India: Bombay High Court: Non-Signatories Bound By Arbitration Agreement

Last Updated: 17 November 2014
Article by Varuna Bhanrale and Sahil Kanuga

Bombay High Court:

  • Holds that in an arbitration agreement between two groups, group entities which are not signatories to the agreement may also be made party to the arbitration agreement if they are referred to in the contract.
  • Reiterates that an arbitration agreement ought to be construed in a broad and common sense manner.
  • Reiterates that the arbitration agreement should be interpreted having regard to words and phraseology therein and no term / phrase should be treated as meaningless, especially if they are consistent with the other parts of the agreement. 


The Division Bench of the Bombay High Court ("Court") has, in the case of Rakesh S. Kathotia and Anr. v. Milton Global Ltd. and Ors. 1, liberally and purposefully interpreting an arbitration agreement, has held that group entities (who are referred to in but are non-signatories to an agreement) will be bound by the terms of the arbitration agreement.


Under a Joint Venture Agreement ('JVA'), the 'Subhkam Group' and 'Vaghani Group' constituted 'Milton Global Limited' as a Joint Venture Company ("JVCo"). The management of the JVCo was vested in a Board of Directors to be appointed by 'Subhkam Group' and 'Vaghani Group', holding 49.99% and 50.01%, respectively, of the total issued and paid up capital of the JVCo.

Under the JVA, the definition of the 'Subhkam Group' included "such other entities controlled by him or his immediate relatives or his group companies directly or indirectly". Similarly, the definition of the 'Vaghani Group' included "...and their immediate relatives taken together and such other entities controlled by them or their immediate relatives directly or indirectly".

Disputes arose between the parties when the Appellants alleged that the Respondents were carrying on a competitive business set up by the Respondents through Hamilton Housewares Pvt. Ltd. The Subhkam Group approached the Court to seek certain interim reliefs under Section 9 of the Arbitration and Conciliation Act, 1996 ("Act").

The Section 9 petition was dismissed by the Learned Single Judge of the Court on the ground that the identities of the parties to the arbitration agreement under the JVA and identities of the parties to the Section 9 application were not the same. The order of the Learned Single Judge was carried in appeal before the Division Bench.


Interpretation of Arbitration Agreements

The Court reiterated that an arbitration agreement ought to be construed in a broad and common sense manner. A commercial document should be interpreted having regard to words and phraseology therein and no term / phrase should be treated as meaningless, especially if they are consistent with the other parts of the agreement. In case of ambiguity, the intention of the parties should be determined and honoured to the extent possible.

It was observed that the legislative intent of the Act was to encourage arbitration. In accordance with the same, it was held that the aforesaid principles were required to be applied to the JVA and the arbitration agreement therein.

Identity between the Parties to the Arbitration Agreement and the Section 9 Petition

The Court observed that the JVA made elaborate references to the 'Vaghani Group' and the 'Subhkam Group' and authorized representatives had been appointed for both the groups. The JVA specifically stated that while there were multiple parties, they belonged to either the Vaghani Group or the Subhkam Group.

The Court observed that the JVA was entered into between the 'Vaghani Group' and the 'Subhkam Group', and not between specific individuals and / or entities. Thus, the immediate relatives and the entities controlled by the respective groups (who were admittedly not signatories to the JVA), were also held to be bound by the terms of the JVA.

Although the 'group of companies doctrine' (as accepted by the Supreme Court of India in Chloro Controls 2) was briefly discussed, it was not applied by the Court. The Court held that the JVA was unambiguously between the whole of the Vaghani Group and Subhkam Group, including the entities who were not signatories to the JVA.

Interestingly, after determining that the Section 9 petition was, in fact, maintainable on the ground of identities of parties, the Court rejected the application on merits.


In the present case, the Court once again has indicated that the intention of the parties to arbitrate is paramount. The Court has favoured a liberal and broad interpretation of arbitration agreements, to ensure that parties' intention to arbitrate is not frustrated on mere technicalities and red-tape.

Liberal interpretation has, in the peculiar facts of this case, been extended to include the non-signatory related entities of a company / person, which may be considered as parties to an arbitration agreement and thus, bound by the dispute resolution mechanism without even being signatories.

Parties should observe caution while entering into agreements containing an arbitration agreement and consciously determine if they desire to bind their related parties/group entities to the agreement. Potential misuse of this view is also possible where it may be attempted to drag non-signatories into arbitration.

We expect this judgment to be taken up to the Supreme Court of India.


1. Appeal no 366 of 2014 in Arbitration Petition No. 66 of 2014

2. Chloro Controls(I) P. Ltd v. Severn Trent Water Purification, (2013) 1 SCC 641

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Varuna Bhanrale
Sahil Kanuga
Similar Articles
Relevancy Powered by MondaqAI
Singhania & Partners LLP, Solicitors and Advocates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Singhania & Partners LLP, Solicitors and Advocates
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions