Regenta Hotels Private Limited vs. M/S Hotel Grand Centre Point

2026 INSC 32

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026
[ ARISING OUT OF SLP (CIVIL) NO. 30212 OF 2024 ]

WITH

CONTEMPT PETITION (CIVIL) NO.189 OF 2025

REGENTA HOTELS PRIVATE
LIMITED

… APPELLANT(S)

VERSUS

M/S HOTEL GRAND CENTRE POINT
AND OTHERS

… RESPONDENT(S)

J U D G M E N T

AUGUSTINE GEORGE MASIH, J.

Leave granted.
2. The instant Civil Appeal assails the Judgment
dated 14.11.2024 (“Impugned Judgment”)
passed by the High Court of Karnataka at
Bengaluru (“High Court”), whereby it dismissed
Signature Not Verified
Digitally signed by
NAVEEN D
the Miscellaneous First Appeal No. 7168 of 2024
Date: 2026.01.07
14:55:45 IST
Reason:
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(AA) filed by the Appellant herein against the
th
Order dated 01.10.2024 of the IX Additional
City Civil and Sessions Judge, Bengaluru (“Trial
Court”) in I.A. Nos. 5 to 7 in AA No. 4 of 2024
which has been filed under Order XXXIX Rules
1 and 2 read with Section 151 of the Code of
Civil Procedure, 1908 (“CPC 1908”) and Section
9 of the Arbitration and Conciliation Act, 1996
(“Act”) read with Rule 9 of the Arbitration
(Proceedings Before the Courts) Rules, 2001
(“2001 Rules”). The Trial Court vide Order dated
01.10.2024 dismissed the application seeking
temporary injunction restraining Respondent
No.2.
3. The Appellant herein is Regenta Hotels Private
Limited, a company registered under the
Companies Act, 1956, engaged in carrying
business, inter alia , of operating hotels and
providing hospitality services in India and
abroad. The Respondent No. 1 is M/s Hotel
Grand Centre Point, a partnership firm
registered under the Partnership Act, 1932.
Respondents No.2 to 5 are brothers and
partners of Respondent No.1 vide partnership
agreement entered on 01.04.2012, with each
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brother having 25% share in the partnership.
Respondent No.1 is owner of a hotel premises
located near Hatrick Restaurant, Raj Bagh,
Srinagar, Jammu and Kashmir (“Hotel”).
4. The abovementioned parties i.e., the Appellant
and Respondent No.1 entered into a Franchise
Agreement dated 23.03.2019. The terms of the
agreement were such that the Appellant would
aid and facilitate the business of Respondent
No.1 by contributing through its brand
reputation, technical know-how, training and
expertise in running premium quality hotel
businesses. In furtherance thereto, the
management and operations of Respondent
No.1 were being carried out as per the said
agreement.
5. Interregnum, the Respondents No. 2 to 5 were
involved in a family dispute over rights on
properties resulting into a settlement deed
dated 20.04.2022 providing that Respondent
No. 5 will be responsible for operations of the
Hotel for a period of two years and after the
expiry of said period, the Hotel operation shall
be conducted by such party who shall be
nominated by the parties by voting. Profits of
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the Hotel were decided to be shared by
Respondent No. 2 in the ratio of 25% and
Respondent No. 5 in the ratio of 33.50% as also
to include every month consideration for his
responsibility to operate the Hotel. The
remaining share was to be divided among
Respondent No. 3 and 4 in the ratio of 21.50%
and 20% respectively.
6. As transpires from the material on record, it is
alleged that Respondent No.2 started to
interfere in the functioning of the Hotel by
shouting at staff and threatening to cancel
bookings and taking away the records if not paid
exorbitant sums separately over and above the
agreed amount under the Franchise Agreement
dated 23.03.2019. As a consequence to the
alleged conduct of Respondent No. 2, the
Appellant on 16.02.2024 approached the Trial
Court by way of an application under Section 9
of the Act being AA No.4 of 2024 seeking various
injunctive reliefs to restrain the Respondent
No.2 from interfering with the smooth
functioning of the Hotel claiming that Clause
5.1 of the Franchise Agreement stipulates that
Respondent No.1 will maintain a high moral and
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ethical standard and atmosphere at the Hotel
premises. The Appellant also filed three
applications being IA No.5 to 7 seeking interim
reliefs to restrain Respondent No.2 from
obstructing or impeding in smooth functioning,
operations and management of the Hotel
pending disposal of AA No.4 of 2024.
7. The Trial Court vide Order dated 17.02.2024
granted ad-interim injunction against the
Respondent No.2 as prayed for in IA No.5 to 7
till next date of the hearing and issued notice to
the Respondents.
8. Thereafter, the Appellant on 11.04.2024 issued
an Arbitration notice to the Respondents
invoking arbitration in terms of Clause 19.1 of
the Franchise Agreement for the adjudication of
the disputes that have arisen between the
