Order 23 Rule 1 CPC Applies To S.11 Arbitration Act; Fresh Arbitration Barred After Abandoning Earlier Claim : Supreme Court

The Supreme Court has observed that a party who abandons an earlier arbitration proceeding would be barred from initiating a subsequent arbitration proceeding on the same cause of action. The Court underscored that such conduct amounts to an abuse of the judicial process and is barred on grounds of public policy. “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.”, observed a bench of Justices PS Narasimha and Alok Aradhe, while setting aside the Punjab & Haryana High Court's order which had allowed the Respondent's subsequent application seeking appointment of arbitration under Section 11(6), despite abandoning the earlier arbitral proceedings. The dispute arose from a joint venture for the purchase of 550 marlas of land in Hoshiarpur, Punjab, through a bank auction, with financing routed via a joint company. The parties executed three agreements in April 2013 governing their rights, all containing an arbitration clause. The respondent invoked arbitration in 2015, but later withdrew from the proceedings, alleging bias and refusing to participate. An arbitral award was nonetheless passed in June 2020 in favour of the appellant, with a limited opportunity given to the respondent to revive his claims, which he did not pursue. After a 2021 Supreme Court ruling upholding the auction, the respondent sought to initiate fresh arbitration by filing a second Section 11 application, which was allowed by the High Court, prompting an appeal before the Supreme Court on the ground that Order 23 Rule 1(3) of the CPC imposes a bar on the substitution of subsequent proceedings for the same cause of action. Disagreeing with the High Court's decision, the judgment authored by Justice Aradhe observed that the respondent had clearly abandoned the earlier arbitration proceedings through his conduct, particularly by refusing to participate and disclaiming the authority of the arbitrator. The Court further held that no fresh cause of action arose from the 2021 judgment, as the disputes between the parties had already been subject to arbitration and were independent of the validity of the auction. Applying Order 23 Rule 1 of CPC, the Court said “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…”, holding that “the subsequent application filed by the respondent was not maintainable.” Accordingly, the appeal was allowed.HeadnoteArbitration and Conciliation Act, 1996; Section 11(6) — Code of Civil Procedure, 1908; Order 23 Rule 1 — Maintainability of fresh application for appointment of an arbitrator — Abandonment of proceedings - The Supreme Court held that the principles of Order 23 Rule 1 of the CPC, which prohibit the institution of fresh proceedings on the same cause of action without seeking leave of the court, apply to proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996. A litigant who has effectively abandoned previous arbitration proceedings or withdrawn an application without liberty to file afresh is barred from seeking a subsequent appointment of an arbitrator for the same cause of action. The Court emphasized that this bar is founded on Public Policy to prevent the abuse of the process of law. In the present case, the respondent's refusal to participate in the initial arbitral proceedings constituted abandonment. Furthermore, the dismissal of a third-party appeal regarding the underlying property did not create a "fresh cause of action" for the respondent, as the internal dispute between the parties was not the subject matter of that appeal. [Relied on HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad; 2024 SCC OnLine SC 3190; Paras 15-19]Cause Title: RAJIV GADDH VERSUS SUBODH PARKASHCitation : 2026 LiveLaw (SC) 310Click here to download judgmentAppearance: For Petitioner(s) : Mr. Anil Airi, Sr. Adv. Ms. Azra Rehman, Adv. Mr. Arvind Bhatt, Adv. Mr. Asheesh Kumar Mishra, Adv. Mr. Harsh Gautam, Adv. Mr. Vishal Tyagi, Adv. Ms. Bindya Logawney Airi, Adv. Ms. Jasmin Sokhi, Adv. Ms. Lubna Naaz, AOR For Respondent(s) : 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.

Order 23 Rule 1 CPC Applies To S.11 Arbitration Act; Fresh Arbitration Barred After Abandoning Earlier Claim : Supreme Court

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Order 23 Rule 1 CPC Applies To S.11 Arbitration Act; Fresh Arbitration Barred After Abandoning Earlier Claim : Supreme Court

Yash Mittal

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