1. Petition under Section 11(6) of Arbitration and Conciliation Act for appointment of arbitrator in contract dispute — Prior attempts invalid due to lack of notice under Section 21 — Claim now time-barred. (Para 1 , 2 , 3 , 4 , 5 )
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2026 Supreme(HP) 581
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
G.S. Sandhawalia, CJ.
State of Himachal Pradesh and Another - Petitioner
Versus
M/s Sun Shine Const. - Respondent
Arb. Case No.622 of 2024
Decided On : 07-08-2026
Advocate Appeared:
For the Petitioners:Mr. Navlesh Verma, Additional Advocate General
For the Respondent:Mr. Suneet Mohan Goel, Senior Advocate with Mr. Vivek Negi and Mr. Vishwas Kaushal, Advocates.
For the Petitioners:Mr. Navlesh Verma, Additional Advocate General
For the Respondent:Mr. Suneet Mohan Goel, Senior Advocate with Mr. Vivek Negi and Mr. Vishwas Kaushal, Advocates.
A party cannot repeatedly file petitions for the appointment of an arbitrator on a stale claim after previous proceedings on the same cause of action were dismissed and upheld by courts, as this constitutes an abuse of the process of law and violates public policy.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(6), 16, and 21 - Code of Civil Procedure, 1908 - Order 23 Rule 1 and 3 - Appointment of Arbitrator - Mandatory nature of Section 21 notice - Stale claims - Abuse of process - Non-issuance of notice under Section 21 is not necessarily fatal to pursuing a claim, as its primary purpose is to determine the commencement of the dispute for reckoning the limitation period (Para 19) - If a party abandons a claim or withdraws proceedings without leave, they are precluded from instituting fresh proceedings on the same cause of action (Paras 20-21) - A second application on the same cause of action after unconditional withdrawal of previous proceedings is not maintainable and violates public policy (Para 22) - Stale claims, those brought well beyond the limitation period, are not to be adjudicated (Paras 24-25).
Facts of the case:
A contract was awarded in January 2006 and rescinded in August 2007. The petitioner sought recovery of damages. Two prior attempts at arbitration were unsuccessful; the first arbitrator dismissed the case under Section 16 because no notice under Section 21 had been served, and the second arbitrator closed the proceedings based on the first order. Appeals against these orders were dismissed by the court. A third petition under Section 11(6) was filed without a proper Section 21 notice, and the petitioner subsequently sought leave to withdraw the petition to file a fresh one after issuing the requisite notice.
Findings of Court:
The court found that the petitioner's claims were stale, as the first appointment of an arbitrator occurred in 2011, significantly beyond the three-year limitation period from the date of contract rescission in 2007. Furthermore, the petitioner cannot take advantage of its own faults by repeatedly attempting to restart litigation after multiple judicial dismissals.
Issues: Whether a petition for the appointment of an arbitrator is maintainable when the claim is time-barred and the party has repeatedly attempted to litigate the same cause of action after prior proceedings were dismissed and upheld by the court.
Ratio Decidendi: The court ruled that a litigant cannot be permitted to abuse the process of the court by filing fresh proceedings on a stale cause of action, particularly when prior orders closing the proceedings have become final. The right of the respondent to be free from belated litigation originating two decades prior must be protected.
Result: Petition dismissed.
Legal Category Hierarchy
- arbitration and conciliation
- practice and procedure
- limitation
Table of Contents
2. State sought withdrawal to file fresh petition; respondent argued res judicata and abuse of process barring fresh proceedings. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 )
3. Court held non-issuance of Section 21 notice not fatal, but repeated attempts and inordinate delay render claim stale and barred by res judicata. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 )
4. Repeated petitions under Section 11(6) on same cause of action barred by res judicata; stale claims not referable to arbitration. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 )
5. Petition dismissed as time-barred; pending miscellaneous applications disposed of. (Para 27 )
6. Is notice under Section 21 of the Arbitration and Conciliation Act mandatory for maintainability of a petition under Section 11(6)?
