Interim Protection Lapses As Arbitration Invoked After 90 Days: Andhra Pradesh High Court Denies Firm Relief

The Andhra Pradesh High Court has recently declined to interfere with an order granting limited interim relief against the freezing of a partnership firm's bank account, observing that the protection had already lapsed after the firm failed to initiate arbitral proceedings within 90 days.

A division bench of Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam observed that the interim relief granted by the Special Judge for Trial and Disposal of Commercial Disputes at Visakhapatnam was expressly limited to a period of 90 days, and the appellants had invoked arbitration only after that period had expired.

“From the admitted facts on record it is evident that within a period of 90 days the arbitral proceedings were not commenced in terms of Sub-section (2) of Section 9 of the Act 1996. Notice under Section 21, sent to the respondents, is dated 07.11.2025 which is after the expiry of the period of 90 days from the date of the impugned Order.”

The appeal was filed by JPR Projects, a construction partnership firm, challenging an order of the special judge that had revoked the freezing of its current account with Axis Bank only for the limited purpose of paying statutory dues.

The firm had approached the special judge under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection against the freezing of the account, stating that the restriction prevented it from paying statutory liabilities.

The special judge partly allowed the application and revoked the freeze only to permit payment of taxes and statutory dues to the central government, state government, and local bodies.

The court also directed that the order would remain in force for a period of not more than 90 days.

Aggrieved by the limited relief, the firm filed an appeal under Section 13(1) of the Commercial Courts Act read with Section 37(1)(c) of the Arbitration Act, seeking complete defreezing of the account.

The High Court noted that the order granting interim protection was passed on July 31, 2025, while the notice invoking arbitration under Section 21 of the Arbitration Act was issued only on November 7, 2025.

“Sub-section (2) of Section 9 of the Act 1996 specifically provides for the time to commence the arbitral proceedings. The statutory period is 90 days from the date of the Order of interim measure of protection or within such further time as the Court may provide.”

Since the arbitral proceedings had not been commenced within the prescribed period and no application seeking an extension of time had been filed, the Court held that the interim protection granted by the Special Judge came to an end upon expiry of the 90-day period.

“The consequences for not commencing the arbitral proceedings within the statutory period have not been provided under Section 9 of the Act 1996. In such a case, the interim measure granted would be governed by the terms of the order granting interim measure. On expiry of 90 days from the Order, the interim measure came to an end.”

The bench also reiterated that appellate powers under Section 37 of the Arbitration Act are limited and that interference with an order passed under Section 9 must remain confined to the scope of that provision.

“The scope of Section 37 of the Act arising out of the proceedings under Section 9 of the Act 1996 is also confined to the scope of Section 9 of the Act and is not like an ordinary civil appeal under the Code of Civil Procedure.”

Finding no illegality in the order granting limited interim relief for a specified duration, the High Court dismissed the appeal.