Under Section 9 of the Arbitration Act, failure to commence arbitral proceedings within 90 days of an interim order may terminate proceedings unless extensions are granted due to ongoing enforcement actions.

JUDGMENT :

T.R. RAVI, J.

1. The original petition has been filed with the following prayer:

“Call for the records of CMA (Arbitration) 13/2023 before the Commercial Court-2, Thiruvananthapuram (Court of the 1^st Additional Subordinate Judge, Thiruvananthapuram) and set aside the entire proceedings.”

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 Vs. 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. Vs. 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 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 (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 orde