No Second Bite At Arbitration: Courts Bar Resets Vide Section 11 Of The A&C Act, 1996, If The Arbitration Is Voluntarily Abandoned

I. Introduction 

Latin maxim interest reipublicae ut sit finis litium is a foundational stone of any judicial system, which means the litigation must come to an end. This is the principle based on which doctrine of Res Judicata is developed and incorporated as Section 11 of the Code of Civil Procedure, 1908 (“CPC”). The same principle also assumes significance in arbitration considering the party autonomy and objective of the arbitration to expeditiously resolve the dispute. The Arbitration and Conciliation Act, 1996 (“the A&C 1996 Act") provides a strict timeline, procedure and judicial safeguards to ensure that claims in arbitration should be prosecuted with due diligence to achieve the objective. 

Section 11 of the A&C Act, 1996 provides mechanism for the appointment of the arbitrator through Court if both the parties fail to appoint the arbitrator as per the procedure agreed by the parties. However, as expeditious resolution of dispute is the objective of the Arbitration then an interesting question arise that whether a party can be permitted to apply a fresh appointment of an arbitrator under Section 11 of the A&C 1996 Act if the same party has either voluntarily abandoned or allowed prior arbitral proceedings to lapse its mandate through its own acts and commissions. Recently supreme court in Rajiv Gaddh v. Subodh Prakash¹ as well as Bombay High Court in Nalin Vallabhbhai Patel and Ors. v. Atharva Realtors and Ors.² answered the same in negative. The aforesaid decisions crystallise important principle in Indian arbitration jurisprudence, therefore, this article examines both judgments in detail and assesses the impact of such judgments on arbitration practice in India. 

II. Brief Facts 

A. Rajiv Gaddh v. Subodh Prakash:  

Certain disputes arose between parties regarding a joint commercial venture for the purchase of land vide auction at Hoshiarpur, Punjab. Subodh Prakash invoked arbitration on 06.05.2015 and filed an application under Section 11 of the A&C Act before the Hon’ble Punjab & Haryana High Court for the appointment of the Arbitrator. Subsequently, Justice Aftab Alam was appointed as sole arbitrator, and both parties filed their competing claims before him. However, on 13.05.2019 and onward, Subodh Prakash and his counsel did not appear before the Hon’ble Sole Arbitrator and insisted on appointment of another arbitrator. The Hon’ble Sole arbitrator passed an award dated 30.06.2020, wherein the Hon’ble Sole Arbitrator allowed the claims of Rajiv Gadh and dismissed the claims of Subodh Prakash. However, the Sole Arbitrator afforded Subodh Prakash a three-months’ time to revive his claims by filing an amended statement of claim, failing which his claims would be terminated. However, he did not file any amended statement of claim and his claims stand terminated. 

Subsequently, on 09.07.2021, the Hon’ble Supreme Court in Civil Appeal No. 1599 of 2011 upheld the auction and held that the auction purchasers including both the parties were entitled to the Hoshiarpur land. Subodh Prakash invoked a fresh arbitration on 01.09.2021 on the pretext of fresh cause of action and subsequently, filed a fresh Section 11 application before the Hon’ble Punjab & Haryana High Court, which has allowed the application vide order dated 08.11.2024. Rajiv Gadh challenged the order dated 08.11.2024 before the Hon’ble Supreme Court.  

B. Nalin Vallabhbhai Patel and Ors. v. Atharva Realtors and Ors.:  

Disputes arose between parties from an Assignment Deed dated 06.12.2010 containing arbitration clause. Arbitral tribunal was constituted on 13.01.2020, which passed an interim order on 31.08.2020. However, thereafter no substantial development took place in the arbitral proceeding in the guise of settlement talks, which ultimately failed on 20.04.2022. Even thereafter, the applicant did not take any step and on 26.04.2024, the Applicant filed Commercial Arbitration Petition No. 221 of 2024 before the Hon’ble Bombay High Court under Section 29A of the 1996 Act seeking extension of the arbitrator's mandate. However, Section 29A petition was rejected by the Hon’ble Bombay High Court vide order dated 18.10.2024 on the ground that the applicant was not serious in pursuing the arbitration and effectively abandoned the arbitration proceeding after the interim order of 31.08.2020 and therefore the delay in arbitral proceeding is attributable to the Applicant.  

Order dated 18.10.2024 of the Hon’ble Bombay High Court was challenged before the Hon’ble Supreme Court in Special Leave Petition (C) No. 29786 of 2024, which was dismissed on 14.02.2025. Applicants issued fresh notices dated 10.07.2025 and 18.07.2025 asserting continuous cause of action and nominated an arbitrator, which was not accepted by the Respondent. Subsequently, the applicant filed an application under Section 11(6) of the A&C Act for appointment of new arbitrator in new arbitral proceeding. 

