A third-party or a non signatory could be subjected to arbitration without his prior

consent only in exceptional cases .

[Case Brief] RV Solutions Pvt. Ltd. V/S Ajay Kumar Dixit & Ors.

Case name: RV Solutions Pvt. Ltd. V/S Ajay Kumar Dixit & Ors.

Case number: CS(COMM) 745/2017

Court: THE HIGH COURT OF DELHI , NEW DELHI

Bench: HON'BLE MR. JUSTICE JAYANT NATH

Decided on: January 15, 2019

Relevant Section 8 Arbitration and Conciliation Act, 1996

Act/Sections:

 BRIEF FACTS AND PROCEDURAL HISTORY:

1. RV Solutions Pvt. Ltd. the plaintiff in this case is a company which is providing quality
mobile repairing and maintenance, telecom, IT services and IT solutions to its clients for
a long period of time and has created a reputation.
2. It was stated that the defendants are the ex-employees of the plaintiff company and they
have joined the company at different points of time and was working at senior managerial
positions.
3. But the defendants however left the services of the plaintiff company and the defendants
with mala fide and ulterior motives have colluded with each other and had acted in
breach of the express agreement and covenants signed and executed by them and hence
acting in a manner causing grave damages to the plaintiff company.
4. It was pleaded that all the defendants had joined a company and one of the defendants
being the CEO of the company had misused the private and confidential information of
 the plaintiff company to solicit clients, vendors and staff of the plaintiff company and it
was further stated that huge losses have been suffered by the plaintiff company on
account of the soliciting activities committed by the defendants.
5. The procedural history is:
a. The defendants filed application under Section 8 of the Arbitration and
Conciliation Act 1996 to refer the parties to arbitration and direct the plaintiff
company to have the dispute resort in accordance with the mechanism of dispute
resolution provided in the agreement specially under Clause 14.
b. The plaintiff company filed a suit seeking a decree of permanent prohibitory
injunction to restrain the defendants and it affiliates, directors etc. from inducing
or soliciting or working with any employees of the plaintiff company and also
decree of damages costing ₹ 1.10 crores was sought against the defendants.

 ISSUE BEFORE THE COURT:

1. Whether a non-signatory or the third-party could be subjected to arbitration without their
prior consent ?

 RATIO OF THE COURT:

1. The Court considered the judgement of the Supreme Court in the case Cheran
Properties Limited vs. Kasturi & Sons Limited and Ors. where the Court held that a
non signatory or third party could be subjected to arbitration without their prior consent
but this would only be applicable in exceptional cases and the Court are to examine these
exceptions from the touchstone of direct relationship to the party signatory to the
arbitration agreement direct commonality of the subject matter and the agreement
between the parties being a composite transaction.
2. The Court held that the transaction should be of a composite nature where performance of
the mother agreement may not be feasible without it execution and performance of the
supplementary or ancillary agreements.
 3. The Court observed that in the plaintiff’s case all the defendant’s are in collusion with
each other in a mala fide an unlawful manner which ultimately resulted in the loss and
damages to the plaintiff. It was manifested that there was a commonality of parties,
commonalities of interest which would warrant the matter to be referred to arbitration.
4. Counsel for the parties requested the matter to be referred for arbitration to Delhi
International Arbitration Centre and therefore the Court appointed Mr. Justice N.K.
Mody as the sole arbitrator and asked the arbitrator to work under the aegis of Delhi
International Arbitration Center.
5. Counsel for the plaintiff submitted that as the matter has been referred to Arbitration the
Court may direct refund of the Court Fees under Section 89 of the CPC with Section 16
of the Court Fees Act 1870 and was further accepted by the Court .

 DECISION HELD BY COURT:

1. The suit stands disposed of , and
2. All pending applications also stand disposed of.

-Author : Aditya Das.