In short. It can happen. In India, a company or person that never signed a contract can still be bound by its arbitration clause. What matters is conduct showing that it, too, meant to be a party. The Supreme Court said so in Cox and Kings v. SAP India (2023), where it kept the group of companies doctrine but rested it on consent, not on corporate ties alone. Assignees, legal heirs and others claiming through a signatory can be bound as well. Before you invoke arbitration, gather the emails, payments and meeting records that show what the non-signatory actually did.
Is this your situation?
- Your contract is with the subsidiary. But it was the parent company's people who sat across the table, sent the instructions and paid a couple of your invoices.
- The company that signed is now an empty shell, and you'd like its group company or promoter brought into the arbitration.
- You're a sub-vendor. Your purchase order came from the contractor, yet the main employer's engineers told you what to do every day.
- An arbitration notice has arrived naming you as a respondent, under a contract you never signed.
- The other party has assigned the contract or its receivables (or has passed away), and nobody can tell you who gets to arbitrate now.
- Your group signs through one company and delivers through another. You want to know how exposed that leaves you.
Can someone who never signed be bound by the arbitration clause?
Yes. But it isn't easy, and it never happens just because the outsider is related to the party that signed. Arbitration rests on consent. So every non-signatory case comes down to one question. Did the person or company that didn't sign nonetheless agree, by the way it behaved, to be bound by the arbitration agreement? Indian courts accept that consent can be shown by conduct. A signature isn't the only proof.
Section 7 of the Arbitration and Conciliation Act, 1996 wants the arbitration agreement in writing. In Cox and Kings Ltd v. SAP India Pvt Ltd (December 2023), a five-judge Constitution Bench held that this doesn't stop a non-signatory from being bound. The agreement itself must be written. Who is bound by it can be worked out from the surrounding facts. Say a company negotiated the contract, ran its performance and treated itself as a party throughout, and it may be a party even though a different group company's name sits on the signature page.
And then there are the everyday ways a non-signatory gets bound, which hardly anyone disputes. These involve stepping into a party's shoes. Think of a legal heir of a partner who has died, a company that has taken an assignment of the contract, or an insurer that has paid a claim and taken over the insured's rights. The law calls them people 'claiming through or under' a party. They stand where that party stood.
The parts of the Arbitration Act that deal with non-signatories
Section 2(1)(h), Arbitration and Conciliation Act, 1996
It defines 'party' as a party to an arbitration agreement. Reading it with Section 7, Cox and Kings held that a party to the agreement doesn't have to be a signatory to it.
Section 7
The arbitration agreement has to be in writing. That includes an exchange of letters or electronic messages. It also includes a statement of claim and defence in which one side asserts the agreement and the other doesn't deny it. That last route, in Section 7(4)(c), sometimes binds a party through its own pleadings.
Sections 8 and 45
A court must send to arbitration a case brought by a party 'or any person claiming through or under him'. Section 8 got these words in 2015. Section 45, for foreign-seated arbitration, always had them. Cox and Kings held that the phrase covers only derivative claims (assignment, subrogation, succession), and that it isn't where the group of companies doctrine comes from.
Sections 11 and 16
The High Court appointing an arbitrator under Section 11 takes a prima facie look at whether an arbitration agreement exists and who's party to it. The tribunal then rules on its own jurisdiction under Section 16, and that includes the final word on whether a non-signatory is bound.
Sections 35 and 40
An award binds the parties and anyone claiming under them (Section 35). A party's death doesn't discharge an arbitration agreement. It can be enforced by or against the legal representative (Section 40).
What the Supreme Court decided in Cox and Kings v. SAP India
The matter went to a Constitution Bench because of earlier rulings, mainly Chloro Controls v. Severn Trent (2013). Those had used the group of companies doctrine to bind affiliates, but leaned partly on the words 'claiming through or under' in Section 45. Several judges had their doubts. Did Indian law recognise the doctrine at all? Or had it turned into a back door for dragging in parents and promoters who'd never agreed to arbitrate?
