The Delhi High Court, in a judgment by Justice Manoj Kumar Ohri, held that if a party withdraws a petition seeking the appointment of an arbitrator without seeking liberty to refile, a fresh petition on the same matter is barred under Order 23 Rule 1(4) of the Civil Procedure Code (CPC).

Case Background

The dispute revolved around a contract for constructing a Staff Training Institute Building and related works, valued at Rs. 13.57 crores.

• Petitioner: The company that undertook the construction.
• Respondent No. 1: The organization that awarded the contract.
• Respondent No. 2: The Project Management Consultant (PMC) appointed by Respondent No. 1.

The petitioner claimed to have completed the work as per the agreement, but the respondents disputed this claim.

This case marked the third attempt by the petitioner to invoke arbitration under Section 11 of the Arbitration and Conciliation Act (A&C Act).

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1. First Petition (Arb P. 24/2017)
   • Arbitration was invoked on 28.09.2016.
   • The petition was withdrawn on 16.01.2017, but the court granted liberty to refile with better particulars.
2. Second Petition (Arb P. 277/2021)
   • Filed on 18.02.2021.
   • Withdrawn on 02.08.2022, but without seeking liberty to refile.
3. Third Petition (Present Case)
   • Filed after issuing a fresh notice on 08.08.2022 under Section 21 of the A&C Act.

Petitioner’s Arguments

The petitioner claimed a new cause of action arose when:

• Respondent No. 2 wrote a letter to the bank on 28.03.2022.
• Bank Guarantees worth Rs. 58,00,000/- were invoked.
• The main building bill amounted to Rs. -62,76,336.00/-.

The petitioner relied on Dolphin Drilling Ltd. v. ONGC Ltd. (2010) 3 SCC 267, arguing that multiple petitions under Section 11 of the A&C Act are not barred.

Respondents’ Counter-Arguments

Respondent No. 1 opposed the petition based on:

1. Res Judicata: The petitioner had already withdrawn the second petition without liberty and could not refile on the same cause of action.
2. Limitation: The fresh petition was filed beyond the legally permissible timeframe.

The respondents cited:

• BSNL v. Nortel Networks (India) (P) Ltd. (2021) 5 SCC 738
• HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad 2024 SCC OnLine SC 3190

The court examined the legal impact of unconditionally withdrawing a prior petition under Section 11 of the A&C Act.

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Order 23 Rule 1(4) of CPC

The court relied on Order 23 Rule 1(4) of the CPC, which states:

“When a plaintiff withdraws a suit without being granted liberty to refile, they are barred from filing a fresh suit on the same subject matter.”

The court extended this principle to:

• Writ petitions
• Special Leave Petitions (SLPs)
• Arbitration petitions under Section 11 of the A&C Act

The Supreme Court’s ruling in HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad 2024 SCC OnLine SC 3190 was cited as precedent.

1. First Petition (Arb P. 24/2017):
   • The court had granted liberty to refile, but the petitioner chose to settle the matter instead.
2. Second Petition (Arb P. 277/2021):
   • Filed on 18.02.2021.
   • Withdrawn on 02.08.2022, without seeking liberty to refile.

Since the petitioner voluntarily withdrew without requesting liberty, Order 23 Rule 1(4) barred them from refiling.

The petitioner argued that:

• Bank Guarantees were invoked on 12.04.2022 while the second petition was still pending.
• A new notice under Section 21 of the A&C Act was issued on 08.08.2022.

However, the court noted:

“The Bank Guarantees were invoked while the second petition (Arb P. 277/2021) was still pending, yet the petitioner chose to withdraw unconditionally on 02.08.2022.”

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Since the petitioner did not argue the issue at that time, the court held that no fresh cause of action arose.

• The petitioner’s third attempt to invoke arbitration was barred under Order 23 Rule 1(4) CPC.
• The fresh petition was not based on a new cause of action.
• Petition dismissed.

Case Title: M/s Dewan Chand v. Chairman cum Managing Director and Another

Case Number: ARB.P. 1387/2022

Appearance:

For Petitioner - Mr. Tejpal Singh Kang, Advocate.

For Respondent No. 1- Mr. Sumit Teterwal, Advocate

For Respondent No. 2- Mr. Ansh Singh Luthra

Date: 26.03.2025