping Ltd, (2009) 2 SCC 134; Trimex
International FZE Ltd v. Vedanta Aluminium Ltd, (2010) 3 SCC 1
61 (2008) 14 SCC 240
62 (2011) 1 SCC 320
674 SUPREME COURT REPORTS [2023] 15 S.C.R.

existence. All the three circumstances contained in Section 7(4) are geared
towards determining the mutual intention of the parties to be bound by the
arbitration agreement.
74. Section 7 of the Arbitration Act contains two aspects: a substantive
aspect and a formal aspect. The substantive aspect is contained is Section
7(1) which allows parties to submit disputes arising between them in respect
of a deﬁned legal relationship to arbitration. The legal relationships between
and among parties could either be contractual or non-contractual. For legal
relations to be contractual in nature, they ought to meet the requirements of
the Indian contract law as contained in the Contract Act. It has been shown
in the preceding paragraphs that a contract can either be express or implied,
which is inferred on the basis of action or conduct of the parties. Thus, it
is not necessary for the persons or entities to be signatories to a contract to
enter into a legal relationship – the only important aspect to be determined
is whether they intended or consented to enter into the legal relationship by
the dint of their action or conduct.
75. The second aspect is contained in Section 7(3) which stipulates
the requirement of a written arbitration agreement. A written arbitration
agreement need not be signed by the parties if there is a record of agreement.63
The mandatory requirement of a written arbitration agreement is merely to
ensure that there is a clearly established record of the consent of the parties
to refer their disputes to arbitration to the exclusion of the domestic courts.
76. Section 2(h) read with Section 7 does not expressly require the
“party” to be a signatory to an arbitration agreement or the underlying
contract containing the arbitration agreement. This interpretation is in
line with the general trend in national and international legislations that a
signature is not necessary for an arbitration agreement. The UNCITRAL
Model Law as amended in 2006 lays down the writing requirement for an
arbitration agreement under Article 7 in the following terms:
“(3) An arbitration agreement is in writing if its content is recorded
in any form, whether or not the arbitration agreement or contract
has been concluded orally, by conduct, or by other means.”

63 Govind Rubber Ltd v. M/s Louis Dreyfus Commodities, (2015) 13 SCC 477
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 675
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

The above provision states that an arbitration agreement may be
entered into in any form, for example orally or tacitly, as long as the
content of the agreement is recorded. It eliminates the requirement of
the signature of parties or an exchange of messages between the parties.
77. Article II paragraph 2 of the New York Convention deﬁnes
“agreement in writing” to include an arbitral clause in a contract or an
arbitration agreement, signed by the parties or contained in an exchange of
letters or telegrams. Article 7 of the UNCITRAL Model Law establishes a
more favourable requirement for a written arbitration agreement. In 2006,
UNCITRAL recommended that the circumstances described in Article II
paragraph 2 of the New York Convention “be applied recognizing that the
circumstances described therein are not exhaustive.”64 Additionally, it also
recommended that Article 7 paragraph 1 of the UNCITRAL Model Law
should be applied “to allow any interested party to avail itself of rights it
may have, under the law or treaties of the country where an arbitration
agreement is sought to be relied upon, to seek recognition of the validity of
such an arbitration agreement.” The Arbitration Act is largely based on the
UNCITRAL Model Law. Therefore, the UNCITRAL Model Law could be
referred to while construing the provisions of the Arbitration Act.65 Although
the amended Section 7 of the UNCITRAL Model Law has not been adopted
in the Indian law, it reﬂects the modern commercial reality where substance
is given precedence over technical legal formalities. 66
78. Reading Section 7 of the Arbitration Act in view of the above
discussion gives rise to the following conclusions: first, arbitration
agreements arise out of a legal relationship between or among persons or
entities which may be contractual or otherwise; second, in situations where
the legal relationship is contractual in nature, the nature of relationship can

64 UNCITRAL Model Law on International Commercial Arbitration, Recommendation
regarding the interpretation of article II, paragraph 2, and article VII, paragraph 1, of
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done
in New York, 10 June 1958, (adopted by the UNCITRAL on 7 July 2006) 39.
65 Sundaram Finance Ltd v. NEPC India Ltd, (1999) 2 SCC 479, para 9; P Manohar
Reddy and Bros v. Maharashtra Krishna Valley Development Corporation,
(2009) 2 SCC 494, para 27.
66 Redfern and Hunter on International Arbitration (7th edn, Oxford University Press,
2023) para 2.23.
676 SUPREME COURT REPORTS [2023] 15 S.C.R.

be determined on the basis of general contract law principles; third, it is not
necessary for the persons or entities to be signatories to the arbitration agreement
to be bound by it; fourth, in case of non-signatory parties, the important
determination for the courts is whether the persons or entities intended or
consented to be bound by the arbitration agreement or the underlying contract
containing the arbitration agreement through their acts or conduct; ﬁfth, the
requirement of a written arbitration agreement has to be adhered to strictly,
but the form in which such agreement is recorded is irrelevant; sixth, the
requirement of a written arbitration agreement does not exclude the possibility
of binding non-signatory parties if there is a deﬁned legal relationship between
the signatory and non-signatory parties; and seventh, once the validity of an
arbitration agreement is established, the court or tribunal can determine the issue
of which parties are bound by such agreement.
79. It is presumed that the formal signatories to an arbitration agreement are
parties who will be bound by it. However, in exceptional cases persons or entities
who have not signed or formally assented to a written arbitration agreement
or the underlying contract containing the arbitration agreement may be held to
be bound by such agreement. As mentioned in the preceding paragraphs, the
doctrine of privity limits the imposition of rights and liabilities on third parties
to a contract. Generally, only the parties to an arbitration agreement can be
subject to the full eﬀects of the agreement in terms of the reliefs and remedies
because they consented to be bound by the arbitration agreement. Therefore,
the decisive question before the courts or tribunals is whether a non-signatory
consented to be bound by the arbitration agreement. To determine whether a
non-signatory is bound by an arbitration agreement, the courts and tribunals
apply typical principles of contract law and corporate law. The legal doctrines
provide a framework for evaluating the speciﬁc contractual language and the
factual settings to determine the intentions of the parties to be bound by the
arbitration agreement.67
80. Gary Born suggests that the legal theories and doctrines provide a
basis for determining the real intent of parties to be bound by an arbitration
agreement. Therefore, it is incorrect to use terminologies such as ‘extension’
of an arbitration agreement to non-signatories or ‘third parties’:

67 Gary Born (n 44) 1531.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 677
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

“Judicial case law and commentary on international arbitration
sometimes make reference to the “extension” of an arbitration
agreement to non-signatories, or to “third parties” on the basis of one
or more of the foregoing theories. These expression are inaccurate,
in that they imply that an entity which is not a party to an arbitration
agreement is nonetheless subject to that agreement’s eﬀects, by virtue
of something other than the parties’ consent. Contrary to the references
to “extension” or “third parties”, most of the theories […] provide a
basis for concluding that an entity is in reality a party to the arbitration
agreement – which therefore does not need to be “extended” to a
“third party” – because that party’s actions constitute consent to the
agreement, or otherwise bind it to the agreement, notwithstanding the
lack of its formal execution of the agreement. The arbitration agreement
is therefore not ordinarily “extended”, but rather the true parties that
have consented to the arbitration agreement are identiﬁed.”
81. Courts and tribunals across the world have been applying traditional
contractual and commercial doctrines to determine the consent of the non-
signatory parties to be bound by the arbitration agreement. Generally, consent
based theories such as agency, novation, assignment, operation of law,
merger and succession, and third party beneﬁciaries have been applied in
diﬀerent jurisdictions. In exceptional circumstances, non-consensual theories
such as piercing the corporate veil or alter ego and estoppel have also been
applied to bind to bind a non-signatory party to an arbitration agreement.
The group of companies doctrine is one such consent-based doctrine which
has been applied, albeit controversially, for identifying the real intention of
the parties to bind a non-signatory to an arbitration agreement.
Group of Companies Doctrine
i. Separate legal personality
82. The phenomenon of group companies is the modern reality of
economic life and business organisation. Group companies are a set of
separate ﬁrms linked together in formal or informal structures under the
control of a parent company. The group companies can be deﬁned in the
Indian context as “an agglomeration of privately held and publicly traded
ﬁrms operating in diﬀerent lines of business, each of which is incorporated as
a separate legal entity, but which are collectively under the entrepreneurial,
678 SUPREME COURT REPORTS [2023] 15 S.C.R.

ﬁnancial, and strategic control of a common authority, typically a family,
and are linked by trust-based relationships forged around a similar
persona, ethnicity, or community.”68 A group company involving the
parent and subsidiary companies are created for myriad purposes such as
limiting the liability of the parent corporation, facilitating international
trade, entering into business ventures with investors, establishing
domestic corporate residence, and avoiding tax liability.
83. The principle of separate legal personality has been the
cornerstone of corporate law. In Salomon v. Salomon,69 the House of
Lords famously observed that a company is at law a diﬀerent person
altogether from the promoters, directors, shareholders, and employees.
The principle of separate legal personality equally applies to corporate
groups. A parent company is not generally held to be liable for the actions
of the subsidiary company of which it is a direct or indirect shareholder.
The Companies Act, 2013 70 has statutorily recognized a subsidiary
company as a separate legal entity.71 Section 2(46) of the 2013 Act deﬁnes
a holding company as a company of which one or more other companies
are subsidiary companies. Section 2(87) deﬁnes “subsidiary company”
to mean a company in which the holding company exercises control
over the composition of the Board of Directors and has a controlling
interest of at least 50 percent over the voting rights. Although a holding
company owns a controlling interest in the subsidiary company, they
are considered as separate legal entities. Group companies’ structures
allow multinational corporations to structure their businesses at both
the national and international level to leverage better returns for the
investors and ensure business growth of the corporation.
84. A Bench of three Judges of this Court in Vodafone International
Holding BV v. Union of India72 emphasized the principles of corporate
separateness in the following terms:

68 Jayati Sarkar, ‘Business Groups in India’ in Asli Coplan, Takashi Hikino, and James
Lincoln (eds) The Oxford Handbook of Business Groups (2010) 299
69 [1897] AC 22
70 “2013 Act”
71 Balwant Rai Saluja v. Air India, (2014) 9 SCC 407
72 (2012) 6 SCC 613
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 679
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

101. A company is a separate legal persona and the fact that all its
shares are owned by one person or by the parent has nothing to do
with its separate legal existence. If the owned company is wound up,
the liquidator, and its parent company, would get hold of the assets of the
subsidiary. In none of the authorities have the assets of the subsidiary been
held to be those of the parent unless it is acting as an agent. Thus, even
though a subsidiary may normally comply with the request of a parent
company it is not just a puppet of the parent company. The diﬀerence is
between having power or having a persuasive position. Though it may
be advantageous for parent and subsidiary companies to work as a group,
each subsidiary will look to see whether there are separate commercial
interests which should be gained.”
85. The separateness of corporate personality will be ignored by courts
in exceptional situations where a company is used as a means by the members
and shareholders to carry out fraud or evade tax liabilities. If the court, on
the basis of factual evidence, determines that the company was acting as an
agent of the members or shareholders, it will ignore the separate personality
of the company to attribute liability to the individuals. In Tata Engineering
and Locomotive Co Ltd v. State of Bihar73, the issue before a Constitution
Bench of this Court was whether a company could be treated as a citizen for
the purposes of maintaining a writ petition under Article 32 of the Constitution.
The company urged that the corporate veil should be lifted to treat the petition
as one ﬁled by the shareholders. This Court held that the veil of a corporation
can be lifted where fraud is intended to be prevented or trading with an enemy
is sought to be defeated.
86. In case of group companies, there may arise situations where a holding
company completely dominates the aﬀairs of the subsidiary company, to the
extent of misusing its control, to avoid or conceal liability. In such situations,
the courts apply the doctrine of “alter ego” or piercing the corporate veil to
disregard the corporate separateness between the two companies and treat them
as a single entity.74 In LIC v. Escorts Ltd,75 a Constitution Bench of this Court

73 (1964) 6 SCR 885
74 Gary Born (n 44) 1545.
75 (1986) 1 SCC 264
680 SUPREME COURT REPORTS [2023] 15 S.C.R.

noted that the principle of distinct legal personality may be ignored where the
associate companies are inextricably connected as to be, in reality, part of one
concern. Speaking for the Bench, Justice O Chinnappa Reddy observed:
“90. […] Generally and broadly speaking, we may say that the
corporate veil may be lifted where a statute itself contemplates lifting
the veil, or fraud, or improper conduct is intended to be prevented, or
a taxing statute or a beneﬁcent statute is sought to be evaded or where
associated companies are inextricable connected as to be, in reality,
part of one concern. It is neither necessary nor desirable to enumerate
the classes of cases where lifting the veil is permissible, since that must
necessarily depend on the relevant statutory or other provisions, the
object sought to be achieved, the impugned conduct, the involvement
of the element of the public interest, the eﬀect on parties who may be
aﬀected, etc.”
87. The application of the doctrine of lifting the corporate veil rests
on the overriding considerations of justice and equity.76 Often, the courts
pierce the corporate veil when maintaining the separateness of corporate
personality is found opposed to justice, convenience, and public interests.77
In Balwant Rai Saluja v. Air India,78 this Court cautioned that the principle
of piercing the corporate veil should be applied in a restrictive manner and
only in scenarios where it is evident that the subsidiary company was a mere
camouﬂage deliberately created by the holding company for the purpose
of avoiding liability. It was further observed that the intent of piercing the
corporate veil must be such that would seek to remedy a wrong done by the
holding company. In the context of arbitration, the principle of piercing the
corporate veil has been sparingly used because it disregards the intention of
the parties by emphasizing on the overriding considerations of good faith
and equity to bind the non-signatories to an arbitration agreement.
88. Moreover, since the companies in a group have separate legal
personality, the presence of common shareholders or directors cannot lead to

76 Delhi Development Authority v. Skipper Construction Co. (P) Ltd., (1996) 4 SCC
662
77 Kapila Hingorani v. State of Bihar, (2003) 6 SCC 1
78 (2014) 9 SCC 407
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 681
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

the conclusion that the subsidiary company will be bound by the acts of the
holding company. The statements or representations made by promoters or
directors in their personal capacity would not bind a company. Similarly, the
mere fact that the two companies have common shareholders or a common
Board of Directors will not constitute a suﬃcient ground to conclude that
they are a single economic entity. The single economic entity or the single
economic unit theory imposes general enterprise liability on the corporate
group. In D H N Food Distributors Ltd v. Tower Hamlets London
Borough Council79, Lord Denning held that a group of three companies
should be treated as a single economic entity on the basis of two factors:
ﬁrst, the parent company owned all the shares of the subsidiary companies
to the extent that it controlled every movement of the given subsidiary
companies; and second, all the three companies in the group virtually acted
as partners and could not be treated separately. Thus, the determination of
whether two or more companies constitute a single economic entity depends
upon the concerted eﬀorts of the companies to act in pursuance of a common
endeavour or enterprise.
89. From the above discussion, we can infer that entities within a
corporate group have separate legal personality, which cannot be ignored
save in exceptional circumstances such as fraud. The distinction between
a parent company and its subsidiary is fundamental, and cannot be easily
abridged by taking recourse to economic convenience. 80 Legally, the rights
and liabilities of a parent company cannot be transferred to the subsidiary
company, and vice versa, unless, there is a strong legal basis for doing so.
ii. Adopting a pragmatic approach to consent
90. In the context of arbitration law, the intention of the parties has to be
derived from the words used in the arbitration agreement. While construing
the arbitration agreement, it is the duty of the court to not delve deep into
the intricacies of the human mind, but only consider the expressed intentions
of the parties.81 The words used in the contract reﬂect the commercial

79 [1976] 1 WLR 852 (2)
80 Bank of Tokyo v. Karoon, (1986) 3 All ER 468
81 Kamla Devi v. Takhatmal Land, AIR 1964 SC 859; Bangalore Electricity Supply
Co Ltd v. E S Solar Power (P) Ltd, (2021) 6 SCC 718
682 SUPREME COURT REPORTS [2023] 15 S.C.R.

understanding between the parties. The intention of the parties has to be
ascertained from the words used in the contract, considered in light of the
surrounding circumstances and the object of such contract. 82
91. An arbitration agreement encapsulates the commercial
understanding of business entities as regards to the mode and manner
of settlement of disputes that may arise between them in respect of their
legal relationship. In most situations, the language of the contract is only
suggestive of the intention of the signatories to such contract and not the
non-signatories. However, there may arise situations where a person or
entity may not sign an arbitration agreement, yet give the appearance of
being a veritable party to such arbitration agreement due to their legal
relationship with the signatory parties and involvement in the performance
of the underlying contract. Especially in cases involving complex
transactions involving multiple parties and contracts, a non-signatory
may be substantially involved in the negotiation or performance of the
contractual obligations without formally consenting to be bound by the
ensuing burdens, including arbitration.
92. Modern commercial reality suggests that there often arise situations
where a company which has signed the contract containing the arbitration
clause is not always the one to negotiate or perform the underlying
contractual obligations. In such situations, emphasis on formal consent will
lead to the exclusion of such non-signatories from the ambit of the arbitration
agreement, leading to multiplicity of proceedings and fragmentation of
disputes. In A Ayyasamy v. A Paramsivam,83 this Court observed that it is
the duty of the courts “to impart to that commercial understanding a sense
of business eﬃcacy.” The courts must interpret contracts in a manner that
would give them a sense of eﬃcacy rather than invalidating the commercial
interests of the parties. The meaning of the contract must be gathered by
adopting a common sense approach, which should “not be allowed to be
thwarted by a narrow, pedantic and legalistic interpretation.”84 Therefore,
there is a need to adopt a modern approach to consent, which takes into

