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Reckitt Benckiser (India) Private Limited v. Reynders Label Printing India Private Limited & Anr.

Arbitration Petition (Civil) · 2019 INSC 700Decided 1 Jul 2019
Arbitration Petition (Civil) No. 65 of 2016
Justice A.M. Khanwilkar · Justice Ajay Rastogi

Background

Reckitt Benckiser had a supply agreement (dated 1 May 2014) with Reynders Label Printing India Pvt. Ltd. (respondent No.1), which had an arbitration clause. It sought to also implead Reynders' Belgium-based parent group entity (respondent No.2), a non-signatory to that agreement, into the same arbitration, invoking the "group of companies" doctrine on the ground that both respondents belonged to the same corporate group. Respondent No.2 contested this, denying it had agreed to or intended to be bound by the arbitration clause.

Decision Breakdown

The Supreme Court applied its earlier rulings in Chloro Controls India (P) Ltd. vs Severn Trent Water Purification Inc. and Cheran Properties Ltd. vs Kasturi and Sons Ltd., which allow a non-signatory group company to be bound by an arbitration agreement only where the facts clearly show a mutual intention of all parties, signatory and non-signatory alike, to be bound together, viewed through the lens of the real business arrangement. On the facts, the Court found no such clear intention to bind respondent No.2, rejecting the applicant's claim that a particular individual had acted with respondent No.2's authority. It therefore dismissed the application as against respondent No.2, but, since respondent No.1 had itself agreed to arbitration, it went on to appoint a former Chief Justice of the Jammu & Kashmir High Court as sole arbitrator to conduct a domestic (not international) commercial arbitration between the applicant and respondent No.1 alone.

Lesson Learnt

Merely belonging to the same corporate group as a signatory to a contract does not automatically make a company bound by that contract's arbitration clause: courts will look for clear, fact-specific evidence of a shared intention to bind the non-signatory before extending arbitration to it.

Official source (sci.gov.in)View Judgment (PDF)

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