While observing that a claimant cannot be permitted to abuse the process of Court to file a fresh proceeding again on the same cause of action, the Supreme Court has held that a subsequent application filed under Section 11(6) of the Arbitration and Conciliation Act based on same cause of action would be barred on the principles contained in Order 23 Rule 1 of the Code Of Civil Procedure.

The Apex Court was considering an appeal filed against an order of the Punjab and Haryana High Court whereby an application filed by the respondent under Section 11 of the Arbitration and Conciliation Act, 1996 was allowed and a sole arbitrator was appointed.

The Division Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe held, “It is pertinent to note that the issue, which was sub judice, was with regard to validity of the auction. The dispute between the appellant and the respondent was not the subject matter of the Civil Appeal. Therefore, on dismissal of the Civil Appeal filed by the owner of the land, no fresh cause of action accrued to the respondent. Thus, it is axiomatic that the subsequent application filed under Section 11(6) was based on same cause of action and was barred on the principles contained in Order 23 Rule 1 of the Code.”

“A litigant cannot be permitted to abuse the process of Court to file a fresh proceeding again on the same cause of action. The bar contained in Order 23 Rule 1 of the Code which applies to proceeding under Section 11 of the Act is founded on Public Policy. For the aforementioned reasons, we hold that the subsequent application filed by the respondent was not maintainable”, it added.

Senior Advocate Anil Airi represented the Appellant while Senior Advocate Gagan Gupta represented the Respondent.

Factual Background

The parties jointly participated in an auction conducted by Jammu & Kashmir Bank for the auction of 550 marlas of land situated in Hoshiarpur, Punjab (‘the Hoshiarpur Land’). The primary bid in respect of said land was made through the respondent’s firm. A new entity, namely M/s. JMD Special Steel Pvt. Ltd., in which both parties were directors, was utilised for funding and registration purposes. A loan of Rs 4.30 crore was obtained from HDFC Bank by mortgaging various properties. A Tripartite Agreement was executed between the appellant, the respondent and HDFC Bank to regulate the loan liability and to facilitate the release of the mortgaged properties. In 2013, the parties executed three agreements to resolve disputes relating to ‘the Hoshiarpur Land’ and other joint ventures.

Clause 6 of the aforesaid agreements contained an arbitration clause. The respondent invoked the arbitration clause by notice and subsequently filed an application under Section 11 seeking the appointment of an arbitrator. The High Court appointed a sole Arbitrator, who later recused himself. The respondent raised allegations of bias, prompting the arbitrator’s recusal. Subsequently, Justice Aftab Alam was appointed as the sole Arbitrator. The respondent refused to accept the arbitrator’s authority and filed a civil suit seeking termination of the arbitrator’s mandate. The Arbitrator decreed the claim of the appellant and dismissed the claim of the respondent.

The respondent challenged the arbitral award under Section 34. The Apex Court upheld the auction held by the Jammu & Kashmir Bank regarding ‘the Hoshiarpur Land’ and held that the auction purchaser, namely, the appellant and the respondent, were entitled to ‘the Hoshiarpur Land’.The respondent filed a fresh application under Section 11 seeking the appointment of an arbitrator. By the impugned order, the High Court allowed the application and dismissed the civil suit filed by the respondent seeking termination of the mandate of the Arbitrator for non-prosecution. It was in such circumstances that the appeal came to be filed before the Apex Court.

Reasoning

Explaining the scope and ambit of Section 11, the Bench affirmed the view that the jurisdiction under Section 11 is primarily confined to determining the existence of an arbitration agreement. “The issue of res judicata does not arise for consideration in a Section 11 proceeding. Order 23 Rule 1 of the Code provides that if the plaintiff either abandons the suit or part of the claim or withdraws the same without leave of the court, then he is precluded from instituting a fresh suit in respect of such subject matter or such part of the claim. The plaintiff on abandoning a suit or part of the claim or withdrawing the same without leave of the court, also becomes liable to pay such costs as may be imposed by the court as provided under Order 23 Rule 1(4) of the Code”, it stated.

On a perusal of the facts of the case, the Bench noted that the respondent himself, by a notice, had invoked the arbitration clause contained in the agreements and had filed a petition under Section 11(6). The High Court, on the application of the respondent, appointed an Arbitrator. Considering the communication sent by the sole respondent to the Arbitrator informing him that he would not participate in the proceeding, the Bench held that it was the respondent who had abandoned the proceeding.

The Bench held that the subsequent application filed under Section 11(6) was based on the same cause of action and was barred on the principles contained in Order 23 Rule 1 of the Code. Thus, setting aside the impugned order, the Bench allowed the appeal.

Cause Title: Rajiv Gaddh v. Subodh Parkash (Neutral Citation: 2026 INSC 302)

Appearance

Appellant: Senior Advocate Anil Airi, AOR Lubna Naaz, Advocates Azra Rehman, Arvind Bhatt, Asheesh Kumar Mishra, Harsh Gautam, Vishal Tyagi, Bindya Lagawney, Jasmin Sokhi

Respondent: Senior Advocate Gagan Gupta, AOR Mahesh Thakur, Advocates Vibhav Chaturvedi, Narveer Yadav, Siddhartha Sati, Ruchi Kumari, Anusha R, Dr. Anthony Raju

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Justice Pamidighantam Sri NarasimhaJustice Alok Aradhe

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.