Principle of “claiming through or under” for Arbitration
The person “claiming through or under” cannot be made a “party” to the arbitration agreement on its own terms, as it only stands in the shoes of original signatory party. The phrase “claiming through or under” has not been used either in Section 2(1)(h) or Section 7 of the Arbitration Act. This is so because those provisions are based on the concept of party autonomy and party independence, which requires the party to provide consent to submit their disputes to arbitration. On the contrary, a person claiming through or under a party to an arbitration agreement is merely standing in the shoes of original party to the extent that it is merely agitating the right of the original party to the arbitration agreement.
This Court is of the view that parties may be referred to arbitration only if they are signatories to the arbitration agreement or, though non signatories, fall within the recognised exceptions, such as persons claiming “through or under” a signatory or those covered by the Group of Companies Doctrine. The latter applies where the conduct of the companies within the group demonstrates that they participated in the negotiation, execution, performance, or fulfilment of the contract in a manner indicating a common intention to be bound by its terms, including the arbitration agreement, notwithstanding that one of the companies is not a signatory to the arbitration agreement.
Respondent nos. 3 and 4 have absolutely no connection with the Applicants and the Partnership 1985. Accordingly, Respondent Nos. 3 and 4 cannot be referred to arbitration under the 1985 Partnership Deed. The 1985 and 2009 partnership Deeds, act is completely different orbits.
Partners & Non-signatory to Arbitration -Whether veritable or derivative parties
In the first round of litigation, the arbitral award was set-aside on 15.10.2019. The respondent nos.3 and 4 were not parties to the first arbitration.
On 8.3.2024, fresh section 21 notice was issued and thereafter, section 11 petition was filed on 15.10.2026.
The partnership deed dated 9.12.1985 of the applicant and the respondent nos.1 and 2 had arbitration clause. Later on, the respondent no.3 was inducted as a partner of the firm. Respondent no.4 is a private trust and the beneficiaries are members of the family of the respondent no.1. The rights of the respondent nos.3 and 4 emanate from and derived under the partnership deed.
it is to be seen that that the partnership deed of 1985 and the partnership deed of 2009 are distinct and Respondent nos.3 and 4 have not participated in the business of the partnership under the 1985 deed in close proximity for the benefit or overall business transactions under the 1985 partnership deed. The concept of group companies doctrine, has no applicable in the instant case.
The parties to the 1985 Partnership Deed and the parties to the 2009 Partnership Deed operate on separate orbits.
Non-signatories of 2009 Partnership Not Bound by Arbitration & Dispute of Erstwhile Partners of 1985 Partnership Deed
Judgment dated 6.7.2026 of the High Court of Bombay in Commercial Arbitration Application No.184 of 2026 of Hemant D. Shah HUF and another Vs. Chittaranjan D. Shah HUF and others
