Introduction

The significance of arbitration is constantly rising as a preferred mode for resolving disputes in the country. One of its primary reasons is the speedy resolution of disputes. However, this objective is undermined when a delay arises in the delivery of the arbitral award by the Tribunal. Although “delay” is not specifically mentioned as a ground for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act 1996 (Act of 1996), it has always been a matter of discussion among the Indian Courts as to whether it may constitute a valid ground or not. If so, can it operate on a standalone basis, or is there a requirement to substantiate its prejudicial effect on the quality of the award?

This article analyses the recent developments within the evolving legal scenario governing the setting aside of arbitral awards on the ground of delay.

Statutory Framework

Section 29A of the Act of 1996 was inserted by the 2015 amendment, to create a time limit for making arbitral awards. This provision made it clear that a domestic award must be made within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23 of the Act of 1996[1]. However, the said period may be extended to a further six months if the parties deem fit, but any additional extension shall be subject to the discretion of the Court.

Prior to the insertion of the aforesaid provision, Courts have set aside awards on account of unexplained delay, holding that such delay rendered the award contrary to the public policy of India under Section 34(2)(b)(ii) of the Act of 1996.[2]

Reassessing Delay and its Adverse Impact

The issue was first discussed under the auspices of the Act of 1996 in Harji Engg. Works Pvt. Ltd. v. Bharat Heavy Electricals Ltd & Anr.[3], wherein the Delhi High Court stated that Courts are well within their jurisdiction to invalidate an award if there is undue delay in its dispatch. The Court gave the reasoning that under Sections 30 and 33 of the Arbitration Act 1940[4], delay in making an award amounted to grave misconduct and was a sufficient ground to set aside the award. The Court concluded that even though the 1940 Act has been repealed by the Act of 1996, the underlying principle that arbitral proceedings ought to be concluded with utmost expedition remains preserved.

In Peak Chemical Corporation Inc. v. National Aluminium Co. Ltd.[5], the Delhi High Court clarified that a reasoned and comprehensive award passed after analysing the submissions led by the parties would not be vitiated solely because of inordinate delays in pronouncing the award. However, in several recent judgments such as GL Litmus Events Pvt. Ltd. v. Delhi Development Authority[6] of the Delhi High Court, and Unique Builders v. Union of India[7] of the Madras High Court, the awards were set aside on the sole ground of delay in rendering the award, while observing that the delay was unreasonable and certainly prejudiced both the parties. The Court opined that it does not sit in appeal to review the merits of the award while dealing with an application to set aside the award and distinguished Peak Chemical Corporation (supra) where the inordinate delays were reasonable.

The debate was finally settled by the Supreme Court of India in M/s. Lancor Holdings Limited v. Prem Kumar Menon and others[8], wherein the Court was dealing with an application to set aside an arbitral award rendered almost four years after the date of reserving the award. The award not just failed to resolve the dispute but was also altering the positions of the parties irrevocably. The arbitrator recorded an unsustainable justification that proper pleadings and evidence were not presented by the parties, leaving them free to seek appropriate relief before another arbitrator or the Civil Court for seeking appropriate relief.

The Supreme Court while settling the position, made it clear that delay by itself, cannot be the sole ground to set aside an arbitral award under Section 34 of the Act of 1996. However, if undue delay is explicit and creating an adverse impact on the findings of the award, then it may be construed as rendering the award (i) in conflict with the public policy of India under Section 34(2)(b)(ii) of the Act of 1996 or (ii) vitiated by patent illegality under Section 34(2A) of the Act of 1996. That ascertainment shall be made after analysing the facts and circumstances of each case.

The Court also noted that the essence of arbitration lies in the speedy resolution of disputes. If that underlying principle is not satisfied by a delayed award which compels the parties to pursue further adjudication while altering their positions irrevocably, the Court may exercise its power under Article 142 of the Constitution to do complete justice and avoid further delay, in accordance with the power of modification of arbitral awards conferred through the Gayatri Balasamy Case[9].

Other than this, the Court pointed out Section 14(2) of the Act of 1996[10] which talks about the termination of an arbitrator’s mandate in certain situations, and clarified that it is not mandatory to exhaust that remedy as a pre-condition before challenging a delayed and tainted award. The Court held, “a party to an arbitration proceeding would not willingly choose to incur the risk of provoking the wrath of the arbitrator by moving such an application as, in the event of failing in that endeavour, the very same arbitrator would continue with the arbitration proceedings and deliver a verdict.”

Conclusion

The Supreme Court highlighted the duty of the arbitrators to adjudicate disputes within a reasonable time without affecting the quality of the award. This will encourage arbitrators to act responsibly, as the Courts will have the discretion to decide what constitutes “adverse impact”, and arbitrators whose awards are invalidated on the ground of delay may face consequences affecting their professional credibility and reputation.

Trust in the process of arbitration will increase as inordinate delays will be avoided, thereby preventing numerous detrimental consequences. The arbitrators may not be able to recollect oral submissions presented by the parties owing to the delay.

However, this measure for enhancing procedural efficiency must ensure that the arbitrators act in a speedy manner without burdening them with excessive pressure that may negatively affect the quality of the award.

*Advocate-on-Record, Supreme Court of India

**Final-year student at Faculty of Law, Jamia Millia Islamia

[1] The pleadings are to be completed within a period of six months from the constitution of the Tribunal [Section 23(4)].

[2]BWL Ltd. v. Union of India, 2012 SCC OnLine Del 5873.

[3] 2008 SCC OnLine Del 1080.

[4] Arbitration Act, 1940 (Act 10 of 1940), ss. 30, 33.

[5] 2012 SCC OnLine Del 759.

[6] 2025 SCC OnLine Del 5772.

[7] 2025 SCC OnLine Mad 239.

[8] 2025 SCC OnLine SC 2319.

[9]Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1.

[10] The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), s. 14(2).