In a judgment that could influence how arbitration awards are delivered across India, the Supreme Court has set aside an arbitral award in the long-running dispute between property developer Lancor Holdings Limited and landowners Prem Kumar Menon and family. The Court noted that the award came nearly four years after hearings were completed and failed to resolve the dispute, effectively pushing both sides back into litigation.
Background
The dispute began with a Joint Development Agreement (JDA) in 2004 for constructing a commercial building named Menon Eternity in Chennai. Under the agreement, the landowners were to receive 50% of the constructed area, while the developer would retain the rest.
However, disagreements surfaced regarding the completion of the building and the refund of security deposits. Matters escalated further when the developer executed sale deeds in its own favour without obtaining the original power of attorney from escrow, prompting allegations of bad faith.
The issue eventually went to arbitration. But the arbitrator, a retired High Court judge, reserved the award in July 2012 and pronounced it only in March 2016-with no clear explanation for the delay. The award declared the sale deeds illegal but did not resolve the financial and ownership consequences, leaving both sides to “work out remedies afresh.”
Court’s Observations
The Supreme Court said the delay in pronouncing the award was not just a procedural lapse but one that directly affected fairness.
“An arbitrator cannot take years to deliver an award and then leave the parties without closure,” the bench observed.
The Court pointed out two major problems:
- The inordinate delay (3 years and 8 months) raised serious doubts about whether the arbitrator could still accurately recall submissions and evidence.
- The award failed to settle the dispute, instead compelling the parties to start over, which defeated the purpose of arbitration as a faster alternative to litigation.
The Court noted that arbitration aims for speedy and final resolution, and when an award makes parties return to court or another arbitration, it undermines the entire dispute-resolution process.
The bench also remarked:
“Justice must not only be done but must be seen to have been done. An award that leaves parties in further uncertainty cannot stand.”
Decision
The Supreme Court allowed the appeal filed by Lancor Holdings. The arbitral award was set aside in its entirety on the grounds of patent illegality and conflict with public policy, primarily because:
- The delay was unexplained and excessive
- The award failed to conclusively resolve the dispute
The Court stopped at this point without issuing directions for a fresh award, leaving the parties free to pursue appropriate remedies under law.
Case: M/s Lancor Holdings Limited v. Prem Kumar Menon & Others
Court: Supreme Court of India
Citation: 2025 INSC 1277
Bench: Justice Sanjay Kumar
Decision Date: 2024
