Overview
In this matter, the Supreme Court considered whether the respondent, who was a non-signatory to the Memorandum of Settlement (MoS) dated 9 May 2022, could be treated as a “veritable party” to its arbitration agreement.

The dispute arose when the appellant proposed the takeover of Sensorise Digital Services Pvt. Ltd. The respondent was a consultant and shareholder. Even though he was not a signatory to the MoS, he executed a Share Purchase Agreement on the same date for transfer of his shares.

The Delhi High Court treated other non-signatories as veritable parties but excluded the respondent from arbitration. The Apex Court had to determine whether his conduct showed an intention to be bound.

Facts of the Case

KKH Finvest Pvt. Ltd., the appellant herein, wanted to take over Sensorise Digital Services Pvt. Ltd. and Sensorise Smart Solutions Pvt. Ltd. To settle the disputes related to this takeover, the parties entered into an MoS on 9 May 2022. It provided for the transfer of shares held by several promoters, management team members and other shareholders. It also contained an arbitration clause for the disputes which could not be resolved through negotiations. 

Ashiesh Shukla, the respondent herein, was a consultant and shareholder of Sensorise and held 1,480 shares. Even though he was a non-signatory to the MoS, he was still included in its schedule of shareholders. On the same day, a separate Share Purchase Agreement was signed by him with the appellant for the sale of his shares. The agreement stated that his shares were being bought as part of the settlement for which the buyer was taking over the company. 

When disputes arose later, the appellant invoked the arbitration clause. The respondent was then included in the arbitration proceedings, but he objected on the ground that he never signed the MoS. This objection was accepted by the Delhi High Court by relying on a clause in the Share Purchase Agreement, which stated that the transfer of the shares was independent of the MoS. The appellant then approached the Supreme Court.

Legal Issues

1. Whether a party that is a non-signatory to an MoS, could be treated as a “veritable party” to an arbitration agreement.
2. Whether the conduct of the respondent and the contractual arrangements between the parties showed an intention to be bound by the MoS.
3. Whether Clause 16 of the Share Purchase Agreement prevented the parties from referring their disputes to arbitration.

Decision

The Supreme Court allowed the appeal and set aside the portion of the judgement of the Delhi High Court concerning the respondent. It was held that the respondent was a “veritable party” to the MoS and could therefore be referred to arbitration.

The Court noted that the Share Purchase Agreements signed by other people treated as veritable parties had provisions which were similar to the clause relied upon by the High Court to exclude the respondent. The Court, therefore, found no basis for treating him in a different manner. 

Referring to the case of Cox and Kings Ltd. v. SAP India Private Ltd., the Court explained that a non-signatory may be bound where its conduct and involvement in the transaction shows an intention to be bound by the arbitration agreement. Since the respondent’s share transfer was necessary to complete the settlement, his disputes were referred to the sole arbitrator, Justice T.S. Thakur.

Case Reference :- KKH Finvest Pvt. Ltd. and Anr. Vs. Ashiesh Shukla and Ors.Civil Appeal No. …. of 2026 (@ Special Leave Petition (C) No. 4222 of 2025) (DB, Before Sanjay Kumar and Sanjeev Sachdeva, JJ., Delivered by Sanjay Kumar, J.)