Award Passed After Inordinate And Unexplained Delay Can Be Set Aside U/S 34 Of Arbitration Act: Madras High Court

The Madras High Court bench of Justice P.B. Balaji has held that inordinate and unexplained delay in passing the arbitral award can be a ground to set it aside under section 34 of the Arbitration Act. Brief Facts The present petition has been filed under section 34 of the Arbitration Act against an award passed by the Arbitrator on September 30, 2019. The petitioner submitted that delay in passing the arbitral award can be a ground to set it aside even without going into the merits of the case. It was further contended that the award had not been passed even after a lapse of significant time from the date of the conclusion of arguments. The award was passed in haste when an application under sections 14 and 15 of the Arbitration Act was moved seeking termination of the mandate of the tribunal and while passing the award no reasons were provided. Per contra, the respondent submitted that the amendment act of 2015 which introduced the timelines within which an award has to be passed is not applicable in the facts of the present case as claims were filed before the amendment came into force. It was further argued that the Arbitrator had duly considered the evidence and reached logical conclusions which cannot be interfered with under section 34 of the Arbitration Act unless grounds under this section are established. Observations: The primary question before the court was whether an arbitral award can be set aside on the ground that a significant time was taken by the Arbitrator in passing the award. The court noted that in Harji Engineering Works Private Limited v. Bharat Heavy Electricals Limited, (2009) the Delhi High Court while referring to the UNCITRAL guide held that arbitration aims to provide speedy justice and a substantial delay in passing the award would lead to the Arbitrator forgetting the crucial facts. An unexplained delay in passing the award could render the award contrary to public policy. The court further referred to its own judgment in K. Dhanasekar v. Union of India, 2019 where the court while referring to Harji Engineering Works Private Limited (supra) held that when there is a huge gap between the last date of the hearing and the date on which the award is passed, the arbitrator is obligated to explain the inordinate delay and in absence of such an explanation it would cause grave prejudice to the aggrieved party. Similarly, the Delhi High Court in Department of Transport, GNCTD v. Star Bus Services Private Limited, 2023 held that when there is an inordinate and unexplained delay in passing the award from the date on which the award was reserved, it would be in contravention of public policy. While applying the above law to the facts of the present case, the court noted that the Arbitrator failed to publish the award for over a year from the date on which arguments were concluded. It further noted that submissions again were made with respect to pendente lite interest as per clauses of the GCC and the matter was reserved for judgment on the same day. Still, the arbitrator failed to publish the award. It is only when an application seeking termination of the mandate was filed, that the arbitrator passed the award within a week after filing of the application. Furthermore, the arbitrator is mandated to send signed copies of the award to each party to an arbitration agreement under section 31(5) of the Arbitration Act but in this case, the copy was served on the counsel of the petitioner and the petitioner got his copy only after 10 days from the date of passing the award. This indicates a serious irregularity being committed by the Arbitrator. The court concluded that “I am constrained to set aside the award on the only ground that there has been an inordinate and unexplained delay in passing the award. This Original Petition is allowed. Case Title: M/s. Unique Builders Vs The Union of IndiaCitation: 2025 LiveLaw (Mad) 17 Case Number:O.P. No.21 of 2020 Judgment Date: 10/01/2025 For Petitioner : Mrs.K.Aparna Devi For Respondent : Mr.P.T.Ramkumar, Standing Counsel for Railways. Click Here To Read/Download The Order

Award Passed After Inordinate And Unexplained Delay Can Be Set Aside U/S 34 Of Arbitration Act: Madras High Court

Mohd Malik Chauhan

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