Arbitration in Turmoil: How a Family Feud Led to a Landmark Supreme Court Ruling on Interim Measures and Commencement of Proceedings

In a judgment that brings much-needed clarity to a contentious area of arbitration law, the Supreme Court of India, on January 7, 2026, delivered a decisive verdict in Regenta Hotels Private Limited v. M/s Hotel Grand Centre Point & Others. The case, arising from a bitter family dispute that spilled over into a franchise agreement, became a battleground for interpreting critical provisions of the Arbitration and Conciliation Act, 1996 (the Act), particularly concerning interim injunctions and the crucial moment when arbitral proceedings are deemed to have "commenced."

The Court's ruling, authored by Justice Augustine George Masih, with Justice Dipankar Datta concurring, overturns the Karnataka High Court's order and reinstates an interim injunction protecting a hotel's operations. More importantly, it authoritatively settles the legal debate on the interpretation of Sections 9 and 21 of the Act, harmonizing them with procedural rules. This deep dive unpacks the facts, the legal labyrinth, and the profound implications of this landmark judgment for businesses, legal practitioners, and the arbitration ecosystem in India.

 Part 1: The Factual Quagmire – A Hotel, a Franchise, and a Family Feud

The saga begins in the scenic locale of Srinagar, Jammu & Kashmir, where Respondent No. 1, M/s Hotel Grand Centre Point, operated a hotel. The hotel was owned by a partnership firm consisting of four brothers (Respondents No. 2 to 5). Seeking to elevate its business, the firm entered into a Franchise Agreement dated March 23, 2019, with the appellant, Regenta Hotels Private Limited, a well-known hospitality brand. Under this agreement, Regenta would lend its brand name, technical expertise, and operational know-how.

Parallelly, the brother-partners were embroiled in a family dispute over property rights, which was partially settled by a Settlement Deed dated April 20, 2022. This deed gave Respondent No. 5 operational control of the hotel for two years. Trouble began when Respondent No. 2 allegedly started interfering with the hotel's daily operations—shouting at staff, threatening to cancel bookings, and demanding separate payments outside the franchise agreement.

To safeguard its brand and the hotel's operations, Regenta approached the IXth Additional City Civil and Sessions Judge, Bengaluru (Trial Court) on February 16, 2024, filing an application (AA No.4 of 2024) under Section 9 of the Arbitration Act. They sought interim injunctions to restrain Respondent No. 2 from causing disruptions. The court granted an ad-interim injunction on February 17, 2024.

Subsequently, Regenta initiated arbitration by sending a notice to all respondents on April 11, 2024, as per Clause 19.1 of the Franchise Agreement. Respondent No. 2 replied on April 23, 2024, refusing arbitration and claiming he was not a signatory to the franchise agreement. As the parties could not agree on an arbitrator, Regenta filed a petition under Section 11 of the Act before the High Court on June 28, 2024, for the appointment of a sole arbitrator.

Meanwhile, the Trial Court, after hearing the parties, dismissed Regenta's interim applications (I.A. Nos. 5 to 7) on October 1, 2024. It held that Regenta failed to establish a prima facie case, notably because they hadn't shown Respondent No. 2's consent to the franchise agreement.

Regenta appealed to the High Court of Karnataka. In its Impugned Judgment dated November 14, 2024, the High Court made two key findings:

1.It rejected the Trial Court's reasoning, holding that the franchise agreement was valid and the partners had acquiesced to it from 2019 to 2023.

2.However, it upheld the dismissal of the interim injunction on a different, procedural ground. It ruled that as per Section 9(2) of the Act and Rule 9(4) of the Arbitration (Proceedings Before the Courts) Rules, 2001, arbitral proceedings must commence within 90 days (3 months) of an interim order. Since Regenta's Section 11 petition was filed on June 28, 2024 (over 90 days after the February 17 injunction), the High Court deemed the arbitration not commenced in time, leading to the automatic vacation of the interim order.

