Separate in Name, Joined in Practice: The Group of Companies Doctrine after Cox and Kings and the Fate of the Corporate Veil in India

Author

Deepika Mohnani, Priyamvada Nema, Rishika Jain

Abstract

 In Cox and Kings Ltd v SAP India Pvt Ltd (2023), a Constitution Bench of the Supreme Court of India held that the group of companies doctrine is part of Indian arbitration law, but that it is not an application of veil piercing or the alter ego principle. The Court said the doctrine only identifies the parties’ mutual intention to arbitrate and leaves corporate separateness intact. This paper argues that the line is much thinner than the Court suggests. The factors the Court uses to find consent (a close relationship with a signatory, a common subject matter, a composite transaction, participation in performance) are, in practice, the same facts that veil piercing looks at, and the result for the non-signatory company is the same: it is bound, and its assets are exposed. The paper then looks at what this means for company law, especially limited liability, group structures and creditors, and compares the Indian position with the English and French approaches. It proposes a “two-door” model in which a non-signatory can be bound either through genuine proof of its own consent to arbitrate, or through an openly named, narrow, evasion-based veil-piercing exception, and never through a blend of the two.

Keywords

group of companies doctrine; corporate veil; non-signatories; separate legal personality; arbitration agreement; Cox and Kings

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Cox and Kings answered a question that had troubled Indian arbitration for years. It kept the group of companies doctrine, rooted it in consent and said it has nothing to do with veil piercing. That is a good outcome for the stability of arbitration law, and it correctly refuses to treat group membership as a reason for binding a company.

But the judgment’s central claim, that the doctrine leaves corporate separateness intact, is true only in a limited sense. The evidence that decides whether a non-signatory consented is very

similar to the evidence that decides whether the veil should be lifted, and the effect on the non-signatory is much the same. If the law is not careful about this, the doctrine can slide into a form of group liability without the safeguards that company law has built up over a century.

The two-door model offers a way of avoiding this. It asks for real proof of consent where the claim is consent, and it provides a narrow, honest exception where the claim is abuse. It leaves the Court’s holding in place and tries to make it work as intended. For company law, the lesson is that decisions on arbitration agreements can quietly reshape the rules on group liability, and company lawyers should pay attention to them.

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