The Supreme Court has put to rest a recurring confusion in arbitration law: proceedings begin when a party’s notice invoking arbitration reaches the other side—not when a court is approached to appoint an arbitrator.
In a decisive ruling, the Court overturned a Karnataka High Court order that had stripped interim protection on the assumption that arbitration had not “commenced” in time. The apex court cautioned that tying the start of arbitration to a court filing would twist the structure of the Arbitration and Conciliation Act, 1996.
The dispute arose from a 2019 franchise agreement between Regenta Hotels Private Limited and a Srinagar-based hotel firm operating under the name Hotel Grand Centre Point. Relations soured when Regenta alleged interference in hotel operations by some partners. Seeking immediate relief, Regenta secured an ad-interim injunction from a Bengaluru trial court in February 2024 to ensure uninterrupted functioning of the hotel.
Within weeks, on April 11, 2024, Regenta issued a formal notice invoking arbitration under Section 21 of the Act. That notice was duly received by the firm and its partners. When the parties failed to agree on an arbitrator, Regenta later moved the High Court with a petition under Section 11 for appointment of an arbitrator.
Both the trial court and the High Court took the view that arbitration had not begun within the 90-day window required under Section 9(2), reasoning that the Section 11 petition had been filed too late. On that basis, the interim protection was vacated.
The Supreme Court disagreed—firmly.
Tracing the statutory framework, the Court underlined that Section 21 leaves no room for doubt: arbitral proceedings commence on the date the request for reference to arbitration is received by the respondent. This definition, the Court said, applies across the Act unless specifically excluded. Judicial filings under Section 9 or Section 11 do not—and cannot—trigger commencement.
The judgment stressed that allowing courts to treat a Section 11 petition as the starting point would undermine the legislative design and hollow out Section 21. Arbitration, the Court noted, is deliberately structured to begin outside the courtroom, with party notice—not judicial intervention—setting the process in motion.
The Court also rejected reliance on Karnataka’s procedural rules to justify automatic vacation of interim orders. Any reference to arbitration being “initiated” under those rules, it held, must align with Section 21. Reading it otherwise would defeat the mandate of Section 9(2) and invite circumvention.
Applying this reasoning to the facts, the Court found that Regenta’s arbitration notice had been issued well within 90 days of the interim injunction. The High Court, therefore, erred in pegging the commencement of arbitration to the later Section 11 filing.
The appeal was allowed, restoring clarity to a core principle of arbitration law: the arbitral journey begins with a notice across the table, not a petition across the counter.
