He withdrew an arbitration plea, then filed again. The Supreme Court says: not barred.

HPCL thought the second arbitration plea was dead on arrival. The Supreme Court disagreed — here's why. On a November morning in 2024, a government company stood before the Supreme Court arguing that a contractor had already walked away from arbitration once, and that should have been the end of it.

The question was deceptively simple: if you withdraw an application asking the court to appoint an arbitrator, can you file a second one later? Or does the law treat that first withdrawal as a permanent door slam?

When the contractor walked away

M/s HPCL Bio-Fuels Ltd., a government company, hired Shahaji Bhad's firm for turnkey work at sugar plants in Bihar. The project soured. Bhad claimed over Rs. 18 crore was outstanding. Disputes erupted over payments and quality of work.

Bhad did what any contractor would do — he filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (a provision that lets a party ask the High Court to appoint an arbitrator when the other side refuses to cooperate). The application went before the Bombay High Court in February 2018.

Then Bhad changed strategy. He withdrew that application unconditionally. Instead, he filed insolvency proceedings against HPCL under Section 9 of the Insolvency and Bankruptcy Code, 2016 (a provision that allows an operational creditor — someone owed money for goods or services — to push a company into insolvency resolution).

The insolvency application succeeded at the National Company Law Tribunal (NCLT) in Kolkata. HPCL appealed. The National Company Law Appellate Tribunal (NCLAT) reversed the order. The Supreme Court upheld the NCLAT's decision in July 2022, noting that Bhad could still pursue arbitration since there was a pre-existing dispute over the debt.

Why HPCL said the second plea was dead

Bhad went back to the Bombay High Court in December 2022 with a fresh Section 11(6) application asking for an arbitrator to be appointed. HPCL objected on two grounds.

First, HPCL argued that the earlier unconditional withdrawal triggered the bar under Order 23 Rule 1 of the Code of Civil Procedure, 1908 (a rule that says once you withdraw a suit unconditionally, you cannot file a fresh suit on the same cause of action). If the rule applied, the second application was dead.

Second, HPCL argued that the application was time-barred. The limitation period for filing a Section 11(6) application is three years under Article 137 of the Limitation Act, 1963 (the catch-all provision for applications not covered by any other article). Bhad's first application was filed in 2018. The second came in December 2022 — more than three years later.

The Bombay High Court rejected both arguments and appointed an arbitrator. HPCL appealed to the Supreme Court.

"Not a suit" — the court's first blow

Justice J. B. Pardiwala, writing for the Supreme Court bench, began with the first question: does Order 23 Rule 1 CPC apply to Section 11(6) applications at all?

The court held that the bar under Order 23 Rule 1 applies only to suits. A Section 11(6) application is not a suit. It is an application seeking court assistance to constitute the arbitral tribunal — a procedural step, not a substantive claim for relief. The court cited its own precedent in Sarguja Transport Service v. S.T.A.T. (1987) and the more recent Arif Azim Co. Ltd. v. Aptech Ltd. (2024) to reinforce that the rule cannot be mechanically extended to non-suit proceedings.

"The bar under Order 23 Rule 1(3) CPC on filing fresh proceedings after unconditional withdrawal applies only to suits and cannot be mechanically extended to applications under Section 11(6) of the Arbitration Act," the court observed.

That disposed of HPCL's first objection.

Why the IBC clock didn't help

The second question was trickier. Bhad argued that the time spent pursuing the insolvency proceedings should be excluded under Section 14 of the Limitation Act, 1963 (a provision that allows exclusion of time spent in a proceeding that was pursued in good faith before a court that lacked jurisdiction or could not grant effective relief).

The court examined whether the IBC proceedings and the arbitration application were proceedings for the "same relief" or "same cause of like nature" as required under Section 14.

The answer was no. The court explained that an insolvency proceeding under Section 9 IBC is in rem — it affects the rights of all creditors against the corporate debtor. An arbitration application under Section 11(6) is in personam — it concerns only the two parties to the arbitration agreement. One seeks resolution of the company's insolvency. The other seeks adjudication of a contractual claim. They are fundamentally different proceedings.

"An application under Section 9 IBC by an operational creditor and an application under Section 11(6) of the Arbitration Act are not proceedings for the 'same relief' or 'same cause of like nature' within meaning of Section 14 Limitation Act," the court held.

This meant Bhad could not claim the benefit of Section 14 to exclude the time spent in the IBC proceedings.

Deadwood claims get no arbitrator

But the court did not stop there. It went on to examine whether the Section 11(6) application itself was within the three-year limitation period under Article 137 of the Limitation Act.

The court noted that a Section 11(6) application is governed by Article 137 with a three-year limitation period. The clock starts ticking from when the cause of action for arbitration arises — typically when the dispute crystallises and the other side refuses to appoint an arbitrator.

More importantly, the court held that where the Section 11(6) application and the underlying claims are themselves time-barred, the court should not appoint an arbitrator to adjudicate what it called "deadwood claims." This is a significant clarification: the court at the appointment stage can examine whether the claims are patently time-barred, and if they are, refuse to appoint an arbitrator.

The judgment text is truncated, and the final operative order — whether the Supreme Court upheld the Bombay High Court's appointment of the arbitrator or sent the matter back for reconsideration — is not fully available in the source material. What is clear is the legal framework the court established.

What this means for practitioners

For anyone involved in commercial disputes with arbitration clauses, this judgment draws a clean line. Withdrawing a Section 11(6) application does not bar a fresh one under Order 23 Rule 1 CPC. But the limitation clock keeps ticking. Insolvency proceedings under the IBC will not pause that clock under Section 14 of the Limitation Act because they are fundamentally different proceedings.

THE PLAY: If you withdraw a Section 11(6) application, file the fresh one within three years from when the dispute arose — do not assume that parallel insolvency proceedings will stop the limitation clock.

The court ended where it began: with a government company's objection that crumbled once the law drew the right distinction between a suit and an application for court assistance.