Arbitration proceedings commence from receipt of invocation notice by Respondent

The Hon’ble Supreme Court has held that Arbitration proceedings commence from the date of receipt of invocation notice by the Respondent and not from the date of appointment of Arbitrator.

The Court held,

“31. The legal position as settled when applied to the present factual matrix yields a clear conclusion. The Trial Court passed the Order dated 17.02.2024 granting ad-interim injunction to the Appellant. The period of ninety days as provided under Section 9(2) of the Act would end on 17.05.2024. The Appellant served a notice invoking arbitration on 11.04.2024. The reply of Respondent No. 2 dated 23.04.2024 refusing to join in the appointment of an arbitrator entails that notice had indeed been received and understood as an invocation of the arbitral process by the Respondent No.2. Under Section 21 of the Act, the date of receipt of the notice is the date of commencement of arbitral proceedings. Even if 23.04.2024, the date on which the reply sent by the Respondent No.2, is taken to calculate the period of ninety days, as stipulated under Section 9(2) of the Act and the consequences thereof provided under Rule 9(4) of the 2001 Rules, the arbitral proceedings have commenced well within the time and way before expiry of such periods. The High Court, however, in the Impugned Judgment treated the date of filing of the Section 11 petition i.e. 28.06.2024 as the date of commencement of the arbitral proceedings resulting into the finding that ad-interim stay stood vacated and proceedings commenced after the expiry of ninety days period provided under Section 9(2) of the Act. This finding of the High Court cannot sustain as it is contrary to the objective and purpose of the Act. The arbitral proceedings, as commenced by the Appellant, is well within the statutory time frame provided under Section 9(2) of the Act and the rigor of Rule 9(4) of the 2001 Rules cannot be attracted to the Appellant.”