82 Bank of India v. K Mohandas, (2009) 5 SCC 313; M Dayanand Reddy v. A P
Industrial Infrastructure Corporation Ltd, (1993) 3 SCC 137
83 (2016) 10 SCC 386
84 Union of India v. D N Revri, (1976) 4 SCC 147
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 683
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

consideration the circumstances, apparent conduct, and commercial facets
of business transactions.
93. As Professor Hanotiau suggests, there is a need to adopt a modern
and pragmatic approach to consent:
“I would suggest that it is more accurate to refer to a modern approach
to consent; an approach that is more pragmatic, more focussed on an
analysis of facts, which places an emphasis on commercial practice,
economic reality, trade usages, and the complex and multifaceted
dimensions of large projects involving group of companies and
connected agreements in multiparty multi-contract scenarios; an
approach that is no longer restricted to express consent but that takes
into consideration all its various expressions and tends to give much
more importance than before to the conduct of the individuals or
companies concerned.”85
94. It has been urged before us that where a written arbitration
agreement clearly sets out the parties to it, the courts or tribunals cannot
read into the agreement an intention to bind persons or entities other than
the signatory parties. Reliance was placed on Roop Kumar v. Mohan
Thedani,86 where this Court observed that “wherever written instruments
are appointed, either by the requirement of law, or by the contract of the
parties, to be the repositories and memorials of truth, any other evidence
is excluded from being used either as a substitute for such instruments, or
to contradict or alter them.” Consequently, it was urged that the courts or
tribunals cannot interpret the arbitration agreement in a manner so as to
expand its reach to parties not named in the agreement.
95. Arbitration law is an autonomous legal ﬁeld. While the main
purpose of corporate law and contract law is imputation of substantive
legal liability, the main purpose behind the law of arbitration is to determine
whether an arbitral tribunal has jurisdiction over the dispute arising between
parties to an arbitration agreement. On the one hand, the courts and tribunals
cannot lightly brush aside the decision of the parties to not make a person or

85 Bernard Hanotiau, ‘Consent to Arbitration: Do We Share a Common Vision?’ (2011)
27(4) Arbitration International 539, 554
86 (2003) 6 SCC 595
684 SUPREME COURT REPORTS [2023] 15 S.C.R.

entity a party to the arbitration agreement. The fact that the non-signatory did
not put pen to paper may be an indicator of its intention to not assume any
rights or responsibilities under the arbitration agreement. On the other hand,
courts and tribunals cannot adopt a rigid approach to exclude all persons
or entities who, through their conduct and relationship with the signatory
parties, intended to be bound by the underlying contract containing the
arbitration agreement. The area of arbitration law not only concerns domestic
law, but it also encompasses the international law, particularly when it
pertains to the enforcement of international arbitral awards. Therefore, this
Court ought to adopt a balanced approach without comprising on the basic
principles of arbitration law, contract law, and company law to ensure that
the resultant legal framework is consistent with internationally accepted
practices and principles.
96. A formalistic construction of an arbitration agreement would
suggest that the decision of a party to not sign an arbitration agreement
should be construed to mean that the mutual intention of the parties was
to exclude that party from the ambit of the arbitration agreement. Indeed,
corporate entities have the commercial and contractual freedom to structure
their businesses in a manner to limit their liability. However, there have been
situations where a corporate entity deliberately made an eﬀort to be not
bound by the underlying contract containing the arbitration agreement, but
was actively involved in the negotiation and performance of the contract. The
level of the non-signatory party’s involvement was to the extent of making
the other party believe that it was a veritable party to the contract, and the
arbitration agreement contained under it. Therefore, the group of companies
doctrine is applied to ascertain the intentions of the parties by analysing the
factual circumstances surrounding the contractual arrangements.87
97. Increasingly, multinational groups often adopt new and sophisticated
corporate structures for execution and delivery of complex commercial
transactions such as construction contracts, concession contracts, license
agreements, long-term supply contracts, banking and ﬁnancial transactions,
and maritime contracts. For the execution of such contracts, corporate
structures may take the form of groups based on equity, joint ventures, and

87 Gary Born (n 44) 1568.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 685
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

informal alliances.88 A multi-corporate structure helps a group in adopting
commercially eﬀective models of operation as diﬀerent companies can get
involved at diﬀerent stages of a single transaction. Often, persons or entities,
who are not signatories to the underlying contract containing the arbitration
agreement, are involved in the negotiation, performance, or termination of
the contract. In the context of arbitration law, the challenge arises when only
one member of the group signs the arbitration agreement, to the exclusion of
other members. Should the non-signatories be excluded from the arbitration
proceedings, even though they were implicated in the dispute which forms
the subject matter of arbitration? As a response to this challenge, arbitration
law has developed and adopted the group of companies doctrine, to allow
or compel a non-signatory party to be bound by an arbitration agreement.
iii. Group of companies doctrine – a fact based doctrine
98. The group of companies doctrine is used in the context of
companies which are related to each other by virtue of their being a part of the
same corporate group. Since every company in a group has a separate legal
personality, a contract formally entered by one member of a group will not be
binding on the other members by virtue of the limited liability principle. The
group of companies doctrine is used to bind a non-signatory company within
a group to an arbitration agreement which has been signed by other member
of the group.89 The underlying basis of the group of companies doctrine rests
on maintaining the corporate separateness of the group companies while
determining the common intention of the parties to bind the non-signatory
party to the arbitration agreement. In other words, the group of companies
doctrine is a means of identifying the common intention of the parties to
bind a non-signatory to arbitration agreement by emphasizing and analysing
the corporate aﬃliation of the distinct legal entities.90

88 Stavros Brekoulakis, ‘Parties in International Arbitration: Consent v. Commercial
Reality’ in Stavros Brekoulakis, Julian DM Lew, et al (eds) in ‘The Evolution and
Future of International Arbitration’ (2016) 119, 120.
89 UNCITRAL, ‘Settlement of Commercial Disputes: Possible uniform rules on certain
issues concerning settlement of commercial disputes: conciliation, interim measures
of protection, written form of arbitration agreement: Report of the Secretary General’
A/CN.9/WG.II/WP.108/Add.1 (26 January 2000)
90 Gary Born (n 44) 1563.
686 SUPREME COURT REPORTS [2023] 15 S.C.R.

99. The group of companies doctrine has been a subject of rigorous
academic debate among practitioners of arbitration law and academics
with domain expertise. The ﬁrst view questions the necessity of adopting
the doctrine by suggesting that the determination of consent in complex
multi-party arbitration can be done on the basis of traditional contractual
and commercial law theories. Professor Bernard Hanotiau suggests that the
group of companies doctrine should be discarded because it has been used as
a “shortcut to avoid legal reasoning” leading to a distorted approach by courts
and arbitral tribunals.91 However, Professor Hanotiau does concede that
the existence of a group of companies may be a relevant factual element to
determine whether the conduct of a non-signatory party amounts to consent.
100. In contrast, the second view suggests that the group of companies
doctrine is an integral aspect of arbitration law. According to this view,
the existence of speciﬁc patterns of corporate structure could be a useful
factual indicator to determine the common intention of the parties to make
the non-signatory a party to the arbitration agreement.92 For instance, the
active involvement of a non-signatory group company in the facilitation and
performance of a commercial project helmed by other signatory companies
of the group can be considered as an indication that the non-signatory
party also consented to arbitrate. Moreover, Gary Born also suggests that
the group of companies doctrine is helpful because it allows the courts
to go beyond the objective intentions of the parties to determine their
dynamic subjective intentions both before, during, and after the execution
of the contract.93 According to Born, the doctrine also promotes eﬃcacy of
arbitration agreements by prohibiting circumvention of arbitration through
satellite litigation by non-signatory parties within a group. We are broadly
in agreement with this view for the reasons to follow.
101. The group of companies doctrine was developed by international
arbitral tribunals speciﬁcally in the context of arbitration, and is not generally

91 Hanotiau (n 85) 546.
92 Stavros Brekoulakis, ‘Parties in International Arbitration: Consent v. Commercial
Reality’ in Stavros Brekoulakis, Julian DM Lew, et al (eds) ‘The Evolution and Future
of International Arbitration’ (2016) 119, 137.
93 Gary Born (n 44) 1568.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 687
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

used in other areas of law.94 Although the existence of a group of companies
is a necessary condition, it is not the suﬃcient condition to determine the
intention of the parties. In almost all formulations, the courts and tribunals
have cautioned that the mere membership of a non-signatory in a group
of companies is not enough to bind it to the arbitration agreement. Rather,
the courts need to determine: ﬁrst, the existence of a group of companies;
and second, the conduct of the signatory and non-signatory parties which
indicate their common intention to make the non-signatory a party to the
arbitration agreement.95 Thus, the group of companies doctrine is similar
to other consent based doctrines such as agency, assignment, assumption,
and guarantee to the extent that it is ordinarily applied as a means of
identifying the common intention of the parties to bind the non-signatory
to the arbitration agreement.
102. The above position was explicitly adopted by the ICC Tribunal in
Dow Chemicals (supra) where it held that an arbitration agreement signed
by certain companies of a corporate group will bind the other non-signatory
members only where all the parties intended and understood the non-
signatories to be the “veritable parties” to the underlying contract containing
the arbitration agreement based on their participation in the “conclusion,
performance, or termination of the contracts”. Thus, the existence of a group
of companies is a factual element that the court or tribunal has to consider
when analysing the consent of the parties. It inevitably adds an extra layer
of criteria to an exercise which at its core is preponderant on determining
the consent of the parties in case of complex transactions involving multiple
parties and agreements.
103. In Chloro Control (supra), this Court rightly observed that a
non-signatory could be subjected to arbitration provided the underlying
transactions were with a group of companies and there was a clear intention
of the parties to bind both the signatory as well as non-signatory parties to the
arbitration agreement. This legal proposition has been reiterated in a series
of subsequent decisions of this Court including Canara Bank (supra) and
Discovery Enterprises (supra). Further, this Court in Cheran Properties

94 Gary Born (n 44) 1559.
95 Gary Born (n 44) 1562.
688 SUPREME COURT REPORTS [2023] 15 S.C.R.

(supra) held that the group of companies doctrine helps in decoding the
layered structure of commercial arrangements to unravel the true intention of
the parties to bind someone who is not formally a signatory to the contract,
but has “assumed” the obligation to be bound by the actions of a signatory.
This court explained the purport of the doctrine to discern the “true” party
in interest:
“25. […] The group of companies doctrine has been applied to
pierce the corporate veil to locate the “true” party in interest, and
more signiﬁcantly, to target the creditworthy member of a group
of companies. Through the extension of this doctrine is met with
resistance on the basis of the legal imputation of corporate personality,
the application of the doctrine turns on a construction of the arbitration
agreement and the circumstances relating to the entry into and
performance of the underlying contract.”
104. In Cox and Kings (supra), Surya Kant, J questioned whether
the principles of alter ego or piercing the corporate veil can alone justify
the application of the group of companies doctrine even in the absence of
implied consent. This Court in Cheran Properties (supra) clariﬁed that there
is an important distinction between the group of companies doctrine and the
principle of veil piercing or alter ego. The principle of alter ego disregards
the corporate separateness and the intentions of the parties in view of the
overriding considerations of equity and good faith. In contrast, the group
of companies doctrine facilitates the identiﬁcation of the intention of the
parties to determine the true parties to the arbitration agreement without
disturbing the legal personality of the entity in question. Therefore, the
principle of alter ego or piercing the corporate veil cannot be the basis for
the application of the group of companies doctrine.
iv. The determination of mutual intention
105. In multi-party agreements, the courts or tribunals will have to
examine the corporate structure to determine whether both the signatory
and non-signatory parties belong to the same group. This evaluation is fact
speciﬁc and must be carried out in accordance with the appropriate principles
of company law. Once the existence of the corporate group is established,
the next step is the determination of whether there was a mutual intention
of all the parties to bind the non-signatory to the arbitration agreement.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 689
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

106. The group of companies doctrine requires the courts and tribunals
to consider the commercial circumstances and the conduct of the parties
to evince the common intention of the parties to arbitrate. It is important
to note that the group of companies doctrine concerns only the parties to
the arbitration agreement and not the underlying commercial contract. 96
Consequently, a non-signatory could be held to be a party to the arbitration
agreement without becoming a formal party to the underlying contract. The
existence of a group companies is one of the essential factors to determine
whether the conduct amounts to consent but membership of a group is not
suﬃcient in itself. This has been the consistent position of law, starting from
the Dow Chemicals (supra) award, where it was observed that the common
intention of the parties to bind the non-signatory party to the arbitration
can be inferred from the ”circumstances that surround the conclusion and
characterize the performance and later the termination of the contracts.”
In other words, it was held that a non-signatory party could be considered
as a “true party” to the arbitration agreement on the basis of their role in
the conclusion, performance, or termination of the underlying contract
containing the arbitration agreement.
107. This Court in Chloro Controls (supra) laid down four factual
indices that the courts or tribunals should consider to bind a non-signatory
party to arbitration agreement. It is important to extract the relevant
paragraphs in full:
“72. This evolves the principle that a non-signatory could be subjected
to arbitration provided these transactions were with group of companies
and there was a clear intention of the parties to bind both, the signatory
as well as the non-signatory parties. In other words, “intention of
the parties” is a very signiﬁcant feature which must be established
before the scope of the arbitration can be said to include the
signatory as well as the non-signatory party.”
73. A non-signatory or third party could be subjected to arbitration
without their prior consent, but this would only be in exceptional
cases. The court will examine these exceptions from the touchstone of
direct relationship to the party signatory to the arbitration agreement,

96 Gary Born (n 44) 1567
690 SUPREME COURT REPORTS [2023] 15 S.C.R.

direct commonality of the subject-matter and the agreement between
the parties being a composite transaction. The transaction should be
of a composite nature where performance of the mother agreement
may not be feasible without aid, execution and performance of the
supplementary or ancillary agreements, for achieving the common
object and collectively having bearing on the dispute. Besides all this,
the court would have to examine whether a composite reference of such
parties would serve the ends of justice. Once this exercise is completed
and the court answers the same in the aﬃrmative, the reference of even
non-signatory parties would fall within the exception afore-discussed.”
(emphasis supplied)
108. In Cox and Kings (supra), Justice Surya Kant observed a
contradiction in terms of the above extracted paragraphs 72 and 73 of
Chloro Controls (supra). According to Justice Surya Kant, on the one hand,
Chloro Controls (supra) emphasizes on the “intention of the parties”, while
on the other hand it allows joinder of non-signatory parties to arbitration
proceedings “without their prior consent”. Justice Surya Kant is indeed
correct in noticing this inconsistency in the observations in the above
two paragraphs. Para 72 underlines mutual intent while para 73 seems to
move away from it by suggesting an absence of prior consent as well. We
would like to clarify that the phrase “without their prior consent” has to be
construed as “without prior formal consent to the arbitration agreement or the
underlying contract containing the arbitration agreement.” Reading the above
two paragraphs harmoniously, it is evident that paragraph 72 emphasizes
on determining the “intention of the parties” to bind a non-signatory party
to an arbitration agreement. In paragraph 73, the Court deals with the
tests for joining a non-signatory party which has not formally consented
to the arbitration agreement. Furthermore, the said paragraph enlist the
cumulative factors for deciphering the mutual intention of the parties to
join non-signatory parties to the arbitration agreement. In view of the above
clariﬁcation, we are of the opinion that so construed there would be no
inconsistency between paragraphs 72 and 73 of Chloro Controls (supra).
109. One of the contentions that has been raised before us pertains
to the observations in paragraph 73 of Chloro Controls (supra) that the
composite reference of all the parties should “serve the ends of justice”.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 691
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

It was contended that the equity jurisdiction doesn’t generally apply to
arbitration agreements because they are in the realm of private law. Since
arbitration is a matter of consent, interests of justice and equity cannot be
the sole grounds for invoking arbitration agreement. The primary test to
apply the group of companies doctrine is by determining the intention of the
parties on the basis of the underlying factual circumstances. The application
of the group of companies doctrine will serve to stymie satellite litigation
by non-signatory members of the corporate group, thereby ensuring the
eﬃcacy of the agreement between the parties. Avoiding multiplicity of
proceedings and fragmentation of disputes is certainly in the interests of
justice. However, it can never be the sole consideration to invoke the group
of companies doctrine.
110. In Discovery Enterprises (supra), this Court reﬁned and clariﬁed
the cumulative factors that the courts and tribunals should consider in
deciding whether a company within a group of companies is bound by the
arbitration agreement:
“40. In deciding whether a company within a group of companies
which is not a signatory to arbitration agreement would nonetheless
be bound by it, the law considers the following factors:
(i) The mutual intent of the parties;
(ii) The relationship of a non-signatory to a party which is a signatory
to the agreement;
(iii) The commonality of the subject-matter;
(iv) The composite nature of the transactions; and
(v) The performance of the contract.”
111. Since the group of companies doctrine is a consent based theory, its
application depends upon the consideration of a variety of factual elements
to establish the mutual intention of all the parties involved. In other words,
the group of companies doctrine is a means to infer the mutual intentions of
both the signatory and non-signatory parties to be bound by the arbitration
agreement. The relationship between and among the legal entities within
the corporate group structure and the involvement of the parties in the
performance of the underlying contractual obligations are indicators to
692 SUPREME COURT REPORTS [2023] 15 S.C.R.

determine the mutual intentions of the parties. The other factors such as the
commonality of the subject matter, composite nature of the transactions, and
the performance of the contract ought to be cumulatively considered and
analysed by courts and tribunals to identify the intention of the parties to
bind the non-signatory party to the arbitration agreement. The party seeking
joinder of a non-signatory bears the burden of proof of satisfying the above
factors to the satisfaction of the court or tribunal, as the case may be.
112. Section 7 of the Arbitration Act broadly talks about an agreement
by the parties in respect of a deﬁned legal relationship, whether contractual
or not. Such a legal relationship must give rise to legal obligations and
duties. In a corporate group, a company may have various related companies.
The legal relationship must be analysed in the context of the underlying
contract containing the arbitration agreement. The nature of the contractual
relationship can either be formally encrusted in the underlying contract, or
it can also be inferred from the conduct of the signatory and non-signatory
parties with respect to such contract. However, we clarify that mere presence
of a commercial relationship between the signatory and non-signatory
parties is not suﬃcient to infer “legal relationship” between and among the
parties. If this factor is applied solely, any related entity or company may
be impleaded even when it does not have any rights or obligations under
the underlying contract and did not take part in the performance of the
contract. The group of companies doctrine cannot be applied to abrogate
party consent and autonomy. The doctrine, properly conceptualised and
applied, gives eﬀect to mutual intent and autonomy.
113. In Canara Bank (supra), this Court observed that the group
of companies doctrine can also be invoked in cases where a “tight group
structure with strong organisational and ﬁnancial links, so as to constitute
a single economic unit, or a single economic reality.” In Cox and Kings
(supra), Justice Surya Kant observed that applying this approach has the
tendency to overlook the principle of corporate separateness and dispense
with the consent of the parties. There is weight in the caution expressed by
Justice Surya Kant. The presence of commercial relationships between a
party and a non-signatory cannot be the sole criteria to bind non-signatory
parties to the arbitration agreement. Adopting such an approach would bind
all the non-signatories within a corporate group, even though they are not
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 693
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

related to the contractual obligations under consideration, to the arbitration
agreement. Consequently, such an approach will lead to the violation of the
basic legal tenet of arbitration – the necessity of consent, either express or
implied, to be bound by an arbitration agreement. Moreover, the imposition
of liability on a non-signatory company within a group for the acts of other
members of the group merely on the basis of the fact that they belong to a
“single economic unit” will ride roughshod over the principle of distinct
corporate personality. The objective of the group of companies doctrine is
to identify the mutual intentions of the parties without disregarding the legal
personality of the entities.
114. In Dow Chemicals (supra), it was held that a group of
companies constitutes the same economic reality, which has to be
considered by the arbitral tribunal while deciding on its jurisdiction.
According to the tribunal, the presence of the group of companies is
merely an additional factor that the tribunal may consider to determine
the mutual intention of the parties. In Canara Bank (supra), this Court
did not apply the group of companies doctrine solely on the basis that
the companies belonged to a single economic unit. Rather, it was held
that there was an implied or tacit consent by the non-signatory party
(CANFINA) to being impleaded in the arbitral proceedings. The presence
of strong organizational links and ﬁnancial links between the signatory
and non-signatory parties is only one of the factual elements that the
court or tribunal may consider to determine the legal relationship between
the signatory and non-signatory parties. We accordingly clarify that the
principle of “single economic entity” cannot be used as a sole basis to
invoke the group of companies doctrine.
115. In case of multiple parties, the necessity of a common subject-
matter and composite transaction is an important factual indicator. An
arbitration agreement arises out of a deﬁned legal relationship between
the parties with respect to a particular subject matter. Commonality of
the subject matter indicates that the conduct of the non-signatory party
must be related to the subject matter of the arbitration agreement. For
instance, if the subject matter of the contract underlying the arbitration
agreement pertains to distribution of healthcare goods, the conduct of
the non-signatory party should also be connected or in pursuance of the
694 SUPREME COURT REPORTS [2023] 15 S.C.R.

contractual duties and obligations, that is, pertaining to the distribution
of healthcare goods. The determination of this factor is important to
demonstrate that the non-signatory party consented to arbitrate with
respect to the particular subject matter.
116. In case of a composite transaction involving multiple agreements,
it would be incumbent for the courts and tribunals to assess whether the
agreements are consequential or in the nature of a follow-up to the principal
agreement. This Court in Canara Bank (supra) observed that a composite
transaction refers to a situation where the transaction is interlinked in
nature or where the performance of the principal agreement may not be
feasible without the aid, execution, and performance of the supplementary
or ancillary agreements.
117. The general position of law is that parties will be referred to
arbitration under the principal agreement if there is a situation where there are
disputes and diﬀerences “in connection with” the main agreement and also
disputes “connected with” the subject-matter of the principal agreement.97 In
Chloro Controls (supra), this Court clariﬁed that the principle of “composite
performance” would have to be gathered from the conjoint reading of the
principal and supplementary agreements on the one hand, and the explicit
intention of the parties and attendant circumstances on the other. The
common participation in the commercial project by the signatory and non-
signatory parties for the purposes of achieving a common purpose could be
an indicator of the fact that all the parties intended the non-signatory party to
be bound by the arbitration agreement. Thus, the application of the group of
companies doctrine in case of composite transactions ensures accountability
of all parties who have materially participated in the negotiation and
performance of the transaction and by doing so have evinced a mutual intent
to be bound by the agreement to arbitrate.
118. The participation of the non-signatory in the performance of the
underlying contract is the most important factor to be considered by the
courts and tribunals. The conduct of the non-signatory parties is an indicator
of the intention of the non-signatory to be bound by the arbitration agreement.
The intention of the parties to be bound by an arbitration agreement can

97 Olympus Superstructures (P) Ltd v. Meena Vijay Khetan, (1999) 5 SCC 651
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 695
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

be gauged from the circumstances that surround the participation of the
non-signatory party in the negotiation, performance, and termination of the
underlying contract containing such agreement. The UNIDROIT Principle
of International Commercial Contract, 201698 provides that the subjective
intention of the parties could be ascertained by having regard to the following
circumstances:
(a) preliminary negotiations between the parties;
(b) practices which the parties have established between themselves;
(c) the conduct of the parties subsequent to the conclusion of the
contract;
(d) the nature and purpose of the contract;
(e) the meaning commonly given to terms and expressions in the trade
concerned; and
(f) usages.
119. In Dow Chemicals (supra), consent of the non-signatory parties
to arbitrate was implied primarily in view of their predominant participation
in the conclusion, performance, and termination of contracts. Similarly,
this Court in Canara Bank (supra) observed that a non-signatory entity
may be bound by an arbitration agreement where a parent or a member of
the group of companies is a signatory to the arbitration agreement and the
non-signatory entity of the group has been engaged in the negotiation or
performance of the commercial contract.
120. In Reckitt Benckiser (supra), this Court was called upon to
determine whether the representation of a purported promoter of a non-
signatory entity would bind it to the said representation. In that case, the
applicant entered into an agreement with an Indian company for the supply of
packing materials. During the stage of negotiation, the applicant circulated
a draft of the agreement by email with the Indian company. This email was
reverted by one Mr. Frederick Reynders, who the applicant claimed was the
promoter of a Belgian sister company of the Indian company. The Belgian

98 UNIDROIT Principles of International Commercial Contracts, 2016, Article 4.3
696 SUPREME COURT REPORTS [2023] 15 S.C.R.

company was a non-signatory to the agreement. Yet, the applicant sought to
implead the Belgian company on the basis that it had participated during the
negotiations preceding the execution of the agreement. This Court refused
to allow the joinder of the Belgian company to the arbitration agreement
on the grounds that Mr. Reynders was not the promoter of the Belgian
company, and was therefore not acting in that capacity on or behalf of the
company and the applicant failed to discharge its burden to prove that the
Belgian company consented to the arbitration agreement.
121. Evaluating the involvement of the non-signatory party in the
negotiation, performance, or termination of a contract is an important factor
for a number of reasons. First, by being actively involved in the performance
of a contract, a non-signatory may create an appearance that it is a veritable
party to the contract containing the arbitration agreement; second, the
conduct of the non-signatory may be in harmony with the conduct of the
other members of the group, leading the other party to legitimately believe
that the non-signatory was a veritable party to the contract; and third, the
other party has legitimate reasons to rely on the appearance created by the
non-signatory party so as to bind it to the arbitration agreement.
v. Threshold standard
122. In Cox and Kings (supra), Justice Surya Kant observed that
Reckitt Benckiser (supra) ﬁxed a higher threshold of evidence for the
application of the group of companies doctrine as compared to earlier
decisions of this Court. This Court’s approach is Reckitt Benckiser (supra)
is indicative of the fact that the mere presence of a group of companies is
not the sole or determinative factor to bind a non-signatory to an arbitration
agreement. Rather, the courts or tribunals should closely evaluate the overall
conduct and involvement of the non-signatory party in the performance of
the contract. The nature or standard of involvement of the non-signatory in
the performance of the contract should be such that the non-signatory has
actively assumed obligations or performance upon itself under the contract.
In other words, the test is to determine whether the non-signatory has a
positive, direct, and substantial involvement in the negotiation, performance,
or termination of the contract. Mere incidental involvement in the negotiation
or performance of the contract is not suﬃcient to infer the consent of the
non-signatory to be bound by the underlying contract or its arbitration
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 697
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

agreement. The burden is on the party seeking joinder of the non-signatory
to the arbitration agreement to prove a conscious and deliberate conduct of
involvement of the non-signatory based on objective evidence.
123. An arbitration agreement is a distinct and separate agreement from
the substantive commercial contract which contains the arbitration agreement.
An arbitration agreement is independent of the other terms of the contract,
to the extent that nulliﬁcation of the contract will not lead to invalidation
of the arbitration agreement.99 The concept of separability of the arbitration
agreement from the underlying contract ensures that the intention of the parties
to resolve the disputes through arbitration does not vanish merely because
of a challenge to the legal validity of the underlying contract.100 To join a
non-signatory to arbitration, the decisive question that has to be answered is
whether a non-signatory consented to the arbitration agreement, as distinct
from the underlying contract containing the arbitration agreement.101
124. Stavros Brekoulakis argues that the application of legal theories
such as group of companies doctrine rests on an assumption that an arbitration
agreement requires “less consent” or “less evidence of consent” than the
underlying contract containing the arbitration agreement. 102 Brekoulakis
further notes that the assumption that implied consent of a non-signatory to
the underlying contract is suﬃcient to constitute consent to the arbitration
agreement contained in such contract militates against the principle of
separability of contracts.103
125. The non-signatory’s participation in the negotiation, performance,
or termination of the contract can give rise to the implied consent of it being
bound by the contract. Brekoulakis rightly points out an anomalous situation
where the legal theories such as the group of companies doctrine treat consent
as a functional legal construct without actually determining the main question –

99 Reliance Industries Ltd v. Union of India, (2014) 7 SCC 603
100 Enercon (India) Ltd v. Enercon Gmbh, (2014) 5 SCC 1
101 Gary Born (n 44) 1545.
102 Stavros Brekoulakis, ‘Rethinking Consent in International Commercial Arbitration:
A General Theory for Non-signatories’ (2017) 8 Journal of International Dispute
Settlement 610, 621.
103 Stavros Brekoulakis, ‘Parties in International Arbitration: Consent v. Commercial
Reality’ in Stavros Brekoulakis, Julian DM Lew, et al (eds) ‘The Evolution and Future
of International Arbitration’ (2016) 119, 148.
698 SUPREME COURT REPORTS [2023] 15 S.C.R.

whether the arbitral tribunal has jurisdiction over the parties (and non-signatory
parties) to resolve the disputes?104
126. The involvement of a non-signatory in the negotiation,
performance, or termination of the underlying contract could be an important
indicator of the fact that such non-signatory accepted to be bound by the
contract. However, transposition of such consent to an arbitration agreement
is a legal ﬁction to accommodate commercial reality. The contemporary
commercial reality suggests that diﬀerent companies within a group often
become involved in diﬀerent stages of execution and performance of a
contractual transaction. For instance, a non-signatory may merely participate
in the performance of a contract to carry out a speciﬁc task or assist the
parent company. Such incidental involvement in the contractual performance
is insuﬃcient to constitute consent to the underlying contract, let alone
the arbitration agreement. Rather, it has been suggested that it should also
be considered whether the commercial dispute suﬃciently implicates the
non-signatory party for the arbitral tribunal to exercise its jurisdiction.105
The emphasis on the scope of the jurisdiction of the arbitral tribunal with
respect to the subject matter of the dispute between the signatory parties
would ensure eﬀective arbitration and prevent unnecessary fragmentation of
disputes. It also adequately accounts for the lack of formal consent on behalf
of the non-signatory to the arbitration agreement (and the ensuing procedural
aspects such as the constitution of arbitral tribunal) by considering facts and
circumstances, such as close relationship and composite transactions, which
indicates that there was a mutual understanding or convergence among all
the parties to treat non-signatory as parties to the arbitration agreement. 106
127. We are of the opinion that there is a need to seek a balance between
the consensual nature of arbitration and the modern commercial reality
where a non-signatory becomes implicated in a commercial transaction
in a number of diﬀerent ways. Such a balance can be adequately achieved
if the factors laid down under Discovery Enterprises (supra) are applied

104 Ibid, at 121.
105 Brekoulakis (n 102) 629.
106 Karim Youssef, ‘The Limits of Consent: The Right or Obligation to Arbitrate of Non-
Signatories in Group of Companies’ in Multiparty Arbitration: Dossiers of the ICC
Institute of Worlds Business Law, Volume 7 (2010) 71, 79.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 699
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

holistically. For instance, the involvement of the non-signatory in the
performance of the underlying contract in a manner that suggests that it
intended to be bound by the contract containing the arbitration agreement is
an important aspect. Other factors such as the composite nature of transaction
and commonality of subject matter would suggest that the claims against
the non-signatory were strongly inter-linked with the subject matter of the
tribunal’s jurisdiction. Looking at the factors holistically, it could be inferred
that the non-signatories, by virtue of their relationship with the signatory
parties and active involvement in the performance of commercial obligations
which are intricately linked to the subject matter, are not actually strangers
to the dispute between the signatory parties.
128. We hold that all the cumulative factors laid down in Discovery
Enterprises (supra) must be considered while determining the applicability
of the group of companies doctrine. However, the application of the above
factors has to be fact-speciﬁc, and this Court cannot tie the hands of the
courts or tribunals by laying down how much weightage they ought to give
to the above factors. This approach ensures that a dogmatic emphasis on
express consent is eschewed in favour of a modern approach to consent
which focuses on the factual analysis, complexity of commercial projects,
and thereby increases the relevance of arbitration in multi-party disputes.
Moreover, it is also keeping in line with the objectives of the Arbitration
Act which aims to make the Indian arbitration law more responsive to the
contemporary requirements.
F. The group of companies doctrine has independent existence
129. In Cox and Kings (supra), Chief Justice Ramana observed that
Chloro Controls (supra), and the series of subsequent decisions, have
not appropriately dealt with the scope and ambit of the phrase “claiming
through or under” as appearing under Sections 8 and 45 of the Arbitration
Act. Connectedly, one of the issues that arises for the consideration of this
Court is whether the phrase “claiming through or under” could be interpreted
to include the group of companies doctrine.
130. The Arbitration Act does not deﬁne the phrase “person claiming
through or under” a party. A person “claiming through or under” a party is
not a signatory to the contract or agreement, but can assert a right through or
under the signatory party. Russel on Arbitration states that an assignee can
700 SUPREME COURT REPORTS [2023] 15 S.C.R.

invoke the arbitration agreement as a person “claiming through or under”
a party to the arbitration agreement.107 An assignee takes the assigned right
under a contract with both the beneﬁt and burden of the arbitration clause.108
Similarly, the English courts have held that a transferee or subrogate can
claim through or under a party to the arbitration agreement. 109 Under the
English law, the typical scenarios where a person or entity can claim
through or under a party are assignment, subrogation, and novation. In
these situations, the assignees or representatives become successors to the
signatory party’s interests under the arbitration agreement. They step into the
shoes of the signatory party, from whom they derive the right to arbitrate,
rather than claiming an independent right under the arbitration agreement.
131. The scope of an arbitration agreement under the English law is
limited to the parties who entered into it and those claiming through or under
them.110 In Roussel-Uclaf (supra), it was held that a subsidiary company can
invoke the arbitration agreement on the basis that it is “claiming through or
under” the parent company because of the close relationship between the
two companies. However, Roussel-Uclaf (supra) was expressly overruled
by the Court of Appeal in Sancheti (supra) on the ground that a mere legal
or commercial connection is not suﬃcient for a person to claim through or
under a party to an arbitration agreement.
132. The scope of the phrase “claiming through or under” has been
evaluated by other common law jurisdictions. In Tanning Research
Laboratories Inc v. O’Brien,111 the issue before the High Court of Australia
was whether a liquidator could be regarded as a person “claiming through
or under” a party to an arbitration agreement. The High Court construed
the words “through” or “under” to hold that the liquidator had a derivative
interest through the company. The relevant observation is extracted below:

107 Russel on Arbitration (23rd edn, 2007) 99 para 3-018.
108 Schiﬀahrts–gesellschaft Detlev von Appen v Voest Alpine Intertrading, [1997]
EWCA Civ 1420.
109 Through Transport Mutual Insurance Association (Eurasia) Ltd v. New India
Assurance Co Ltd, [2005] EWHC 455 (Comm); West Tankers Inc. v. Allianz Spa,
[2012] EWCA Civ 27.
110 Section 82(2) of the English Arbitration Act, 1996
111 [1990] HCA 8
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 701
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

“[T]he prepositions “through” or “under” convey the notion of a
derivative cause of action or ground of defence, that is to say, a
cause of action or ground of defence derived from the party. In
other words, an essential element of the cause of action or defence
must be or must have been vested in or exercisable by the party
before the person claiming through or under the party can rely on
the cause of action or ground of defence. A liquidator may be a
person claiming through or under a company because the causes
of action or grounds of defence on which he relies are vested in or
exercisable by the company; a trustee in bankruptcy may be such a
person because the causes of action or grounds of defence on which
he relies were vested in or exercisable by the bankrupt.”
The test of derivative action conveys that a third party’s cause of
action is derived from the original party to the arbitration agreement.
The third party cannot be saddled with new duties and liabilities to
which it has not consented. They can only be held liable or entitled to
the extent they derive their rights or entitlements from the original party
to the agreement.
133. The above formulation was further clariﬁed by the Australian
High Court in Rinehart v. Hancock Prospecting Pty Ltd112, where it
observed that the ultimate test in Tanning Research (supra) was whether
an essential element of the defence was or is vested in or exercisable by
the party to the arbitration agreement. In Rinehart (supra), the Court
was dealing with a situation where a signatory party had assigned mining
tenements in breach of trust. It was held that assignees stand in the same
position vis-à-vis the claimant as the assignor since the “assignee [took]
its stand upon a ground which [was] available to the assignor.” The
Court concluded that the assignees were persons claiming through or
under the signatory parties on the basis that the parties to the arbitration
agreement had agreed that any dispute as to the beneﬁcial title to the
mining tenements would be determined by arbitration. Since the third
parties accepted the beneﬁts of the agreement, it was held that they must
also accept the burdens of its stipulated conditions, including arbitration.

112 [2019] HCA 13
702 SUPREME COURT REPORTS [2023] 15 S.C.R.

134.In Rinehart (supra), the Australian High Court’s approach is
similar to the doctrine of equitable estoppel developed by the US Courts,
to the eﬀect that a non-signatory party who elects to take the beneﬁt of
some aspects of the contract, must also accept the burden of it. 113 However,
we cannot adopt the Rinehart (supra) position in the context of the phrase
“claiming through or under” as doing so would be contrary to the common
law position and the legislative intent underpinning the Arbitration Act, as
will be discussed below.
135. An analysis of the cases cited above establishes the following
propositions of law: ﬁrst, the typical scenarios where a person or entity can
claim through or under a party are assignment, subrogation, and novation;
second, a person “claiming through or under” can assert a right in a derivative
capacity, that is through the party to the arbitration agreement, to participate
in the agreement; third, the persons claiming through or under do not possess
an independent right to stand as parties to an arbitration agreement, but
as successors to the signatory parties’ interest; and fourth, mere legal or
commercial connection is not suﬃcient for a non-signatory to claim through
or under a signatory party.
i. Party and Persons “claiming through or under” are diﬀerent
136. The 246th Law Commission suggested that the deﬁnition of “party”
under section 2(1)(h) of the Arbitration Act be amended to include the words
“or any persons claiming through or under such party”. The Commission
reasoned that in appropriate contexts, a party also include persons “claiming
through or under” a signatory party such as successors-in-interest. However,
the suggested amendment was not carried out by Parliament.
137. The word “claim” is of very extensive signiﬁcance embracing
every species of legal demand. In the ordinary sense, it means to demand as
one’s own or as one’s right.114 A “claim” also means assertion of a cause of
action.115 The expression “through” connotes “by means of, in consequence

113 Vicky Priskich, ‘Binding non-signatories to arbitration agreements – who are person
‘claiming through or under’ a party?’ (2019) 35(3) Arbitration International 375-386.
114 Black’s Law Dictionary (5th edn, 1979) 224
115 P Ramanatha Aiyar’s, The Law Lexicon (1997) 330
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 703
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

of, by reason of.”116 The term “under” is used with reference to an inferior or
subordinate position. P Ramanatha Aiyar’s Law Lexicon deﬁnes “claiming
under” or “claiming under him” to denote a person putting forward a claim
under derived rights.117 When the above deﬁnitions are read harmoniously,
it gives rise to an inference that a person “claiming through or under”
is asserting their legal demand or cause of action in an intermediate or
derivative capacity. We can also conclude that a person “claiming through
or under” has inferior or subordinate rights in comparison to the party from
which it is deriving its claim or right. Therefore, a person “claiming through
or under” cannot be a “party” to an arbitration agreement on its own terms
because it only stands in the shoes of the original signatory party.
138. An arbitration is founded upon the consent of the parties to refer
their disputes to an alternative dispute resolution mechanism. Consequently,
third parties typically cannot be compelled to arbitrate based on an agreement
to which they have not consented. The phrase “claiming through or under”
has not been used either in Section 2(1)(h) or Section 7 of the Arbitration Act.
This is because those provisions are based on the concept of party autonomy
and party independence, which requires the party to provide consent to
submit their disputes to arbitration. On the contrary, a person claiming
through or under a party to an arbitration agreement is merely standing in
the shoes of the original party to the extent that it is merely agitating the
right of the original party to the arbitration agreement.
139. The phrase “claiming through or under” has been used in Sections
8, 35, and 45 in their speciﬁc contexts. Section 8 contains a mandate that
when an action is brought before a judicial authority which is the subject
of an arbitration agreement, the dispute shall be referred to arbitration on
an application made by a party or any person claiming through or under
him. As mentioned above, the phrase “claiming through or under” was
inserted in Section 8 to bring it in line with Section 45. Sections 8 and 45 are
peremptory in nature mandating the court to refer the parties to arbitration if
there is a valid arbitration agreement.118 In A Ayyasamy (supra), it was held

116 Black’s Law Dictionary (5th edn, 1979) 1328
117 P Ramanatha Aiyar’s, The Law Lexicon (1997) 331
118 Agri Gold Exims Ltd v. Sri Lakshmi Knits & Wovens, (2007) 3 SCC 686
704 SUPREME COURT REPORTS [2023] 15 S.C.R.

that Section 8 imposes an aﬃrmative obligation on every judicial authority
to “hold down parties to the terms of the agreement entered into between
them to refer disputes to arbitration.”119 Thus, the legislative intent behind
Sections 8 and 45 is to ensure that parties fulﬁl their mutual intention of
settling disputes arising between or among them by way of arbitration.
140. Section 35 of the Arbitration Act provides that an arbitral award
shall be ﬁnal and binding on the parties and persons claiming under them
respectively. In Cheran Properties (supra), this Court rightly observed that
the expression “persons claiming under them” is “a legislative recognition
of the doctrine that besides the parties, an arbitral award binds every person
whose capacity or position is derived from and is the same as a party to the
proceedings.” It was further observed that “[h]aving derived its capacity
from a party and being in the same position as a party to the proceedings
binds a person who claims under it.” Similarly, Section 73 also provides
that a settlement agreement signed by the parties shall be ﬁnal and binding
“on the parties and persons claiming under them respectively.”
141. Sections 8, 35, and 45 use the phrase “parties or any person
claiming through or under”. The word “or” is used in Section 8 and 45 as
a disjunctive particle to express an alternative or give a choice between
“parties” or “any person claiming through or under”. Consequently, either
the party to an arbitration agreement or any person claiming through or
under the party can make an application to the judicial authority to refer
the dispute to arbitration. It is in the interest of respecting the intention of
the parties and promoting commercial eﬃcacy, that the above provisions
allow either the party or any person “claiming through or under him” to
refer the disputes to arbitration.
142. On the other hand, Sections 35 and 73 use the phrase “parties
and persons claiming under them”. The use of the word “and” in Sections
35 and 73 conveys the idea that “parties” is to be added or taken together
with the subsequent phrase “any person claiming through or under.” The
above provisions provide that an arbitration award binds not only the parties
but also all such persons who derive their capacity from the party to the
arbitration agreement. Again, the foundational basis for this provision is

119 (2016) 10 SCC 386
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 705
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

commercial eﬃcacy as it ensures that an arbitral award leads to ﬁnality,
such that both the parties and all persons claiming through or under them
do not reagitate the claims. Moreover, the use of the word “and” in Sections
35 and 73 leads to an unmistakable conclusion that under the Arbitration
Act, the concept of a “party” is distinct and diﬀerent from the concept of
“persons claiming through or under” a party to the arbitration agreement.
ii. The approach adopted by this Court in Chloro Controls is
Incorrect
143. This Court in Chloro Controls (supra) observed: ﬁrst, that the use
of the expression “any person” reﬂects the legislative intent of enlarging the
scope of the words beyond the “parties” who are signatory to the arbitration
agreement; second, a signatory party to an arbitration agreement may have a
legal relationship with the party claiming through or under the party on the
basis of the group of companies doctrine; and third, in case of a multi-party
contract, a subsidiary company which “derives” its basic interest from the
parent contract would be covered under the expression “claiming though
or under.”
144. The ﬁrst proposition of law relies on the construction of the
expression “any person” to conclude that the language of Section 45 has
wider import. However, the expression “any person” cannot be singled out
and construed devoid of its context. The context, in terms of Section 8 and
45, is provided by the subsequent phrase – “claiming through or under”.
Therefore, such “any persons” are acting only in a derivative capacity. Since
an arbitration agreement excludes the jurisdiction of national courts, it is
essential that the parties consent, either expressly or impliedly, to submit
their dispute to the arbitral tribunal.
145. The second and third proposition of law states that a non-signatory
party may claim through or under a signatory party by virtue of its legal
or commercial relationship with the latter. However, this proposition is
contrary to the common law position as evidenced in Sancheti (supra) and
Tanning Research Laboratories (supra) according to which a mere legal
or commercial connection is not suﬃcient to allow a non-signatory to claim
through or under a party to the arbitration agreement. In A Ayyasamy (supra),
this Court observed that the Arbitration Act should be interpreted “so as to
bring in line the principles underlying its interpretation in a manner that is
706 SUPREME COURT REPORTS [2023] 15 S.C.R.

consistent with prevailing approaches in the common law world.” Therefore,
even though a subsidiary derives interests or beneﬁts from a contract entered
into by the company within a group, they would not be covered under the
expression “claiming through or under” merely on the basis that it shares a
legal or commercial relationship with the parties.
146. One of the questions that has been referred before us is whether
the phrase “claiming through or under” in Section 8 could be interpreted to
include the group of companies doctrine. The group of companies doctrine
is founded on the mutual intention of the parties to determine if the non-
signatory entity within a group could be made a party to the arbitration
agreement in its own right. Such non-signatory entity is not “claiming
through or under” a signatory party. As mentioned above, the phrase
“claiming through or under” is used in the context of successors in interest
that act in a derivative capacity and substitute the signatory party to the
arbitration agreement. To the contrary, the group of companies doctrine is
used to bind the non-signatory to the arbitration agreement so that it can
agitate the beneﬁts and be subject to the burdens that it derived or is conferred
in the course of the performance of the contract. The doctrine can be used
to bind a non-signatory party to the arbitration agreement regardless of the
phrase “claiming through or under” as appearing in Sections 8 and 45 of
the Arbitration Act.
147. In Chloro Controls (supra), this Court joined the non-signatory
entities as parties to the arbitration agreement in their own rights on the
basis that they were signatories to ancillary agreements which were closely
interlinked with the performance of the principal agreement containing the
arbitration agreement. This Court in Chloro Controls (supra) reasoned
that the non-signatory entities, being part of the same corporate group as
the signatory parties, were subsidiaries in interest or subsidiary companies,
and therefore were “claiming through or under” the signatory parties. As
held above, the phrase “claiming through or under” only applies to entities
acting in a derivative capacity and not with respect to joinder of parties in
their own right. Therefore, we hold that the approach of this Court in Chloro
Controls (supra) to the extent that it traced the group of companies doctrine
to the phrase “claiming through or under” is erroneous and against the well-
established principles of contract and commercial law. As observed above,
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 707
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

the existence of the group of companies doctrine is intrinsically found on
the principle of the mutual intent of parties to a commercial bargain.
148. Chief Justice N. V. Ramana also sought our consideration on
the question of whether the “group of companies doctrine” as expounded
by Chloro Controls (supra) and subsequent judgments is valid in law.
The group of companies doctrine has important utility in determining
the mutual intention of the parties in the context of complex transactions
involving multiple parties and multiple agreements. Moreover, the doctrine
has been substantively entrenched in the Indian arbitration jurisprudence.
We are aware of the fact that the group of companies doctrine has not found
favor in some other jurisdictions, including in English law. However, we
deem it appropriate to retain the doctrine which has held the ﬁeld in Indian
jurisprudence though by ﬁrmly establishing it within the realm of the mutual
consent or the mutual intent of the parties to a commercial bargain. This
will ensure on the one hand that Indian arbitration law retains a sense of
dynamism so as to respond to contemporary challenges. At the same time,
structuring the doctrine in the manner suggested so as to ground it in settled
principles governing the elucidation of mutual intent is necessary. This will
ensure that the doctrine has a jurisprudential foundation in party autonomy
and consent to arbitrate.
149. Although the issue before us largely concerns the application of
the group of companies doctrine in the Indian context, this Court cannot
be oblivious to the changing currents in the international arbitration
jurisprudence. In deciding the contours of the group of companies doctrine,
we have reiterated the general legal proposition that non-signatory persons
or entities can also be bound by an arbitration agreement. The basis for
such joinder stems from the harmonious reading of Section 2(1)(h) along
with Section 7 of the Arbitration Act. Since the scope of this judgment was
limited to the group of companies doctrine, any authoritative determination
given by this Court in the course of this judgment should not be interpreted
to exclude the application of other doctrines and principles for binding non-
signatories to arbitration agreements. However, we also need to be mindful of
the fact that the Indian courts and tribunals should not adopt an overzealous
approach to extending the jurisdiction of arbitral tribunals to non-signatory
parties merely on the ground that they are part of a corporate group.
708 SUPREME COURT REPORTS [2023] 15 S.C.R.

150. In Cheran Properties (supra), this Court found the non-signatory
to be “claiming through or under” the signatory party to the arbitration
agreement and not as a “party” to the arbitration agreement. In that case,
this Court was dealing with an issue pertaining to enforcement of an arbitral
award. On the available facts and circumstances, the Court held that the
non-signatory was a nominee of the signatory party under the underlying
commercial contract, and therefore was acting in a derivative capacity. In
Canara Bank (supra) this Court indirectly adopted the principle of estoppel
to bind the non-signatory on the basis that it had already participated in the
judicial proceedings before the High Court, and cannot subsequently deny
being a party to the proceedings before the arbitral tribunal. In Discovery
Enterprises (supra), this Court remanded the matter back to the arbitral
tribunal to decide afresh the application for discovery and inspection by
applying the group of companies doctrine. Therefore, we can conclude
that the observations pertaining to the group of companies doctrine were
rendered in the facts and circumstances of each case. We have harmonized
the divergent strands of law emanating from these judgments in the preceding
paragraphs.
151. In Law’s Empire, Ronald Dworkin proposed a hypothetical
where a group of novelists write a novel seriatim, each novelist interpreting
the chapters given to them to write a new chapter.120 The novelists are
expected to “take their responsibilities of continuity more seriously” to
create “a single uniﬁed novel that is the best it can be.”121 Chloro Controls
(supra) was the ﬁrst chapter in the group of companies doctrine in Indian
arbitration jurisprudence. The series of subsequent judgments starting from
Cheran Properties (supra) and ending with Cox and Kings (supra) were
the incremental chapters – each adding further dimensions to the theory
already propounded in the previous chapters. In this case, we have added
another chapter to the theory of group of companies doctrine. Our aim was
to make further progress in the course of evolution of arbitration law. In the
process, we have tweaked the plotline to make the novel a more coherent
read, instead of rewriting or discarding the previous chapters.

