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Supreme Court Restricts Fresh Arbitration After Abandoning Earlier Proceeding Midway

Overview

In this matter, the Supreme Court addressed the question as to whether a party can later come back and begin fresh proceedings in arbitration, if it voluntarily stopped participating earlier. Basically, whether someone can restart the process of arbitration after leaving it midway. The dispute reached the Apex Court after the High Court appointed an arbitrator for the second time for the same dispute between the same parties. 

The Supreme Court had to decide whether such a second attempt should be considered legally valid or if it goes against the basic legal principles.

 

Facts of the Case

The dispute arose from a joint business arrangement between the appellant and the respondent after a land auction in 2005. They later  formed a company together to manage the obligations as to land and finances. To properly formalise and regulate their relationship, they entered into an agreement in 2013, which also included an arbitration clause. 

Certain disagreements arose, and the respondent initiated arbitration in 2015. After some changes in the appointment of the arbitrators, a sole arbitrator was appointed in 2017. The respondent filed monetary claims and counter claims were made as a response by the appellant. 

However, during the proceedings, the respondent stopped participating from 2019. He sent a communication which stated that he lacks trust in the process and does not wish to continue. Despite being given several opportunities to participate, the respondent did not return. As a result, the arbitrator proceeded with the matter and passed an award dismissing the respondent’s claims in June 2020.

In 2021, a fresh notice for arbitration was issued by the respondent claiming that a Supreme Court judgement validating the original auction creates a new cause of action. He approached the High Court, which further allowed his request, and appointed a new arbitrator. This order was challenged before the Supreme Court.

 

Legal Issues

  1. Whether a party who abandons arbitration can start a fresh proceeding on the same dispute.
  2. Whether the conduct of the respondent amounted to a clear abandonment of his claims.
  3. Whether filing a second arbitration request in such circumstances, an abuse of process. 
  4. Whether the Supreme Court judgement of 2021 created a new cause of action to initiate fresh arbitration proceedings.
  5. Whether principles similar to Order 23 Rule 1 CPC applicable to arbitration matters. 

 

Decision

The Supreme Court allowed the appeal and ruled in favour of the appellant. It was held that the respondent clearly abandoned the arbitration earlier by choosing not to participate despite being given multiple opportunities. Once a party leaves the process midway, they cannot come back later and reopen the same dispute. The court also clarified that the principle behind Order 23 Rule 1 CPC which prevents repeated litigation on the same cause would apply here as well as it is concerned with public policy. 

As to the question of a fresh cause of action, the court while rejecting the argument stated that the Supreme Court decision of 2021, only dealt with the validity of the auction and had nothing to do with the dispute between the parties. 

The Apex Court finally held that the second arbitration was not maintainable and was a misuse of the legal process. The order of the High Court was set aside.

 

Case Reference:- Rajiv Gaddh (Appellant) Vs. Subodh Parkash (Respondent) Civil Appeal No.  Of 2026 Arising Out Of SLP(C) No. 4430 of 2025 (SJB, Delivered By Alok Aradhe, J.)