Expanding the scope and ambit of the term ‘party’ under the arbitration law, the Supreme Court ruled that arbitration agreements can be binding on non-signatory firms under the ‘group of companies’ doctrine.
“The definition of ‘parties’ under Section 2(1)(h) (term party) read with Section 7 (arbitration agreement and its ingredients) of the Arbitration Act includes both the signatory and non-signatory parties,” a five-judge Bench led by CJI DY Chandrachud said. “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,” the Bench said.