120 Ronald Dworkin, Law’s Empire (Belknap Press, Harvard University Press 1986) 229.
121 Ibid.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 709
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

iii. Power of the Courts to issue directions under Section 9
152. In Cox and Kings (supra), Chief Justice Ramana observed that
establishing the group of companies doctrine in the phrase “claiming through
or under” creates an anomalous situation where a party “claiming through or
under” could be referred to an arbitration agreement, but would not have a
right to seek relief under Section 9 of the Arbitration Act. Section 9 allows a
“party” to approach the court to seek interim measures such as appointment
of a guardian for a minor or person of unsound mind, custody or sale of
any goods which are the subject matter of the arbitration agreement, and
appointment of receiver.
153. The group of companies doctrine is based on determining the
mutual intention to join the non-signatory as a “veritable” party to the
arbitration agreement. Once a tribunal comes to the determination that a
non-signatory is a party to the arbitration agreement, such non-signatory
party can apply for interim measures under Section 9 of the Arbitration Act.
Establishing the legal basis for the application of the group of companies
doctrine in the deﬁnition of “party” under Section 2(1)(h) read with Section
7 of the Arbitration Act resolves the anomality pointed out by Chief Justice
Ramana.
G. The standard of determination at the referral stage – Sections
8 and 11
154. The last but not the least issue that arises for our consideration
pertains to the stage of applicability of the group of companies doctrine
under the Arbitration Act. In Cox and Kings (supra), Chief Justice Ramana
observed that there is a need to have a relook at the scope of judicial reference
at the stage of Sections 8 and 11 of the Arbitration Act considering the ambit
of the unamended Section 2(1)(h). Section 5 of the Arbitration Act provides
that “no judicial authority shall intervene except where so provided in this
Part.” The context for “so provided” is contained in Sections 8 and 11 which
mandate the courts to refer the parties to arbitration. Under Section 8, the
court has to “prima facie” ascertain the existence of a valid arbitration
agreement before referring the parties to arbitration. Section 11 empowers
the Supreme Court and High Courts to appoint arbitrators on the failure of
the parties to comply with the agreed arbitration procedure. Section 11 could
be invoked in situation where a dispute has arisen and one of the parties to
710 SUPREME COURT REPORTS [2023] 15 S.C.R.

the arbitration agreement unsuccessfully invoked the agreed procedure for
the appointment of an arbitrator due to the non-cooperation of the other party.
155. In SBP & Co v. Patel Engineering Ltd, 122 a seven-Judge
Bench of this Court was called upon to determine the scope of the
powers of the Chief Justice or their designate under Section 11 of the
Arbitration Act. It was held that the Chief Justice or the designated
judge will have the powers to determine the jurisdiction to entertain the
request, the existence of a valid arbitration agreement, the existence
of a live claim, the existence of the condition for the exercise of their
powers, and the qualifications of the arbitrators. Furthermore, it was
held that the Chief Justice has to decide whether there is an arbitration
agreement as defined under the Arbitration Act and whether the person
who has made a request is party to such an agreement.
156. In 2015, the Arbitration Act was amended to insert Section
11(6-A). The said provision reads as follows:
“(6A) The Supreme Court, or as the case may be, the High
Court, while considering any application under sub-section (4)
or sub-section (5) or (sub-section (6), shall, notwithstanding
any judgment, decree, or order of any Court, confine to the
examination of the existence of an arbitration agreement.”
By virtue of non-obstante clause, Section 11(6A) has set out a new
position, which takes away the basis of the position laid down in
Patel Engineering (supra). In 2019, the Parliament passed the
Arbitration and Conciliation (Amendment) Act, 2019 omitting
Section 11(6-A). However, the amendment to Section 11(6-A) is
yet to be notified. Till such time, Section 11 as amended in 2015
will continue to remain in force.
157. When deciding the referral issue, the scope of reference
under both Sections 8 and 11 is limited. Where Section 8 requires
the referral court to look into the prima facie existence of a valid
arbitration agreement, Section 11 confines the court’s jurisdiction to
the existence of the examination of an arbitration agreement.

122 (2005) 8 SCC 618
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 711
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

158. Section 16 of the Arbitration Act enshrines the principle
of competence-competence in Indian arbitration law. The provision
empowers the arbitral tribunal to rule on its own jurisdiction, including
any ruling on any objections with respect to the existence or validity
of arbitration agreement. Section 16 is an inclusive provision which
comprehends all preliminary issues touching upon the jurisdiction of the
arbitral tribunal.123 The doctrine of competence-competence is intended
to minimize judicial intervention at the threshold stage. The issue of
determining parties to an arbitration agreement goes to the very root
of the jurisdictional competence of the arbitral tribunal.
159. In Vidya Drolia (supra), Justice N. V. Ramana (as the
learned Chief Justice then was) held that the amendment to Section 8
rectified the shortcomings pointed out in Chloro Controls (supra) with
respect to domestic arbitration. He further observed that the issue of
determination of parties to an arbitration agreement is a complicated
exercise, and should best be left to the arbitral tribunals:
“239. […] Jurisdictional issues concerning whether certain parties
are bound by a particular arbitration, under group-company
doctrine or good faith, etc. in a multi-party arbitration raises
complicated factual questions, which are best left for the tribunal
to handle. The amendment to Section 8 on this front also indicates
the legislative intention to further reduce the judicial interference
at the stage of reference.”
160. In Pravin Electricals Pvt Ltd v. Galaxy Infra and
Engineering Pvt Ltd, 124 a Bench of three Judges of this Court was
called upon to decide an appeal arising out of a petition filed under
Section 11(6) of the Arbitration Act for appointment of sole arbitrator.
The issue before the Court was the determination of existence of
an arbitration agreement on the basis of the documentary evidence
produced by the parties. This Court prima facie opined that there was
no conclusive evidence to infer the existence of a valid arbitration

123 Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field, (2020) 2
SCC 455
124 (2021) 5 SCC 671
712 SUPREME COURT REPORTS [2023] 15 S.C.R.

agreement between the parties. Therefore, the issue of existence of a
valid arbitration agreement was referred to be decided by the arbitral
tribunal after conducting a detailed examination of documentary
evidence and cross-examination of witnesses.
161. The above position of law leads us to the inevitable
conclusion that at the referral stage, the court only has to determine
the prima facie existence of an arbitration agreement. If the referral
court cannot decide the issue, it should leave it to be decided by
the arbitration tribunal. The referral court should not unnecessarily
interfere with arbitration proceedings, and rather allow the arbitral
tribunal to exercise its primary jurisdiction. In Shin-Etsu Chemical Co
Ltd v. Aksh Optifibre Ltd,125 this Court observed that there are distinct
advantages to leaving the final determination on matters pertaining to
the validity of an arbitration agreement to the tribunal:
74. […] Even if the Court takes the view that the arbitral agreement
is not vitiated or that it is not valid, inoperative or unenforceable,
based upon purely a prima facie view, nothing prevents the
arbitrator from trying the issue fully rendering a final decision
thereupon. If the arbitrator finds the agreement valid, there is
no problem as the arbitration will proceed and the award will
be made. However, if the arbitrator finds the agreement invalid,
inoperative or void, this means that the party who wanted to
proceed for arbitration was given an opportunity of proceedings
to arbitration, and the arbitrator after fully trying the issue has
found that there is no scope for arbitration.”
162. In Chloro Controls (supra), this Court held that it is the
legislative intent of Section 45 of the Arbitration Act to give a finding
on whether an arbitration agreement is “null and void, inoperative
and incapable of being performed” before referring the parties to
arbitration. In 2019, the expression “unless it prima facie finds” was
inserted in Section 45. In view of the legislative amendment, the basis

125 (2005) 7 SCC 234
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 713
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

of the above holding of Chloro Controls (supra) has been expressly
taken away. The present position of law is that the referral court only
needs to give a prima facie finding on the validity or existence of an
arbitration agreement.
163. In Deutsche Post Bank Home Finance Ltd v. Taduri
Sridhar,126 a two-Judge Bench of this Court held that when a third party
is impleaded in a petition under Section 11(6) of the Arbitration Act, the
referral court should delete or exclude such third party from the array
of parties before referring the matter to the tribunal. This observation
was made prior to the decision of this Court in Chloro Controls (supra)
and is no longer relevant in light of the current position of law. Thus,
when a non-signatory person or entity is arrayed as a party at Section
8 or Section 11 stage, the referral court should prima facie determine
the validity or existence of the arbitration agreement, as the case may
be, and leave it for the arbitral tribunal to decide whether the non-
signatory is bound by the arbitration agreement.
164. In case of joinder of non-signatory parties to an arbitration
agreement, the following two scenarios will prominently emerge: first,
where a signatory party to an arbitration agreement seeks joinder of a
non-signatory party to the arbitration agreement; and second, where a
non-signatory party itself seeks invocation of an arbitration agreement.
In both the scenarios, the referral court will be required to prima facie
rule on the existence of the arbitration agreement and whether the
non-signatory is a veritable party to the arbitration agreement. In view
of the complexity of such a determination, the referral court should
leave it for the arbitral tribunal to decide whether the non-signatory
party is indeed a party to the arbitration agreement on the basis of the
factual evidence and application of legal doctrine. The tribunal can
delve into the factual, circumstantial, and legal aspects of the matter
to decide whether its jurisdiction extends to the non-signatory party.
In the process, the tribunal should comply with the requirements of

126 (2011) 11 SCC 375
714 SUPREME COURT REPORTS [2023] 15 S.C.R.

principles of natural justice such as giving opportunity to the non-
signatory to raise objections with regard to the jurisdiction of the
arbitral tribunal. This interpretation also gives true effect to the doctrine
of competence-competence by leaving the issue of determination of true
parties to an arbitration agreement to be decided by arbitral tribunal
under Section 16.
H. Conclusions
165. In view of the discussion above, we arrive at the following
conclusions:
a. The definition of “parties” under Section 2(1)(h) read with
Section 7 of the Arbitration Act includes both the signatory
as well as non-signatory parties;
b. Conduct of the non-signatory parties could be an indicator
of their consent to be bound by the arbitration agreement;
c. The requirement of a written arbitration agreement under
Section 7 does not exclude the possibility of binding non-
signatory parties;
d. Under the Arbitration Act, the concept of a “party” is distinct
and different from the concept of “persons claiming through
or under” a party to the arbitration agreement;
e. The underlying basis for the application of the group of
companies doctrine rests on maintaining the corporate
separateness of the group companies while determining the
common intention of the parties to bind the non-signatory
party to the arbitration agreement;
f. The principle of alter ego or piercing the corporate veil cannot
be the basis for the application of the group of companies
doctrine;
g. The group of companies doctrine has an independent existence
as a principle of law which stems from a harmonious reading
of Section 2(1)(h) along with Section 7 of the Arbitration Act;
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 715
[DR. DHANANJAYA Y CHANDRACHUD, CJI]

h. To apply the group of companies doctrine, the courts or
tribunals, as the case may be, have to consider all the
cumulative factors laid down in Discovery Enterprises
(supra). Resultantly, the principle of single economic unit
cannot be the sole basis for invoking the group of companies
doctrine;
i. The persons “claiming through or under” can only assert a
right in a derivative capacity;
j. The approach of this Court in Chloro Controls (supra) to
the extent that it traced the group of companies doctrine to
the phrase “claiming through or under” is erroneous and
against the well-established principles of contract law and
corporate law;
k. The group of companies doctrine should be retained in the
Indian arbitration jurisprudence considering its utility in
determining the intention of the parties in the context of
complex transactions involving multiple parties and multiple
agreements;
l. At the referral stage, the referral court should leave it for
the arbitral tribunal to decide whether the non-signatory is
bound by the arbitration agreement; and
m. I n t h e co u r s e o f t h i s j u d g m e n t , a n y a u t h o r i t a t i v e
determination given by this Court pertaining to the group
of companies doctrine should not be interpreted to exclude
the application of other doctrines and principles for binding
non-signatories to the arbitration agreement.
166. We answer the questions of law referred to this Constitution
Bench in the above terms. The Registry shall place the matters before
the Regular Bench for disposal after obtaining the directions of the
Chief Justice of India on the administrative side.
716 SUPREME COURT REPORTS [2023] 15 S.C.R.

JUDGMENT
Index*
A. Introduction ................................................................................1
B. Civil Remedy and Arbitration ....................................................4
i. Arbitration Agreement is a Contract........................................6
ii. Section 7(4)(b) ........................................................................9
C. Group of Companies Doctrine .................................................17
i. International Perspectives .....................................................17
ii. Indian Precedents on the Group of Companies Doctrine .....27
D. Group of Companies Doctrine in the Context of Section 7 .....39
E. Conclusion ................................................................................43
PAMIDIGHANTAM SRI NARASIMHA, J.
A. Introduction
1. The reference to this Constitution Bench is for an authoritative
determination of the applicability of the ‘Group of Companies doctrine’ to
proceedings under the Arbitration and Conciliation Act, 1996, 1 and if found
to be applicable and statutorily anchored, to delineate its precise contours.
2. In the reference order, Chief Justice N.V. Ramana highlighted the
variations in the exposition and application of the doctrine as it has evolved
in India. He questioned the statutory source of the doctrine in the phrase
“claiming through or under”, which appears in Sections 8 and 45 of the Act.
He also cautioned that maintaining the separate legal identities of members
within the same group of companies is a fundamental principle of corporate
and contract law. In this light, the speciﬁc questions formulated and referred
to this Constitution Bench by Chief Justice N.V. Ramana,2 are as follows:
“(a) Whether phrase “claiming through or under” in Sections 8 and
113 could be interpreted to include “Group of Companies” doctrine?

1 Hereinafter referred to as the Act.
2 For himself and for Justice A.S. Bopanna.
3 The phrase “claiming through or under” does not appear in Section 11. Rather, the
reference to Section 11 must be read as Section 45 that contains this phrase.
*Ed. Note: The pagination as per the original Judgment.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 717
[PAMIDIGHANTAM SRI NARASIMHA, J.]

(b) Whether the “Group of Companies” doctrine as expounded by
Chloro Controls case4 and subsequent judgments are valid in law?”5
3. Justice Surya Kant concurred with Chief Justice Ramana and
supplemented his reasons for reference. At the outset, he emphasised
the need to retain the doctrine in India to keep pace with the complexity
of multi-party business transactions, where certain persons do not
formally sign the contract but are involved in its negotiation and
performance. Especially in India, with large number of family-run
business groups, he expressed that the inclusion of the non-signatory
company is essential for effective and complete dispute resolution
through arbitration. However, he also indicated the need to iron out
inconsistencies in the formulation of the doctrine. He questioned
the reliance on equity considerations and ‘single economic reality’
to determine non-signatories to be parties, as these undermine well-
entrenched principles of party autonomy and separate legal entity. In
this light, for an authoritative determination of the contours of the
doctrine, he framed the following questions:
“(a) Whether the Group of Companies doctrine should be read into
Section 8 of the Act or whether it can exist in Indian jurisprudence
independent of any statutory provision?
(b) Whether the Group of Companies doctrine should continue
to be invoked on the basis of the principle of “single economic
reality”?
(c) Whether the Group of Companies doctrine should be construed
as a means of interpreting the implied consent or intent to arbitrate
between the parties?
(d) Whether the principles of alter ego and/or piercing the
corporate veil can alone justify pressing the Group of Companies
doctrine into operation even in the absence of implied consent?” 6

4 Chloro Controls India (P) Ltd. v. Severn Trent Water Puriﬁcation Inc., (2013) 1 SCC
641 [2012 INSC 436].
5 Cox and Kings Ltd v. SAP India Pvt Ltd, (2022) 8 SCC 1, para 54 [2022 INSC
523].
6 ibid, para 104.
718 SUPREME COURT REPORTS [2023] 15 S.C.R.

4. I have had the advantage of going through the erudite and
comprehensive opinion of the learned Chief Justice. While I agree with
his reasoning and conclusions, I consider it necessary to supplement them
with my own reasoning on some important aspects. The broad question
before us relates to the ‘parties’ to an ‘arbitration agreement’. This
question must take us to Section 7 of the Act that deﬁnes an ‘arbitration
agreement’ as under:
“7. Arbitration agreement.—(1) In this Part, “arbitration
agreement” means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a deﬁned legal relationship,
whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means
of telecommunication including communication through
electronic means which provide a record of the agreement;
or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and
not denied by the other.
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.”
5. It is evident from the above-referred statutory prescription that
an ‘arbitration agreement’ is described in sub-section (1) of Section 7 as,
“an agreement by the parties”. Both these expressions, ‘agreement’ and
‘parties’ are important for our consideration. For a proper understanding
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 719
[PAMIDIGHANTAM SRI NARASIMHA, J.]

of these expressions, it is necessary to examine the place of arbitration
as a dispute redressal mechanism in the larger body of institutional
remedies in civil law.
B. Civil Remedy and Arbitration
6. In our legal system, access to civil courts is a standard judicial remedy.
Civil courts have the jurisdiction to try all civil suits,7 and any agreement to
restrict the remedy is declared void under Section 28 of the Indian Contract
Act, 1872.8 However, exceptions to Section 28 save a “contract to refer to
arbitration” any dispute that has arisen or may arise between two or more
persons.9 Thus, a restriction on accessing civil remedy is saved under Section
28 of the Contract Act, if there is a contract to arbitrate.