parties. The Respondent No. 2, in response to
the said notice dated 11.04.2024, sent a reply
on 23.04.2024 refusing to concur with the
nomination of the Arbitrator claiming that he
has not signed any Franchise Agreement with
the Appellant. The Appellant, on 28.06.2024
filed CMP No.314 of 2024 under Section 11(6) of
Act before the High Court seeking appointment
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of sole Arbitrator and for referring the parties to
arbitration under the Franchise Agreement
dated 23.03.2019.
9. The Respondent No.2 has filed written
statement before Trial Court in AA No. 4 of 2024
denying allegations and contended that the suit
itself is not maintainable claiming that
Respondent No.2 is not a signatory to the
Franchise Agreement. He contested that
Respondent No.5 is not allowing Respondent
No.2 to inspect the books of accounts, ledgers
or bills etc.
10. The Trial Court vide Order dated 01.10.2024
dismissed IA Nos.5 to 7 filed by the Appellant
with the observation that the Appellant failed to
produce any document demonstrating that
Respondent No.2 granted consent for the
contested Franchise Agreement, thereby failing
to establish a prima facie case or the balance of
convenience in its favour. It was further stated
that AA No.4 of 2024 was filed on 16.02.2024,
and more than six and a half months had
elapsed without the Appellant producing any
document except for the notice and reply for
initiation of arbitral proceedings as mandated
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after filing an application under Section 9 of the
Act nor was any substantive material produced
to satisfy the requirements under Section 21 of
the said Act, as Respondent No.2 had not agreed
to refer the dispute to arbitration. The Trial
Court also observed that all partners held equal
rights under the partnership deed and must
obtain mutual written consent for any
substantive decision or agreement.
11. This Order dated 01.10.2024 was challenged by
the Appellant in Miscellaneous First Appeal No.
7168 of 2024 (AA) before the High Court. The
High Court vide Impugned Judgment dismissed
the appeal holding that Section 9(2) of the Act
read with Rule 9(4) of the 2001 Rules mandate
that arbitral proceedings must commence
within 90 days or three months from the date of
an interim order or presentation of the Section
9 application, failing which any interim relief
granted stands vacated automatically. The High
Court reiterated that arbitral proceedings
commence only when a request for reference to
arbitration is received by the respondent, and
mere issuance of notice does not constitute
such commencement. The petition under
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Section 11 of Act was filed on 28.06.2024 which
was beyond the permissible period, as arbitral
proceedings ought to have been initiated by
17.05.2024. The High Court, however, rejected
the contention of the Respondent No. 2 that he
is not a signatory to Franchise Agreement and
noted that the Trial Court erred in relying upon
clauses of the partnership deed to conclude
absence of a prima facie case or existence of
Franchise Agreement dated 23.03.2019 as the
same evidenced consent among partners and
was acted upon as the Hotel kept running as per
agreement and the partners kept quiet from
2019 to 2023. The High Court nevertheless
upheld the dismissal of the Appellant’s
application, holding that failure to initiate
arbitration within 90 days rendered the interim
order unsustainable, and issuance of notice
alone could not be construed as commencement
of arbitration.
12. It would not be out of way to mention here that
the above finding of High Court with respect to
the existence of the Franchise Agreement dated
23.03.2019 has not been challenged by the
Respondent No.2. It is only the Appellant being
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aggrieved by the dismissal of the Appeal by the
High Court on the ground of arbitration
proceedings having not commenced within 90
days from the date of ad-interim injunction, is
before this Court.
13. This Court, on 17.12.2024, while issuing notice
to the Respondents had granted interim
injunction in terms of Order dated 17.02.2024
of the Trial Court and continued it till the
disposal of the Appeal.
14. The learned counsel for the Appellant submits
that the arbitration proceedings commence on
the date of receipt of notice given under Section
21 of the Act unless parties agree otherwise. The
phrase commencement is defined under Section
21 of the Act, and it is also used in Section 9,
43(2) and 85(2) of the Act. In all these contexts,
this Court has held that it is the date of receipt
of notice under Section 21 that is determinative
of the commencement of arbitration
proceedings. Reliance is placed on Sundaram
1
Finance Ltd. v. NEPC India Ltd. , Arif Azim
2
Company Limited v. Aptech Limited ,

1
(1999) 2 SCC 479
2
(2024) 5 SCC 313
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3
Milkfood Ltd. v. GMC Ice Cream (P) Ltd. , Geo
Miller and Company Private Limited v.
Chairman, Rajasthan Vidyut Utpadan
4
Nigam Limited . He submits that the dispute
between the brothers, who are partners of the
Respondent No.1, have no bearing on the
Franchise Agreement and in any case, it has
been decided in favour of the Appellant by the
High Court by the Impugned Judgment which
has not been challenged by the Respondents
either by filing an appeal or by cross-objections.
The learned counsel further submits that the
Respondent No.2 and other partners
suppressed an agreement dated 09.10.2025
entered into between them by which they have
decided to close the hotel in violation of this
Court’s interim order dated 17.12.2024.
15. The learned counsel for the Respondent No.2
submits that the Appellant’s right in the
management of the Hotel is limited to getting
royalty payment of 5% each month along with
taxes, while the Respondent No.1 retains and
exercises direct management and control over
the day-to-day operations of the Hotel, which

3
(2004) 7 SCC 288
4
(2020) 14 SCC 643
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was the duty Respondent No.5 has undertaken
and despite completion of two years has not
stepped down. The Respondent No.5 has not
taken written consent of all the partners while
signing the Franchise Agreement on behalf of
the Respondent No.1. He submits that Section
21 of the Act is a deeming provision whereby the
date of commencement of arbitral proceedings
relates back to the date on which the notice
invoking arbitration was received. Section 43(2)
of the Act provides that an arbitration is deemed
to have commenced from the date referred in
Section 21 of the Act. Reliance is placed on
5
State of Goa v. Praveen Enterprises ,
contending that the primary object of Section 21
of the Act is to determine the date of
commencement of the arbitral proceedings to
decide if claims were ex-facie time barred. The
learned counsel further submits that
“commencement” in Section 21 is not for the
purpose of Section 9(2) of the Act but for Section
43, which explicitly mentions Section 21.
16. Having heard the learned counsels for the
parties and upon perusal of material on record,

5
(2012) 12 SCC 581
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it emerges that the finding as returned by the
High Court with regard to the existence of
Franchise Agreement dated 23.03.2019 is not
challenged by the Respondent No.2 by way of
cross-objection in this appeal nor is there any
material on record to show that any other
petition is filed in this regard. The said finding
has thus attained finality to the effect that the
consent of Respondent No.2 was there to the
Franchise Agreement.
16(A). The only issue which concerns the present
Appeal is whether the High Court was correct in
holding that the Appellant has initiated arbitral
proceedings after the expiry of 90 days period as
prescribed under Section 9(2) of the Act, thereby
resulting in automatic vacation of ad-interim
injunction in terms of Rule 9(4) of the 2001
Rules.
17. Before delving into the jurisprudential
foundation governing the commencement of the
arbitral proceedings under the Act, let us
reproduce the relevant provisions of the Act for
convenience.
18. Sections 9, 21 and 43(2) of Act read as follows:
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“ 9. Interim measures, etc., by Court. ––(1) A
party may, before or during arbitral
proceedings or at any time after the making of
the arbitral award but before it is enforced in
accordance with section 36, apply to a court—
(i) for the appointment of a guardian for
a minor or a person of unsound mind
for the purposes of arbitral
proceedings; or
(ii) for an interim measure of protection in
respect of any of the following
matters, namely:—
(a) the preservation, interim
custody or sale of any goods
which are the subject-matter of
the arbitration agreement;
(b) securing the amount in dispute
in the arbitration;
(c) the detention, preservation or
inspection of any property or
thing which is the subject-
matter of the dispute in
arbitration, or as to which any
question may arise therein and
authorising for any of the
aforesaid purposes any person
to enter upon any land or
building in the possession of
any party, or authorising any
samples to be taken or any
observation to be made, or
experiment to be tried, which
may be necessary or expedient
for the purpose of obtaining full
information or evidence;
(d) interim injunction or the
appointment of a receiver;
(e) such other interim measure of
protection as may appear to the
Court to be just and convenient,
and the Court shall have the same power for
making orders as it has for the purpose of,
and in relation to, any proceedings before it.

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(2) Where, before the commencement of the
arbitral proceedings, a Court passes an order
for any interim measure of protection under
sub-section (1), the arbitral proceedings shall
be commenced within a period of ninety days
from the date of such order or within such
further time as the Court may determine.

(3) Once the arbitral tribunal has been
constituted, the Court shall not entertain an
application under sub-section (1), unless the
Court finds that circumstances exist which
may not render the remedy provided under
section 17 efficacious.

21. Commencement of arbitral
proceedings .––Unless otherwise agreed by
the parties, the arbitral proceedings in respect
of a particular dispute commence on the date
on which a request for that dispute to be
referred to arbitration is received by the
respondent.

43. Limitations .––(1) . . .
(2) For the purposes of this section and the
Limitation Act, 1963 (36 of 1963), an
arbitration shall be deemed to have
commenced on the date referred in section 21.”

