Facts
KKH Finvest Pvt. Ltd. entered into a Memorandum of Settlement (MoS) dated 09.05.2022 to acquire complete ownership of Sensorise Digital Services Pvt. Ltd. Although Ashiesh Shukla, a consultant-shareholder, was not a signatory to the MoS, he was named in Schedule 2 and simultaneously executed a Share Purchase Agreement (SPA) pursuant to the MoS. The Delhi High Court held other non-signatories to be "veritable parties" but excluded Ashiesh Shukla, relying on Clause 16 of his SPA. The appellants challenged this finding before the Supreme Court.
Issues Framed
Whether Ashiesh Shukla, a non-signatory to the MoS, was bound by its terms and qualified as a veritable party for the purpose of arbitration proceedings initiated under the MoS.
Court’s Reasoning
(a) The Court held that the High Court erred in distinguishing Ashiesh Shukla solely on the basis of Clause 16 of his SPA. Identical clauses existed in the SPAs executed by the other four persons whom the High Court had already held to be veritable parties. The distinction was therefore factually unsustainable.
(b) The Court observed that the SPA itself acknowledged that it was executed pursuant to the MoS and that Ashiesh Shukla agreed to transfer his shares as part of the overall settlement. These clauses demonstrated his intention to be bound by the MoS.
(c) Applying Cox and Kings Ltd. v. SAP India Pvt. Ltd., the Court reiterated that a non-signatory's participation in the performance of the underlying contract, the composite nature of the transaction, commonality of subject matter, and intention to be bound are decisive factors. Ashiesh Shukla's transfer of shares was fundamental to completion of the MoS, making him a veritable party.
Held
The appeal was allowed. The Supreme Court set aside the Delhi High Court's finding concerning Ashiesh Shukla, held him to be a veritable party to the MoS, and referred his disputes to the same sole arbitrator already appointed for the connected disputes.
Conclusion
A non-signatory whose participation is fundamental to the performance of a composite transaction and whose conduct demonstrates an intention to be bound by the underlying contract may be treated as a "veritable party" and be referred to arbitration notwithstanding the absence of his signature on the principal agreement.
Relevant Para
Para 19
The principle of ‘veritable parties’ would be applicable in situations where a person or entity may not sign an arbitration agreement, yet give the appearance of being a veritable party to such agreement due to that person/entity’s legal relationship with the signatory parties and involvement in the performance of the underlying contract.
Case Details
Citation: 2026 INSC 803
Decided on: 5 August 2026
Case Title: KKH Finvest Pvt. Ltd. and another v. Ashiesh Shukla and others
Court: Supreme Court of India
Bench: Sanjay Kumar, J.; Sanjeev Sachdeva, J.