Contractual privity and foreign company standing: arbitration allowed where dealings and conduct linked the parties, and no Indian business place existed.

Contractual privity may be inferred from the agreement text, preamble, correspondence, and the parties' conduct where the respondent dealt throughout with the foreign parent company and accepted payment through the petitioner's representative. On that basis, the objection that the Indian subsidiary lacked privity failed. A foreign company is not barred from maintaining proceedings merely because it acts through a constituted attorney; the statutory restriction applies only if it had an established place of business in India at the relevant time. As no such permanent and specific business place was shown, the objection under the Companies Act, 1956 failed and the dispute was directed to arbitration, including the claims and counter-claims.

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Issues: (i) Whether the petitioner No. 1 was in privity of contract with the respondent so as to maintain the request for appointment of an arbitrator; (ii) Whether the foreign petitioner No. 2 was barred from instituting the present proceedings for want of an established place of business in India under the Companies Act, 1956.

Issue (i): Whether the petitioner No. 1 was in privity of contract with the respondent so as to maintain the request for appointment of an arbitrator.

Analysis: The agreement, its preamble, and the related correspondence showed that the respondent dealt throughout with the foreign parent company through its constituted attorney, who was also the director of the Indian subsidiary. The contract itself described the foreign company and its subsidiary as the buyer, and the respondent received payment through the petitioner's accountant. These materials established that the respondent had not dealt with a stranger, and the plea of absence of privity was inconsistent with the contractual documentation and conduct of the parties.

Conclusion: The petitioner No. 1 was held to be sufficiently connected with the contract, and the objection based on absence of privity failed.

Issue (ii): Whether the foreign petitioner No. 2 was barred from instituting the present proceedings for want of an established place of business in India under the Companies Act, 1956.

Analysis: The relevant provisions governing foreign companies were read as requiring an established place of business in India before the statutory bar against instituting proceedings could operate. Mere appointment of a constituted attorney did not by itself create such an established place of business. On the facts, the petitioner No. 2 had no permanent and specific business place in India at the time of the contract, and therefore the restrictions relied upon by the respondent did not apply.

Conclusion: The foreign petitioner No. 2 was not barred from maintaining the proceedings, and the objection under the Companies Act, 1956 was rejected.

Final Conclusion: The dispute was directed to arbitration, with the arbitrator empowered to decide both the claims and counter-claims arising out of the contract.

Ratio Decidendi: A foreign company is not disabled from maintaining proceedings merely because it acts through a constituted attorney unless it had an established place of business in India at the relevant time, and contractual privity may be inferred from the agreement text and the parties' conduct.

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