The Court kept the doctrine. It rebuilt the foundation, though. The doctrine now stands on its own feet, grounded in the mutual intention of the parties as read from Sections 2(1)(h) and 7. The Court rejected the Chloro Controls idea that it flows from 'claiming through or under'. Being part of a single economic entity isn't enough by itself. There has to be evidence that the non-signatory and the signatories meant it to be bound. The Court also kept the doctrine apart from lifting the corporate veil. Veil-lifting ignores separate legal personality. The group of companies doctrine respects it, and asks what each company intended.
On who decides, the Court said the referral court under Section 8 or 11 should usually leave the question to the arbitral tribunal, since the tribunal can take evidence. Later rulings have fine-tuned that. More on this below.
What decides whether a non-signatory is bound under the group of companies doctrine?
- Mutual intention. This is the heart of it. Did everyone, signatories and non-signatory alike, understand when contracting or while performing that the non-signatory was a party? Emails, board notes and term sheets count for a lot here.
- Its relationship with a signatory. A parent, subsidiary or sister company is the textbook case. But the relationship is only where you begin. It explains why the outsider might be involved. It doesn't prove it consented.
- Same subject matter. Whatever the non-signatory did has to concern the same commercial deal as the contract with the arbitration clause, and not some other transaction between the same two groups.
- One composite transaction. Sometimes several agreements make up a single deal, say a shareholders' agreement, a technology licence and a supply agreement for one project. A party to some of them may then be bound by the arbitration clause in the main one.
- How it behaved during performance. Often this is the strongest evidence you'll have. A parent that issued purchase orders, signed off deliverables, paid bills or terminated the contract for its subsidiary starts to look very much like a party.
- Who has to prove it. The side trying to bind the non-signatory carries the burden, and it's a heavy one. Courts and tribunals weigh these factors together. The Supreme Court listed them in ONGC v. Discovery Enterprises (2022), and Cox and Kings adopted them.
Other ways, apart from the group doctrine, that a non-signatory gets bound
Succession and assignment come up most. When a party dies, Section 40 lets the arbitration go on with its legal representative, and when the whole contract is validly assigned, the assignee generally takes the arbitration clause along with the rights and obligations. The exceptions are contracts that are personal in nature or that bar assignment. An insurer that has paid a loss and been subrogated to the insured's claim can usually arbitrate on it too. These are the 'claiming through or under' cases.
Assignment has a limit that trips up a lot of people. If only the receivables are assigned, meaning just the right to be paid, the contract's obligations don't move. In December 2025 the Supreme Court said such an assignment doesn't, by itself, carry the arbitration agreement across either. Contractual obligations can't be assigned without the other side's consent. So a factoring company, or a sub-vendor that has taken an assignment of payments, shouldn't assume it can arbitrate against the original buyer. It probably can't.
Agency and incorporation by reference are two more routes, since a principal can be bound by an arbitration agreement its agent signed with authority. A separate document, a guarantee for instance, can pull in the main contract's arbitration clause if it refers to that clause specifically. Our note on the usual arbitration clause mistakes explains why vague references often fail. Last, the veil can be lifted where a company is a sham set up to cheat creditors, but that's a separate doctrine and a much harder one to prove.
Can a promoter or a personal guarantor be made a party?
Only if the facts show he consented to arbitrate. This is where many claimants overreach. A promoter who signed the contract for a company signed as its director, not in his own name. That signature doesn't make him personally a party to the arbitration agreement, so to bring him in you need evidence that he personally took on obligations under the same transaction and meant to arbitrate them.
Personal guarantors are easier when the guarantee deed has its own arbitration clause, or specifically pulls in the main contract's clause. But where the guarantee is a separate document with no arbitration clause and a different dispute mechanism (or none at all), the guarantor usually isn't bound. The creditor then has to sue on the guarantee in court, and lenders often discover this only when their Section 11 petition is being argued.
