Arbitral Award Cannot Be Set Aside Solely For Delay In Delivering It Unless It Is Unexplained And Affects The Findings: Delhi High Court

Applying this test to a fire-insurance dispute, the Court set aside the Single Judge’s judgment invalidating an award delivered two years after it was reserved, and remanded the insurer’s challenge for fresh consideration.

The Court was hearing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against a Single Judge’s judgment allowing the insurer’s petition under Section 34 of the same enactment and setting aside a unanimous award passed by a three-member Arbitral Tribunal.

A Bench of Justice C. Hari Shankar and Justice Vinod Kumar held: “Delay in rendition of an arbitral award is not, by itself, sufficient to set it aside. Additionally, (a) the delay must be unexplained, and (b) the findings in the award must be affected by the delay.”

Senior Advocates Darpan Wadhwa and Rajiv Nayar appeared for the appellant, while Senior Advocate A.S. Chandhiok appeared for the respondent.

Background

The hotel company had obtained a Standard Fire and Special Perils Policy and a Fire Loss of Profit Policy. Following a fire during the policies’ validity, it sought payment for the losses. The insurer maintained that the claims had been fully and finally settled, while the hotel company invoked arbitration for the amounts it considered unpaid.

Clause 13, common to both insurance policies, permitted arbitration of disputes concerning the amount payable where liability was otherwise admitted. The Tribunal found that the settlement was not voluntary and proceeded to decide the claims. It awarded about ₹65.13 crore, with simple interest at 9% per annum from the filing of the statement of claim until the award and thereafter until realisation, besides ₹50 lakh in costs.

The insurer challenged the award, arguing that the two-year gap between reservation and delivery was inordinate and unexplained, and that the Tribunal had failed to address its jurisdiction under Clause 13 of the policies. The hotel company relied on pandemic-related interruptions, delayed written submissions and the Tribunal’s deliberations, maintaining that the award comprehensively addressed the dispute.

The Single Judge found the explanations insufficient and held that the delay had affected consideration of the jurisdictional objection. He set aside the award without examining the detailed reasons concerning the merits of the claims. The hotel company appealed.

Court’s Observations

The Court examined Section 29A of the Arbitration and Conciliation Act, 1996, introduced through the 2015 amendment and subsequently amended in 2019. It noted the change from a twelve-month period measured from entering upon the reference to one measured from completion of pleadings. Since the pleadings in this arbitration predated those amendments, neither version applied.
The Court clarified: “As such, Section 29A(1), whether in its originally inserted form, or in its amended avatar, would not apply. The issue of whether the delay in rendition of the arbitral award would vitiate it has therefore to be examined agnostic of Section 29-A.”

The Court relied on Lancor Holdings Limited v. Prem Kumar Menon (2025), distinguishing its unexplained delay and failure to resolve the dispute from the present case. It rejected the insurer’s argument that the decision lacked precedential value because Article 142 of the Constitution had been invoked. That power concerned the relief granted, not the binding rule on delay. The Court also noted its reaffirmation in C. Velusamy v. K. Indhera (2026), although the statutory-extension question in that case was different.

Explaining the governing principle, the Court observed: “The ratio of the decision in Lancor Holdings is contained in the afore-extracted para 25.2, which follows after reference to earlier decisions and authoritative commentaries on the point. Delay can be said to vitiate an arbitral award only if it is explicit, adversely reflects on the findings in the award and is unexplained to the extent that the arbitral award is riddled with the damaging effects of the delay. Short of this, the mere fact that an arbitral award was rendered belatedly cannot constitute sufficient basis to set it aside.”

Examining Clause 13 of the Standard Fire and Special Perils Policy and the Fire Loss of Profit Policy, the Court found that the insurer had not categorically denied liability for the insured fire loss. The disagreement concerned the amount payable. It also found that no specific objection based on that clause had been pleaded before the Tribunal.

The Court held: “Pleadings bind the parties as much in arbitration as in other legal proceedings. A plea that the dispute was not arbitrable, given the nature of Clause 13 of the Policies, is, at the very least, a mixed question of fact and law. It has to be pleaded.”

The Tribunal had examined the objection that the discharge voucher and payments had settled the claims, finding financial duress and abuse of the insurer’s dominant position. The Court held that this reasoning effectively addressed maintainability and the quantum dispute under Clause 13. However, it expressly declined to decide whether the Tribunal’s finding on the settlement was legally sustainable, since the Single Judge had not examined that question.

