Non-Signatory Sub-Contractor Cannot Invoke Arbitration Against Principal Employer; Supreme Court Sets Aside Bombay HC Referral Order

The Supreme Court of India has set aside a Bombay High Court order that appointed an arbitrator to adjudicate disputes between Hindustan Petroleum Corporation Ltd. (HPCL) and BCL Secure Premises Pvt. Ltd. (BCL), a sub-contractor with whom HPCL had no direct contract.

The Bench, comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan , ruled that a non-signatory to an arbitration agreement cannot invoke arbitration against a principal party unless it is prima facie established that the non-signatory is a “veritable party” to the contract. The Court held that HPCL and BCL were operating on “separate orbits,” and there was no privity of contract between them.

The central legal issue before the Apex Court was whether the High Court was justified in referring the parties to arbitra