BENCKISER (INDIA) PRIVATE LIMITED versus REYNDERS LABEL PRINTING INDIA PRIVATE LIMITED AND ANR.

Citation: [2019] 8 S.C.R. 966 · Decided: 01-07-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Disposed off

Cited by 2 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 8 S.C.R.
RECKITT BENCKISER (INDIA) PRIVATE LIMITED
v.
REYNDERS LABEL PRINTING INDIA PRIVATE LIMITED
AND ANR.
(Petition for Arbitration (Civil) No. 65 of 2016)
JULY 01, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 11(5), 11(9) and
11(12)(a) – Signatory and non-signatory parties to the arbitration
agreement – According to the applicant, the respondents had
approached them with an offer to print labels – Pursuant thereto,
respondent no.1 and applicant entered into an agreement dated
01.05.2014 – It was averted that arbitration agreement was an
integral part of the agreement dated 01.05.2014 – Respondent no.2
was a non-signatory party to the agreement dated 01.05.2014 –
Dispute arose between the parties – Respondent no.2 was impleaded
in the arbitration proceedings on the ground that respondent no.2
was the parent/holding Company of respondent no.1 – Respondent
no.2 refuted the assertions made by the applicant – Held: In the
instant case, burden is on the applicant to establish that respondent
no.2 had an intention to consent to the arbitration agreement and
be party, may be for the limited purpose of enforcing the indemnity
clause in the agreement, which refers to respondent no.1 and the
supplier group against any claim of loss, damages and expenses,
howsoever incurred or suffered by the applicant and arising out of
or in connection with matter specified – That burden was not
discharged by the applicant – Further, respondent no.2 was never
involved in the negotiation process concerning the agreement dated
01.05.2014 – Thus, respondent cannot be subjected to proposed
arbitrative proceedings.
Disposing of the application, the Court
HELD : 1. In the backdrop of the averments in the
application and the correspondence exchanged between the
parties adverted to by the applicant, it is obvious that the thrust
of the claim of the applicant is that one ‘FR’ was acting for and on
behalf of respondent No.2, as a result of which the respondent
   [2019] 8 S.C.R. 966
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No.2 has assented to the arbitration agreement. This basis has
been completely demolished by respondent No.2 by stating, on
affidavit, that  ‘FR’ was in no way associated with respondent
No.2 and was only an employee of respondent No.1, who acted in
that capacity during the negotiations preceding the execution of
agreement. Thus, respondent No.2 was neither the signatory to
the arbitration agreement nor did have any causal connection
with the process of negotiations preceding the agreement or the
execution thereof, whatsoever. If the main plank of the applicant,
that ‘FR’ was acting for and on behalf of respondent No.2 and had
the authority of respondent No.2, collapses, then it must
necessarily follow that respondent No.2 was not a party to the
stated agreement nor had it given assent to the arbitration
agreement and, in  absence thereof, even if respondent No.2
happens to be a constituent of the group of companies of which
respondent No.1 is also a constituent, that will be of no avail.
For, the burden is on the applicant to establish that respondent
No.2 had an intention to consent to the arbitration agreement
and be party thereto, maybe for the limited purpose of enforcing
the indemnity clause 9 in the agreement, which refers to
respondent No.1 and the supplier group against any claim of loss,
damages and expenses, howsoever incurred or suffered by the
applicant and arising out of or in connection with matters specified
therein. That burden has not been discharged by the applicant at
all. On this finding, it must necessarily follow that respondent
No.2 cannot be subjected to the proposed arbitration
proceedings. Considering the averments in the application under
consideration, it is not necessary for this Court to enquire into
the fact as to which other constituent of the group of companies,
of which the respondents form a part, had participated in the
negotiation process. [Para 9] [983-C-H; 984-A-B]
2. Suffice it to observe that respondent No.2 was never
involved in the negotiation process concerning the stated
agreement dated 1st May, 2014. On this finding, the application
must fail as against respondent No.2 and as a consequence
whereof, the provisions for making reference to the sole
arbitrator, on the  assumption that it is an international commercial
arbitration, cannot be taken forward. As respondent No.1 is a
RECKITT BENCKISER (I) PVT. LTD. v

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