whether respondent No.2 ­ a company established under the laws of Belgium, having its principal place of business at Nijverheldsstraat 3, 2530 Boechout, Belgium, could be impleaded in the proposed arbitration proceedings despite the fact that it is a non­ 2 signatory party to the agreement dated 1st May, 2014, executed between the applicant and respondent No.1 ­ a company established under the Companies Act, 2013 ­ merely because it (respondent No.2) is one of the group companies of which respondent No.1 also is a constituent. ?

whether respondent No.2 ­ a company established under the laws of Belgium, having its principal   place   of   business   at   Nijverheldsstraat   3,   2530 Boechout,   Belgium,   could   be   impleaded   in   the   proposed arbitration   proceedings   despite   the   fact   that   it   is   a   non­ 2 signatory   party   to   the   agreement   dated   1st  May,   2014, executed   between   the   applicant   and   respondent   No.1   ­   a company established under the Companies Act, 2013 ­ merely because it (respondent No.2) is one of the group companies of which respondent No.1 also is a constituent. ?

The legal position as to when a non­signatory to an arbitration agreement can be impleaded and subjected to arbitration proceedings is no more res integra.   

In the case of  Chloro  Controls   India  Private Limited   Vs.   Severn   Trent   Water   Purification   Inc.   and Ors., 1   a   three­Judge   Bench   of   this   Court   opined   that ordinarily, an arbitration takes place between the persons who have been parties to both the arbitration agreement as well as the substantive contract underlying it.  Invoking the doctrine of   “group   of   companies”,   it   went   on   to   observe   that   an arbitration agreement entered into by a company, being one within   a   group   of   corporate   entities,   can,   in   certain circumstances,   bind   its   non­signatory   affiliates.

whether it is manifest from the indisputable correspondence exchanged between the parties, culminating in the agreement dated   1st  May,   2014,   that   the   transactions   between   the applicant and respondent No.1 were essentially with the group of companies and whether there was a clear intention of the parties to bind both   the signatory as well as non­signatory parties (respondent No.1 and respondent No.2, respectively). In other words, whether the indisputable circumstances go to show that the mutual intention of the parties was to bind both 5 the signatory as well as the non­signatory parties, namely, respondent No.1 and respondent No.2, respectively, qua the existence of an arbitration agreement between the applicant and the said respondents. 

 Respondent No.1, however, through its counsel has urged that respondent No.2 has no concern with the subject agreement dated 1st May, 2014. That agreement is only between the applicant and respondent No.1 and   as   a   result   thereof,   it   would   give   rise   to   a   domestic commercial arbitration and not an international commercial arbitration. Respondent No.1 has also made it amply clear through its counsel that it will have no objection, whatsoever, 6 if the Court were to appoint a sole arbitrator for resolving the dispute   between   the   applicant   and   respondent   No.1,   who would conduct the arbitration proceedings in accordance with the   Act,   in   Delhi,   as   a   domestic   commercial   arbitration between the applicant and respondent No.1 alone. 

whether respondent No.2 can be said to have assented   or   had   an   intention   to   become   party   to   the arbitration   agreement   by   its   conduct,   without   being   a signatory to the agreement dated 1st May, 2014.

 the thrust of the claim of the applicant is  that Mr. Frederik Reynders was acting for and on   behalf   of   respondent   No.2,   as   a   result   of   which   the respondent No.2 has assented to the arbitration agreement. This   basis   has   been   completely   demolished   by   respondent 22 No.2 by stating, on affidavit, that Mr. Frederik Reynders was in no way associated with respondent No.2 and was only an employee   of   respondent   No.1,   who   acted   in   that   capacity during the negotiations preceding the execution of agreement. Thus,   respondent   No.2   was   neither   the   signatory   to   the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution   thereof,   whatsoever.   If   the   main   plank   of   the applicant, that Mr. Frederik Reynders was acting for and on behalf of respondent No.2 and had the authority of respondent No.2,   collapses,   then   it   must   necessarily   follow   that respondent No.2 was not a party to the stated agreement nor had   it   given   assent   to   the   arbitration   agreement   and,   in absence  thereof,  even  if  respondent  No.2  happens  to  be  a constituent of the group of companies of which respondent No.1 is also a constituent, that will be of no avail. 

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

PETITION FOR ARBITRATION (CIVIL) NO. 65  OF 2016

Reckitt Benckiser (India) Private Limited      …..Petitioner(s)

:Versus:

Reynders Label Printing India 

Private Limited and Anr.     ….Respondent(s)