7 Section 9 of the Code of Civil Procedure, 1908 reads:
“9. Courts to try all civil suits unless barred.—The Courts shall (subject to the
provisions herein contained) have jurisdiction to try all suits of a civil nature excepting
suits of which their cognizance is either expressly or impliedly barred.
Explanation I.—A suit in which the right to property or to an oﬃce is contested is a suit
of a civil nature, notwithstanding that such right may depend entirely on the decision
of questions as to religious rites or ceremonies.
Explanation II. —For the purposes of this section, it is immaterial whether or not any
fees are attached to the oﬃce referred to in Explanation I or whether or not such oﬃce
is attached to a particular place.”
8 Hereinafter the ‘Contract Act’. The relevant portion of Section 28, Indian Contract
Act, 1872 reads:
“28. Agreements in restraint of legal proceedings, void. —Every agreement, —
(a) by which any party thereto is restricted absolutely from enforcing his rights under
or in respect of any contract, by the usual legal proceedings in the ordinary tribunals,
or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto,
from any liability, under or in respect of any contract on the expiry of a speciﬁed
period so as to restrict any party from enforcing his rights, is void to that extent.”
9 The relevant portion of Section 28, Indian Contract Act, 1872 reads:
“Exception 1.—Saving of contract to refer to arbitration dispute that may arise.
—This section shall not render illegal a contract, by which two or more persons agree
that any dispute which may arise between them in respect of any subject or class of
subjects shall be referred to arbitration, and that only the amount awarded in such
arbitration shall be recoverable in respect of the dispute so referred.
Exception 2.—Saving of contract to refer questions that have already arisen.—
Nor shall this section render illegal any contract in writing, by which two or more
persons agree to refer to arbitration any question between them which has already
arisen, or aﬀect any provision of any law in force for the time being as to references to
arbitration.”
720 SUPREME COURT REPORTS [2023] 15 S.C.R.

7. A ‘contract’ is deﬁned under the Contract Act as an agreement
enforceable by law.10 Agreement11 is formed when a promise or mutual
promises (deﬁned in Section 2(b))12 are reciprocated with a consideration
(deﬁned in Section 2(d))13, and these promises can either be express (when
its proposal or acceptance is in words) or implied (when its proposal or
acceptance is otherwise than in words).14 An agreement is legally enforceable
as a contract if it is formed with the free consent of parties who are competent
to contract, for a lawful consideration and lawful object.15
i. Arbitration Agreement is a Contract
8. An arbitration agreement is more speciﬁcally deﬁned in Section 7(1)
of the 1996 Act as an “an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which may arise between them
in respect of a deﬁned legal relationship, whether contractual or not.” The
use of the phrase ‘whether contractual or not’ qualiﬁes the dispute, not the
agreement; an arbitration agreement must always be a contract, but the
dispute that is referred to arbitration need not necessarily be contractual,
suﬃce it to be arising out of a “deﬁned legal relationship”.16

10 Section 2(h) of the Indian Contract Act, 1872 reads:
“(h) An agreement enforceable by law is a contract;”
11 Section 2(e), Indian Contract Act 1872 reads:
“(e) Every promise and every set of promises, forming the consideration for each
other, is an agreement;”
12 Section 2(b), Indian Contract Act 1872 reads:
“(b) When the person to whom the proposal is made signiﬁes his assent thereto, the
proposal is said to be accepted. A proposal, when accepted, becomes a promise;”
13 Section 2(d), Indian Contract Act 1872 reads:
“(d) When, at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to abstain
from doing, something, such act or abstinence or promise is called a consideration for
the promise;”
14 Section 9, Indian Contract Act 1872 reads:
“9. Promises, express and implied.—In so far as the proposal or acceptance of any
promise is made in words, the promise is said to be express. In so far as such proposal
or acceptance is made otherwise than in words, the promise is said to be implied.”
15 Section 10, Indian Contract Act 1872 reads:
“10. What agreements are contracts. —All agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly declared to be void.”
16 Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, para 24 [2020 INSC
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 721
[PAMIDIGHANTAM SRI NARASIMHA, J.]

9. Arbitration Agreement must be in writing, as against an oral
agreement. However, it need not be signed document: India has adopted the
UNCITRAL model17 which lays emphasis on the substance of an agreement,
rather than its form, to determine the existence of the agreement to arbitrate.
Sub-Section (2) of Section 7 incorporates this principle and recognises an
agreement, either in the form of an arbitration clause in the contract or in
the form of a separate agreement.
10. Section 7(3) mandates that an arbitration agreement shall be in
writing, meaning that the arbitration agreement must be in express terms.
Subsequently, Section 7(4) declares that an arbitration agreement “is in
writing” if it is contained in: (a) a document signed by the parties; (b)
exchange of correspondence that provides the record of the agreement; and
(c) admission in the proceedings, i.e., the statement of claim and defence.
It is evident from the deliberate language of Section 7 that the arbitration
agreement must be in a written form, in contradistinction to an oral
agreement, and at the same time, that it is not necessary for it to be signed
by the parties.18 A signed document containing the arbitration agreement is
only one of the written forms, where the signature of the party is absolute
proof for the existence and privity of the contract.
11. Section 7 therefore comprehensively deﬁnes what an arbitration
agreement is and also from where it is to be identiﬁed. The referral court
under Sections 8, 11 or 45 of the Act, or the arbitral tribunal, is the forum
that identiﬁes and deciphers the existence of an arbitration agreement and
its parties. The real question, however, is how must the court or tribunal
make this determination, particularly when a non-signatory seeks to initiate
arbitration, or is sought to be made party by a signatory. Apart from the
standard methods of drawing inferences by interpreting the express language
employed in the agreement, what are the other external aids to assist the
court or the arbitral tribunal in constructing the existence of the arbitration

697]; Gemini Bay Transcription Pvt Ltd v. Integrated Sales Service Ltd, (2022) 1 SCC
753, para 30 [2021 INSC 392].
17 UNCITRAL Model Law on International Commercial Arbitration, 1985.
18 Jugal Kishore Rameshwardas v. Goolbai Hormusji, (1955) 2 SCR 857, para 7 [1955
INSC 22]; Caravel Shipping Services (P) Ltd v. Premier Sea Foods Exim (P) Ltd,
(2019) 11 SCC 461, para 8 [2018 INSC 1008].
722 SUPREME COURT REPORTS [2023] 15 S.C.R.

agreement with the non-signatory, is the question that we are called upon
to answer.
ii. Section 7(4)(b)
12. An arbitration agreement with non-signatories is to be inferred
from the record of the agreement consisting the exchange of correspondence
such as letters, telex, telegrams, and other telecommunication and electronic
communication, wherein it “unequivocally and clearly emerge(s) that
the parties were ad idem”.19 In Rickmers Verwaltung Gmbh v. Indian Oil
Corporation Ltd,20 this Court referred to the role of courts while considering
the existence of an arbitration agreement as under:
“12. …The question, however, is: can any agreement be spelt out from
the correspondence between the parties in the instant case?
13. In this connection the cardinal principle to remember is that it is the
duty of the court to construe correspondence with a view to arrive at a
conclusion whether there was any meeting of mind between the parties,
which could create a binding contract between them but the court is
not empowered to create a contract for the parties by going outside
the clear language used in the correspondence, except insofar as there
are some appropriate implications of law to be drawn. Unless from
the correspondence, it can unequivocally and clearly emerge that the
parties were ad idem to the terms, it cannot be said that an agreement
had come into existence between them through correspondence. The
court is required to review what the parties wrote and how they acted
and from that material to infer whether the intention as expressed in
the correspondence was to bring into existence a mutually binding
contract. The intention of the parties is to be gathered only from the
expressions used in the correspondence and the meaning it conveys
and in case it shows that there had been meeting of mind between the
parties and they had actually reached an agreement upon all material
terms, then and then alone can it be said that a binding contract was
capable of being spelt out from the correspondence.

19 Rickmers Verwaltung Gmbh v. Indian Oil Corporation Ltd, (1999) 1 SCC 1, para 13
[1998 INSC 436].
20 ibid; also see MTNL v. Canara Bank, (2020) 12 SCC 767, para 9.3 [2019 INSC 881].
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 723
[PAMIDIGHANTAM SRI NARASIMHA, J.]

14. From a careful perusal of the entire correspondence on the record,
we are of the opinion that no concluded bargain had been reached
between the parties as the terms of the standby letter of credit and
performance guarantee were not accepted by the respective parties. In
the absence of acceptance of the standby letter of credit and performance
guarantee by the parties, no enforceable agreement could be said to
have come into existence. The correspondence exchanged between
the parties shows that there is nothing expressly agreed between the
parties and no concluded enforceable and binding agreement came
into existence between them. Apart from the correspondence relied
upon by the learned Single Judge of the High Court, the fax messages
exchanged between the parties, referred to above, go to show that the
parties were only negotiating and had not arrived at any agreement.
There is a vast diﬀerence between negotiating a bargain and entering
into a binding contract. After negotiation of bargain in the present
case, the stage never reached when the negotiations were completed
giving rise to a binding contract…”
Further in Babanrao Rajaram Pund v. Samarth Builders and
Developers,21 this Court held:
“29. It is thus imperative upon the courts to give greater emphasis to
the substance of the clause, predicated upon the evident intent and
objectives of the parties to choose a speciﬁc form of dispute resolution
to manage conﬂicts between them. The intention of the parties that
ﬂows from the substance of the agreement to resolve their dispute by
arbitration are to be given due weightage. It is crystal clear to us that
Clause 18, in this case, contemplates a binding reference to arbitration
between the parties and it ought to have been given full eﬀect by the
High Court.”
The parties must mutually intend to refer their diﬀerences to arbitration
as consent is the source of the arbitral tribunal’s jurisdiction over them. 22

21 (2022) 9 SCC 691 [2022 INSC 935].
22 KK Modi v. KN Modi, (1998) 3 SCC 573, para 17 [1998 INSC 63]; Bihar State Mineral
Development Corporation v. Encon Builders (I) Pvt Ltd, (2003) 7 SCC 418, para 13
[2003 INSC 409].
724 SUPREME COURT REPORTS [2023] 15 S.C.R.

13. The settled jurisprudence under Section 7(4)(b) is that the non-
signatory’s consent to an arbitration agreement can be made out from
its conduct by way of exchange of letters, telegrams and other forms of
written communication.23 These correspondences constitute the written
record of the agreement. In Smita Conductors v. Euro Alloys,24 this Court
was tasked with determining whether certain correspondences by the
appellant therein, that were not addressed to the respondent, showed the
appellant’s consent to arbitration as per the Article II(2) of the New York
Convention, under the Foreign Awards (Recognition and Enforcement)
Act, 1961. The Court noted that the contracts containing the arbitration
clause were not signed by the appellant, nor were there any letters or
telegrams between the appellant and respondent where the appellant
expressly assented to these contracts. Rather, it relied on correspondences
by the appellant to a bank where it acted in pursuance of the terms of the
contract, as providing a record of the arbitration agreement.25 Therefore,
even in the absence of a signature, the non-signatory’s consent to
arbitration can be gathered from its written correspondence (even with
third parties) that shows its conduct pursuant to the contract containing
the arbitration agreement.
14. This principle has been consistently applied by the Court
to determine whether the non-signatory is a party to an arbitration
agreement in accordance with Section 7(4)(b).26 Our courts and tribunals
have suﬃ ciently developed the interpretive tools to determine the
intention of the parties to refer disputes to arbitration by construing the
express language in the correspondence. It has also been held that once
the terms of the contract show that there is an intention to refer disputes
to arbitration, parties cannot “wriggle out” of the arbitration agreement. 27

23 Shakti Bhog Foods v. Kola Shipping Ltd, (2009) 2 SCC 134, para 17 [2008 INSC
1081].
24 (2001) 7 SCC 728 [2001 INSC 417].
25 ibid, paras 6-7.
26 Unissi (India) Pvt Ltd v. Post Graduate Institute of Medical Education and Research,
(2009) 1 SCC 107 [2008 INSC 1111]; Powertech World Wide Ltd v. Delvin international
General Trading LLC, (2012) 1 SCC 361 [2011 INSC 799]; Govind Rubber v. Louids
Dreyfus Commodities Asia Pvt Ltd, (2015) 13 SCC 477 [2014 INSC 1042].
27 Unissi (India) (supra), paras 16-19; Govind Rubber (supra), paras 21-22.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 725
[PAMIDIGHANTAM SRI NARASIMHA, J.]

15. Having considered the statutory scheme and also the consistent
approach of this Court in interpreting and construing the existence or lack
of intention to arbitrate, the following principle can be restated:
i. An arbitration agreement is a contract. It must meet the requirements
of an agreement enforceable by law under the Indian Contract Act,
1872.28
ii. Section 7(2) of the Arbitration and Conciliation Act, 1996
recognises the existence of an arbitration agreement in substance,
rather than in form.29 The agreement may be in the form of an
arbitration clause in a contract or it may be in the form of a separate
agreement.
iii. Section 7(3) mandates that the arbitration agreement shall be in
writing, as against an oral agreement. However, the written form
of the document evidencing the agreement need not be signed by
the parties.30
iv. ‘Party’ is deﬁned in Section 2(1)(h) as “a party to an arbitration
agreement”. The determination of the arbitration agreement and its
parties are inextricably connected with one another, their existence
is based on the written agreement.
v. If the arbitration agreement is evidenced in the written form as
contained in a document signed by the parties (Section 7(4)(a)),
the parties to the agreement are evidently those who have signed
the agreement.
vi. If the arbitration agreement is evidenced in the written form as
contained as admissions in pleadings comprising statements of
claim and defence (Section 7(4)(c)), parties to this agreement
would be evident from the statements of claim and defence and
the admissions made therein.

28 Vidya Drolia (supra), para 21.
29 Nimet Resources Inc v. Essar Steels Ltd, (2000) 7 SCC 497, para 5; Babanrao Rajaram
Pund (supra), paras 15 and 29.
30 Jugal Kishore Rameshwardas (supra), para 7; Rickmers Verwaltung Gmbh (supra),
para 12; Shakti Bhog Foods Ltd (supra), para 17; Caravel Shipping Services (P) Ltd
(supra), para 8.
726 SUPREME COURT REPORTS [2023] 15 S.C.R.

vii. The arbitration agreement may also be in writing if it is contained
in the record of the agreement comprising exchange of letters,
telex, telegrams or other means of telecommunication including
communication through electronic means (Section 7(4)(b)). In these
instances, parties to the agreement as well as the existence of the
arbitration agreement is a matter of interpretation and construction
by the referral court or arbitral tribunal. The inquiry under Section
7(4)(b) is to determine whether there exists an agreement for
referring the matter to arbitration, and who are the parties to such
an agreement.
viii. The referral court or the arbitral tribunal, while considering the
claim of a non-signatory for reference, or the objection of a non-
signatory to the inclusion in an arbitration, will primarily examine
the record of agreement under Section 7(4)(b) and consider the
express language employed by the parties.
ix. Once the express terms are ascertained,31 their meaning is a matter
of construction by the court or arbitral tribunal. The object of such
construction is to discover the intention of the parties. 32 Intention
must always be ascertained through the words actually used, for
there is no intention independent of the language employed by
the parties.
x. For the purpose of ascertaining the true meaning of the express
words, the court or tribunal may also look into the surrounding
circumstances such as the nature and object of the contract, 33 and
conduct of the parties during the formation, implementation, and
discharge of the contract.34 Trade practices also assume importance

31 Rickmers Verwaltung Gmbh (supra), para 13; MTNL v. Canara Bank (supra),
para 9.3.
32 Bangalore Electricity Supply Company Ltd (BESCOM) v. E.S. Solar Power Pvt Ltd
(2021) 6 SCC 718, paras 16 and 17; Food Corporation of India v. Abhijit Paul 2022
SCC OnLine SC 1605, para 27 [2022 INSC 1216]; Lewison, The Interpretation of
Contracts (6th edn, Sweet and Maxwell 2016) para 2.01, 27.
33 Bank of India v. K. Mohandas (2009) 5 SCC 313, para 28 [2009 INSC 417].
34 Godhra Electricity Co Ltd v. State of Gujarat (1975) 1 SCC 199, paras 11, 16 [1974
INSC 174]; McDermott International Inc v. Burn Standard Co Ltd (2006) 11 SCC 181,
para 112 [2006 INSC 326].
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 727
[PAMIDIGHANTAM SRI NARASIMHA, J.]

in determining the meaning of the language employed by the
parties.35 While interpreting the contract, courts or tribunals adopt
well-established principles of construction. These principles are
in the nature of guidelines for the court to presume the intention
of the parties.
xi. As the arbitration agreement is conﬁned to a written document
contained in the material speciﬁed in Section 7(4)(b) and the
interpretation and construction is based on its text, Sections 91
and 92 of the Indian Evidence Act, 1872 disable adducing of oral
evidence.36 This is necessary to prevent a referral proceeding from
being converted into a full-ﬂedged trial. If the arbitration agreement
cannot be deduced from the record of agreement as provided in
Section 7(4)(b), the inquiry must conclude. This approach is in
consonance with the requirement of a written agreement and also
subserves the important policy consideration as surmised in Section
5 of the Act.
16. It is in the context of the above referred legal regime, statutory as
well as precedential, that we need to consider the questions referred to this
Constitution Bench – whether the Group of Companies Doctrine is part
of Indian arbitration jurisprudence and whether it has any statutory basis.
C. Group of Companies Doctrine
i. International Perspectives
17. I am in complete agreement with the opinion of the learned Chief
Justice, who has in his scholarly exposition considered this matter in great
detail. He has examined the precedents on the applicability of the doctrine
in France, England, Switzerland, and the USA.
18. The Group of Companies Doctrine was formulated and initially
applied by international arbitral tribunals to determine whether a person
who has not formally signed an arbitration agreement can be made party
to it. It is one of the various legal theories used to determine whether a

