Hindustan Petroleum Corporation Ltd. Vs BCL Secure Premises Pvt Ltd. (Supreme Court)
No Privity, No Arbitration: Non-Signatory Must Show Intent- Sub-Vendor Cannot Force Arbitration on Principal Employer Without Consent
Dispute arose from HPCL’s tender for Tank Truck Locking System (TTLS) awarded to AGC Networks Ltd. BCL, a sub-vendor to AGC, later attempted to invoke arbitration against HPCL relying on an assignment-cum-settlement agreement executed only between AGC & BCL. HPCL denied privity, citing express contractual prohibition against subletting or assignment without prior written consent, which was never obtained. Bombay High Court, in a Section 11(4) A&C Act proceeding, appointed an arbitrator while directing that arbitrability be decided as a preliminary issue.
Supreme Court held that even at Section 11 stage the referral court must prima facie examine whether a non-signatory is a veritable party to the arbitration agreement. Relying on Cox & Kings, Interplay, Krish Spinning, Ajay Madhusudan Patel & ASF Buildtech, Court emphasised that a non-signatory must show genuine intention to be bound. On facts, HPCL & BCL “operated on separate orbits”; BCL never participated in negotiation or execution of HPCL’s contract; contract expressly barred sub-letting without consent; BCL’s documents, emails or escrow arrangements fell short of establishing veritable-party status; assignment between AGC & BCL could not create an arbitration agreement with HPCL. Consequently, Supreme Court held no arbitration agreement existed between HPCL & BCL & High Court erred in referring matter to arbitration. Appeal allowed; Section 11 application dismissed.