19. The jurisprudential foundation governing the
commencement of arbitral proceedings under
the Act stands on a principled and consistent
line of authority emanating from this Court. In
Sundaram Finance Ltd. (supra) , this Court,
while dealing with the issue as to whether a
court has jurisdiction to pass interim orders
under Section 9 of the Act even before the
arbitral proceedings commence, has observed
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that reading of Section 21 of the Act clearly
shows that the arbitral proceedings commence
on the date on which a request for a dispute to
be referred to arbitration is received by the
respondent.
20. The contours of this principle were later given
sharper precision in Milkfood Ltd. (supra) ,
wherein a three-Judge Bench of this Court held
that the Legislature has deliberately adopted the
UNCITRAL Model Law’s formulation, whereby
the arbitral proceedings commence upon
respondent’s receipt of a request or notice that
the dispute be referred to arbitration. The
provisions under Section 21 of the Act are
consistent with Article 21 of the Model Law of
UNCITRAL. The Court further observed that the
issuance of notice under Section 21 is required
to be interpreted broadly and not for the
purpose of limitation only but for other
purposes also.
21. In Geo Miller (supra) , this Court reaffirmed the
principles of Milkfood Ltd. (supra), holding
that for the purpose of determining which law
applies or for computing limitation, the date of
commencement is invariably the date on which
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the notice invoking arbitration is received by the
respondent. The Court clarified that the
procedural route adopted thereafter i.e.,
whether the parties agree on an arbitrator or
whether a Section 11 petition becomes
necessary, is irrelevant to the date of
commencement, which remains tethered
exclusively to Section 21 of the Act.
22. In Arif Azim (supra), a three-Judge Bench of
this Court has consolidated and restated what
is being held in Milkfood Ltd. (supra) and Geo
Miller (supra) . The Court re-emphasized that
the date on which the respondent receives a
notice or request invoking arbitration is the
moment at which the arbitral proceedings
commence under Section 21 of the Act. It
further clarified that a valid invocation requires
the notice to articulate the dispute sought to be
referred but once such notice is received,
commencement is complete and effective for all
legal purposes including limitation,
maintainability of the Section 11 Petition and
the legal efficacy of any pre-arbitral measures.
The relevant portion in paras 88 to 91, are
reproduced herein:
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‘26. The commencement of an
arbitration proceeding for the purpose
of applicability of the provisions of the
Indian Limitation Act is of great
significance. Even Section 43(1) of the
1996 Act provides that the Limitation
Act, 1963 shall apply to the arbitration
as it applies to proceedings in court.
Sub-section (2) thereof provides that for
the purpose of the said section and the
Limitation Act, 1963, an arbitration
shall be deemed to have commenced on
the date referred to in Section 21.
27. Article 21 of the Model Law which
was modelled on Article 3 of
the Uncitral Arbitration Rules had been
adopted for the purpose of drafting
Section 21 of the 1996 Act. Section 3 of
the 1996 Act provides for as to when a
request can be said to have been
received by the respondent. Thus,
whether for the purpose of applying the
provisions of Chapter II of the 1940 Act
or for the purpose of Section 21 of the
1996 Act, what is necessary is to
issue/serve a request/notice to the
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respondent indicating that the claimant
seeks arbitration of the dispute.
*
29. For the purpose of the Limitation
Act an arbitration is deemed to have
commenced when one party to the
arbitration agreement serves on the
other a notice requiring the
appointment of an arbitrator. This
indeed is relatable to the other
purposes also, as, for example, see
Section 29(2) of the (English)
Arbitration Act, 1950.
*
49. Section 21 of the 1996 Act, as
noticed hereinbefore, provides as to
when the arbitral proceedings would
be deemed to have commenced. Section
21 although may be construed to be
laying down a provision for the purpose
of the said Act but the same must be
given its full effect having regard to the
fact that the repeal and saving clause
is also contained therein. Section 21 of
the Act must, therefore, be construed
having regard to Section 85(2)(a) of the
1996 Act. Once it is so construed,
indisputably the service of notice
and/or issuance of request for
appointment of an arbitrator in terms of
the arbitration agreement must be held
to be determinative of the
commencement of the arbitral
proceeding.’

90. Similarly, in BSNL v. Nortel Networks
(India) (P) Ltd. [(2021) 5 SCC 738], it was held
by this Court thus: (SCC p. 766, para 51)
‘51. The period of limitation for issuing
notice of arbitration would not get
extended by mere exchange of letters,
[S.S. Rathore v. State of M.P., (1989) 4
SCC 582 : 1990 SCC (L&S) 50; Union of
India v. Har Dayal, (2010) 1 SCC
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394; CLP (India) (P) Ltd. v. Gujarat Urja
Vikas Nigam Ltd., (2020) 5 SCC 185] or
mere settlement discussions, where a
final bill is rejected by making
deductions or otherwise. Sections 5 to
20 of the Limitation Act do not exclude
the time taken on account of settlement
discussions. Section 9 of the Limitation
Act makes it clear that: ‘where once the
time has begun to run, no subsequent
disability or inability to institute a suit
or make an application stops it’. There
must be a clear notice invoking
arbitration setting out the “particular
dispute” [ Section 21 of the Arbitration
and Conciliation Act, 1996.] (including
claims/amounts) which must be
received by the other party within a
period of 3 years from the rejection of a
final bill, failing which, the time bar
would prevail.’

