Arbitral award passed after long delay, without resolving dispute, violates public policy: Supreme Court
Court sets aside award delivered after nearly four years of delay, criticizes arbitrator’s indecisiveness and failure to resolve issues
The Supreme Court has invalidated an arbitral award that was issued after an unexplained delay of almost four years and failed to resolve the underlying dispute between the parties, ruling that such delay and ineffectiveness violate India’s public policy. A Bench of Justices Sanjay Kumar and Satish Chandra Sharma highlighted that arbitration’s fundamental purpose is to provide speedy and efficient dispute resolution, which was clearly defeated in the present case.
The case involved a property dispute dating back to 2004 concerning a Joint Development Agreement between Lancor Holdings Limited and landowners in Chennai over a commercial building project. The arbitrator appointed in 2009 reserved the verdict in 2012 but delivered it only in 2016. The award declared certain sale deeds illegal but denied monetary claims and directed the parties to resort to further litigation or arbitration, while also providing interim relief favoring one party, thereby upsetting the balance.
The Court condemned the arbitrator’s wavering stance and undue delay, stating it resulted in a “rudderless” award that forced parties into fresh litigation. It termed the award patently illegal and a clear violation of public policy, emphasizing that such an approach undermines arbitration as a time-saving alternative to court battles.
Utilizing its constitutional power under Article 142, the Supreme Court settled the dispute by validating the sale deeds but penalizing the developer by forfeiting their security deposit and ordering payment of ₹3.18 crores in compensation, totaling about ₹10 crores. This resolution brought finality to a 21-year-old dispute.