Inordinate, Unexplained Delay In Passing Award After Conclusion Of Arguments Can Be Ground To Set Aside U/S 34 Of Arbitration Act: Delhi High Court

Brief Facts

The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the A&C Act') assails an arbitral award dated 21.09.2020 (hereinafter referred to as “the award”) passed by the learned Sole Arbitrator.The short ground on which the award has been challenged by the petitioner is that there was an inordinate delay in passing of the award.

Contentions

The petitioner submitted that in terms of the ratio laid down by judgments of the Coordinate Benches of the Delhi High Court in Gian Gupta v. MMTC Ltd., 2020, Harji Engineering Works Pvt. Ltd. vs. BHEL, 2008 and BWL Limited v. Union of India, 2012, the award deserves to be set aside on the ground of inordinate delay in passing the same.

On the other hand, the respondent has filed a reply to the present petition. Neither the said reply nor the submissions of the learned counsel for the respondent deals with the issue raised by the petitioner viz. inordinate delay in issuing the award after completion of arbitral proceedings, although the respondent has sought to justify the delay in completion of arbitral proceedings.

Court's Analysis

The court, at the outset, agreed with the contention of the petitioner and observed that It can hardly be disputed that there was, indeed, an inordinate delay in passing the impugned award. The delay is even more conspicuous in light of the fact that after the final arguments were concluded on 16.01.2018, the petitioner was compelled to file a petition under Section 14 and 15(2) of the A&C Act, to ventilate its grievance as regards the inordinate delay. The said petition was filed on 25.02.2020. It was more than seven months after the said petition was filed that the impugned award was issued.

The court further referred to its own judgment in Harji Engineering Works Pvt. Ltd. v. BHEL, (supra) wherein the court dealt with the issue as to whether a delay of three years between the last effective hearing and making of the award was sufficient to set aside the award.

The court in the above observed that An award which is passed after a period of three years from the date of last effective hearing, without satisfactory explanation for the delay, will be contrary to justice and would defeat justice. It defeats the very purpose and the fundamental basis for alternative dispute redressal. Delay which is patently bad and unexplained, constitutes undue delay and therefore unjust.

The court further referred to another judgment of the Delhi High Court in CRPF v. Fibroplast Marine (P) Ltd., (2022) wherein it was observed that inordinate, and unexplained delay in rendering the award makes it amendable to challenge under Section 34(2)(b)(ii) of the A&C Act, that is, being in conflict with the public policy of India.

Having noticed various judgments, the court held that inordinate and unexplained delay in rendering the award can be a ground to set aside an award.

The court further observed that in Union of India v. Niko Resources Ltd. & Ors, 2021, even while observing the delay per se may not invalidate an award, it was held that it is open to the aggrieved party to file a petition under Section 14(2) of the A&C Act on account of “Failure to Act”.

The court further observed that in the present case, the situation had already reached a point that the petitioner had to invoke the jurisdiction of this Court under Section 14(2) of the A&C Act on account of inordinate delay in passing the award. There appears to be some substance in the apprehension of the petitioner that the award was passed as a reaction to the said petition being filed.

The court further noted that another exacerbating factor in the present case is that even after the petition under Section 14 and 15(2) of the A&C Act was filed, the learned sole arbitrator took more than seven months to issue the award. By then, more than two years and eight months had already passed from the date on which rejoinder arguments were concluded before the learned Sole Arbitrator.

The court concluded that the impugned award is liable to be set aside on the application of the principle laid down in Harji Engineering Works Pvt. (supra), BWL Limited (supra) and Gian Gupta (supra).Accordingly, the present petition was allowed.

Case Title: HR BUILDERS THROUGH GPA HOLDER V. DELHI AGRICULTURAL MARKETING BOARD

Case Reference: O.M.P. (COMM) 88/2021 & I.A. 3291/2021

Judgment Date: 29/10/2024

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