The Supreme Court has held that a party which abandons arbitration proceedings cannot subsequently seek appointment of an arbitrator on the same cause of action, setting aside a Punjab & Haryana High Court order that had allowed a fresh application under Section 11 of the Arbitration and Conciliation Act, 1996.
The dispute arose out of agreements executed between the parties in 2013 concerning land at Hoshiarpur and related financial arrangements. The respondent had initially invoked arbitration in 2015, leading to the appointment of an arbitrator. However, during the proceedings, the respondent chose to withdraw participation and expressly communicated to the arbitrator that he would not continue.
Despite this, the respondent later issued a fresh notice invoking arbitration in 2021 and approached the High Court under Section 11 seeking the appointment of an arbitrator. The High Court allowed the plea, holding that issues such as res judicata could be examined by the arbitral tribunal.
Allowing the appeal, the Bench of Justice PS Narasimha and Justice Alok Aradhe held that such a course was impermissible in law. It emphasised that the scope of Section 11 is limited but the bar under procedural law would still apply. The Court observed, “The jurisdiction under Section 11 of the Act is primarily confined to determining existence of an arbitration agreement,” but clarified that statutory bars cannot be ignored.
Crucially, the Court found that the respondent had clearly abandoned the earlier arbitration proceedings. It noted that the communication sent to the arbitrator stating non-participation left no doubt about such abandonment.
The Bench further held that the subsequent application was based on the same cause of action and therefore hit by the principles underlying Order XXIII Rule 1 CPC. Rejecting the argument of a fresh cause of action, the Court observed, “On dismissal of the Civil Appeal… no fresh cause of action accrued to the respondent.”
Emphasising the policy rationale, the Court held that a litigant cannot be permitted to repeatedly initiate proceedings on the same cause. It stated, “A litigant cannot be permitted to abuse the process of Court to file a fresh proceeding again on the same cause of action.”
Accordingly, the Court held that the fresh Section 11 application was not maintainable and quashed the High Court’s order appointing an arbitrator.
Appearances
Petitioner- Mr. Anil Airi, Sr. Adv. Ms. Lubna Naaz, AOR Ms. Azra Rehman, Adv. Mr. Arvind Bhatt, Adv. Mr. Asheesh Kumar Mishra, Adv. Mr. Harsh Gautam, Adv. Mr. Vishal Tyagi, Adv. Ms. Bindya Lagawney, Adv. Ms. Jasmin Sokhi, Adv.
Respondent- Mr. Gagan Gupta, Sr. Adv. Mr. Mahesh Thakur, AOR Mr. Vibhav Chaturvedi, Adv. Mr. Narveer Yadav, Adv. Mr. Siddhartha Sati, Adv. Ms. Ruchi Kumari, Adv. Ms. Anusha R, Adv. Dr. Anthony Raju, Adv.
