Seven-Year Delay Violates Public Policy: Madras High Court Quashes ₹51.48 Lakh Award Against TN Housing Board

The Madras High Court has set aside an arbitral award of ₹51.48 lakhs passed in favour of the contractor, M/s. N.C.C. Ltd., on the ground of an inexplicable and excessive seven-year delay in its decision.

On December 8th, 2025, Justice N. Anand Venkatesh ruled that such a delay, which is "explicit and adversely reflects on the findings," renders the award in conflict with the public policy of India and is vitiated by patent illegality, thereby attracting the provisions of Section 34 of the Arbitration and Conciliation Act, 1996.

The dispute originated from a building contract entered into between the Tamil Nadu Housing Board (TNHB) and M/s. N.C.C. Ltd. (previously M/s. Nagarjuna building Company Ltd.) for roughly ₹61.98 crores for the construction of 560 HIG Flats at the S.A.F. Games Village at Koyambedu.

Arbitration clause was invoked owing to disputes and the 3-member tribunal's award was set aside by the High Court in 2007 and thereafter, a sole arbitrator was appointed. The new arbitration process started in 2008 and ended on November 24, 2013, following which, the case was adjourned until the award was rendered. But in July 30, 2020, over six and a half months after the conclusion of the arguments, the Arbitrator awarded the contractor ₹51.48 Lakhs, along with high interest rates.

Mr. J Ravindra, Additional Advocate General, representing the Tamil Nadu Housing Board, challenged the award under Section 34 of the Arbitration and Conciliation Act, arguing that the award was vitiated by the excessive delay and that interest could not be charged for the time the arbitrator himself failed to deliver the award. It was claimed that the award was made based only on outdated evidence and without a hearing after 2013. The contractor contested the arguments claiming that the award was supported by documentary evidence and that a delay by itself does not render it invalid.

Relying heavily on the 2025 Supreme Court ruling in Lancor Holdings Ltd v. Prem Kumar Menon, Justice N. Anand Venkatesh on 8th December, 2025, held that although delay by itself is not a sufficient reason to set aside an award, each case must be evaluated on its own facts to determine whether the delay has caused prejudice and vitiated the decision. The Supreme Court's decision that "an undue and unexplained delay in the pronouncement of an arbitral award has several deleterious effects" was cited by the Court.

Criticising the glaring and wholly unexplained 7-year delay, the court held that "The very basis and public policy underlying the process of arbitration is that it is less time-consuming and results in faster resolution of disputes between the parties, and while so, an award passed with an unexplained and exorbitant delay of more than seven years is certainly in conflict with the Public Policy of India".

Noting that while arbitrator blamed the Housing Board for not filing written submissions, the award itself gave no explanation for the excessive delay in delivering the decision.

The Court held that the high interest component also suffers from patent illegality and an unexplained delay which harms the fairness of the decision is a valid ground to set aside the arbitral award under section 34 of the Arbitration and Conciliation Act, 1996.

Allowing the petition, the High Court set aside the arbitral award dated 30 July 2020 in its entirety and permitted the parties to appoint a new arbitrator for passing a fresh award within a stipulated timeframe. ________________________________________

Case Title: Tamil Nadu Housing Board v M/s NCC Ltd

Citation: 2025 LiveLaw (Mad) 481

Case Number: Arb O.P.(Com.Div.) No. 35 of 2022

Coram: Justice N. Anand Venkatesh

Date of Pronouncement: 08 December 2025

Appearances: J. Ravindran, Additional Advocate General for the Tamil Nadu Housing Board; P.J. Rishikesh for NCC Ltd

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