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SUPREME COURT OF INDIA
DIPANKAR DATTA, AUGUSTINE GEORGE MASIH , JJ.
Regenta Hotels Private Limited – Appellant
Versus
M/S Hotel Grand Centre Point And Others – Respondents
Civil Appeal No. 90 of 2026 [Arising out of SLP (Civil) No. 30212 of 2024 ] With Contempt Petition (Civil) No.189 of 2025
Decided On : 07-01-2025
Civil Procedure Code, 1908 – Order XXXIX Rules 1 and 2 read with Section 151 – Arbitration and Conciliation Act, 1996 – Sections 9, 21 and 43(2) read with Rule 9(4) of Arbitration (Proceedings Before the Courts) Rules, 2001 – Temporary injunction – Automatic vacation of ad-interim injunction – Commencement of arbitral proceedings is a statutory event defined exclusively under Section 21 of the Act – Statutory consequences tied to commencement, including mandate under Section 9(2) of Act, must be assessed solely with reference to date of receipt of request invoking arbitration under Section 21 of Act – As per mandate of Section 9(2) of Act, arbitration proceedings shall commence within a period of ninety days from date of such interim order or within such further time as court may determine, and such commencement will be date on which notice invoking arbitration is received by respondent in consonance of Section 21 of Act – In terms of Rule 9(4) where an interim order has been granted on application made under Section 9 of Act but no arbitral proceedings are initiated within three months from date of presentation of application, interim order shall stand vacated automatically – Arbitral proceeding, as commenced by Appellant, is well within statutory time frame provided under Section 9(2) of Act and rigour of Rule 9(4) of 2001 Rules cannot be attracted to Appellant – Impugned orders set aside.(Paras 23, 24, 26, 27, 31 and 32)
Facts of the case:
Only issue which concerns present Appeal is whether High Court was correct in holding that Appellant has initiated arbitral proceedings after expiry of 90 days period as prescribed under Section 9(2) of Arbitration and Conciliation Act, 1996, thereby resulting in automatic vacation of ad-interim injunction in terms of Rule 9(4) of Arbitration (Proceedings Before the Courts) Rules, 2001.
Findings of Court:
High Court in Impugned Judgment conflates trigger for arbitral proceedings with remedial mechanism made available when respondent obstructs or declines to participate. Purpose of Section 21 is to specify date of commencement of arbitral proceedings in order to determine whether a claim is barred by limitation and whether a party has complied with requisite statutory or contractual time limit for initiation of arbitration.
Result : Appeal allowed.
यह मामला एक अविभाजित विवाद से संबंधित है जिसमें एक होटल प्रबंधन कंपनी ने एक होटल के संचालन में हस्तक्षेप को लेकर अदालत का सहारा लिया। अदालत ने निर्धारित किया कि यदि किसी भी पक्ष ने मध्यस्थता के लिए आवेदन करने के बाद तीन महीने के भीतर प्रक्रिया शुरू नहीं की, तो अस्थायी आदेश अपने आप समाप्त हो जाएगा। इस मामले में, अपीलकर्ता ने समय सीमा से पहले ही arbitration प्रक्रिया शुरू कर दी थी, इसलिए अदालत ने इस प्रक्रिया को समय सीमा के भीतर माना। उच्च न्यायालय ने यह भी पाया कि arbitration प्रक्रिया की शुरुआत उस तारीख से मानी जानी चाहिए जब नोटिस प्राप्त किया गया हो, न कि जब संबंधित आवेदन या प्रक्रिया फाइल की गई हो। इस आधार पर, अदालत ने फैसला दिया कि अपीलकर्ता ने समय सीमा का उल्लंघन नहीं किया है और इसलिए अस्थायी आदेश और संबंधित रोक को फिर से बहाल किया जाना चाहिए। अंत में, अदालत ने उच्च न्यायालय का निर्णय रद्द कर दिया और अपीलकर्ता के पक्ष में फैसला सुनाया, साथ ही साथ संबंधित प्रक्रिया को शीघ्र पूरा करने का निर्देश दिया।
JUDGMENT
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 the Miscellaneous First Appeal No. 7168 of 2024 (AA) filed by the Appellant herein against the Order dated 01.10.2024 of the IXth 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 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 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 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 R
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