In Brief
ONGC contracted with Discovery Enterprises Private Limited (DEPL) to operate an offshore vessel. The vessel was imported and customs duty paid with the expectation of re-export, but the vessel never returned and DEPL failed to complete duty drawback formalities. ONGC claimed damages from both DEPL and Jindal Drilling and Industries Limited (JDIL), a related company, on the ground that they form a single economic unit under the group of companies doctrine. An Arbitral Tribunal rejected JDIL's inclusion based on strict interpretation of the Arbitration Act's requirement that only signatories can arbitrate. The Supreme Court held that the Tribunal committed a fundamental error of natural justice by not deciding ONGC's application for discovery and inspection before ruling on jurisdiction. The Court allowed the appeal and directed reconstitution of the Tribunal to decide the jurisdiction issue afresh after hearing evidence on the group of companies doctrine, emphasizing that modern arbitration law recognizes such doctrine may bind non-signatories when mutual intent is demonstrated.
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