Communication On Company Letterhead Not Enough To Establish Consent To Arbitrate: Bombay High Court
Today, the Bombay High Court held that use of a company's letterhead in project-related communications does not by itself make the company a party to another company's contract or establish its consent to the arbitration clause.
Justice Amit Borkar made the observation while referring the dispute between New Consolidated Construction Company Limited (NCCCL) and Limitless Contracting Private Limited concerning construction works at the “One Park Avenue” project in Kolshet, Thane, to arbitration, and refused to refer Man Realty and Puravankara to arbitration. The Bench observed:
“The letterhead may show from which company the communication came. But it does not show that the company became a party to another company's contract or accepted the arbitration clause contained in that contract.”
NCCCL and Limitless Contracting executed four Work Orders on 25 September 2017 for shell and core construction works at One Park Avenue. They subsequently executed an Addendum on 17 February 2020.
After a payment dispute arose, NCCCL demanded Rs. 12.37 crore from Limitless Contracting on 30 October 2024 and invoked arbitration on 27 June 2025. NCCCL then approached the High Court under Section 11 of the Arbitration and Conciliation Act, 1996, seeking to refer Limitless Contracting, Man Realty and Puravankara to arbitration.
To establish Man Realty's involvement, NCCCL relied on a communication dated 25 September 2017 issued on Man Realty's letterhead, minutes of a meeting held on 1 November 2018 involving Man Realty, CBRE South Asia and NCCCL, and email correspondence. NCCCL contended that these materials showed that Man Realty was a “veritable party” to the arbitration agreement.
NCCCL also sought to include Puravankara on the ground that it had allegedly taken over the project. Limitless Contracting did not oppose the reference to arbitration. Man Realty argued that the Work Orders and Addendum existed exclusively between NCCCL and Limitless Contracting and that it had never consented to the arbitration clause.
The Court found that Man Realty had dealings concerning the project and had participated in the 1 November 2018 meeting. However, it held that “having some dealings concerning the project is a different matter from consenting to the arbitration agreement.” It also held that Man Realty's letterhead did not establish its consent to the contract or arbitration clause. It said that participation in a project could not amount to acceptance of every term of a contract to which the company was not a party. It observed:
“Respondent No.2 may have had commercial interest in the project. That alone does not mean that Respondent No.2 accepted the claims of the Applicant or the arbitration mechanism contained in the agreement between the Applicant and Respondent No.1.”
Further, the Bench held that involvement in the project could not enlarge the scope of the arbitration agreement. It noted that “the arbitration agreement determines who has consented to arbitrate. It cannot become wider merely because the dispute has involved different companies or because later events concerning the property have affected the Applicant.”
Applying the same principle to Puravankara, the Court noted that the Sale Certificates dated 7 June 2024 identified Purva Oak Private Limited, a separate sister concern, as the purchaser. It found no assignment, novation or succession of the arbitration agreement in favour of Puravankara.
Relying on the Supreme Court's decision in Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises (P) Ltd., the Bench reiterated that “a complete stranger cannot be sent to arbitration only on the ground that the issue can be raised before the Arbitral Tribunal under Section 16.”
Accordingly, the High Court refused to refer Man Realty and Puravankara to arbitration. It appointed Advocate Tushad Kakalia as the Sole Arbitrator to adjudicate the disputes between NCCCL and Limitless Contracting arising from the four Work Orders dated 25 September 2017.
For New Consolidated Construction Company Limited: Advocates Jash Gandhi, Chirag Sancheti, Asif Lampwala, Saad Memon and Hriday Karia, instructed by Bulwark Solicitors.
For Limitless Contracting Private Limited: Advocates Harsh Moorjani, Jay Zaveri and Tavleen Saini, instructed by Crawford Bayley & Co.
For Man Realty Limited: Advocates Ankit Lohia, Ujjwal Batra and Aditya Seth, instructed by Sujit Lahotia and Associates.
For Puravankara Limited: Advocates Mutahhar Khan, Apoorv Karekar and Aakash Mehta, instructed by Khaitan & Co.