For suppliers dealing with small private companies, Advocate B.K. Singh's tip is simple. If the promoter's personal backing matters to you, get it in a written guarantee, and give that guarantee an arbitration clause matching the main contract, same seat, same institution. Proving later that the promoter was a party by conduct is a far harder case. Reading out a clause he signed is easy.
What about sub-contractors and sub-vendors with no paper link to the main employer?
We get this request often. Courts are cautious with it. A sub-vendor that supplied the contractor, not the employer, usually has no arbitration agreement with the employer, however closely the employer's people watched the work. Take Hindustan Petroleum Corporation Ltd v. BCL Secure Premises Pvt Ltd (December 2025). A sub-vendor claimed most of the money due under a purchase order HPCL had issued to its contractor. The Supreme Court set aside a High Court order appointing an arbitrator, holding that the sub-vendor had shown no prima facie arbitration agreement with HPCL. The tender barred assignment and sub-letting without HPCL's written consent, and no consent had been given. Being copied on emails, or being part of escrow arrangements, didn't show that HPCL had agreed to arbitrate with it.
For sub-contractors the lesson isn't pleasant. It is practical. Your claim lies against whoever you contracted with, under your own contract's dispute clause. If you want to be able to go straight at the employer, you need something the employer has signed. A tripartite agreement, a direct payment undertaking or a consent to assignment would do. And it should contain, or specifically incorporate, an arbitration clause.
It's no different if the sub-vendor is a registered micro or small enterprise. The MSME Facilitation Council route under Section 18 of the MSMED Act works against the sub-vendor's own buyer, meaning the contractor that placed the order. It doesn't reach the employer higher up the chain. Picture a Noida fabrication unit supplying steel structures to a contractor on a PSU project. It can claim delayed payment interest from the contractor. It can't use the Council to reach the PSU unless the PSU is its buyer on paper. If the contractor is itself waiting for the PSU to pay, that's the contractor's headache under its own contract. And a 'pay when paid' line in the purchase order doesn't wipe out the interest the MSMED Act imposes on late payment to a registered supplier.
Who decides if a non-signatory is bound, the court or the arbitrator?
Both, but at different depths. At the Section 11 stage, the High Court takes a prima facie look at whether an arbitration agreement exists and whether the non-signatory seems to be a party to it. In Ajay Madhusudan Patel v. Jyotrindra S. Patel (2024), a three-judge bench appointed an arbitrator and let a non-signatory group be arrayed. It left the final call on whether that group was bound to the tribunal. Then in HPCL v. BCL Secure Premises (2025), the Court added something. The referral court can't just pass the question along. It must be prima facie satisfied that the non-signatory is a 'veritable party', a real party in substance. If nothing shows that, it should refuse the reference.
In practice, then, you need a believable documentary case at the referral stage that the non-signatory consented. Not a full trial. Before the tribunal, the non-signatory can object to jurisdiction under Section 16, and the tribunal decides after evidence. If the tribunal gets it wrong and binds it anyway, the non-signatory can raise the point in a Section 34 petition against the award. See challenging an arbitral award under Section 34.
For the Section 11 petition itself, our note on going to court under Section 11 explains how it works in Delhi.
Can a non-signatory sit in on hearings, or join an arbitration that's already running?
Not as of right. In Kamal Gupta v. L.R. Builders Pvt Ltd (2025), the Supreme Court held that the referral court's job ends once it appoints the arbitrator. Rights to attend hearings, see the pleadings and receive the award belong to parties within Section 2(1)(h). Non-signatories who aren't claiming through a signatory have none of those rights. Letting them watch the hearings breaches the confidentiality Section 42A requires.
Adding a new party midway depends on how the tribunal sees its own jurisdiction. In institutional cases, the centre's joinder rules matter too. No tribunal will join a non-signatory just because it's convenient, and it wants the same proof of consent a court would. So plan for this from day one. If you want a group company bound, name it in your notice invoking arbitration and in the Section 11 petition. Don't try to slip it in after the pleadings.
