Composite Transaction Route To “Veritable Party”: Doctrine Still Finding Its Edges

Indian arbitration law has spent the last two years refining a single question when can a non-signatory be forced into or allowed to invoke an arbitration clause it never signed? The Constitution Bench in Cox and Kings Ltd. v. SAP India Pvt. Ltd. 2023 LiveLaw (SC) 1042, gave courts two distinct routes to answer this “group of companies” doctrine, which looks at corporate structure and conduct and the “composite transaction” doctrine which looks at whether a set of linked agreements forms a single commercial arrangement. But three rulings since December 2025 one from the Supreme Court, two from the Bombay High Court show that composite transaction is developing its own, narrower logic and that court are not yet applying it consistently.

The doctrinal starting point

The composite transaction idea predates Cox and Kings by over a decade. In Chloro Controls (I) Pvt. Ltd. v. Severn Trent Water Purification Inc. & Ors. 2012 INSC 436, the Supreme Court held that where a group of agreements are executed to achieve one commercial object, a non-signatory to the arbitration clause in one agreement could still be bound if it was a signatory to another agreement forming part of the same transaction. Ameet Lalchand Shah v. Rishabh Enterprises, 2018 INSC 450, extended this logic to a solar-power project where four interlinked agreements only some containing arbitration clauses were held to form a single commercial arrangement. Oil and Natural Gas Corporation Ltd. v. Discovery Enterprises Pvt. Ltd. & Anr., 2022 LiveLaw (SC) 416 carried the reasoning further.

Cox and Kings folded this line into the broader “veritable party” framework a non-signatory who is, in substance rather than form a real party to the arbitration agreement. What Cox and Kings did not fully settle is whether composite transaction is an independent basis for binding a non-signatory or merely one factual indicator feeding the group-of-companies inquiry.

The Supreme Court narrows the frame

Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd., 2025 LiveLaw (SC) 1184, answered this in the negative on its facts. HPCL had floated a tender for a Tank Truck Locking System, awarded to AGC Networks Ltd. (later Black Box Ltd.), whose tender terms (Clause 3.17) barred subletting subcontracting or assignment without HPCL's written consent. AGC subcontracted the work to BCL Secure Premises Pvt. Ltd. on a back-to-back basis, and a clause in that arrangement barred BCL's project manager from communicating with HPCL without AGC's prior approval. When disputes arose BCL invoked the arbitration clause in the HPCL-AGC contract relying on a later Settlement cum Assignment Agreement with AGC to argue it was a veritable party.

Court held that a Section 11 referral court retains jurisdiction to screen veritable-party status even after Cox and Kings and is not a “monotonous automation” bound to relegate every such question to the arbitral tribunal. On the facts the Court found HPCL and BCL had been “operating on separate orbits” there was no privity between them the assignment ran only between AGC and BCL and neither the contractual chain nor BCL's conduct copied group emails, an escrow arrangement established even a prima facie case of intention to be bound. The Court applied Khardah Company Ltd. v. Raymon & Co. (India) Pvt. Ltd., 1962 INSC 202 the distinction between assignable rights and non-assignable obligations and held that mere commercial or economic connection to a project cannot substitute for a prima facie showing of assignment, novation or subrogation. The Court set aside the Bombay High Court's order appointing an arbitrator.

The Bombay High Court's wider reading

Three months later on materially different facts, the Bombay High Court reached the opposite result using the same doctrine. In Jupicos Entertainment Pvt. Ltd. v. Probability Sports (India) Pvt. Ltd. & Anr., 2026 LLBiz HC(BOM) 155, Justice Sandeep V. Marne held that the Mumbai Cricket Association (MCA), though not a signatory to the Participation Agreement governing a T20 franchise was nevertheless bound to arbitrate. First MCA's dominant operational control over the league, including approval of team participation and a decisive role in termination, satisfied the group-of-companies test under Cox and Kings. Second the Participation Agreement and a later Supplementary Agreement, to which MCA was a signatory, formed a single composite transaction under Ameet Lalchand Shah, binding MCA to the arbitration clause despite the Supplementary Agreement containing no separate arbitration clause.

What distinguishes this from HPCL v. BCL is not the doctrine but its inputs. MCA was a signatory to one of the linked agreements BCL was a signatory to none of the agreements in the HPCL chain. The composite-transaction route, on this reading, requires at minimum a documentary foothold actual execution of some connected instrument before conduct or commercial proximity can do further work.

