Case Background
The petitioner is a partnership firm engaged in selling petroleum products through a retail outlet (petrol pump) under a licence granted by Bharat Petroleum Corporation Limited (BPCL).
The respondent-Corporation granted the licence on 17.01.2017. Later, BPCL terminated this licence. The firm challenged the termination before the Patna High Court in Civil Writ Jurisdiction Case No. 1493 of 2017.
On 21.03.2017, the High Court directed the firm to take steps for arbitration under the agreement between the parties. Following this, the firm filed Request Case No. 91 of 2017 before the High Court seeking appointment of an arbitrator.
By order dated 30.08.2017, the Court appointed Hon’ble Justice Smt. Mridula Mishra (Retd.) as the arbitrator. She conducted the arbitration proceedings and on 02.07.2018 passed an award in favour of the firm.
The arbitrator held that BPCL’s termination of the licence was illegal, quashed the termination order, and directed BPCL to restore the firm’s licence in terms of the agreement dated 28.03.2014 as well as to resume supply of petroleum products to the retail outlet.
BPCL then decided to challenge this award under Section 34 of the Arbitration and Conciliation Act, 1996. This is how the matter moved to the District Judge, Patna, and then back to the High Court under Article 227 of the Constitution.
What the Court Examined and Decided
After the award dated 02.07.2018, BPCL first filed Misc. (Arbitration) Case No. 133 of 2018 before the District Judge, Patna, under Section 34 of the 1996 Act. This first challenge was filed on 06.09.2018, i.e., 66 days after the award, within the basic limitation period of three months under Section 34(3).
The firm objected before the District Judge that Misc. Case No. 133 of 2018 was not maintainable because BPCL had not complied with Section 34(5) of the 1996 Act, which requires prior notice to the other party before filing a Section 34 application.
On this objection, BPCL sought permission to withdraw Misc. Case No. 133 of 2018. The District Judge, by order dated 17.01.2019, allowed withdrawal and dismissed Misc. Case No. 133 of 2018 as withdrawn. No liberty to file a fresh case was specifically recorded.
BPCL then served a notice on the firm on 18.01.2019 informing about its intention to challenge the award. Thereafter, on 01.02.2019, BPCL filed a second case under Section 34 before the District Judge, numbered Misc. (Arbitration) Case No. 12 of 2019.
Along with this second case, BPCL also filed a petition under Section 14 of the Limitation Act, 1963, asking that the time spent in the first Section 34 case be excluded when computing limitation.
The firm appeared in Misc. Case No. 12 of 2019 and filed a preliminary objection questioning maintainability and limitation. Despite the objection, the District Judge, by order dated 25.04.2019, admitted Misc. Case No. 12 of 2019 for hearing. That order of admission is what the firm challenged before the Patna High Court in Civil Miscellaneous No. 1021 of 2019 under Article 227.
Arguments by the petrol pump firm
The firm’s senior counsel raised essentially two main objections.
First, he argued that once BPCL had withdrawn Misc. Case No. 133 of 2018 without seeking liberty to file a fresh case, it could not maintain a second case on the same subject, namely Misc. Case No. 12 of 2019. He relied on the principle underlying Order XXIII Rule 1(4) of the Code of Civil Procedure (CPC), 1908, and Supreme Court judgments like Ramesh Chandra Sankla v. Vikram Cement and Sarguja Transport Service v. State Transport Appellate Tribunal. According to him, withdrawal without liberty amounted to abandonment of the claim, and public policy prevented BPCL from starting a fresh round of litigation.
Second, he contended that Misc. Case No. 12 of 2019 was barred by limitation. Under Section 34(3) of the 1996 Act, a party has three months to challenge an award, extendable by a further 30 days for sufficient cause, making a maximum of 120 days. The firm pointed out that 90 days from 02.07.2018 expired on 02.10.2018 and the outer limit of 120 days expired on 02.11.2018. Yet the second misc. case was filed only on 01.02.2019, i.e., 239 days after the award.
Since BPCL did not obtain liberty when withdrawing Misc. Case No. 133 of 2018 on 17.01.2019, the firm argued that a fresh filing after the limitation period could not be permitted. It relied on Supreme Court decisions like Ramjee Power Construction Limited v. Jharkhand Urja Vikash Nigam Limited and B.B.M. Enterprises v. State of West Bengal, where the Court held that the time limit under Section 34(3) (three months plus thirty days) is mandatory and cannot be extended by Section 5 of the Limitation Act.
The firm also questioned the validity of the pre-filing notice claimed by BPCL for Misc. Case No. 12 of 2019. It pointed out that the notice was addressed to “M/s Dwivedi of sons” instead of “M/s Dwivedi and Sons”, suggesting that proper notice under Section 34(5) had not been served.
Finally, it argued that the District Judge had admitted Misc. Case No. 12 of 2019 without dealing with these objections or giving reasons, contrary to judgments like Geeta Devi v. State of Bihar, which emphasise that courts must record reasons while condoning delay.