91. In the present case, the notice invoking
arbitration was received by the respondent on
29-11-2022, which is within the three-year
period from the date on which the cause of
action for the claim had arisen. Thus, it cannot
be said that the claims sought to be raised by
the petitioner are ex facie time-barred or dead
claims on the date of the commencement of
arbitration.”

23. Upon perusal of the binding decisions of this
Court and provisions of the Act, there is no
doubt left with regard to the correct
conceptualization of “commencement of arbitral
proceedings” under the Act. The settled position
as emerged is that the commencement of
arbitral proceedings is a statutory event defined
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exclusively under Section 21 of the Act, wherein
the respondent’s receipt of a request to refer the
dispute to arbitration sets the arbitral
proceedings in motion and no judicial
application i.e. whether under Section 9 or
Section 11 petition, constitutes commencement.
Therefore, the statutory consequences tied to
commencement, including the mandate under
Section 9(2) of the Act, must be assessed solely
with reference to the date of receipt of request
invoking arbitration under Section 21 of the Act.
24. The contention of the Respondent No.2 that the
commencement under Section 21 of the Act is
only for the purpose of calculating limitation
under Section 43(2) of the Act does not find force
with us. Section 21 explicitly provides that
arbitral proceedings commence on the date on
which a request for dispute to be referred to
arbitration is received by the respondent. In
absence of any other provision providing for the
date of commencement of the arbitral
proceedings, Section 21 is to be construed to
apply to all the provisions of the Act unless
specifically provided as not applicable. The only
exception that is carved out in Section 21
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pertains to the arbitral agreement itself,
providing that unless otherwise agreed by the
parties, the date of commencement of arbitral
proceedings must be from the date when notice
or request invoking arbitration is received by the
respondent. Therefore, as per the mandate of
Section 9(2) of the Act, the arbitration
proceedings shall commence within a period of
ninety days from the date of such interim order
or within such further time as the court may
determine, and such commencement will be the
date on which notice invoking arbitration is
received by the respondent in consonance of
Section 21 of the Act.
25. At this stage, it requires to be mentioned that
the consequences flowing from the non-
compliance of mandate under Section 9(2) of the
Act are not provided for in the said Act. To fill in
this gap reference is required to be made at this
juncture to Rule 9 of 2001 Rules framed by the
High Court as per the powers conferred on it
under Section 82 of the Act, which reads as
follows:
“ Rule 9. Application for interim measure,
etc. ––(1) When an application is made for an
interim measure, under Section 9 of the Act, the
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Court shall in all cases, except where it
appears that the object of granting the interim
measure would be defeated by the delay,
before passing the interim order, direct notice
of the application to be given to the opposite
party:
Provided that, where it is proposed to make an
order by way of interim measure without giving
notice of the application to the opposite party,
the Court shall record the reasons for its
opinion that the object of granting the interim
measure would be defeated by delay, and
require applicant.––
(a) to deliver to the opposite party, or to sent
to him by registered post, immediately
after the order granting the interim
measure has been made, a copy of the
Application for interim order together
with:
(ii) a copy of affidavit filed in support of
the application;
(iii) copies of documents on which the
applicant relies;
(b) to file, on the day on which such interim
order is granted or on the day
immediately following that day, an
affidavit stating that the copies aforesaid
have been so delivered or sent.
(2) Where an interim order has been granted
without giving notice to the opposite party, the
Court shall make endeavours to finally
dispose of the Application within thirty days
from the date on which the interim order was
granted and where it is unable so to do, it
shall record its reasons for such inability.
(3) In an application for interim measure filed
under Section 9, before the commencement of
the arbitral proceedings, the applicant shall
specifically refer to the steps, if any, already
taken to seek arbitration and that he is willing
and prepared to take necessary steps with
utmost expedition to seek reference to
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arbitration in terms of the Arbitration
Agreement/Clause.
(4) In the case of an application for interim
measure made before initiating arbitral
proceedings, if the arbitral proceedings are
not initiated within three months from the
date of the presentation of the Application
under Section 9, any interim order granted
shall stand vacated without any specific order
being passed by the Court to that effect.”
26. Upon the reading of Section 9 of the Act, it is
evident that the said section does not provide for
the consequences of non-compliance with its
mandate of commencing arbitral proceedings
within ninety days, however, the said vacuum
stands statutorily filled through Rule 9(4) of the
2001 Rules. According to this Rule where an
interim order has been granted on an
application made under Section 9 of the Act but
no arbitral proceedings are initiated within
three months from the date of presentation of
the application, the interim order shall stand
vacated automatically.