Hind Offshore Pvt. Ltd. v. OCS Services (India) Pvt. Ltd., 2026 LLBiz HC(BOM) 301, decided two months later reinforces this reading from the opposite direction. The Bombay High Court upheld the refusal to implead Planet Support Services India Pvt. Ltd., a group company of OCS Services, holding that a group relationship and support role, without a documented commitment, cannot justify joinder. Composite transaction could not substitute for a signed instrument. Read together, these three rulings suggest that composite transaction is hardening into a threshold rule rather than a discretionary factor a non-signatory must ordinarily be a signatory to some agreement within the linked set before the composite-transaction argument can bind it to an arbitration clause in a different agreement within that set.

How other major arbitration jurisdictions answer the same question

France is the doctrine's home and remains its most hospitable jurisdiction. The group-of-companies The doctrine originated in the ICC's 1982 in Dow Chemical v. Isover Saint Gobain,¹ which award and the Paris Court of Appeal upheld it in 1983. French law continues to treat group conduct and mutual intention as relevant to binding non-signatories.

England has gone the other way, deliberately. In Peterson Farms Inc. v. C & M Farming Ltd. 2004,² the English Commercial Court set aside an ICC award that had applied the group-of-companies doctrine to award damages to non-signatory affiliates. The Court held that “English law treats the issue as one subject to the chosen proper law of the Agreement and that excludes the doctrine which forms no part of English law” a ruling since summarised in commentary as holding the doctrine “has no place in English law.” English courts bind non-signatories only through conventional routes agency, assignment, novation, or piercing the corporate veil for fraud never through a free-floating single-economic-entity theory.

Singapore has followed England closely. In Manuchar Steel Hong Kong Ltd. v. Star Pacific Line Pte Ltd. 2014,³ the Singapore High Court refused to enforce a London-seated award against a non-signatory. The Singapore High Court rejected enforcement against a non-signatory and treated separate legal personality as inconsistent with the “single economic entity” theory. Its approach remains anchored in demonstrated consent.

The United States takes a broader but structured approach. Federal courts recognise domestic-law doctrines particularly equitable estoppel, for enforcing arbitration agreements against non-signatories. In GE Energy Power Conversion France SAS v. Outokumpu Stainless 2020,⁴ the U.S. Supreme Court ruled that these domestic-law doctrines also apply to international arbitration agreements under the New York Convention. Despite these ruling courts of appeals in the U.S. have limited equitable estoppel to instances where the non-party directly benefits from the contract in dispute direct-benefit estoppel or where the claims made by the non-signatory are so intertwined with the signed contract.

What stance should India take from here

India has legitimate reasons not to adopt the English or Singaporean approach. Layered contracting in infrastructure, logistics and franchising means strict privity could allow a party substantially involved in a dispute to avoid arbitration. Cox and Kings' willingness to look beyond the signature therefore has commercial justification.

However, these cases expose the danger of an intention-based test without clear boundaries. Two refinements would make India's approach more consistent

First, treat the documentary foothold requirement visible in Jupicos and Hind Offshore as the general rule, not an incidental feature of those facts. The most natural interpretation of HPCL v. BCL is that mere commercial reliance upon a transaction, even if there is no written connected agreement or conduct suggesting assumption of any contractual obligations, will never suffice for true party status. The court ought to state this clearly, rather than leaving every High Court to re-discover it for itself.

Second, borrow the American approach's discipline of naming discrete categories rather than relying on a single open-ended “intention” inquiry. Specific and answerable questions are raised by American courts was the non-signatory a beneficiary of the same contract which it contests? Are its claims so interwoven with the contract that its separate litigation would be artificial? Indian courts have a single global question was there intention to create legal relations, which is difficult to apply consistently. Structuring the test for composite transaction on the basis of specific categories documentary evidence of relation direct benefit intertwining of claims conduct constituting assumption would retain the flexibility of Cox & Kings while rendering the test administrable.

Reference

1. Dow Chemical v. Isover Saint Gobain (ICC Case No. 4131)
2. Peterson Farms Inc. v. C & M Farming Ltd. [2004] EWHC 121 (Comm)
3. Manuchar Steel Hong Kong Ltd. v. Star Pacific Line Pte Ltd. [2014] 4 SLR 832
4. GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC, 590 U.S. 432 (2020).