Regenta Hotels Private Limited Vs Hotel Grand Centre Point And Others (Supreme Court of India)
Commencement of Arbitration Under Section 21 Governs Section 9(2): Interim Relief Cannot Lapse Once Notice Invoking Arbitration Is Served Within 90 Days
The Supreme Court held that arbitral proceedings “commence” strictly in terms of Section 21 of the Arbitration and Conciliation Act, 1996, i.e., on the date when the notice/request invoking arbitration is received by the respondent, and not on the date of filing a petition under Section 11. Consequently, for the purposes of Section 9(2), which mandates commencement of arbitral proceedings within 90 days of the grant of interim protection, the relevant date is the receipt of the Section 21 notice, and not subsequent judicial steps.
The Court set aside the Karnataka High Court’s judgment which had held that interim relief granted under Section 9 stood automatically vacated because the Section 11 petition was filed beyond 90 days. The Supreme Court clarified that the High Court misconstrued the statutory scheme by equating commencement of arbitration with filing of a Section 11 petition. Relying on consistent precedent (Sundaram Finance, Milkfood Ltd., Geo Miller, Arif Azim), the Court reaffirmed that judicial intervention is not the trigger for commencement of arbitration; rather, it is a statutory event under Section 21.
The Court further harmonised Section 9(2) with Rule 9(4) of the Arbitration (Proceedings Before the Courts) Rules, 2001, holding that although Rule 9(4) uses the term “initiated”, it must be read as “commenced” in the sense of Section 21, failing which Section 9(2) would be rendered otiose. Since the appellant had issued a notice invoking arbitration well within 90 days from the ad-interim injunction, the arbitral proceedings had validly commenced in time, and automatic vacation of interim relief did not arise.
Accordingly, the Supreme Court restored the interim injunction, set aside both the High Court and Trial Court orders vacating it, and directed expeditious disposal of the pending Section 11 petition, while clarifying that the merits of the arbitration remain unaffected.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