Common non-signatory situations and how courts tend to treat them
| Situation | Bound? | What tips it | Where it's usually fought |
|---|---|---|---|
| Parent negotiated, gave instructions and paid on the subsidiary's contract | Possibly | Proof of mutual intent and performance (Cox and Kings factors) | Section 11 (prima facie), then Section 16 |
| Sister company that played no part in the contract | Unlikely | Being in the same group isn't enough | Section 11 or Section 16 |
| Legal heir of a party who has died | Yes, generally | Section 40 and the law of succession | Rarely disputed |
| Assignee of the whole contract, with consent | Yes, generally | Whether the assignment is valid, and whether the contract is personal | Section 11 |
| Assignee of receivables only | Usually not | Obligations weren't assigned (HPCL v. BCL, 2025) | Section 11 |
| Director who signed for the company | Usually not, personally | He signed as the company's representative | Section 11 or Section 16 |
| Personal guarantor whose guarantee has an arbitration clause | Yes | An express clause, or specific incorporation | Rarely disputed |
| Sub-vendor going after the main employer | Usually not | No privity, and no consent | Section 11 |
Bringing a non-signatory into an arbitration
If you're the claimant and think a non-signatory ought to answer your claim, build that case from the very first notice.
Map who did what
Write a short chronology. Who negotiated, who signed, who gave instructions, who took delivery of the goods or services, who paid and who terminated. Attach the supporting document to each line.
Test it against the Cox and Kings factors
Be honest. Do the papers show the non-signatory acting as a party, or just a related company somewhere in the background? If it's the second, think twice before naming it.
Name it in the Section 21 notice
Address the notice invoking arbitration to everyone you mean to bind. Say briefly why each one is bound, and propose an arbitrator or institution. See invoking an arbitration clause under Section 21.
Include it in the Section 11 petition
If appointment ends up in court, array the non-signatory as a respondent and annex the main documents. The court will look at them prima facie.
Plead the facts fully in the statement of claim
The tribunal has the final say under Section 16. Plead the actual facts of consent, not just the conclusion. Be ready with witnesses on negotiation and performance.
Think about interim relief
If assets might be shifted around inside the group, consider a Section 9 petition early. Our note on filing a Section 9 petition covers where and how.
Look ahead to enforcement
An award is executed against whoever it names. If the non-signatory holds the assets, it has to be bound in the award itself.
Papers that show a non-signatory consented
While the deal was being made
- Term sheets, letters of intent and drafts that went back and forth with the non-signatory's officers
- Emails where its people talk about 'our contract' or make promises
- Its own board resolutions or approvals for the deal
- Any group-level presentation or proposal pitched to you
While the work was done and paid for
- Purchase orders, work orders or instructions it sent you
- Payments from its bank account, backed by bank statements
- Acceptance certificates, delivery challans and inspection reports its staff signed
- Minutes of meetings and progress reports that show its role
When things fell apart
- Any termination letter or notice it sent
- Its replies to your demand notices or legal notice
- A guarantee, comfort letter or undertaking it gave you
- Linked agreements that form part of the same deal
An invented example: a Gurugram IT vendor and a parent company that called the shots
This example is made up. A software services firm in Gurugram signs a two-year development contract with the Delhi-based subsidiary of a retail group. The contract has a DIAC arbitration clause. The parent's chief technology officer chairs every steering meeting and approves each milestone by email, and when the subsidiary runs out of money, the parent pays three invoices directly. Eight months in, the parent's legal head sends a termination letter on group letterhead. Rs 1.1 crore is left unpaid.
The subsidiary has almost nothing left. The vendor's lawyers serve a Section 21 notice on both companies and explain why the parent is bound. It negotiated the contract, directed the work, paid under it and ended it. The parent replies that it never signed anything. At the Section 11 stage, the vendor annexes the emails, the bank statements and the termination letter. The court is prima facie satisfied. It refers both companies to arbitration and leaves the final question to the tribunal under Section 16.
Now change one fact. Suppose the parent only received monthly reports and did nothing else. The case for binding it would be thin. Naming it would burn time and costs without getting the vendor any closer to its money. The evidence decides, not the group chart.