27. It requires to be noted and mentioned here that
Rule 9(4) employs the expression “initiated”
whereas Section 9(2) uses the expression
“commenced” in the context of arbitral
proceedings. As per Concise Oxford English
Dictionary (Eleventh Edition, Revised), the term
“initiation” connotes the act of causing
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something to begin or taking the first step
towards beginning a process, whereas
“commencement” denotes the actual beginning
of the process itself, which is a step further than
mere initiation. Thus, linguistically, initiation
precedes commencement and as per Rule 9(4)
the initiation shall be within three months from
the date of presentation of such application,
which would be before the commencement as
per Section 21 of Act and would ideally be the
date on which the notice invoking arbitration is
sent by a party. However, the expression
“initiated” occurring in Rule 9(4) cannot be
interpreted in isolation or in a manner divorced
from the statutory context in which it appears.
Rule 9 has been framed in aid of, and to give
procedural effect to, Section 9 of the Act, and
therefore the terminology employed therein
must be construed harmoniously with the
parent provision. If “initiation” in Rule 9(4) were
to be understood as something short of
“commencement” as contemplated under
Section 21 of the Act, the mandate under
Section 9(2) prescribing a strict timeline for
commencement of arbitral proceedings would
be rendered otiose and susceptible to
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circumvention. Consequently, for the purposes
of Rule 9(4), the expression “initiated” has
necessarily to be read as “commenced” within
the meaning of Section 21 of the Act. It follows
that upon failure to commence arbitral
proceedings within three months, the period
stipulated under Rule 9(4) of 2001 Rules
attracts the consequence as provided therein,
namely, the interim order shall stand vacated
automatically.
28. In the case at hand, the High Court proceeded
on the premise that since the petition under
Section 11 was filed on 28.06.2024, beyond
three months from the date of ad-interim Order
dated 17.02.2024, the arbitral proceedings had
not commenced within time. This view of the
High Court rests on a misconception regarding
the statutory scheme. The very frame of Section
21 provides that the Legislature has consciously
delinked the commencement of arbitral
proceedings from any judicial proceedings. This
Court, in Milkfood Ltd. (supra) described this
as a deliberate legislative choice modelled on the
UNCITRAL framework, meant to ensure that the
commencement of arbitral proceedings is clear
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and independent of procedural contingencies.
The objective of this statutory scheme would be
defeated if a court is permitted to substitute the
date of commencement under Section 21 with
the date of filing a Section 11 petition. Resort to
the proceedings under Section 11 would be
necessitated only in case there is refusal or no
response to the notice under Section 21 of the
Act.

29. The High Court in the Impugned Judgment
conflates the trigger for arbitral proceedings
with remedial mechanism made available when
the respondent obstructs or declines to
participate. The purpose of Section 21 is to
specify the date of commencement of arbitral
proceedings in order to determine whether a
claim is barred by limitation and whether a
party has complied with the requisite statutory
or contractual time limit for initiation of
arbitration. If the date of filing of the Section 11
petition is to be treated as the date of
commencement of arbitral proceedings, as has
been observed by the High Court in the
Impugned Judgment, that would result into the
displacement of commencement of arbitral
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proceedings as provided under Section 21 and
would be contrary to the text and purpose of the
Act. Such a position is impermissible as has
been consistently held in the dicta of this Court
from the decision in Sundaram Finance Ltd.
(supra) to that in Arif Azim (supra) .

