The court affirmed that interim orders under Section 9 of the Arbitration and Conciliation Act, 1996 automatically vacate if arbitration is not initiated within the stipulated time frame.

JUDGMENT :

C.M. POONACHA, J.

1. The present petition is filed under Section 37 (1)(b) of the Arbitration and Conciliation Act, 1996 [Hereinafter referred to as ‘Act of 1996’] calling in question the order dated 22.11.2022 passed in AA No.42/2022 by the CCH 70 LXIX Additional City Civil and Sessions Judge, Bengaluru, [Hereinafter referred to as ‘Trial Court’]

2. The relevant factual matrix in a nutshell, leading to the present appeal is that the appellant is an institution, which has been allotted a property, by the Government of Karnataka vide registered Lease Deed dated 08.07.2004, wherein it had constructed a building. The appellants being desirous of starting an educational institution and having obtained affiliation from the requisite statutory authorities, entered into a Memorandum of Fee Sharing Agreement, [Hereinafter referred to as ‘MOU’] dated 06.03.2017 with the respondents, whereunder the respondent had paid a sum of `1.00 crore and was required to make further periodic payments. The respondent was permitted to use the property of the appellants for the purpose of running an educational institution.

3. Various disputes arose between the parties culminating in the appellants instituting AA No.103/2020 before the Trial Court under Section 9 of the Act of 1996. Thereafter, the appellants also instituted CMP No.180/2021 before this Court under Section 11 (5) of the Act of 1996 for appointment of an Arbitrator. This Court vide order dated 21.06.2021 allowed the said CMP and appointed an Arbitrator. Thereafter, the appellants filed IA.No.1/2024 in CMP No.180/2021 for appointment of a Substitute Arbitrator. This Court noticing that in the communication dated 22.08.2023 made by the Arbitration and Conciliation Centre, Bengaluru, [Hereinafter referred to as ‘Centre’], the file was treated as closed because the appellants did not file statement of claim and that the Arbitrator appointed was omitted from the panel of Arbitrators, vide order dated 22.07.2024 refused to appoint a Substitute Arbitrator and disposed of the said application. Thereafter, the respondent instituted AA No.42/2022 before the Trial Court under Section 9 of the Act of 1996. The Trial Court by its order dated 22.11.2022, has disposed of the application and passed the following order:

“ORDER

The respondents are hereby directed not to interfere in the suit schedules premises unless the order in AA No.103/2020 is passed concerning the relief of injunction sought in this case on merits.

Case disposed accordingly.

Further the respondents are directed to act in accordance with the Arbitration Tribunal orders if any instituted as per the agreement between the parties in an arbitration proceedings.”

4. Being aggrieved, the present appeal is filed.

5. The respondent in the present appeal was served through paper publication and IA.No.1/2023 for condonation of delay was allowed vide order dated 15.04.2025. Thereafter, this Court vide order dated 16.04.2025 allowed IA No.2/2023 and granted stay of the order dated 22.11.2022 passed in AA No.42/2022. The respondent has filed IA No.2/2025 seeking for vacating of the said order of stay.

6. At this stage, the arguments of both the learned counsel were heard on the merits of the appeal.

7. Learned Senior counsel, Sri Udaya Holla, appearing along learned counsel Sri Sunil S.Rao, for the appellants would contend that pursuant to the order dated 22.11.2022 which is impugned in the present appeal, the respondent not having instituted any arbitration proceedings or given any notice of arbitration, the said order does