The Supreme Court (‘SC’) in Cox & Kings Limited v. SAP India Private Limited & Anr.^[1], held that the doctrinal ingredients concerning the ‘Group of Companies’ doctrine needs to be relooked. The Court observed that the law laid down in Chloro Controls India Private Limited v. Severn Trent Water Purification Inc.^[2], and the cases following it, appear to have been based, ‘more on economics and convenience rather than law’ and commented that this may not be the correct approach. The Court took note of the inconsistencies amongst the earlier judicial pronouncements regarding the basis for the ‘Group of Companies’ doctrine. Expressing their doubts on the correctness of the law laid down in Chloro Controls, the SC accordingly referred the following questions to a larger bench:

i.     Whether the phrase ‘claiming through or under’ in Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) could be interpreted to include ‘Group of Companies’ doctrine?

ii.    Whether the ‘Group of Companies’ doctrine as expounded in Chloro Controls and subsequent judgments are valid in law?

i.     Whether the ‘Group of Companies’ doctrine should be read into Section 8 of the Arbitration Act or whether it can exist in Indian jurisprudence independent of any statutory provision?

ii.    Whether the ‘Group of Companies’ doctrine should continue to be invoked on the basis of the principle of ‘single economic reality’?

iii.   Whether the ‘Group of Companies’ doctrine should be construed as a means of interpreting the implied consent or intent to arbitrate between the parties?

iv.    Whether the principles of alter ego and/or piercing the corporate veil can alone justify pressing the ‘Group of Companies’ doctrine into operation even in the absence of implied consent?

[1] Cox & Kings Limited v. SAP India Private Limited & Anr., 2022 SCC OnLine SC 570.

[2] Chloro Controls India Private Limited v. Severn Trent Water Purification Inc., (2013) 1 SCC 641.