The Court rejected the hotel company’s contention that failure to seek termination of the Tribunal’s mandate under Section 14 of the Arbitration and Conciliation Act, 1996 prevented the insurer from challenging the delayed award under Section 34. The two remedies operated independently, subject to the applicable requirements for a delay-based challenge.

Adopting the Supreme Court’s reasoning in Lancor Holdings Limited v. Prem Kumar Menon (2025), the Court reproduced: “Further, it would not be necessary for an aggrieved party to invoke the remedy under Section 14(2) of the 1996 Act as a condition precedent to laying a challenge to a delayed and tainted award under Section 34 thereof. Both provisions would operate independently as the latter is not dependent on the former.”

The Court rejected the comparison of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 with a second appeal under the Code of Civil Procedure, 1908. Referring to Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills (2024), it explained that appellate intervention remained confined to the limits governing Section 34, rather than ordinary appellate reassessment.

The Court reproduced the principle from MMTC Ltd. v. Vedanta Ltd. (2019): “As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision.”

The Court considered the pandemic-related interruption, the parties’ delay in filing written submissions, and the need for three arbitrators to deliberate and reach a decision. It also noted that neither side had objected to the delay while awaiting the award; the insurer raised it in the subsequent challenge after the award went against it.

The Court observed: “Viewed in that light and, the fact that the period included the pandemic lockdown, it cannot be said that the delay in rendering the arbitral award was unexplained.” On its effect on the award, the Court further held: “Besides, at the cost of repetition, delay in its rendition does not vitiate an arbitral award, unless it is positively demonstrated and held that the delay fatally impacted the findings in the award. There is no such finding by the learned Single Judge.”

The Court found that the award discussed all issues comprehensively and that the insurer had not identified a single argument advanced before the Tribunal but left unconsidered. It rejected the speculative assumption that the arbitrators had forgotten submissions, without deciding whether the findings would otherwise withstand scrutiny under Section 34 of the Arbitration and Conciliation Act, 1996.

The Court distinguished D.D.A. v. G.L. Litmus Events Pvt. Ltd. (2025), relied upon by the insurer. It noted that the earlier decision did not address the specific requirement of adverse impact on the award’s findings, and that C. Velusamy v. K. Indhera (2026), reiterating that requirement, was decided subsequently.

On the factual differences, the Court observed: “Three stark features distinguish the present case from G.L. Litmus Events. Firstly, and most significantly, the arbitral award provided no explanation for the delay, and this aspect weighed heavily both with the learned Single Judge as well as with the Division Bench of this Court in the decision to set aside the award. Secondly, as many as three communications were addressed by the parties to the arbitrator in that case, requesting for an expeditious award, but to no avail.”

Applying Bombay Slum Redevelopment Corpn. (P) Ltd. v. Samir Narain Bhojwani (2024), the Court found that the absence of consideration of merits justified an exceptional remand under Section 37 of the Arbitration and Conciliation Act, 1996. It also held that declining to examine the award’s findings was inconsistent with assessing whether delay had adversely affected them.

The Court reproduced the Supreme Court’s explanation: “In the Arbitration Act, there is no statutory embargo on the power of the appellate court under Section 37(1)(c) to pass an order of remand. However, looking at the scheme of the Arbitration Act, the appellate court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable.”

Conclusion

The Court allowed the appeal, set aside the Single Judge’s judgment, and remanded the insurer’s petition under Section 34 of the Arbitration and Conciliation Act, 1996 for fresh consideration, uninfluenced by the observations or findings in the judgment set aside.

The High Court clarified that all observations in the appellate judgment were limited to deciding whether the award could be set aside solely for delay in its delivery. There was no order as to costs.

Cause Title: Unison Hotels Private Limited v. IFFCO Tokio General Insurance Company Limited (Neutral Citation: 2026:DHC:7875-DB)

Appearances

Appellant: Senior Advocates Darpan Wadhwa and Rajiv Nayar, with Advocates Ajay Bhargava, Shivank Diddi, Arsh Alok and Sanjana

Respondent: Senior Advocate A.S. Chandhiok, with Advocates Bindu Saxena, Tanpreet Gulati, Aparajita Swarup and Dhruv Chandra Saxena

Click here to read/download Judgment