In Brief
Two brothers, business partners in Sachdeva and Sons, entered into a Memorandum of Understanding containing an arbitration clause. The elder brother filed two suits seeking injunctions against the other brother and third parties (a private company and Canara Bank). The respondent moved to stay the suits and refer disputes to arbitration. The High Court allowed these applications, but the Supreme Court reversed this decision. The Court held that an arbitration agreement can only bind its signatories. Since the company and bank were not parties to the agreement, a reference to arbitration was not maintainable. The appeals were allowed and the arbitration applications dismissed.
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