- The original petition has been filed with the following prayer;
2. The question involved is whether the failure to commence arbitral proceedings within 90 days after the first order was passed in a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996( 'the Act' for short) will result in termination of the entire proceedings. The short facts required as follows:
3. The respondent filed a Section 9 application before the Commercial Court II, Thiruvananthapuram and on 04.05.2023 the first order was issued prohibiting transfer of shares of the petitioner company. On the same day, another order was issued prohibiting alienation of the property. The contention of the petitioner is that, since even 90 days after the passing of the order no arbitral proceedings were initiated, and since the court has not granted any extension of the period for commencing the proceedings, the entire proceedings have to stop there and cannot be continued any further.
4. Reliance is placed on the judgment of a Division Bench of the Madras High Court in Archer Power Systems Private Limited V. Kohli Ventures Limited Company (2017 SCC OnLine Mad 36458) and that of a Division Bench decision of this Court in M/s.Manosh Elias Constructions Pvt. Ltd. V. Manuel John [Arbitration Appeal No.75/2017 dated 18.01.2018]. In Archer (supra), the Division Bench of the Madras High Court held that the law is well settled that the arbitral proceedings has to be initiated with 90 days after the initial order and the party who moves the court cannot eternally squat on the interim order obtained without commencing the arbitral proceedings. The Division Bench of this Court in Manosh Elias (supra) held that the parties who had succeeded in securing an interim measure of protection before commencement of the arbitral proceedings cannot be allowed to sit and sleep over the relief and conveniently forget the “proximity contemplated” or “manifestly intended”, arbitral proceedings. The Court further held that if arbitral proceedings are not commenced within a reasonable time of an order under Section 9, the relationship between the order under Section 9 and the arbitral proceedings would stand snapped and the relief allowed to the parties shall cease to be an order made “before” the arbitral proceedings and in contemplation of arbitral proceedings. The court also held that the provisions of Section 9(2) will equally apply even in case of an ad-interim order of conditional order of attachment.
5. The Senior counsel appearing for the respondents on the other hand pointed out to the reliefs prayed for in the original petition and submitted that Section 9(2) does not contemplate the setting aside of the entire proceedings if arbitral proceedings are not initiated within 90 days. The counsel submitted that the agreement between the parties related to the running of a hotel. It is pointed out that, after the order was issued on 04.05.2023, the petitioners started taking steps for re- branding the hotel on 20.05.2023. The respondent moved the court against these steps and on 03.06.2023, an order of status quo was ordered in I.A.No.3/2023. The petitioner thereafter filed I.A.No.6/2023 challenging the maintainability of a Section 9 application. This was followed by O.P.(C) No.1471/2023 seeking a disposal of I.A.No.6/2023. This Court by judgment dated 31.07.2023 directed that I.A.No.6/2023 should be disposed of within 25.08.2023. When the status quo order was violated, a contempt application was filed by the respondents. It is stated that the said application is still pending consideration and charge memo has already been issued and a Prosecutor has also been appointed. Against the violation of the injunction, the Commercial Court has also been moved and the said petition is also pending. It is hence submitted that the proceedings under Section 9 did not stop with the first order and it is still continuing in the form of petitions seeking action against violation of the interim order. According to the counsel, the proceedings under different I.As. before the Commercial Court should be treated as extension of the time under Section 9(2). I do not fully agree with the submission that the interim order granted would amount to an extension of the time granted for initiating arbitral proceedings. However, it would definitely amount to an extension of the interim proceedings which were initiated under Section 9.
6. Section 9 of the Arbitration and Conciliation Act reads thus:
“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.
(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.”
7. The Senior counsel appearing for the respondents submitted that the Hon'ble Supreme Court in Amazon.Com NV Investment Holdings LLC V. Future Retail Limited and Others [(2022) 1 SCC 209] considered the question whether the proceedings regarding the violation of injunction would continue to the Section 9(1) proceedings and held in the affirmative. In paragraph 69, the Hon'ble Supreme Court held thus:
“Properly so read, the expressions “in relation to” and “any proceedings” would include power to enforce orders that are made under Section 9(1), and are not limited to incidental powers to make interim orders, as was suggested by Mr.Viswanathan. Thus, if an order under Section 9(1) is flouted by any party, proceedings for enforcement of the same are available to the court making such orders under Section 9(1). These powers are, therefore, traceable directly to Section 9(1) of the Act – which then takes us to the Code of Civil Procedure. Thus an order under Order 39 Rule 2-A, in enforcement of an order under Section 9, would also be referable to Section 9(1) of the Arbitration Act.”
8. A reading of Section 9(2) would show that the Statute only says that arbitration proceedings should be commenced within a period of 90 days from the date of an order for any interim measure of protection. Going by the judgment in Amazon.Com(supra), even orders for enforcement of a protection order given under Section 9(1) would continue to be an order under Section 9(1). The statutory provision does not say that arbitral proceedings should be started within 90 days of the first order issued under Section 9(1). A reading of the provision along with the law declared by the Hon'ble Supreme Court in Amazon.Com (supra) will necessarily lead us to a conclusion that what is intended by the Statute is a measure of protection in reality. That is the very reason why the Statute has specifically stated that the time can be extended by the Court. The Statute does not contemplate any limit regarding the above extension. The Court thus can ensure that a real protection has been granted. Any other interpretation will only be doing disservice to the intention behind the statutory provision.
Original petition is devoid of merit and is hence dismissed.