Arguments by Bharat Petroleum Corporation Limited
Counsel for BPCL responded that Order XXIII Rule 1(4) CPC, which bars a fresh suit after withdrawal without liberty, applies only to “suits”, whereas an application under Section 34 of the 1996 Act is not a suit. Therefore, that bar did not operate against a second Section 34 application.
He further submitted that Misc. Case No. 133 of 2018 had been withdrawn for a bona fide reason: inadvertent non-compliance with Section 34(5) regarding prior notice. The withdrawal was not for bench-hunting or to avoid an adverse order on merits.
BPCL emphasised that the first case had been filed within time on the 66th day after the award, and the second case was filed only 14 days after withdrawal, on 01.02.2019. If the time spent in the first proceeding was excluded under Section 14 of the Limitation Act, the second case would fall within the 120-day outer limit.
Relying on the Supreme Court judgment in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, BPCL argued that while Section 5 of the Limitation Act cannot extend the time for filing a Section 34 petition, Section 14 (exclusion of time due to defect of jurisdiction or other cause of like nature) can apply to Section 34 applications.
BPCL submitted that the first Section 34 case suffered from a statutory defect due to lack of pre-service of notice under Section 34(5). Any order on that defective application would have been without jurisdiction or beyond the District Judge’s powers. Therefore, the situation was one where Section 14 could legitimately be invoked.
On the notice issue, BPCL maintained that a notice under Section 34(5) was duly sent on 18.01.2019 by speed post, and the firm’s appearance in Misc. Case No. 12 of 2019 as well as the advocate’s acknowledgment on the Section 14 petition showed that the notice had effectively reached the firm. A minor spelling error in the postal receipt could not invalidate service, particularly when the envelope contained the correct name and address.
BPCL also pointed out that the Supreme Court has held Section 34(5) of the 1996 Act to be directory and not mandatory, in Civil Appeal No. 7314 of 2018. Hence, even if there had been some irregularity in notice, it would not automatically render the application non-maintainable.
Court’s analysis on withdrawal and second application
The Patna High Court first dealt with the plea based on Order XXIII Rule 1(4) CPC. The Court noted that as per Section 19 of the 1996 Act, an arbitral tribunal is not bound by the CPC or the Indian Evidence Act, and parties can set their own procedure. Though the CPC may apply for limited purposes such as execution of awards, an application under Section 34 is not a “suit”. Therefore, the strict bar of Order XXIII Rule 1(4) did not automatically govern Section 34 applications.
The Court also examined Supreme Court precedent in Sarva Shramik Sanghatana (KV) v. State of Maharashtra. There, the employer had withdrawn an earlier application for closure under the Industrial Disputes Act to attempt settlement, and later filed a fresh application. The Supreme Court rejected an objection based on Order XXIII, noting that the withdrawal was bona fide and not an attempt at bench-hunting or avoiding a likely adverse decision. It also held that CPC provisions do not apply strictly in such proceedings.
Applying this reasoning, the Patna High Court looked at the order dated 17.01.2019 of the District Judge. It found that BPCL’s first Misc. Case No. 133 of 2018 was withdrawn specifically because of the objection raised by the firm regarding non-compliance with Section 34(5), and there was no indication of mala fides.
The fact that BPCL filed the second Misc. Case No. 12 of 2019 within 14 days of the withdrawal, after issuing prior notice, strengthened the conclusion that the withdrawal was for a genuine statutory reason and not for forum-shopping. Consequently, the Court rejected the firm’s contention that the second case was barred by the principle underlying Order XXIII Rule 1(4).
Court’s analysis on limitation
On limitation, the Court acknowledged that the arbitral award was dated 02.07.2018 and that BPCL filed the first Section 34 case on the 66th day, well within three months. That case was withdrawn on 17.01.2019. The second case was filed on 01.02.2019, along with a Section 14 Limitation Act petition, after serving prior notice.
Referring to Consolidated Engineering Enterprises, the Court reproduced the conditions for applying Section 14: both proceedings must be civil proceedings by the same party; prosecuted with due diligence and in good faith; failure of the prior proceeding must be due to defect of jurisdiction or other cause of like nature; both proceedings concern the same matter; and both are in a court.
The Court considered condition (3) crucial. It held that the first Section 34 case had failed due to a statutory defect regarding prior notice. In such circumstances, Section 14 could be invoked as an “other cause of like nature” akin to jurisdictional defect.
The Court cited further passages from Consolidated Engineering Enterprises, which explained that Section 14 is a beneficial provision, to be construed liberally to protect a litigant who honestly tries to get his case heard on merits but fails because of technical defects. The equity underlying Section 14 applies fully to applications under Section 34 of the 1996 Act.
Applying these principles, the Court concluded that the time spent by BPCL in diligently prosecuting Misc. Case No. 133 of 2018 should be excluded under Section 14. After such exclusion, the filing of Misc. Case No. 12 of 2019 on 01.02.2019 fell on the 80th day of the permissible 120-day period from the award, and was therefore within limitation.
The Court thus rejected the firm’s argument that the second application was time barred.
