“Group of Companies Doctrine”—Formal Arbitration Agreement is not a Sine-Qua Non
Mahanagar Telephone Nigam Ltd. Vs. Canara Bank & Ors: [08/08/2019]: In the referred case the matter for consideration before the Hon’ble Court that whether a subsidiary company can join arbitral proceedings without being party to the formal arbitration agreement. While settling the issue, the division bench of the Supreme Court held that there is no requirement of formal agreement as to arbitral proceedings by the subsidiary company or affiliate company. The Court further held that the letters of exchange in this regard will be sufficient to implead the associate as the necessary parties under the “Group of Companies Doctrine”. The court observed that a commercial document has to be interpreted in such a manner so as to give effect to the agreement, rather than to invalidate it. An ‘arbitration agreement’ is a commercial document inter partes, and must be interpreted so as to give effect to the intention of the parties, rather than to invalidate it on technicalities.
The detail judgment may be visited at:
https://sci.gov.in/supremecourt/2014/11020/11020_2014_6_1501_15918_Judgement_08-Aug-2019.pdf