35 ONGC v. Saw Pipes Ltd (2003) 5 SCC 705, para 13 [2003 INSC 241].
36 See Roop Kumar v. Mohan Thedani (2003) 6 SCC 595, paras 13, 16-18 [2003 INSC
206].
728 SUPREME COURT REPORTS [2023] 15 S.C.R.

non-signatory is a party to the arbitration agreement. Before we proceed
to the doctrine itself, it may be relevant for us to brieﬂy set out the other
legal bases, so as to locate the doctrine in the broader jurisprudence on
non-signatories being a party.
19. The legal bases for making a non-signatory a party can be classiﬁed
as consensual and non-consensual. The consensual theories that are focused
on determining the mutual intent of the parties include agency, implied
consent, and assignment and transfer of contractual rights, and the non-
consensual theories that are based on equity considerations include alter ego/
piercing the corporate veil, estoppel, succession, and apparent authority.37
The formulation of these principles, whether consensual or non-consensual,
is not new. They are derived from general principles of contractual law and
corporate law.38
20. The Group of Companies doctrine was formulated and theorised
exclusively in international arbitration jurisprudence to specifically
determine whether a company which is a non-signatory is party to the
arbitration agreement. Gary Born clariﬁes that this principle is not evoked
outside the context of arbitration.39
21. With this background, I will now discuss the doctrine along with
other considerations and legal tests that guide its application.
22. The doctrine was ﬁrst developed by a French arbitral tribunal
in an interim award by the International Chamber of Commerce in Dow
Chemical v. Isover Saint Gobain.40 In this case, Dow Chemical A.G. and Dow
Chemical Europe (fully-owned subsidiaries of Dow Chemical Company
(USA)) were signatories to two separate agreements containing arbitration
clauses with Isover Saint Gobain. Dow Chemical France, a non-signatory to
these agreements but a member of the Dow group, eﬀectuated the deliveries
under these agreements. When disputes arose and Isover instituted suits in
the French courts against all four Dow companies, both the signatory and

37 Gary Born, International Commercial Arbitration, vol 1 (3rd edn, Kluwer Law
International 2021) 1531.
38 ibid 1525.
39 ibid 1559.
40 ICC Case No. 4131, 23 September 1982.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 729
[PAMIDIGHANTAM SRI NARASIMHA, J.]

the non-signatory Dow companies instituted arbitral proceedings. Isover
objected to the arbitral tribunal’s jurisdiction to render an award with respect
to Dow Chemical France and Dow Chemical Company (USA), as they were
non-signatories. On the other hand, the non-signatory companies argued
that they can invoke arbitration due to their involvement in the conclusion
and performance of these contracts, and by virtue of them being in the same
group of companies.
23. The Arbitral Tribunal applied French law to determine whether
the non-signatories are parties “by reference to the common intent of the
parties to these proceedings, such as it appears from the circumstances that
surround the conclusion and characterize the performance and later the
termination of the contracts in which they appear”. It held that Dow Chemical
France and Dow Chemical Company (USA) were central to the negotiation
and conclusion of both contracts. Further, they were also involved in the
performance of the contracts and their subsequent termination since Dow
Chemical France eﬀected the deliveries and Dow Chemical Company (USA)
owned the trademarks for the goods and also exercised absolute control over
its subsidiaries. Relying on these facts, the Tribunal concluded that both
companies participated in the conclusion, performance, and termination of
the contracts. It held:
“Considering that irrespective of the distinct juridical identity of each
of its members, a group of companies constitutes one and the same
economic reality (une réalité économique unique) of which the arbitral
tribunal should take account when it rules on its own jurisdiction subject
to Article 13 (1955 version) or Article 8 (1975 version) of the ICC Rules.
Considering, in particular, that the arbitration clause expressly accepted
by certain of the companies of the group should bind the other companies
which, by virtue of their role in the conclusion, performance, or
termination of the contracts containing said clauses, and in accordance
with the mutual intention of all parties to the proceedings, appear to
have been veritable parties to these contracts or to have been principally
concerned by them and the disputes to which they may give rise.”41

41 ibid.
730 SUPREME COURT REPORTS [2023] 15 S.C.R.

24. From the above extracts, it is clear that membership in the same
group of companies or “same economic reality” were neither the sole nor
the guiding factors to hold that the non-signatory companies were parties.
Rather, the Tribunal’s emphasis was on the mutual intent of the parties,
gathered from their conduct in the conclusion, performance, and termination
of the contracts.42
25. The subsequent exposition and application of the doctrine by French
arbitral tribunals and courts also largely reﬂects a focus on mutual intent,
rather than mere membership in the same group, which has been held to be
insuﬃcient in and of itself to make the non-signatory a party.43 In Dallah Real
Estate and Tourism Holding Co. v. Ministry of Religious Aﬀairs, Government
of Pakistan, the Paris Court of Appeal enforced the arbitral award against the
Pakistan government (non-signatory) as its conduct through involvement in
the negotiation and performance of the contract reﬂected common will to be
a party to the arbitration.44 Common will must be ascertained according to the
principles of good faith (parties must not be allowed to evade commitments)
and eﬀectiveness (when parties insert an arbitration clause, it must be presumed
that their intent is to be governed by the arbitration).45
26. The focus on mutual intention reﬂects a fundamental diﬀerence
between the Group of Companies doctrine and ‘piercing the veil’ or alter
ego. In veil-piercing, the separate legal identities of the parent and subsidiary
companies are disregarded or nulliﬁed on equity and fairness considerations
(such as to prevent fraud). Application of the Group of Companies doctrine
does not result in lifting the corporate veil, and is rather based on identifying
the mutual intention of the parties.46
27. The doctrine has not been accepted in the same terms across the
world.

42 Also see Born (supra) 1561; Bernard Hanotiau, ‘Chapter 14: Group of Companies in
International Arbitration’ in Loukas A. Mistelis and Julian D.M. Lew (ed), Pervasive
Problems in International Arbitration, vol 15 (Kluwer Law International 2006), 286.
43 Born (supra) 1562-1563.
44 Case No. 9-28533, dated 17 February 2011 (Paris Cour d’Appel).
45 Malakoﬀ Corporation Berhad and TLEMCEN Desalination Investment Company v.
Algerian Energy Company SA and Hyﬂux Limited, Case No. 21-07296, dated 13 June
2023 (Paris Cour d’Appel).
46 Born (supra) 1563.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 731
[PAMIDIGHANTAM SRI NARASIMHA, J.]

28. In UK, in Peterson Farms Inc v. C&M Farming Ltd,47 the Court
rejected the applicability of the doctrine in English law. The separate legal
identities of the parent and subsidiary companies is held to be a fundamental
legal tenet.48 In the Dallah case, the UK Supreme Court diﬀered from the
Paris Court of Appeal on enforcing the arbitral award against the Government
of Pakistan (non-signatory). Even after applying French law to determine
when a non-signatory is a party, based on the material before it, the Court
held there was no mutual intention in this case to make the Government
of Pakistan a party.49 Similarly, in Kabab-Ji SAL (Lebanon) v. Kout Food
Group (Kuwait),50 the UK Supreme Court did not enforce the arbitral award
against the non-signatory company as there was no material to show that it
was a party as per the terms of the contract.
29. Similarly, Singapore courts have also rejected the applicability of
the Group of Companies doctrine by emphasising the fundamental corporate
law principle of separate legal identities.51
30. Swiss courts, on the other hand, have allowed for non-signatories
to be made party to the arbitration agreement based on their conduct,
manifesting implied consent. The Swiss Federal Court has held that an
arbitration agreement must itself be in writing as per Article 178 of the Swiss
Private International Law Act. However, the question of whether a non-
signatory is a party to such written arbitration agreement can be determined
by reference to its involvement in the preparation and performance of the
contract containing the arbitration clause, which reﬂects its intent to be party
to such arbitration agreement.52
31. American courts also do not expressly rely on the Group of
Companies doctrine to determine whether a non-signatory is a party. Rather,
they use principles such as equitable estoppel, assumption, piercing the

47 [2004] EWHC 121 (Comm); Mayor and Commonalty & Citizens of the City of
London v. Ashok Sancheti, [2008] EWCA Civ 1283.
48 Bank of Tokyo Ltd v. Karoon, [1987] AC 45.
49 [2010] UKSC 46.
50 [2021] UKSC 48.
51 Manuchar Steel Hong Kong Ltd v. Star Paciﬁc Line Pte Ltd [2014] SGHC 181.
52 X._____ et al v. Z._____, 4A_115/2003; A.________, v. B.________ Ltd.,
4A_376/2008; X.________ v. Y.________ Engineering and Y.________ S.p.A.,
4A_450/2013.
732 SUPREME COURT REPORTS [2023] 15 S.C.R.

corporate veil, alter ego, and waiver.53 In the recent decision in GE Energy
Power Conversion v. Outokumpu Stainless, the US Supreme Court relied
on equitable estoppel to hold that a non-signatory can compel arbitration
where a signatory is relying on terms of the contract to make its claim against
the non-signatory.54 American courts have also relied on implied consent,55
third party beneﬁciary,56 and general contractual and agency law principles
to hold that a non-signatory is a party.57
32. This comparative perspective makes it clear that a determination
of parties to an arbitration agreement that is based on mutual intention can
take place without reference to whether the non-signatory is a part of the
group of companies. In fact, Bernard Hanotiau, an international arbitration
scholar, argues that the award in Dow Chemical has been misinterpreted to
give rise to the Group of Companies doctrine. Rather, he emphasises that
the real implication of Dow is that it enables us to determine whether a non-
signatory is a party by reference to its conduct that reﬂects its consent. In this
light, he argues that any reference to a group of companies is unnecessary
as membership within the same group is not a determinative factor in the
inquiry of who is a party to the arbitration agreement. 58
33. The conclusions from the above analysis can be succinctly put
forth as follows:
i. Various jurisdictions use both consensual and non-consensual
legal principles to determine whether a non-signatory is a party
to an arbitration agreement.59
ii. The Group of Companies doctrine is applied irrespective of the
distinct juridical identities of each member of the group when

53 GE Energy Power Conversion France SAS Corp., FKA Converteam SAS v. Outokumpu
Stainless USA, LLC, et al., Case No. 18-1048 (1 June 2020).
54 ibid.
55 McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co. Inc., 741 F.2d 342 (11th Cir.
1984).
56 Nauru Phosphate Royalties, Inc. v. Drago Daic Interests, Inc. 138 F.3d 160 (5th Cir.
1998).
57 Sarhank Group v. Oracle Corp, 404 F. 3d 657 (2nd Cir. 2005).
58 Bernard Hanotiau, ‘Consent to Arbitration: Do We Share a Common Vision?’ (2011)
27(4) Arbitration International 539.
59 Born (supra), 1531.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 733
[PAMIDIGHANTAM SRI NARASIMHA, J.]

they share a common economic reality by virtue of their role
in the formation, performance, and termination of the contract.
The principle is based on mutual intention of all the parties to
settle the dispute through arbitration.60
iii. The acceptance of the doctrine is highly contested across
jurisdictions. The doctrine was developed in France and is
applied there by emphasising mutual consent of the signatory
and non-signatory companies.61
iv. On the other hand, countries like the United Kingdom62 and
Singapore63 have expressly rejected the doctrine and have
emphasised the fundamentality of separate legal personalities
of members within the same group.
v. Some jurisdictions, such as Switzerland64 and the USA,65 have
not accepted the Group of Companies doctrine in those terms.
However, they invoke other legal principles to hold a non-
signatory to be a party to the arbitration agreement (such as
conduct, implied consent, contractual and agency principles).
vi. American courts also solely rely on equity considerations (non-
consensual) to hold a non-signatory to be party, such as when
they apply equitable estoppel and veil piercing/alter ego.66
ii. Indian Precedents on the Group of Companies Doctrine
34. I will now consider the application of the Group of Companies
doctrine by our courts and formulate principles that arise from the
precedents.

60 Dow Chemical (supra).
61 Dallah Real Estate (supra) [Paris Cour d’Appel]; Malakoﬀ Corporation (supra).
62 Peterson Farms (supra).
63 Manuchar Steel (supra).
64 X._____ et al v. Z._____, 4A_115/2003; A.________, v. B.________ Ltd.,
4A_376/2008; X.________ v. Y.________ Engineering and Y.________ S.p.A.,
4A_450/2013.
65 GE Energy Power Conversion (supra); McBro Planning & Dev. Co (supra); Nauru
Phosphate Royalties, Inc. (supra); Sarhank Group (supra).
66 GE Energy Power Conversion (supra).
734 SUPREME COURT REPORTS [2023] 15 S.C.R.

35. I am in agreement with the detailed analysis of the Indian case-law
on this doctrine by the learned Chief Justice. The position of law in India
can broadly be divided as it existed before and after the decision in Chloro
Controls (supra). I have already referred to the decisions interpreting and
applying Section 7(4)(b) in Part B(ii) of my opinion. The decisions cited
therein recognise the possibility of a non-signatory company being a party
to the arbitration. I have also referred to the reasoning in those decisions
where the Court has examined the record of the agreement and constructed
the existence of an arbitration agreement based on the express language,
coupled with the consent of the parties.
36. Two decisions of this Court which preceded Chloro Controls
(supra), namely, Sukanya Holdings67 and Indowind Energy68 were based on a
strict interpretation of Section 7 and considered that parties to an agreement
are limited to its signatories.
37. There was a deﬁnitive shift in this position from the case of Chloro
Controls v. Severen Trent (supra). Arising out of the conspectus of a multi-
party multi-contractual dispute, a petition for reference to arbitration under
Section 45 of the Act was ﬁled in a suit, despite asymmetry in the parties to
the contracts and the parties to the arbitration agreement. Interpreting the
words and phrases “any person”, “claiming through or under”, and “shall”
in Section 45 of the Court, this Court enlarged the scope of reference for
the ﬁrst time, to bind non-signatories.
38. It noted that if a claim is made against or by someone who is not
originally a signatory to an arbitration agreement, the Group of Companies
doctrine can bind the “non-signatory aﬃliates or sister or parent concerns”
to arbitration, “if the circumstances demonstrate that the mutual intention
of all the parties was to bind both the signatories and the non-signatory
aﬃliates.”69 The Court noted in the following words:
“72. This evolves the principle that a non-signatory party could be
subjected to arbitration provided these transactions were with group
of companies and there was a clear intention of the parties to bind

67 SukanRya Holdings v. Jayesh H Pandya (2003) 5 SCC 531 [2003 INSC 230].
68 Indowind Energy Ltd v. Wescare (India) Ltd (2010) 5 SCC 306 [2010 INSC 246].
69 Chloro Controls (supra), para 71.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 735
[PAMIDIGHANTAM SRI NARASIMHA, J.]

both, the signatory as well as the non-signatory parties. In other words,
“intention of the parties” is a very signiﬁcant feature which must be
established before the scope of arbitration can be said to include the
signatory as well as the non-signatory parties.
73. A non-signatory or third party could be subjected to arbitration
without their prior consent, but this would only be in exceptional
cases. The court will examine these exceptions from the touchstone of
direct relationship to the party signatory to the arbitration agreement,
direct commonality of the subject-matter and the agreement between
the parties being a composite transaction. The transaction should be
of a composite nature where performance of the mother agreement
may not be feasible without aid, execution and performance of the
supplementary or ancillary agreements, for achieving the common
object and collectively having bearing on the dispute...”
(emphasis supplied)
39. In his opinion, the learned Chief Justice has considered the
concern of Justice Surya Kant about an apparent contradiction between the
above-referred paragraphs 72 and 73, and has correctly reconciled the two
paragraphs. I am in agreement with the same.
40. In this context, it is critical to emphasize that the Court in Chloro
Controls was interpreting Section 45, in Part II of the Act, in particular,
the phrase “claiming through or under”. The conclusion to include non-
signatories to the arbitration agreement pivoted on their derivative claim to
being a party to the arbitration agreement. The Group of Companies doctrine
thus found recognition in the interpretation of the phrases of Section 45 of
the Act. Further, for the derivative action to pass muster, “a clear intention”
of the signatories and non-signatories had to be ascertained, through the
circumstances delineated by the Court, i.e., i) direct relationship with the
party to the agreement, ii) commonality of subject matter, iii) composite
nature of transaction, and iv) interlinked performance of the contract.
41. In 2015, the Law Commission of India’s 246th Report acknowledged
this interpretation of Section 45 to the Act. In the pursuant amendments,
Section 8 in Part I of the Act was amended to mirror the language of Section
736 SUPREME COURT REPORTS [2023] 15 S.C.R.