You're the non-signatory. How do you stay out?
Object early, and in writing. Reply to the Section 21 notice saying you aren't a party and don't consent to arbitration. Don't comment on the merits of the claim against the signatory. Oppose being impleaded in the Section 11 petition, and point out that there's nothing on paper showing your consent. If the court sends the question to the tribunal, raise your jurisdiction objection under Section 16 no later than your statement of defence. Section 16(2) requires that.
Watch your conduct during the arbitration. A non-signatory that files a counterclaim, asks for relief or argues the merits without reserving its objection may be treated as having accepted jurisdiction. If you have to appear, appear under protest. Get that protest clearly recorded.
When Advocate B.K. Singh advises a group company named as a non-signatory respondent, he reads its own internal emails on the deal before drafting a word of objection. A denial that the company's own correspondence contradicts will damage you before the tribunal. Find the weak spots first. Don't wait for the other side to produce them.
How do you draft so the question never comes up?
Get the right companies to sign. If the parent will give instructions or pay, make it a party, or have it sign a short deed of adherence to the arbitration clause. If a promoter's guarantee matters, put an arbitration clause in the guarantee with the same seat and institution. If several group agreements make up one deal, use the same dispute clause in each, and say plainly that disputes under all of them can be heard together.
And if you're a parent company that wants a subsidiary's contracts kept separate, act like it. Let the subsidiary negotiate, sign, perform, pay and terminate through its own officers and its own bank accounts. A lot of groups lose the separation argument because their own staff blur the line in everyday emails. That's avoidable. Our guide on drafting an arbitration clause for Indian contracts includes wording for multi-party deals.
What you can do this week
If you're owed money, put together the chronology and document set described above. Then decide, honestly, whether the non-signatory's role meets the Cox and Kings factors before you name it in any notice. If an award will have to be executed against group assets, start thinking about that now. Not later. The commercialcourtlawyer.com guide on executing a decree explains how execution works, and our note on enforcing an arbitral award in India deals with awards in particular. If you're the one who's been named, don't ignore the notice. Reply on the jurisdiction point within the time given.
If you'd like your contract, emails and payment records looked at to see whether a non-signatory can be bound, or want to hear as the courts refine the group of companies doctrine, share them with Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Is the group of companies doctrine still good law in India?
Yes. The Constitution Bench in Cox and Kings v. SAP India (December 2023) kept it. But it based the doctrine on the mutual intention of the parties under Sections 2(1)(h) and 7, not on the words 'claiming through or under'.
Is a company bound just because it's in the same group?
No. A shared group, common shareholders or one economic unit isn't enough by itself. You need evidence that the non-signatory meant to be bound. Usually that's its role in negotiation, performance or termination.
Can a non-signatory start an arbitration itself?
It can try. It has to show it's a veritable party, or that it claims through a signatory (as an assignee or legal heir, for example). The tests don't change with which side the non-signatory is on.
Does an award against a company bind its directors personally?
Ordinarily, no. A director who signed for the company did so as its representative. To bind him personally you'd need a separate agreement, like a guarantee with an arbitration clause, or strong evidence that he was a party in his own right.
What happens if a party dies in the middle of an arbitration?
Under Section 40, death doesn't discharge the arbitration agreement. The arbitration carries on by or against the legal representative, who's brought on record before the tribunal.
Can a factoring company that bought my invoices arbitrate against my buyer?
Usually not on the receivables assignment alone. Contract obligations aren't assigned that way, and the arbitration clause doesn't automatically pass. Check the factoring agreement, and whether your buyer consented in writing.
How much time does a fight over a non-signatory usually add?
Expect it to be argued at the Section 11 stage, often for a few months. Then it comes up again before the tribunal as a preliminary jurisdiction point. The total depends on whether evidence is needed. It can run to several months.
Should a non-signatory attend hearings to protect itself?
Not as an observer. The Supreme Court has held that non-parties have no right to attend. If it's been named as a respondent, it should appear and record its Section 16 objection to jurisdiction before arguing anything else.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.