No, the Supreme Court in M/s Bhagheeratha Engineering held that non-issuance is not fatal; it only determines the commencement of arbitration for limitation purposes. (Para 19 )
7. Can a subsequent application under Section 11(6) be maintained after withdrawal or abandonment of an earlier application on the same cause of action?
No, such subsequent application is barred by principles of Order 23 Rule 1 CPC and res judicata; a litigant cannot abuse the process of court. (Para 20 , 21 , 22 )
8. Can a stale claim (beyond limitation period) be referred to arbitration?
No, stale claims cannot be adjudicated; the court must examine limitation at the stage of appointment under Section 11 of the Act. (Para 24 , 25 , 26 )
JUDGMENT :
G.S. Sandhawalia, Chief Justice.
The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) by the petitioners-State for appointment of an Arbitrator regarding the work which was awarded to the respondent-Contractor on 28.01.2006 for a consideration of Rs.52,00,000/-. It is submitted that due to the slow progress of the work, the Contract was ultimately rescinded vide letter dated 25.08.2007. Thereafter, the work was re-awarded to another Contractor under Agreement No.69 of 2007-08 for a consideration of Rs.79,90,000/-, and the difference in the amount, totaling Rs.32,24,216/-, was required to be recovered from the respondent-Contractor.
2. The matter had allegedly been referred to arbitration, and the Chief Engineer (HZ), HPPWD, Hamirpur had appointed the Superintending Engineer, Arbitration Circle, HPPWD, Solan, as an arbitrator to adjudicate the claims and disputes that had arisen between the parties. An order dated 03.09.2011 (Annexure R-I), came to be passed, wherein the arbitrator questioned the validity of his own appointment in the absence of the respondent-Contractor. The said arbitrator concluded that there was nothing on record to show that a request had been made to the Superintending Engineer to appoint an arbitrator as per clause 65 of the contract agreement. While referring to Section 21 of ‘the Act’, he further concluded that a prior request by one party seeking arbitration is a mandatory prerequisite before an arbitrator can be validly appointed. Since, no such request had been made, the appointment was held to be invalid, and the case was dismissed under Section 16 of ‘the Act’.
3. Instead of serving the requisite notice, the second appointment was made on 27.04.2015 and the second Arbitrator closed the proceedings on 15.01.2021 in view of the earlier order passed on 03.09.2011 (Annexure R-I).
4. Subsequently, a time-barred arbitration application bearing OMP(M) No.27 of 2022 was filed by the petitioners-State seeking condonation of delay of ten years, eight months, and seventy-eight days in filing an appeal against the first order dated 03.09.2011 (Annexure R-I). This application was dismissed on 29.05.2023, by the learned Single Judge of this Court. The learned Single Judge had also noted that the subsequent closure of proceedings dated 15.01.2025 was already the subject matter of an appeal in Arbitration Case No. 2 of 2021, titled State of H.P. & another Vs. M/s Sun Shine Const. Resultantly, the inordinate delay was not condoned by holding that merely because certain observations were made in the subsequent proceedings, it would not suffice to condone the delay.
5. Thus, it is apparent that the order dated 03.09.2011 (Annexure R-I) became final. However, the petitioner’s had also suffered another order against them on 22.06.2023 (Annexure P-3), wherein a challenge raised to the second order closing the proceedings on 15.01.2021 by the second Arbitrator was upheld by dismissing the appeal. The Coordinate Bench had also noticed that the second time as well, no notice had been issued while appointing the Arbitrator for referring the dispute. After noting that the first order itself had been upheld by the Coordinate Bench of this Court on 29.05.2023, the appeal was consequently dismissed on 22.06.2023. In such circumstances, the present petition was filed on 08.04.2024.
6. Counsel for the petitioners-State has argued that in the second order passed by the learned Single Judge on 22.06.2023, the appellants were held entitled to avail appropriate remedy, as permissible under the law. However, it is admitted that prior to filing the petition under Section 11(6) of ‘the Act’, no notice was served under Section 21 of ‘the Act’. Consequently, the petition suffers from the same defect third time over.
7. To overcome this, since the matter was contested by filing a reply, the respondent pointed out that repeated references cannot be
