Referred to Larger Bench XXVIII: Chloro Controls

Posted on by Rudrajyoti Nath Ray

Court must examine ambit of Doctrine of Group of Companies. Ever since expounded in Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 it has been utilized in a varied manner.

Mahanagar Telephone Nigam Ltd. v. Canara Bank, (2020) 12 SCC 767 observed, Group of Companies Doctrine can be utilized to bind a third party to an Arbitration, if a tight corporate group structure constituting a single economic reality existed.

We may notice, these cases have been decided by this Court, without referring to ambit of the phrase ‘claiming through or under’ as occurring under Section 8 of The Arbitration & Conciliation Act, 1996. Concepts like single economic entity are concepts difficult to be enforced as principles of law. Chloro Controls and cases following it, correctness of which this Bench doubts, appear to have been based more on economics and convenience rather than law.

Referred to a Larger Bench.

– Hon’ble Chief Justice of India, Hon’ble Justice N.V. Ramana, Cox and Kings Limited v. SAP India Private Limited, [Arbitration Petition (Civil) No. 38 of 2020].

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