The Delhi High Court, through Justice Subramonium Prasad, ruled that arbitral proceedings cannot remain pending for eight years without any award being delivered. The Court invoked Section 14 of the Arbitration and Conciliation Act, 1996, to terminate the mandate of the sole arbitrator for the inordinate and unexplained delay, stating it was contrary to the public policy of India.
“Unnecessary delay or expense would frustrate the very purpose of arbitration.” – Supreme Court in Union of India v. U.P. State Bridge Corpn. Ltd.
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Background of the Case
The dispute arose between Great Eastern Energy Corporation Limited (Petitioner) and Sopan Projects (Respondent). The petitioner had awarded a contract worth ₹3.74 crore to the respondent in 2010 for constructing an underground gas pipeline in Asansol, West Bengal. However, the respondent allegedly abandoned the work midway, leading to disputes.
On 20 October 2015, the respondent invoked arbitration, and on 16 November 2015, a sole arbitrator was appointed. Although final arguments were completed on 5 March 2020, no award was delivered even by October 2023.
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The petitioner was aggrieved by this delay and approached the court, arguing that the arbitrator had failed to act without undue delay, a ground under Section 14 for termination.
Petitioner’s Contentions
- The arbitrator reserved the award in March 2020, but no decision followed for over three years.
- The email dated 4 October 2023 scheduled a new hearing, but gave no reason for the previous delay or the purpose of the new hearing.
- No justification was provided for the delay, nor was it attributed to the pandemic.
- The petitioner maintained that seeking an explanation before filing the petition was not necessary under the law.
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Respondent’s Arguments
The respondent contested the maintainability of the petition, stating:
- The petitioner had failed to pay a fee deficit of ₹14.8 lakhs to the arbitrator.
- Section 14, unlike Section 29A, does not have a timeline clause; hence, mere delay cannot justify termination.
- The period of 15 March 2020 to 28 February 2022 should be excluded as per the Supreme Court’s suo motu COVID directions.
- Restarting proceedings would prejudice the respondent, who had spent considerable time and resources.
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The Court observed that Section 14 permits termination when an arbitrator fails to act without undue delay. Referring to precedents including Singh Builders Syndicate and U.P. State Bridge Corpn. Ltd., the court stressed on the foundational arbitration principle of speedy, fair, and cost-effective resolution.
“Arbitral proceedings cannot be kept pending for eight years without award being pronounced.” – Delhi High Court
The court clarified that there was no allegation of bias or partiality against the arbitrator. The issue was strictly about delay. It found that despite multiple years passing since reserving the award, the arbitrator failed to deliver it or justify the delay.
Hence, the High Court allowed the petition and terminated the arbitrator’s mandate for violating public policy due to undue delay.
Judgment Highlights:
"This Court is of the opinion that the mandate of the learned Sole Arbitrator is to be terminated on account of undue and unexplained delay in rendering the arbitral award which goes against the public policy of India." – Justice Subramonium Prasad
Case Title: Great Eastern Energy Corporation Ltd. vs. Sopan Projects
Case Number: O.M.P. (T) (COMM.) 102/2023 & I.A. 21494/2023
Date of Judgment: 24 April 2025
Counsel for Petitioner: Sr. Adv. Raj Shekhar Rao with Ms. Shrey Chathly
Counsel for Respondent: Mr. Vadlamani Seshagiri and Mr. Siddharth Sachar
