Res judicata bars subsequent arbitration for claims that could have been raised in the initial reference.

The parties entered into an agreement dated August 11, 2016, for the supply of RSJ Poles for projects in Jammu & Kashmir

In 2018, the Petitioner invoked Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) before the MSME Council

These proceedings resulted in an Award dated April 30, 2024, in favor of the Petitioner

The Petitioner had previously filed and withdrawn an application for appointment of an arbitrator (ARB.P. 1124/2022) while the MSME proceedings were pending

The Petitioner filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking a second reference to arbitration for claims regarding liquidated damages, asserting these were not adjudicated in the 2024 Award

Notably, the cause of action for liquidated damages arose on July 25, 2018, prior to the Petitioner’s initial claim and subsequent amendment before the MSME Council

1. Whether a second arbitration proceeding is maintainable for claims arising out of the same contract and cause of action after a prior arbitral award has been rendered between the parties.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators

It relied on the principle of res judicata, holding that the doctrine applies to arbitration proceedings to prevent a second reference for claims that could have been raised in earlier proceedings

Furthermore, the Court followed the precedent set by the Supreme Court in M/s Tantia Constructions Limited v. Union of India (2022), which established that two separate arbitration proceedings cannot be maintained with respect to the same contract or transaction

The Court observed that the Petitioner’s cause of action regarding liquidated damages accrued on July 25, 2018, which was before the Petitioner filed its original claim (October 2018) and its amended claim (July 2022) before the MSME Council

The Court reasoned that the Petitioner had every opportunity to include these claims in the MSME proceedings but chose not to do so

Applying the rule from Tantia Constructions, the Court determined that once a party participates in arbitration resulting in an award, a second proceeding for claims arising from the same transaction is impermissible

The Court emphasized that since the claims "now could have been raised in the earlier arbitral proceedings," the prayer for a second reference is barred by the principles of res judicata

The Court dismissed the petition, concluding that since the Petitioner failed to raise the liquidated damages claim during the MSME arbitration despite having the legal right and opportunity to do so, they are barred from seeking a fresh reference