Aggrieved by this interpretation, Regenta approached the Supreme Court. The core legal question was simple yet profound: When do arbitral proceedings "commence" for the purpose of Section 9(2) of the Act?

 Part 2: The Legal Crucible – Dissecting Sections 9, 21, and Rule 9

The Supreme Court's analysis forms the bedrock of this precedent. The Court meticulously examined the statutory scheme, supported by a consistent line of its own judgments.

 

 Legal Point 1: The Statutory Provisions – A Textual Analysis

The Court first laid out the relevant sections:

1. Section 9: Allows courts to grant interim measures before, during, or after arbitral proceedings.

 aSub-section (2) states: "Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure... the arbitral proceedings shall be commenced within a period of ninety days from the date of such order..."

b. Section 21 – The Heart of the Matter: Defines commencement. "Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."

c. Section 43(2): For limitation purposes, an arbitration is deemed to have commenced on the date referred to in Section 21.

d. Rule 9(4) of the 2001 Rules: A procedural rule which states that if arbitral proceedings are "not initiated within three months" from the date of a Section 9 application, any interim order "shall stand vacated automatically."

The conflict arose from the High Court's interpretation that "commencement" for Section 9(2) was linked to the filing of a Section 11 petition before a court, not merely the receipt of a notice under Section 21.

 Legal Point 2: The Settled Jurisprudence – Commencement is Defined by Section 21

The Supreme Court invoked a formidable line of precedents to reinforce the primacy of Section 21:

1. Sundaram Finance Ltd. v. NEPC India Ltd. (1999): Held that arbitral proceedings commence on the date a request for arbitration is received by the respondent.

2. Milkfood Ltd. v. GMC Ice Cream (P) Ltd. (2004): A three-judge bench affirmed this, noting the formulation was deliberately adopted from the UNCITRAL Model Law. The Court emphasized that Section 21 is not for limitation purposes alone but for "other purposes also."

3. Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd. (2020): Reaffirmed that the date of commencement is invariably the date of receipt of the notice invoking arbitration, irrespective of subsequent procedural steps like a Section 11 petition.

4. Arif Azim Co. Ltd. v. Aptech Ltd. (2024): A recent three-judge bench consolidated this principle, stating that once a valid Section 21 notice is received, "commencement is complete and effective for all legal purposes."

The Court crystallized the principle: "The commencement of arbitral proceedings is a statutory event defined exclusively under Section 21 of the Act." It is the receipt of the request by the respondent that sets the proceedings in motion. Judicial applications under Section 9 or Section 11 are consequential steps, not the commencement itself.

 Legal Point 3: Harmonizing Section 9(2) and Rule 9(4) with Section 21

This was the Court's masterstroke. The Respondent had argued that "commencement" in Section 21 was only for calculating limitation under Section 43(2). The Court rejected this as myopic.

The Court performed a harmonious construction:

1.Objective of Section 9(2): To prevent abuse—a party cannot obtain interim relief and then indefinitely delay the arbitration. It ensures interim measures remain tethered to active arbitration.

2.Role of Rule 9(4): The Act itself does not specify consequences for missing the 90-day deadline. Rule 9(4) fills this gap by stating the interim order lapses automatically.

3.Linguistic Harmony: Rule 9(4) uses the word "initiated," while Section 9(2) uses "commenced." The Court reasoned that in the context of the Act and the Rules framed under it, these terms cannot be at odds. To give "initiated" a meaning different from "commenced" would render Section 9(2)'s timeline meaningless. Therefore, for the purpose of Rule 9(4), "initiated" must be read as "commenced" under Section 21.

Thus, the 90-day/3-month clock starts ticking from the interim order. The party must ensure the respondent receives a request for arbitration (Section 21 notice) within this period. Filing a Section 11 petition is not the trigger for commencement; it is a remedial step if the arbitration process stalls after commencement.

