Arbitration and Conciliation Act, 1996 – Ss. 9(2), 21, 43(2) – Arbitration (Proceedings Before the Courts) Rules, 2001 – R.9(4) – Commencement of arbitral proceedings – Interim measures – Whether filing of S.11 petition constitutes commencement – Held: No – Commencement occurs on receipt of notice invoking arbitration – Interim order not automatically vacated.
A. Section 21 – Commencement of arbitral proceedings
Paras 22, 23, 28
Held:
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Commencement of arbitral proceedings is a statutory event defined exclusively under S.21.
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Arbitral proceedings commence on the date when the respondent receives a request to refer dispute to arbitration.
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Judicial applications (S.9 or S.11) do not constitute commencement.
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Legislature consciously delinked commencement from judicial proceedings, consistent with UNCITRAL Model Law (Article 21).
Commencement must be determined solely with reference to S.21.
Relied on:
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Sundaram Finance Ltd. v. NEPC India Ltd.
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Milkfood Ltd. v. GMC Ice Cream (P) Ltd.
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Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd.
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Arif Azim Co. Ltd. v. Aptech Ltd.
B. Section 9(2) – Ninety-day mandate after interim protection
Paras 30, 31
Held:
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Where Court grants interim measure before commencement of arbitration, arbitral proceedings must commence within 90 days.
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Purpose: prevent abuse of interim relief without submitting to arbitration.
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If commencement were tied to filing of S.11 petition, statutory scheme would become incoherent and defeat legislative intent.
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Notice under S.21 is sufficient compliance; filing S.11 petition is not determinative of commencement.
C. Rule 9(4), 2001 Rules – Automatic vacation
Paras 26, 27
Rule 9(4) provides that if arbitral proceedings are not initiated within three months, interim order stands vacated.
Held:
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Expression “initiated” in Rule 9(4) must be read harmoniously with “commenced” under S.21.
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Initiation cannot mean something less than statutory commencement.
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Therefore, failure to commence arbitration within stipulated period alone attracts automatic vacation.
D. High Court’s Error
Paras 28, 31
High Court treated date of filing of S.11 petition (28.06.2024) as date of commencement and held 90-day period expired.
Held:
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This approach misconceived statutory scheme.
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Commencement occurred upon receipt of notice dated 11.04.2024 (reply dated 23.04.2024 shows receipt).
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Thus, arbitral proceedings commenced well before expiry of 90 days (17.05.2024).
Impugned judgment unsustainable.
E. Applicability of S.21 beyond limitation
Para 24
Argument that S.21 applies only for limitation under S.43 rejected.
Held:
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In absence of contrary provision, S.21 governs commencement for all purposes under the Act.
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Only exception: where parties agree otherwise.
Reference made to:
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State of Goa v. Praveen Enterprises
RATIO DECIDENDI
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Commencement of arbitral proceedings under the Arbitration and Conciliation Act, 1996 occurs exclusively upon receipt of notice invoking arbitration under Section 21.
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Filing of a petition under Section 11 does not determine commencement.
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For compliance with Section 9(2), service and receipt of notice invoking arbitration within 90 days from grant of interim protection satisfies statutory mandate.
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Rule 9(4) of the 2001 Rules must be read harmoniously with Section 21; automatic vacation of interim order occurs only if arbitration is not commenced within statutory period.
RESULT
Appeal allowed.
Impugned judgment of High Court set aside.
Order of Trial Court dated 01.10.2024 vacating injunction set aside.
Ad-interim order dated 17.02.2024 restored.
High Court requested to expeditiously decide pending S.11 petition.
Contempt Petition disposed of.
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