The Constitution Bench of the Supreme Court clarified the Indian approach to the application of the “group of companies” theory in respect of the issue whether a nonsignatory is bound to the arbitration agreement in a contract. Indicating the relevant factors to be taken into account, the Court concluded that a nonsignatory is bound when its involvement in the relationship underlying the dispute is such as to make the parties believe that the nonsignatory is a party. The Court also held that, at the stage where referral of the dispute to arbitration is sought, the referral court should leave it for the arbitral tribunal to decide whether a nonsignatory is bound by the arbitration agreement. By this decision, the Court overruled the approach taken in Chloro Controls (INDIA 49) in 2012, which it deemed to be erroneous.