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  • Scope of Sec 9 (2) - Draft

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    Ishika Chauhan
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    Section 9(2) of the Arbitration and Conciliation Act provides that if a court passes an interim order before the commencement of arbitration proceedings, then arbitration must commence within 90 days of the interim order or within an extended period determined by the court. The consequences of not commencing arbitration within this time period is that the interim order would automatically cease to exist. Courts have interpreted Section 9(2) broadly to allow proceedings to commence within an extended period determined by the court. However, parties must still demonstrate a manifest intent to invoke arbitration, as one case denied a request to invoke arbitration after 2 years despite the possibility for extensions under Section 9(2).

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    Section 9(2) of the Arbitration and Conciliation Act provides that if a court passes an interim order before the commencement of arbitration proceedings, then arbitration must commence within 90 days of the interim order or within an extended period determined by the court. The consequences of not commencing arbitration within this time period is that the interim order would automatically cease to exist. Courts have interpreted Section 9(2) broadly to allow proceedings to commence within an extended period determined by the court. However, parties must still demonstrate a manifest intent to invoke arbitration, as one case denied a request to invoke arbitration after 2 years despite the possibility for extensions under Section 9(2).

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    10 views2 pages

    Scope of Sec 9 (2) - Draft

    Uploaded by

    Ishika Chauhan
    Section 9(2) of the Arbitration and Conciliation Act provides that if a court passes an interim order before the commencement of arbitration proceedings, then arbitration must commence within 90 days of the interim order or within an extended period determined by the court. The consequences of not commencing arbitration within this time period is that the interim order would automatically cease to exist. Courts have interpreted Section 9(2) broadly to allow proceedings to commence within an extended period determined by the court. However, parties must still demonstrate a manifest intent to invoke arbitration, as one case denied a request to invoke arbitration after 2 years despite the possibility for extensions under Section 9(2).

    Copyright:

    © All Rights Reserved
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    of 2

    Section 9 [(2) Where, before the commencement of the arbitral proceedings, a Court passes

    an order for any interim measure of protection under sub-section (1), the arbitral
    proceedings shall be commenced within a period of ninety days from the date of such order
    or within such further time as the Court may determine.

    Under the Amendment Ordinance of 2015, two new sub sections have been inserted by way
    of Section 9 (2) and Section 9 (3).

    Section 9(2) provides, that in cases where an interim order is passed under Section 9 (1)
    [Section 9 has been renumbered as Section 9(1)], before the commencement of the Arbitral
    proceedings, they must commence within 90 days from the date of such order or within such
    further period as the court may determine.

    Thus, sub-Section (2) provides for time bound invocation and commencement of Arbitration
    proceedings. Accordingly, once an interim order of any nature is passed by the court under
    Section 9(1) of the Act, the Arbitral proceedings must commence in a time bound manner
    and cannot be delayed at any cost, unless the period is extended by the court.

    Issue 1- What will be the consequences of not commencing arbitration within the period
    of 90 days u/s 9(2) of the Arbitration and Conciliation Act?

    Relevant Case Law- Paragraph- 8,22,24 and 25

    1. Velugubanti Hari Babu Vs. Parvathini Narasimha Rao and Ors. (Hyderabad HC)
    (2017)
    In this case the court mentioned one of the consequences of not commencing
    arbitration after the expiry of 90 days u/s 9(2) of the act. It stated that the interim
    measure would automatically cease to exist on the expiry of the stipulated period of
    90 days from the date on which it was granted or within such further time as
    determined by the Court which granted such order.

    Issue 2- The scope of Sec 9(2) of the Arbitration and Conciliation Act?
    Relevant Case Law- Paragraph- 25, 26.1, 26.2

    1. Chaudhary Avadhesh Kumar Vs. Volleyball Federation of India and Ors. (Madras
    HC) (2017)
    The court in this case provided a wide interperetion to the application of Section 9(2).
    It stated that Sec. 9(2) does not only provide a 90 days limit but also provide that
    proceedings can also commence "within such further period as the Court may
    determine," indicating thereby that the 90 days time limit is stretchable in appropriate
    cases where the Court deems it fit.

    It therefore flows from this that where in a case the Court is in seisin of the dispute
    under Sec. 9 of the A & C Act, but arbitration has not commenced within 90 days of
    the passing of an interim order, or where the Court has not directed the parties to go
    for arbitration within 90 days, it should be deemed to have exercised its authority
    under the latter part of Sec. 9(2).

    2. M/s.Cholamandalam Investment and Finance Company Limited v Mr.Harkhabhai


    Amarshibhai Vaghadiya (Madras HC) (2022)
    Paragraph- 6- ( XIX, XX, XVI, XVII, XVIII, XXX, XXXI, XLIII)

    In this case the court emphasised on the manifest intent of the parties to commence
    arbitration while seeking interim measures. In this one of parties tried to invoke
    arbitration after 2 years after the expiry of 90 days.
    The court denied the application by stating that even though extension is granted by
    the court u/s 9(2) in certain cases but in the present case the party has shown no
    intention to invoke arbitration. Therefore, the application was rejected.

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