Madras High Court: Corporate Veil Can Be Lifted Only by Courts, Not Arbitral Tribunals

The Madras High Court ruled that an arbitral tribunal lacks jurisdiction to lift the corporate veil or hold a non-signatory company liable.

The Court observed that doing so violates the consent-based framework under the Arbitration and Conciliation Act, 1996, which confines arbitration strictly to parties who have agreed to arbitrate. 

The dispute arose when the arbitral tribunal attempted to treat a third company as the petitioner’s “alter ego” and extend liability under an MOU.

The Court held that veil-lifting is strictly within the domain of courts, and only in exceptional cases involving fraud, or statutory provisions.. 

[Sugesan Transport Pvt Ltd v. E.C. Bose & Company Pvt Ltd & Ors.]