Case Note & Summary
The petitioner, Reckitt Benckiser (India) Private Limited, filed a petition under Sections 11(5), 11(9), and 11(12)(a) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator against Reynders Label Printing India Private Limited (respondent No.1) and Reynders Ttiketten NV (respondent No.2), a Belgian company. The dispute arose from an agreement dated 1st May 2014 between the petitioner and respondent No.1 for printing labels. The petitioner sought to implead respondent No.2, the parent company of respondent No.1, as a non-signatory to the agreement, invoking the group of companies doctrine. The Supreme Court examined whether a non-signatory can be bound by an arbitration agreement. Relying on Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. and Cheran Properties Limited v. Kasturi and Sons Limited, the court held that the group of companies doctrine applies when the mutual intention of the parties is to bind both signatory and non-signatory entities. The court found that respondent No.2 was a disclosed principal, actively participated in negotiations, and provided indemnity under clause 9 of the agreement. The court also noted that respondent No.1 did not file a counter affidavit to refute the petitioner's assertions. The court concluded that an arbitration agreement existed between the petitioner and both respondents, and appointed a sole arbitrator to conduct international commercial arbitration in Delhi.
Headnote
A) Arbitration Law - Group of Companies Doctrine - Impleadment of Non-Signatory - Sections 11(5), 11(9), 11(12)(a) and 11(6A) of the Arbitration and Conciliation Act, 1996 - The court examined whether respondent No.2, a non-signatory to the agreement dated 1st May 2014, could be impleaded in arbitration proceedings as a group company of respondent No.1. The court held that the group of companies doctrine applies when the mutual intention of the parties is to bind both signatory and non-signatory entities, based on factors such as relationship, commonality of subject matter, and composite nature of transactions. The court found that respondent No.2 was a disclosed principal and integral to the agreement, and thus could be impleaded. (Paras 1-5) B) Arbitration Law - Enquiry Under Section 11(6A) - Existence of Arbitration Agreement - Section 11(6A) of the Arbitration and Conciliation Act, 1996 - The court noted that under amended Section 11(6A), the enquiry must be confined to the existence of an arbitration agreement. The court examined the correspondence and the agreement to conclude that an arbitration agreement existed between the applicant and both respondents. (Para 4) C) Arbitration Law - International Commercial Arbitration - Definition - Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 - The court considered whether the arbitration would be domestic or international. Since respondent No.2 is a company established under Belgian laws, the arbitration was held to be international commercial arbitration. (Para 1)
Issue of Consideration
Whether a non-signatory party to an arbitration agreement can be impleaded in arbitration proceedings under the group of companies doctrine.
Final Decision
The Supreme Court allowed the petition, holding that respondent No.2 can be impleaded in the arbitration proceedings. The court appointed a sole arbitrator to conduct international commercial arbitration in Delhi in accordance with the Arbitration and Conciliation Act, 1996.
Law Points
- Group of companies doctrine
- Non-signatory to arbitration agreement
- Impleadment in arbitration
- Section 11(6A) of Arbitration and Conciliation Act
- 1996
- International commercial arbitration
