Group of cos rule not automatic talisman to add every co to arbitration - SC
This story was originally published at 19:55 IST on 21 November 2025
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NEW DELHI – The Supreme Court Friday observed that the group of companies doctrine, as recognised in Indian law, is not an "automatic talisman" for impleading every corporate entity of a group into arbitral proceedings. The group of companies doctrine allows courts to bind non-signatory companies within a corporate group to an arbitration agreement signed by another company in the group.
"This court in Cox & Kings (Cox & Kings Ltd. vs SAP India in 2023) was at pains to emphasise that the doctrine is applied sparingly and only where there is compelling evidence of mutual intention of all the parties concerned to bind a non-signatory to an arbitration agreement," said Justice P.S. Narasimha and Justice Atul S. Chandurkar. Such intention may be inferred from direct participation in negotiation, performance of contract, or from the role played in the overall transaction, the bench said. However, a mere overlap of shareholding, or the fact that entities belong to the same corporate family, is not by itself sufficient, the bench added.
The apex court noted that Indian courts lack jurisdiction to appoint an arbitrator for a foreign-seated arbitration. Consequently, it dismissed Balaji Steel Trade's plea for appointment of an arbitrator in a dispute with Fludor Benin S.A. as it was an international commercial arbitration wherein Benin was intended to be the juridical seat of arbitration in the agreement between them. It also refused to include Vink Corporations DMCC and Tropical Industries International Pvt. Ltd. into arbitration as they had signed individual contracts with the petitioner, which limited the disputes to be solved through only those agreements.
The petitioner, Balaji Steel Trade, had approached the apex court praying for appointment of sole arbitrator to adjudicate and decide upon the dispute that arose between the parties owing to the alleged breach of a 2019 buyer and seller agreement executed between the petitioner and, Fludor Benin S.A. The petitioner sought for a composite reference to arbitration by seeking the inclusion of Vink Corp DMCC, a company incorporated in Dubai, UAE, and Tropical Industries International Pvt. Ltd., a company registered in New Delhi, India. As per the petitioner, all three respondents are owned and controlled by Tropical General Investments Ltd. Group, whereby the latter holds 100% shares in Fludor Benin S.A., 51% shares in Vink Corporations and 99.73% shares in Tropical Industries International. End
Reported by Surya Tripathi
Edited by Deepshikha Bhardwaj
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