Bombay High Court - Non-Signatories Bound By Arbitration Agreement

The Bombay High Court (BHC) in a recent judgment of Rakesh S Kathotia and Anr vs Milton Global Limited and Ors applied the group of companies doctrine upheld by the Apex Court in the Cholro Controls India Private Limited vs Severn Trent Water Purification Inc. & ors. (2013) 1 SCC 641 whereby an arbitration agreement entered into by a company, being one within a group of companies, can bind its non-signatory affiliates or sister or parent concerns, if the circumstances demonstrate that the mutual intention of all the parties was to bind both the signatories and the non-signatory affiliates.

Background:

1. This case was an appeal before the division bench of BHC from an order passed by the single judge of the BHC in arbitration petition (Petition) dismissing the application under Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). The primarily ground for dismissal of the Petition by the single bench was that there is no `identity` of the