ELP – Arbitration weekly update – Mahanagar Telephone Nigam Ltd. v. Canara Bank & Ors

This week, we analyze a recent judgment of the Supreme Court in Mahanagar Telephone Nigam Ltd. v. Canara Bank & Ors. Disputes arose between Mahanagar Telephone Nigam Ltd. (MTNL) and Canara Bank (Canara), and Canara filed a writ petition before the Delhi High Court (Court) in relation to bonds placed by MTNL with Can Bank Financial Services Ltd. i.e. the wholly owned subsidiary of Canara Bank (CANFINA). CANFINA was made a proforma party to the writ petition. In the proceedings before the Court, the parties consented to refer their disputes to arbitration before a sole arbitrator. Accordingly, by way of an order (Order), the Court recorded the reference of disputes to arbitration and appointed the sole arbitrator.

The issues which arose for consideration before the Supreme Court were (a) whether a valid arbitration agreement existed between the three parties; and (b) whether CANFINA was a party to the arbitration agreement and ought to be impleaded in the arbitration proceedings.

Upon examining section 7 of the Arbitration and Conciliation Act, 1996 (the Act” and the facts of the case, the Supreme Court held that a valid arbitration agreement existed between the parties.

Reflecting upon the jurisprudence on the ‘Group of Companies’ doctrine and the factual matrix, the Supreme Court invoked the ‘Group of Companies’ doctrine and joined CANFINA in the arbitration proceedings pending before the tribunal. The Supreme Court remitted the matter to the tribunal and clarified that it has not expressed any opinion on the merits of the dispute.

Read the detailed update here.