Court’s conclusion on the Article 227 petition
Having rejected both main objections—bar under Order XXIII and limitation—the Patna High Court found no ground to interfere with the District Judge’s order dated 25.04.2019 admitting Misc. Case No. 12 of 2019.
Accordingly, Civil Miscellaneous No. 1021 of 2019, filed by the firm under Article 227, was dismissed. The Court did not pass any order as to costs.
The result is that BPCL’s challenge to the arbitral award will proceed on merits before the District Judge, Patna. The arbitral award in favour of the petrol pump firm therefore remains under judicial scrutiny and is not yet finally enforceable.
Why This Judgment Matters
This decision is important for dealers, contractors, and companies who are parties to arbitration with large public sector corporations.
First, the Patna High Court confirms that a Section 34 application challenging an arbitral award is not a “suit”. Therefore, technical bars that apply to withdrawal of suits under Order XXIII CPC do not automatically stop a party from filing a second Section 34 application when the first is withdrawn for a genuine procedural defect.
Second, the judgment shows that courts may use Section 14 of the Limitation Act to save a second Section 34 petition from being treated as time barred, if the first petition was filed in time but failed because of a technical or statutory defect, and the party acted in good faith and with diligence.
For people who win an arbitral award against a big corporation, this means that the corporation might still be allowed to correct its mistake and refile a challenge, so long as it had moved in time initially and the defect was only technical.
For corporations and other award-debtors, the judgment underlines the need to comply with procedural requirements like pre-filing notice, but also offers some protection if an initial mistake is corrected quickly and honestly.
The case also implicitly reminds District Judges to consider Section 14 Limitation Act and the good-faith conduct of parties when dealing with limitation objections in arbitration matters.
Legal Issues and Answers
Issue: Can a party file a second application under Section 34 of the Arbitration and Conciliation Act, 1996 after withdrawing the first one without liberty, in view of Order XXIII Rule 1(4) CPC?
Answer: Yes. A Section 34 application is not a “suit”, CPC provisions do not strictly apply, the first withdrawal was bona fide due to a statutory defect, and there was no bench-hunting or abuse of process; hence the second application was maintainable.
Issue: Was BPCL’s second Section 34 application (Misc. Case No. 12 of 2019) barred by limitation under Section 34(3) of the 1996 Act?
Answer: No. The first application had been filed within time and was pursued bona fide; due to a statutory defect it was withdrawn. By applying Section 14 of the Limitation Act and excluding the time spent in the first proceeding, the second application filed on 01.02.2019 was within the 120-day outer limit.
Issue: Should the High Court, in exercise of powers under Article 227, interfere with the District Judge’s order admitting Misc. Case No. 12 of 2019 for hearing?
Answer: No. As the second application was both maintainable and within limitation, the order dated 25.04.2019 admitting it for hearing required no interference, and the Article 227 petition was dismissed.
Cases Cited by the Court
- Ramjee Power Construction Limited v. Jharkhand Urja Vikash Nigam Limited and Another, 2019 (2) PLJR SC 321 (relied on by the petitioner)
- B.B.M. Enterprises v. State of West Bengal and Another, (2020) 9 SCC 448 (relied on by the petitioner)
- Geeta Devi and Another v. State of Bihar, 2001 (1) PLJR 647 (relied on by the petitioner)
- Gulab Chand Jain v. State, 1980 BLJR 156 (relied on by the petitioner)
- Ramesh Chandra Sankla and Others v. Vikram Cement and Others, (2008) 14 SCC 58
- Sarguja Transport Service v. State Transport Appellate Tribunal, (1987) 1 SCC 5
- Sarva Shramik Sanghatana (KV) v. State of Maharashtra and Others, (2008) 1 SCC 494
- Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department and Others, (2008) 7 SCC 169
- Civil Appeal No. 7314 of 2018 (Supreme Court decision holding Section 34(5) of the 1996 Act to be directory)
- Arun Kumar Singh and Another v. State of Bihar and Others, CWJC No. 14797 of 2019 (Patna High Court; cited by respondent)
Case Details
Case Number: Civil Miscellaneous Jurisdiction No. 1021 of 2019 (arising out of Civil Writ Jurisdiction Case No. 11279 of 2019)
Case Title: M/s Dwivedi and Sons through its Partner Sri Amrendra Prakash Dwivedi v. Bharat Petroleum Corporation Limited & Others
Citation: 2022 (1) PLJR 316
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Anil Kumar Sinha
Date of Judgment: 22.01.2022
Advocates for Petitioner (firm): Mr. Amit Shrivastava, Senior Advocate; Mr. Kunal Tiwary; Mr. Girish Pandey
Advocates for Respondents (BPCL): Mr. Siddhartha Prasad; Mr. Om Prakash Kumar
Nature of the Case: Application under Article 227 of the Constitution of India challenging an order of the District Judge, Patna, admitting a Section 34 Arbitration and Conciliation Act case (Misc. Case No. 12 of 2019) for hearing.
Link to Full Judgment: Patna High Court Judgment
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