45;70 thus, parties in domestic arbitrations could also petition for reference
to arbitration in a derivative capacity.
42. We will now examine the application of the Group of Companies
doctrine in the subsequent cases. In Duro Felguera, S.A. v. Gangavaram
Port Ltd,71 the application of the doctrine as recognised in Chloro Controls
(supra) was not applied on the facts of that case.
43. Until now, the precedents pertained to situations where the parties
invoked the pre-referral jurisdiction of the courts. In Cheran Properties Ltd
v. Kasturi and Sons Ltd,72 the Court was approached at the enforcement
stage.73 The Court allowed the enforcement of an arbitral award against a
subsequent purchaser of shares under Section 35 of the Act, interpreting the
phrase “persons claiming under them”. However, expositions pertaining to
the Group of Companies doctrine were observed in the judgment, in response
to certain arguments advanced before the Court. In that context, the Court
made the following observations:
“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.

70 The amended Section 8(1) of Arbitration and Conciliation Act 1996 reads as under:
“8. Power to refer parties to arbitration where there is an arbitration agreement.—
(1) A judicial authority, before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party to the arbitration agreement or any
person claiming through or under him, so applies not later than the date of submitting
his ﬁrst statement on the substance of the dispute, then, notwithstanding any judgment,
decree or order of the Supreme Court or any Court, refer the parties to arbitration
unless it ﬁnds that prima facie no valid arbitration agreement exists.”
71 (2017) 9 SCC 729 [2017 INSC 1026].
72 (2018) 16 SCC 413 [2018 INSC 394].
73 The respondent sold shares of its subsidiary company to one K.C. Palanisamy, who
undertook to discharge the outstanding liabilities of this company. Clause 14 of this
agreement recognised the right of K.C. Palanisamy to sell or transfer his holdings
in the company to any other person of his choice, provided that transferee accepts
the terms of the agreement regarding the management and ﬁnancial aspects of the
company. This agreement also contained an arbitration clause. K.C. Palaniswamy
nominated the appellant to receive 95% of the shares that were to be transferred to
him. Subsequently, disputes arose and an arbitral tribunal directed him to return the
share certiﬁcates and title documents. The appellant was made party to the proceedings
ﬁled by the respondents to enforce the arbitral award.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 737
[PAMIDIGHANTAM SRI NARASIMHA, J.]

The circumstances in which they have entered into 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. 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 to bind both signatories and non-signatories. The eﬀort
is to ﬁnd the true essence of the business arrangement and to unravel
from 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.”74
44. The Court did not rely on the Group of Companies doctrine.
Yet, Cheran (supra) is an important case to demonstrate that a non-
signatory company can be determined to be a party to an arbitration
agreement, based on factors such as relationship of the non-signatory
with the signatory parties, commonality of subject-matter, and composite
nature of transaction. It is also possible for the court to construct such an
agreement where the intention of a business arrangement is apparent and
the non-signatories have bound themselves by their conduct to fulﬁll such
business arrangement.
45. The subsequent decision in Ameet Lalchand Shah v. Rishabh
Enterprises75 is yet another instance where this Court has allowed a non-
signatory to be party to an arbitration agreement, in connected contracts, on
the ground of business eﬃcacy, noting that all agreements were executed
for a single commercial project. This approach was noted in the subsequent
decision of Discovery Enterprises,76 where learned Chief Justice has noted:

74 ibid, para 23.
75 (2018) 15 SCC 678 [2018 INSC 450].
76 ONGC v. Discovery Enterprises Pvt Ltd (2022) 8 SCC 42 [2022 INSC 483].
738 SUPREME COURT REPORTS [2023] 15 S.C.R.

“In Ameet Lalchand, the Court did not explicitly invoke the group
of companies doctrine to bind a non-signatory, rather it relied on Chloro
Controls to hold that a non-signatory would be bound by the arbitration
clause in the mother agreement, since it is a party to an inter-connected
agreement, executed to achieve a common commercial goal.”77
(emphasis supplied)
46. In Reckitt Benckiser (India) Pvt Ltd v. Reynders Label Printing
India Pvt Ltd,78 the Court inferred that since the non-signatory neither
signed the arbitration agreement nor had any causal connection with the
negotiation or execution of the agreement, an intent to consent to the
arbitration agreement could not be discerned. Hence, the non-signatory
was not bound by the arbitration agreement. 79 Thus, in Reckitt, the Court
reverted to the approach of ascertaining mutual intention of the parties for
applying the doctrine, although it did not result in the non-signatory being
made a party to the arbitration.
47. MTNL v. Canara Bank80 is the decision which acknowledged the
Group of Companies doctrine, formulated its principles, and applied them
to the proceedings by recognising CANFINA, a non-signatory, to be party
to the arbitration agreement. The Court held:
“10.5. The group of companies doctrine has been invoked by courts and
tribunals in arbitrations, where an arbitration agreement is entered into
by one of the companies in the group; and the non-signatory aﬃliate,
or sister, or parent concern, is held to be bound by the arbitration
agreement, if the facts and circumstances of the case demonstrate that
it was the mutual intention of all parties to bind both the signatories
and the non-signatory aﬃliates in the group. The doctrine provides that
a non-signatory may be bound by an arbitration agreement where the
parent or holding company, or a member of the group of companies is
a signatory to the arbitration agreement and the non-signatory entity
on the group has been engaged in the negotiation or performance of

77 ibid, para 28.
78 (2019) 7 SCC 62 [2019 INSC 700].
79 ibid, para 12.
80 (2020) 12 SCC 767 [2019 INSC 881].
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 739
[PAMIDIGHANTAM SRI NARASIMHA, J.]

the commercial contract, or made statements indicating its intention to be
bound by the contract, the non-signatory will also be bound and beneﬁtted
by the relevant contracts.
10.6. The circumstances in which the “group of companies” doctrine could
be invoked to bind the non-signatory aﬃliate of a parent company, or
inclusion of a third party to an arbitration, if there is a direct relationship
between the party which is a signatory to the arbitration agreement; direct
commonality of the subject-matter; the composite nature of the transaction
between the parties. A “composite transaction” refers to a transaction
which is interlinked in nature; or, where the performance of the agreement
may not be feasible without the aid, execution, and performance of the
supplementary or the ancillary agreement, for achieving the common
object, and collectively having a bearing on the dispute.
10.7. The group of companies doctrine has also been invoked in cases
where there is a tight group structure with strong organisational and
ﬁnancial links, so as to constitute a single economic unit, or a single
economic reality. In such a situation, signatory and non-signatories have
been bound together under the arbitration agreement. This will apply in
particular when the funds of one company are used to ﬁnancially support
or restructure other members of the group.”
48. Finally, in ONGC v. Discovery Enterprises Pvt Ltd,81 while the decision
on whether the non-signatory was a party was remitted to the arbitral tribunal,
the Court undertook a comprehensive review of the academic literature and
judicial pronouncements on the issue. The court compendiously concluded
the following:
“40. In deciding whether a company within a group of companies which
is not a signatory to arbitration agreement would nonetheless be bound
by it, the law considers the following factors:
(i) The mutual intent of the parties;
(ii) The relationship of a non-signatory to a party which is a signatory
to the agreement;

81 Discovery Enterprises (supra).
740 SUPREME COURT REPORTS [2023] 15 S.C.R.

(iii) The commonality of the subject-matter;
(iv) The composite nature of the transaction; and
(v) The performance of the contract.
41. Consent and party autonomy are undergirded in Section 7 of the
1996 Act. However, a non-signatory may be held to be bound on a
consensual theory, founded on agency and assignment or on a non-
consensual basis such as estoppel or alter ego...”
49. What emerges from the aforementioned precedents is that:
i. The Group of Companies doctrine was adopted and applied in
Indian arbitration jurisprudence in Chloro Controls (supra), where
the Court read the doctrine into the phrase “claiming through or
under” in Section 45. It held that a non-signatory aﬃliate or sister
or parent company can be a party to an arbitration agreement if
there is mutual intention of the signatories and non-signatories to
this eﬀect. In order to determine mutual intention, the Court laid
down factors such as direct relationship, direct commonality of
subject-matter, and a composite transaction where the performance
of multiple agreements is inextricably connected.82
ii. Pursuant to the 2015 Amendment of Section 8, the Court made
a composite reference of signatories and non-signatories to
arbitration by emphasising that all agreements were executed for
a single commercial project,83 but without explicitly referring to
the Group of Companies doctrine.84
iii. Subsequently, this Court relied on mutual intention as the test
for the doctrine. However, it deviated from Chloro (supra) by
prescribing the non-signatory’s causal connection with the
negotiation and execution of the contract as factors to determine
its mutual intent to arbitrate.85

82 Chloro Controls (supra), paras 72 and 73. This was later followed in Cheran Properties
(supra), para 23.
83 Rishabh Enterprises (supra), para 25.
84 Discovery Enterprises (supra), para 28.
85 Reckitt Benckiser (supra), para 12.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 741
[PAMIDIGHANTAM SRI NARASIMHA, J.]

iv. In MTNL (supra), the Court summarised the test under the
doctrine as being based on the common intention of the parties
to bind both signatory and non-signatory members of the group
of companies. Such common intention can be inferred from the
non-signatory’s involvement in negotiation and performance of
the contract (similar to Reckitt Benckiser (supra)), or from its
statements that indicate its intention to be a party.86 Simultaneously,
the Court also referred to the test in Chloro Controls (supra) for
determining mutual intention.87 Lastly, the Court held the doctrine
to be applicable when there is a tight group structure or single
economic reality, without any reference to the intention of the
parties.88 However, the Court ultimately relied on implied or tacit
consent by the non-signatory, evidenced by its conduct, to hold
that it is a party.89
v. In Discovery (supra), the Court comprehensively reviewed the
above cases and ironed out the various tests formulated in them.
It held that (a) mutual intent of the parties, (b) relationship of the
non-signatory to the signatory, (c) commonality of subject-matter,
(d) composite nature of transaction, and (e) performance of the
contract, are the factors to determine whether the non-signatory is
a party.90 These factors emphasise mutual intention and draw from
the tests laid down in Chloro Controls and Reckitt Benckiser but do
not include the test of single economic reality as a determinative
factor, as held in MTNL (supra).
50. At this juncture, it is necessary to clarify and answer a common
question referred for our consideration, i.e., whether the Group of Companies
doctrine is anchored in Sections 8 and 45 of the Act. The expression
“claiming through or under” employed in Sections 8 and 45 is concerned
with instances of succession and derivative rights. Learned Chief Justice
has dealt with this aspect in great detail in Part F (i) and (ii) of his opinion

86 MTNL (supra), para 10.5.
87 ibid, para 10.6.
88 ibid, para 10.7.
89 ibid, para 10.16.
90 Discovery Enterprises (supra), para 40.
742 SUPREME COURT REPORTS [2023] 15 S.C.R.

and held that the doctrine cannot be anchored in Sections 8 and 45 and to
this extent, Chloro Controls (supra) is wrongly decided. I am in complete
agreement with his reasons and ﬁndings.
D. Group of Companies Doctrine in the Context of Section 7
51. In this reference, we are tasked to determine whether the Group of
Companies doctrine is in accord with the statutory regime of the Arbitration
and Conciliation Act, 1996, deﬁning an arbitration agreement and parties
thereto. The adaptation of the doctrine has been doubted, and that is the
reason for this reference. While dealing with the international perspective on
the doctrine in Part C(i) of my opinion, it was noticed that the doctrine could
not attain any conceptual singularity, and it remains contested. Perhaps, this
is for two reasons: ﬁrst, the expression ‘single economic reality’ employed in
Dow (supra) is not in line with the concept of separate legal personality of a
company, and second, the doctrine is applied for determining the intention of
the parties, which is completely fact-based. For these reasons, the doctrine
has remained dynamic, if not uncertain, and is subject to many qualiﬁcations
and exceptions. At the same time, there are certain advantages to adopting
the doctrine, considering modern business practices. I am of the opinion
that it is necessary to entrench the doctrine within the statutory regime
of the Act, to enable a court or arbitral tribunal to apply it as a principle
to decipher the intention of the parties. I ﬁnd it necessary to subsume the
doctrine of Group of Companies within the judicial process under Section
7(4)(b), where a court or arbitral tribunal is called upon to determine the
existence of an arbitration agreement and parties to it.
52. A conjoint reading of Section 9 of the Code of Civil Procedure
and Section 28 of the Indian Contract Act informs us that the jurisdiction
of an arbitral tribunal to settle disputes between the parties, to the exclusion
of ordinary civil courts, must arise out of a contract to arbitrate between
them. An arbitration agreement, being a contract, must necessarily be in
writing, as against an oral agreement, but need not be signed by the parties.
The written arbitration agreement can be in the form of a document signed
by the parties, or be evidenced in the record of agreement. Section 7(4)(b)
prescribes the written material from which a non-signatory’s consent and
intention can be deciphered by a court or arbitral tribunal.
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 743
[PAMIDIGHANTAM SRI NARASIMHA, J.]

53. The existence of an arbitration agreement with a non-signatory is
a matter of interpretation and construction. The express words employed
by the parties enable the court to ascertain the intention of the parties and
their agreement to resolve disputes through arbitration. For ascertaining the
true meaning of the express words, the court or tribunal may look into the
surrounding circumstances such as nature and object of the contract and
the conduct of the parties during the formation, performance, and discharge
of the contract. While interpreting and constructing the contract, courts
or tribunals may adopt well-established principles, which aid and assist
proper adjudication and determination. The Group of Companies doctrine
is one such principle. It may be adopted by courts or arbitral tribunals while
interpreting the record of agreement to determine whether the non-signatory
company is a party to it.
54. Although the application of the Group of Companies doctrine in
India has until now been independent of Section 7, its juxtaposition with
Section 7(4)(b) case-law shows that the inquiry under both is premised
on determining the mutual intention of parties to submit to arbitration.
The mutual intention of the parties is discernible from their conduct in the
performance of the contract and this inquiry is common to Section 7(4)(b)
jurisprudence and the Group of Companies doctrine. Even the precedents on
the doctrine, national and international, look to additional factors beyond the
non-signatory being in the same group of companies, such as commonality
of subject-matter, composite nature of transaction, and interdependence of
the performance of the contracts to determine mutual intent.
55. Since the fundamental issue before the court or tribunal under
Section 7(4)(b) and the Group of Companies doctrine is the same, the
doctrine can be subsumed within Section 7(4)(b). Consequently, the
record of agreement that evidences conduct of the non-signatory in the
formation, performance, and termination of the contract and surrounding
circumstances such as its direct relationship with the signatory parties,
commonality of subject-matter, and composite nature of transaction, must be
comprehensively used to ascertain the existence of the arbitration agreement
with the non-signatory. In this inquiry, the fact of a non-signatory being a
part of the same group of companies will strengthen its conclusion. In this
light, there is no diﬃculty in applying the Group of Companies doctrine as
it would be statutorily anchored in Section 7 of the Act.
744 SUPREME COURT REPORTS [2023] 15 S.C.R.

E. Conclusion
56. In view of the above, while concurring with the judgment of the
learned Chief Justice, my conclusions are as follows:
I. An agreement to refer disputes to arbitration must be in a written
form, as against an oral agreement, but need not be signed by the
parties. Under Section 7(4)(b), a court or arbitral tribunal will
determine whether a non-signatory is a party to an arbitration
agreement by interpreting the express language employed by
the parties in the record of agreement, coupled with surrounding
circumstances of the formation, performance, and discharge of
the contract. While interpreting and constructing the contract,
courts or tribunals may adopt well-established principles, which
aid and assist proper adjudication and determination. The Group
of Companies doctrine is one such principle.
II. The Group of Companies doctrine 91 is also premised on
ascertaining the intention of the non-signatory to be party to an
arbitration agreement. The doctrine requires the intention to be
gathered from additional factors such as direct relationship with
the signatory parties, commonality of subject-matter, composite
nature of the transaction, and performance of the contract.
III. Since the purpose of inquiry by a court or arbitral tribunal under
Section 7(4)(b) and the Group of Companies doctrine is the
same, the doctrine can be subsumed within Section 7(4)(b) to
enable a court or arbitral tribunal to determine the true intention
and consent of the non-signatory parties to refer the matter to
arbitration. The doctrine is subsumed within the statutory regime
of Section 7(4)(b) for the purpose of certainty and systematic
development of law.
IV. The expression “claiming through or under” in Sections 8 and 45
is intended to provide a derivative right; and it does not enable
a non-signatory to become a party to the arbitration agreement.
The decision in Chloro Controls (supra) tracing the Group

91 As delineated in para 40 of Discovery Enterprises (supra).
COX AND KINGS LTD. v. SAP INDIA PVT. LTD. & ANR. 745
[PAMIDIGHANTAM SRI NARASIMHA, J.]

of Companies doctrine through the phrase “claiming through
or under” in Sections 8 and 45 is erroneous. The expression
‘party’ in Section 2(1)(h) and Section 7 is distinct from “persons
claiming through or under them”. This answers the remaining
questions referred to the Constitution Bench.

Headnotes prepared by: Referred questions of law answered.
Bibhuti Bhushan Bose

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