Bombay High Court: In a case revolving around whether computation of interest amounts, received after conclusion of arbitration, could be made the subject of a fresh reference under Section 11 of the Arbitration and Conciliation Act, 1996 (‘Arbitration and Conciliation Act’), a Single Judge Bench of Somasekhar Sundaresan, J., held that such an attempt was barred by constructive res judicata. The Court, while disposing of the petition, concluded that no arbitration agreement subsists in relation to the subject matter now sought to be agitated, and therefore declined to constitute an Arbitral Tribunal.
Background:
The dispute arose out of a Concession Agreement dated 09-07-2018, which contained an arbitration clause. Arbitration proceedings had already been conducted earlier, culminating in an arbitral award dated 15-07-2022. In those proceedings, one side was the claimant while the other filed a counter-claim. It was indicated that computation of interest amounts payable had been raised during those proceedings. However, while filing the counter-claim, the opposing party did not raise a claim on interest.
The present petition was filed on the basis that a fresh computation of interest was received only in 2024, which had not been available during the earlier arbitration. The contention raised in opposition was that this petition is merely an attempt to re-open a matter adjudicated long ago, amounting to a second bite at the cherry, and that all issues incidental to the earlier arbitration had already been conclusively adjudicated.
Analysis and Decision:
The Court emphasised that since disputes had already been subjected to arbitration and culminated in the Arbitral Award, the disputes and differences, including differences over interest payment prior to commencement of arbitration, are issues that are covered by constructive res judicata. The Court noted that the contention of interest being computed only after the arbitration concluded does not lend itself to acceptance, since the interest relates to the period already covered by the earlier arbitration.
The Court highlighted the Henderson Principle as explained by the Supreme Court in Celir LLP v. Bafna Motors (Mumbai) (P) Ltd., (2024) 2 SCC 1 observing that all claims and issues that could and ought to have been raised in previous litigation should not be relitigated in subsequent proceedings. The Court observed that the fundamental policy of law requires finality to litigation, and multiplicity of proceedings undermines judicial efficiency and fairness.
It was further noted that taking any other approach would be hyper-technical, reductive, and erosive of the integrity of the arbitral process. The Court therefore held that no arbitration agreement exists in form or substance for a reference to arbitration in relation to the disputes now sought to be raised. The petition was finally disposed of without constituting an Arbitral Tribunal.
[AAI v. Lite Bite Foods (P) Ltd., 2025 SCC OnLine Bom 5230, decided on 09-12-2025]
Advocates who appeared in this case:
For the Petitioner: S.D. Kothari, Advocate.
For the Respondent: Rohan Shah, Anirudh Krishna Gandhi, Megha Khandelwal & Rounak Doshi i/b Saraf & Partners.
Buy Arbitration and Conciliation Act, 1996 HERE