 Legal Point 4: Why the High Court's View Was Flawed

The Supreme Court identified the High Court's fundamental error: conflating the commencement of proceedings with the judicial mechanism to appoint an arbitrator.

The Court held that treating the date of the Section 11 petition as the date of commencement would:

1. Rewrite Section 21 sub silentio, undermining legislative intent.

2. Create an "incoherent" scheme where a party who has duly served a Section 21 notice could still be non-compliant until they file a court petition.

3. Be "antithetical to the flexibility and autonomy" of the Act, forcing parties to rush to court even when contractual appointment procedures are ongoing or the respondent is cooperating.

 Part 3: Application to Facts and the Final Ruling

Applying the settled law, the Supreme Court found Regenta's actions timely:

a. Ad-interim injunction granted: February 17, 2024.

b. 90-day deadline for commencement: May 17, 2024.

c. Regenta's arbitration notice (Section 21) served: April 11, 2024 (Received and replied to by Respondent No. 2 by April 23, 2024).

Conclusion: Arbitral proceedings commenced on or before April 23, 2024, which was well within the 90-day statutory period from February 17. The subsequent filing of the Section 11 petition on June 28 was irrelevant for calculating commencement.

Therefore, the Supreme Court:

1.Set aside the Impugned Judgment of the Karnataka High Court.

2.Set aside the Trial Court's Order of October 1, 2024, which vacated the injunction.

3.Restored the Trial Court's interim injunction Order of February 17, 2024, protecting Regenta's operational rights pending arbitration.

4.Directed the High Court to expeditiously decide the pending Section 11 petition for arbitrator appointment.

5.Disposed of a related contempt petition, noting the appeal's resolution.

 Part 4: Implications and Conclusion – A Clear Roadmap for Practitioners

The Regenta Hotels judgment is a landmark with wide-ranging implications:

For Parties Seeking Interim Relief:

1. Strategic Priority: The moment you obtain a pre-arbitration interim order under Section 9, your immediate, non-negotiable task is to formally invoke arbitration by serving a clear notice under Section 21 on the respondent.

2. Diary the Deadline: The 90-day period is strict. Ensure proof of receipt (e.g., acknowledgment, email trail, reply) dates within this period.

3. Section 11 Petition is Secondary: You can work on appointing an arbitrator concurrently or subsequently. A delay in filing the Section 11 petition, while not ideal, does not per se cause the interim order to lapse if the Section 21 notice was timely.

For Arbitration Practice:

a. Clarity and Certainty: The judgment ends the confusion between "invocation" and "commencement." It firmly anchors the legal moment of commencement to the respondent's receipt of the notice.

b. Prevents Abuse: It balances the need for urgent court protection with the obligation to proceed to arbitration diligently, preventing tactical delays.

c. Upholds Party Autonomy: By delinking commencement from court intervention, it respects the parties' agreement to resolve disputes privately.

For the Indian Arbitration Landscape:

This ruling strengthens India's pro-arbitration jurisprudence by providing a predictable, principle-based interpretation of the Act. It aligns Indian law with international best practices (UNCITRAL Model Law) and reduces scope for procedural technicalities to derail legitimate interim protections.

In conclusion, the Supreme Court's decision in Regenta Hotels is a textbook example of judicial reasoning that clarifies a complex procedural knot. It reinforces that in arbitration, as in law, clarity of commencement is the beginning of a fair and efficient resolution. By protecting the interim relief granted to Regenta, the Court has also sent a strong message about safeguarding commercial operations from being held hostage by internal disputes, ensuring that business continuity is not sacrificed at the altar of procedural ambiguity.

Case Reference: Civil Appeal No. of 2026 [Arising out of SLP (Civil) No. 30212 of 2024] with Contempt Petition (Civil) No.189 of 2025 – Regenta Hotels Private Limited v. M/s Hotel Grand Centre Point & Others, Supreme Court of India, decided on January 7, 2026.