Unconditional Withdrawal Of Prior Petition Filed U/S 11 Of A&C Act Bars Subsequent Petition On Same Cause Of Action: Delhi High Court

Facts

The contract between the Petitioner and Respondent No. 1 pertained to the construction of a Staff Training Institute Building and other ancillary works, for a total contract price of Rs. 13.57 Crores. Respondent No. 2 was engaged and appointed as the Project Management Consultant (“PMC”) by Respondent No. 1. The Petitioner claimed to have successfully completed the work as per the schedule agreed between the parties. This position has been disputed by the Respondents.

The present petition is the third petition under Section 11 of the A&C Act which has been preferred by the Petitioner. The petitioner had first approached this Court by way of Arb P. 24/2017 after invoking arbitration vide letter dated 28.09.2016. This petition was dismissed as withdrawn with liberty to file with better particulars vide order dated 16.01.2017. The second petition under Section 11 of the A&C Act bearing Arb P. 277/2021 was filed which was withdrawn on 02.08.2022 without any liberty. Now, the present petition, being the third attempt, has been filed on basis of notice dated 08.08.2022 under Section 21 of the A&C Act.

Contentions

The Petitioner contended that a fresh cause of action arose when the Respondent No.2 wrote the letter dated 28.03.2022 to the bank and subsequently invoked the Bank Guarantees worth Rs 58,00,000/- by stating that the bill for main building work was for Rs. -62,76,336.00/-. It was hence contended that this event gave rise to a fresh cause of action and hence bar of Res judicata would not be applicable to the present petition. It was further submitted that there is no bar to multiple petitions under Section 11 of the A&C Act and reliance is placed on Dolphin Drilling Ltd. v. ONGC Ltd. (2010) 3 SCC 267

Learned counsel for the Respondent No.1 opposed the present petition on two grounds, namely, limitation and Res judicata. It was submitted that after hearing both the sides, the Court had permitted the petitioner to withdraw the petition however, no liberty was granted to approach this Court again. Hence, it was submitted that the present petition is barred by limitation as well as Res judicata. Reliance is placed on BSNL v. Nortel Networks (India) (P) Ltd. (2021) 5 SCC 738, and HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad 2024 SCC OnLine SC 3190.

Observations

The Court observed that the issue which arose for its consideration was that what will be the effect of the unconditional withdrawal of the prior petition filed under Section 11 of the A&C Act. The Court held that to understand the effect of such withdrawal, a reference may be made to Order 23 Rule 1 CPC.

The Court observed that the effect of abandonment or withdrawal without liberty has been explained in Order 23 Rule 1 (4) which provides that when the plaintiff withdraws the suit without liberty being granted by the Court to file afresh, he is precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim.

The Court held that though Order 23 Rule 1 mentions the words, “plaintiff” and “Suit”, the Courts have extended the same principles to writ petitions, SLPs and even petitions such as the present one, filed under Section 11 of the A&C Act. In this regard court placed reliance on the decision of the Apex Court in HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad 2024 SCC OnLine SC 3190.

Analysing the facts of the present case, the Court observed that at the time of withdrawal of the first petition, liberty was granted to the Petitioner by the Court to file afresh vide order dated 16.01.2017. However, this liberty was not exercised by the Petitioner at that point, who instead entered into a settlement agreement dated 23.02.2017 with the respondents.

As far as the second petition is concerned i.e., Arb P. 277/2021, it was filed on 18.02.2021. The petition was dismissed as withdrawn on 02.08.2022, and the Petitioner had withdrawn it after some arguments. Moreover, no liberty was granted to the Petitioner to file the petition afresh. Hence, in view of the effect of Order 23 Rule 1 (4), the petitioner was barred from approaching the Court again for the same cause of action

Finally, addressing the argument of the Petitioner that invocation of Bank Guarantees gave rise to a new cause of action, in consequence of which, the second notice dated 08.08.2022 invoking arbitration was given, the Court observed that even at the time of the ultimate encashment of the Bank Guarantees on 12.04.2022, the previous petition bearing Arb P. 277/2021 was still pending. BG was invoked during the pendency of Arb P. 277/2021, yet the Petitioner consciously chose to unconditionally withdraw the petition on 02.08.2022. Thus, it could not be said that the present petition was preferred on account of a new cause of action.

Accordingly, the present petition was dismissed.

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

Citation: 2025 LiveLaw (Del) 389

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

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