A) ABSTRACT / HEADNOTE

The case M/s HPCL Bio-Fuels Ltd. v. M/s Shahaji Bhanudas Bhad revolves around the maintainability and limitation of a fresh application under Section 11(6) of the Arbitration and Conciliation Act, 1996, following the withdrawal of a prior arbitration petition without court-granted liberty. The primary issues include whether the new application could be filed in the absence of liberty, whether it was time-barred, and whether the time spent pursuing proceedings under the Insolvency and Bankruptcy Code (IBC), 2016 could be excluded under Section 14 of the Limitation Act, 1963. The Supreme Court ruled against the respondent, holding that the fresh petition was not maintainable, as no liberty was sought at the time of the first withdrawal. The court also rejected the applicability of Section 14 and denied condonation under Section 5 of the Limitation Act.

Keywords:
Arbitration and Conciliation Act, 1996; Limitation Act, 1963; Section 11(6); Insolvency Proceedings; Time-Barred Claims.

B) CASE DETAILS

i) Judgment Cause Title:
M/s HPCL Bio-Fuels Ltd. v. M/s Shahaji Bhanudas Bhad

ii) Case Number:
Civil Appeal No. 12233 of 2024

iii) Judgment Date:
November 7, 2024

iv) Court:
Supreme Court of India

v) Quorum:
Dr. Dhananjaya Y. Chandrachud, CJI and J.B. Pardiwala, JJ.

vi) Author:
Justice J.B. Pardiwala

vii) Citation:
[2024] 12 SCR 133 : 2024 INSC 851

viii) Legal Provisions Involved:

• Section 11(6), Arbitration and Conciliation Act, 1996
• Section 14, Limitation Act, 1963
• Order 23 Rule 1, Code of Civil Procedure, 1908
• Section 9, Insolvency and Bankruptcy Code, 2016

ix) Judgments Overruled by the Case (if any):
None explicitly overruled.

x) Case is Related to which Law Subjects:
Arbitration Law; Limitation Law; Insolvency and Bankruptcy Law.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arises from a dispute between HPCL Bio-Fuels Ltd. (appellant) and Shahaji Bhanudas Bhad (respondent) regarding outstanding dues under a turnkey contract for enhancing sugar plant capacities. The respondent invoked arbitration after failure to secure payment but later withdrew the Section 11(6) petition unconditionally. Subsequently, the respondent pursued insolvency proceedings under IBC, which failed due to pre-existing disputes. Upon dismissal, the respondent refiled a Section 11(6) application seeking appointment of an arbitrator.

D) FACTS OF THE CASE

1. Tender and Contract Execution:
   HPCL Bio-Fuels Ltd. issued tenders in 2012 for enhancing Boiling House capacities at two plants. Shahaji Bhanudas Bhad won the bids and was awarded purchase orders.

2. Disputes Arise:
   HPCL raised concerns regarding delays, poor work quality, and failure to meet timelines. Despite raising invoices, HPCL refused to clear the respondent’s dues, citing unsatisfactory performance.

3. Legal Notice and Invocation of Arbitration:
   On July 9, 2016, the respondent issued a legal notice demanding payment of Rs. 18.12 crore and invoking the arbitration clause.

4. Section 11(6) Petition Withdrawn:
   The respondent filed an arbitration petition on February 16, 2018, but withdrew it unconditionally on October 1, 2018, without seeking liberty to refile.

5. IBC Proceedings Initiated and Dismissed:
   Respondent filed an application under Section 9 of IBC before NCLT, Kolkata, which admitted the case. However, NCLAT reversed the decision, citing pre-existing disputes, and the Supreme Court upheld NCLAT’s ruling.

6. Refiling of Arbitration Petition:
   After the IBC proceedings failed, the respondent filed a fresh Section 11(6) application on December 9, 2022, which was allowed by the Bombay High Court.

E) LEGAL ISSUES RAISED

i) Whether the fresh application under Section 11(6) was maintainable without court-granted liberty at the time of withdrawal?

ii) Whether the fresh application was time-barred, and if so, whether the benefit of Section 14 of the Limitation Act could be availed?

iii) Whether the delay in filing the fresh application could be condoned under Section 5 of the Limitation Act?

F) PETITIONER/APPELLANT’S ARGUMENTS

i) The petitioner argued that the fresh application was barred by the principles underlying Order 23 Rule 1 of the CPC since the respondent withdrew the first petition unconditionally without liberty to refile.

ii) The fresh Section 11(6) petition was time-barred. The limitation period of three years under Article 137 of the Limitation Act ended in August 2019, as the cause of action arose on February 4, 2014.

iii) IBC and arbitration proceedings are fundamentally different. The relief sought in insolvency is in rem (corporate resolution), while arbitration concerns private contractual disputes.

iv) Section 14 of the Limitation Act is inapplicable. The time spent in pursuing IBC proceedings cannot be excluded as it was a conscious, strategic choice made by the respondent.

G) RESPONDENT’S ARGUMENTS

i) The respondent argued that Section 11(6) petitions are not governed by Order 23 Rule 1 since arbitration proceedings are not suits.

ii) Section 14 of the Limitation Act applied, as the respondent pursued IBC proceedings in good faith and with due diligence, albeit in a wrong forum.

iii) The fresh application was maintainable because the initial withdrawal was procedural, not substantive.

H) JUDGEMENT

a. RATIO DECIDENDI

The Supreme Court held:

1. Fresh application was not maintainable:

   • The principles underlying Order 23 Rule 1 apply to Section 11(6) petitions.
   • Withdrawal without liberty prevents refiling.

2. Time-barred claim:

   • Limitation period of three years under Article 137 ended in 2019.
   • The fresh petition filed in December 2022 was beyond the limitation.

3. Section 14 of Limitation Act inapplicable:

   • IBC and arbitration proceedings seek distinct reliefs and are not for the same matter.
   • The respondent consciously abandoned arbitration in favor of insolvency proceedings.

4. No condonation of delay under Section 5:

   • The respondent’s conduct showed no bona fide mistake.

b. OBITER DICTA (IF ANY)

The object of limitation law is to ensure finality and certainty while preventing claims from being pursued indefinitely.

c. GUIDELINES (IF ANY)

• Withdrawal of applications without liberty bars subsequent refiling under the same cause of action.
• Section 14 of Limitation Act requires the earlier proceedings to be pursued in good faith and for the same relief.

I) CONCLUSION & COMMENTS

The judgment clarifies the strict application of limitation laws and reinforces the importance of judicial discipline when withdrawing legal applications. Parties must exercise caution and seek liberty before withdrawal to avoid procedural barriers.

J) REFERENCES

a. Important Cases Referred

1. Sarguja Transport Service v. S.T.A.T, (1987) 1 SCC 5
2. BSNL v. Nortel Networks (India) Pvt. Ltd., (2021) 5 SCC 738
3. Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018) 1 SCC 353

b. Important Statutes Referred

1. Arbitration and Conciliation Act, 1996
2. Limitation Act, 1963
3. Code of Civil Procedure, 1908
4. Insolvency and Bankruptcy Code, 2016