LexM/S HPCL BIO-FUELS LTD. versus M/S SHAHAJI BHANUDAS BHAD
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[2024] 12 S.C.R. 133 : 2024 INSC 851 M/s HPCL Bio-Fuels Ltd. v. M/s Shahaji Bhanudas Bhad (Civil Appeal No. 12233 of 2024) 07 November 2024 [Dr Dhananjaya Y. Chandrachud, CJI and J.B. Pardiwala,* JJ.] Issue for Consideration (i) Whether a fresh application u/s.11(6) of the Arbitration and Conciliation Act, 1996 filed by the respondent could be said to be maintainable more particularly when no liberty to file a fresh application was granted by the High Court at the time of withdrawal of the first application u/s.11(6) of the Act, 1996; (ii) whether the fresh application u/s.11(6) of the Act, 1996 filed by the respondent on 09.12.2022 could be said to be time-barred. If yes, whether the respondent is entitled to the benefit of Section 14 of the Limitation Act. In other words, whether the period spent by the respondent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application u/s.11(6); (iii) whether the delay caused by the respondent in filing the fresh arbitration application u/s.11(6) of the Act, 1996 can be condoned u/s.5 of the Limitation Act. Headnotes† Arbitration and Conciliation Act, 1996 – s.11(6) – Code of Civil Procedure, 1908 – Or.23 , R.1 – Insolvency & Bankruptcy Code, 2016 – Whether a fresh application u/s.11(6) of the Arbitration and Conciliation Act, 1996 filed by the respondent could be said to be maintainable more particularly when no liberty to file a fresh application was granted by the High Court at the time of withdrawal of the first application u/s.11(6) of the Act, 1996 – The appellant contended that in lieu of the principles contained in Or.23 R.1 of the CPC, the respondent could not have filed a subsequent application u/s.11(6) for adjudication of the same disputes, having previously withdrawn unconditionally an application filed for the same purpose: *Author 134 [2024] 12 S.C.R. Digital Supreme Court Reports Held: In the instant case, both the applications u/s.11(6) of the Act, 1996 were filed seeking adjudication of the dispute which arose on 02.02.2014 upon refusal of the appellant to pay the dues of the respondent – The first application u/s.11(6) was filed on 16.02.2018 and was subsequently withdrawn unconditionally on 01.10.2018 – After a gap of more than four years, the respondent filed a subsequent application u/s.11(6) before the High Court on 09.12.2022 which came to be allowed by the impugned order – The chronology of events clearly indicates that the respondent did not withdraw the first arbitration application because of some defect which would have led to its dismissal – It is also clear from the order dated 01.10.2018 of the High Court permitting the respondent to withdraw the application that neither any liberty was sought by the respondent nor the court had granted any liberty to file a fresh arbitration application – It appears that the only reason the respondent withdrew the arbitration application was to get his application u/s.9 of the IBC any how admitted by the NCLT – It can be said without any doubt that the respondent took a calculated risk of abandoning the arbitration proceedings to maximise the chances of succeeding in the IBC proceedings – The respondent was within its right to abandon the arbitration proceedings in favour of IBC proceedings – However, having done so, it would no longer be open to it to file a fresh application for appointment of arbitrator without having obtained the liberty of the court to file a fresh application at the time of the withdrawal – The principles underlying Order 23 Rule 1 can be extended to applications for appointment of arbitrator, the only recourse to the respondent to defend the second application as maintainable despite it having been withdrawn earlier without liberty was to show bona fides on its part – From the conduct of the respondent, it is evident that it thought fit to initiate insolvency proceedings perhaps thinking that the issues existing between the parties may not get resolved through arbitration – The failure on the part of the respondent to withdraw the first Section 11 application without seeking any liberty cannot be condoned in the facts of the present case – Therefore, in the absence of any liberty sought by the respondents from the High Court at the time of withdrawal of the first arbitration application, the fresh Section 11 petition arising out of the same cause of acti
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