Paragraph numbers below are the court’s original numbering, recovered from the source text.
34. In fact, ASF Buildtech (Supra) expressly notices the holding in Para 169 of Cox & Kings (Supra) to conclude that the Referral Court was required to prima facie rule on the existence of the arbitration agreement and whether the non-signatory was a veritable party. All that it holds further in reiteration of the earlier line of judgments is that even if the Court holds that prima facie a party is a veritable party that will not foreclose the Arbitral Tribunal from concluding to the contrary after an intensive inquiry.
35. This does not mean that where the Referral Court finds prima facie a party is not a veritable party still the matter is left to the Arbitral Tribunal. To hold so, would relegate the Referral Court to the status of a monotonous automation. Further, to countenance such an extreme proposition would lead to disastrous consequences, where absolute strangers could walk into the Referral Court and contend that the matter has to perforce go to the Arbitral Tribunal for a decision on the veritable nature of the party. We are not prepared to accept such an extreme proposition.
36. It could happen that one party having undertaken a contract from the other may engage one or more third parties like in the present case. In such a scenario, if there is nothing even prima facie to show that there was any semblance of an intent to effect legal relationship between that party and the party originally granting the contract and/or to indicate that such a third party was a veritable party, such parties cannot be found to be veritable parties. The following pertinent observations from Cox and Kings (Supra) are relevant: – “117. ….However, we clarify that mere presence of a commercial relationship between signatory and non- signatory parties is not sufficient to infer ‘legal relationship’ 476 between and among the parties. If this factor is applied solely, any related entity or company may be impleaded even when it does not have any rights or obligations under the underlying contract and did not take part in the performance of the contract. The group of companies doctrine cannot be applied to abrogate party consent and autonomy….” As pointed out earlier, on the facts of the present case, we hold that the parties operated on separate orbits.
37. We are not impressed with the argument that the respondent had a right to invoke the arbitration clause for the Indian Bidders in the tender issued by the appellant, despite being a non-signatory, since the respondent was a person claiming through or under AGC. Reliance placed in this regard on Cox and Kings (supra) is completely unjustified. As held in Cox and Kings (supra), mere legal or commercial connection is not sufficient for a non-signatory to claim through or under a signatory party. Para 140 of Cox and Kings (supra) is extracted hereinbelow :- “140. An analysis of the cases cited above establishes the following propositions of law : first, the typical scenarios where a person or entity can claim through or under a party are assignment, subrogation, and novation; second, a person “claiming through or under” can assert a right in a derivative capacity, that is through the party to the arbitration agreement, to participate in the agreement; third, the persons claiming through or under do not possess an independent right to stand as parties to an arbitration agreement, but as successors to the signatory parties’ interest; and fourth, mere legal or commercial connection is not sufficient for a non-signatory to claim through or under a signatory party.”
38. Apart from the above, not only has the respondent not shown any consent for assignment as required under clause 3.17 of the tender document, nothing even prima facie has been shown to establish that there was any semblance of an intent to effect legal relationship between the respondent and the party originally granting the contract and/or to indicate that the respondent was a veritable party. [2025] 12 S.C.R. Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd.
39. It will be apt to refer to the judgment of this Court in Khardah Company Limited vs. Raymon & Co.6 wherein this Court held as under:- “The law of the subject is well settled and might be stated in simple terms. An assignment of a contract might result by transfer either of the rights or of the obligations thereunder. But there is a well-recognised distinction between these two classes of assignments. As a rule obligations under a contract cannot be assigned except with the consent of the promise, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand rights under a contract are assignable unless the contract is personal in its nature the rights are incapable of assignment either under the law or under an agreement between the parties.”
40. Applying the consensual theory or the non-consensual theory, the respondent has not established its case to show even prima facie the existence of an arbitration agreement between HPCL and the respondent. Reference to copies of group emails being marked to HPCL or the creation of an escrow account on account of the contract between AGC and the respondent BCL, fall far short of making out of a prima facie case. We have also perused the Settlement-cum- Assignment Agreement between AGC and respondent-BCL dated 31.10.2023, and particularly clause 2.2 thereto. Under this clause, AGC (Black Box) has represented and warranted that any amount/ receivables accruing to AGC (Black Box) as a result of litigation/ proceeding initiated by BCL against the HPCL was to be transferred to BCL. Here again, the respondent fails the prima facie test of being a veritable party to the arbitration agreement between HPCL and AGC. As to what is the legal status otherwise of clause 2.2 of the Settlement Agreement dated 31.10.2023 is not for us to comment in the present proceeding.
41. The judgment in Pravin Electricals Private Limited vs. Galaxy Infra & Engineering Private Limited7, cited by Mr. Nalin Kohli, learned Senior Advocate, has no relevance to the present case. There was (2021) 5 SCC 671 478 a dispute between employer and the tendering party directly and the dispute was as to whether there existed any agreement between them. Hence, Pravin Electricals (Supra) is also of no help to the respondent. Equally, the reliance on Cox & Kings Ltd. (2) vs. SAP (India) Pvt. Ltd.8, does not carry the case of the respondent any further. That case turned on its own facts. As is clear from para 34 of the said judgment, this Court felt that in view of the complexities involved in the determination of the question as to whether the respondent No.2 therein was a party to the arbitration agreement or not, the matter was felt best left to the arbitral tribunal to take a call. Unlike in Cox & Kings (2) (supra), the situation here is simple, leaving us with no difficulty in arriving at the conclusion that we indeed have arrived at.
42. In view of our holding on the issue of the non-existence of an arbitration agreement between the parties herein, we are not required to go into the issue of whether the claim was ex-facie time-barred.
43. For the reasons stated above, we allow the appeal and set aside the judgment and order dated 07.04.2025 passed by the Learned Single Judge of the High Court of Judicature at Bombay in Comm. Arbitration Application No.125/2025. Comm. Arbitration Application No.125/2025, on the file of the High Court of Judicature at Bombay, shall stand dismissed. If the respondent has any other remedy available in law, it is at liberty to pursue the same. If any such proceedings are resorted to, they have to be decided in accordance with law and on their own merits. No order as to costs. Result of the case: Appeal allowed. †Headnotes prepared by: Nidhi Jain (2025) 1 SCC 611