III. Finding of the Court 

A. Rajiv Gaddh v. Subodh Prakash:  

The Hon’ble Supreme Court set aside the order dated 08.11.2024 of the Hon’ble Punjab & Haryana High Court, on following grounds: 

1. It is settled law that at the stage of Section 11, the Court must primarily determine the existence of an arbitration agreement and not the questions of res judicata³. However, the same is subject to principles underlying Order 23 Rule 1 of the CPC, which states that one cannot initiate a fresh proceeding pertaining to same cause of action for which earlier proceeding was abandoned or withdrawn without obtaining liberty to institute fresh proceedings⁴. 
2. Abandonment of proceeding can be established from the conduct of the parties⁵ and not participating in arbitral proceeding and prolonged absence from proceedings amount to abandonment. 
3. After abandonment of earlier proceeding, initiating a fresh proceeding on the same cause of action is an abuse of the court’s process and against the public policy. 
4. The order dated 09.07.2021 of the Hon’ble Supreme Court in Civil Appeal No. 1599 of 2011 does not constitute a fresh cause of action as the arbitration proceedings is regarding dispute between parties, whereas Civil Appeal No. 1599 of 2011 adjudicates the legality of auction. 

B. Nalin Vallabhbhai Patel v. Atharva Realtors 

The Hon’ble Bombay High Court dismissed the Section 11(6) application on the following grounds: 

1. As per Section 29A, if extension sought by party is refused then the mandate of the arbitrator is terminated and not the arbitral proceedings, which is separately dealt under Section 32 of the A&C Act⁶.  
2. If the party itself faulted and caused delay to expire the mandate of the arbitrator, then the termination of the mandate of arbitrator amounts to termination of arbitral proceeding. Therefore, a new Section 11 application under A&C Act for appointment of arbitrator would be nothing but review of the Section 29A order, which is impressible. 
3. If the delay is not attributable to the party, then there is no bar on Section 11 application for appointment of arbitrator following a refusal by the Court of extension of tribunal’s mandate under Section 29A.⁷ 
4. Court held that the issue is not of determination of res judicata, but a question of referral jurisdiction wherein the Court must determine whether the Section 11 application under the A&C Act can be allowed if the arbitral proceedings itself had ended.  

IV. Analysis & Way Forward 

Both the judgments arise out of different facts and principles but overlapped on the principle that any application under Section 11 of the A&C Act cannot be allowed to reset arbitration proceedings which was lapsed due to the default of applicant. 

In Rajiv Gaddh v. Subodh Prakash⁸, the Hon’ble Supreme Court has held that in case a party has already abandoned arbitral proceedings and subsequently files another new application under Section 11(6) of the A&C 1996 Act on the same cause of action, the principles of Order 23 Rule 1 of the CPC bar the maintainability of such application. Order 23 Rule 1 of the CPC provides that if the party abandoned the suit or withdrawn the suit without reserving any liberty to file fresh suit then the fresh suit on same cause of action cannot be allowed. It is pertinent to note that application under Section 11 of the A&C Act is not a suit, but the application of the principle under Order 23 Rule 1 of the CPC on the application under Section 11 of the A&C Act will restrict multiplicity of the proceeding. Similarly, in the Nalin Vallabhbhai Patel and Ors. v. Atharva Realtors and Ors.⁹ the Hon’ble Court reiterated that termination of arbitral proceeding is different from termination of mandate of the arbitral tribunal, however carved an exception that if the party itself faulted and caused delay to expire the mandate of the arbitrator, then the termination of the mandate of arbitrator amounts to termination of arbitral proceeding. The same is in line of the principle that no one should take benefits of its own wrong. 

In both the cases, the Hon’ble Courts have reiterated that fresh causes of action or recurring cause of action must be established by parties. The Hon’ble Supreme Court set the threshold for the same high as the Hon’ble Supreme Court held that Court’s finding on different legal question over same subject matter does not cause a new fresh cause of action. Further, in both the cases, the Hon’ble Courts have dealt with the important questions about the permissible Court’s jurisdiction at the stage of Section 11 Application under the A&C Act. The Hon’ble Court found a balance between the settled law of minimal judicial interference at the stage of Section 11 Application¹⁰ and the inherent power of the Hon’ble Courts to refuse appointment of the arbitral tribunal in cases of prima-facie non-arbitrability of the dispute or where the application under Section 11 of the A&C Act, 1996 is patently barred.  

It is pertinent to note that the reasoning of both the Courts signifies the principles of finality of suit and restricting parties from reviving the same dispute repeatedly. Both judgments also emphasizes that when parties either with expressed refusal or prolonged inaction delayed or frustrated the arbitral proceedings, then those parties should bear the consequences of those inactions, and they should not be allowed to abuse the process of Court. 

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