30. The rationale underlying Section 9(2) of the Act
is that the arbitral proceedings shall be
commenced within ninety days from the grant
of interim protection. This prevents a party from
abusing Section 9 to obtain interim protection
without submitting to the arbitral forum and it
also ensures that interim measures remain tied
to the arbitration they are meant to support. If
this safeguard is interpreted in a manner that
contradicts the statutory definition of the
commencement, to do so would allow courts to
rewrite Section 21 sub silentio . If the
commencement is to be construed from the date
of filing of the petition under Section 11 of the
Act, the statutory scheme insisting on
expedition in commencing arbitration after the
grant of interim protection under Section 9
would be rendered incoherent. The applicant
could serve notice under Section 21 but still be
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held non-compliant until a Section 11 petition
is filed, an interpretation which would be
directly in contrast with the object and purpose
of the Act. Permitting such an interpretation
would mean that the parties would
paradoxically be required to file the Section 11
petition to prevent the lapse of interim measures
granted under Section 9 of the Act even when
the respondent is cooperating, the contractual
appointment procedure is underway, or even
when the Section 21 notice has only recently
been served. This is antithetical to the flexibility
and autonomy provided in the Act.

31. The legal position as settled when applied to the
present factual matrix yields a clear conclusion.
The Trial Court passed the Order dated
17.02.2024 granting ad-interim injunction to
the Appellant. The period of ninety days as
provided under Section 9(2) of the Act would end
on 17.05.2024. The Appellant served a notice
invoking arbitration on 11.04.2024. The reply of
Respondent No. 2 dated 23.04.2024 refusing to
join in the appointment of an arbitrator entails
that notice had indeed been received and
understood as an invocation of the arbitral
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process by the Respondent No.2. Under Section
21 of the Act, the date of receipt of the notice is
the date of commencement of arbitral
proceedings. Even if 23.04.2024, the date on
which the reply sent by the Respondent No.2, is
taken to calculate the period of ninety days, as
stipulated under Section 9(2) of the Act and the
consequences thereof provided under Rule 9(4)
of the 2001 Rules, the arbitral proceedings have
commenced well within the time and way before
expiry of such periods. The High Court,
however, in the Impugned Judgment treated the
date of filing of the Section 11 petition i.e.
28.06.2024 as the date of commencement of the
arbitral proceedings resulting into the finding
that ad-interim stay stood vacated and
proceedings commenced after the expiry of
ninety days period provided under Section 9(2)
of the Act. This finding of the High Court cannot
sustain as it is contrary to the objective and
purpose of the Act. The arbitral proceedings, as
commenced by the Appellant, is well within the
statutory time frame provided under Section
9(2) of the Act and the rigor of Rule 9(4) of the
2001 Rules cannot be attracted to the
Appellant.
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32. Therefore, in the light of the above discussion
and perusal of material on record, the Impugned
Judgment of the High Court is set aside for
being unsustainable in law. As a consequence
thereof, the Order dated 01.10.2024 of the Trial
Court vacating the ad-interim injunction also
stands set aside, restoring the earlier Order
dated 17.02.2024.

33. Before parting, it is essential that we request the
High Court to expeditiously decide the Section
11 petition filed by the Appellant for
appointment of the arbitrator on its own merits
and in accordance with law, if already not
decided. Nothing stated in this judgment will
influence or prejudice the arbitral process in
any manner.

34. The appeal is allowed in the above terms.

35. As the appeal stands allowed, we would not like
to proceed as of now with the Contempt Petition
(C) No.189 of 2025 as filed by the appellant and
the same is disposed of at this stage.

36. There shall be no order as to costs.

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37. Pending application(s), if any, stand disposed of.

.……..………..……………………..J.
[ DIPANKAR DATTA ]


.……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]

NEW DELHI;
JANUARY 07, 2026.
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