Two-Year Delay In Arbitral Award Not Enough To Set It Aside Without Showing Impact On Findings, Delhi High Court Rules

The Delhi High Court has held that delay in pronouncing an arbitral award cannot, by itself, be a ground to set aside the award. The Court clarified that such delay becomes significant only when it is unexplained and is shown to have adversely affected the findings recorded by the arbitral tribunal.

A Division Bench comprising Justice C. Hari Shankar and Justice Vinod Kumar delivered the judgment on September 16, 2026, in an appeal concerning an arbitral dispute between Unison Hotels Private Limited and IFFCO Tokio General Insurance Company Limited.

Background

Unison Hotels had insured its hotel under two policies issued by IFFCO Tokio, including a Standard Fire and Special Perils Policy and a Fire Loss of Profit Policy. After a fire broke out at the hotel on January 26, 2008, the hotel claimed amounts under both policies.

The insurance company paid ₹20 crore under the Material Damage Policy and ₹30 crore under the Loss of Profit Policy. The hotel subsequently invoked arbitration over the remaining claim. A three-member arbitral tribunal was constituted in April 2012. The tribunal reserved the award on March 6, 2021, but pronounced it on March 6, 2023 - about two years later.

The tribunal eventually awarded ₹65,12,97,874 to the hotel, along with 9% simple interest and ₹50 lakh towards costs.

The insurance company challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. A Single Judge set aside the award, principally holding that the delay in its pronouncement had affected consideration of important issues.

The Division Bench examined the Supreme Court’s decision in Lancor Holdings Limited v. Prem Kumar Menon and reiterated that delay alone does not invalidate an arbitral award.

The Court observed:

“Delay in rendition of an arbitral award is not, by itself, sufficient to set it aside.”

The Bench explained that two additional factors must be established: the delay must be unexplained, and the findings in the award must have been affected by that delay.

In the present case, the tribunal had provided reasons for the delay, including the COVID-19 pandemic, delays in filing written submissions and the need for deliberation among three arbitrators. The Court found that the explanation was adequate.

The Court also examined the insurance policies’ arbitration clause, which permitted arbitration where the dispute concerned the amount payable while liability itself was not disputed.

The Bench found that the insurance company had not specifically pleaded before the tribunal that the dispute was non-arbitrable under Clause 13. It further held that the tribunal had effectively dealt with the issue by examining whether the settlement and discharge voucher had finally extinguished the hotel’s claim.

The Division Bench also noted that the Single Judge had not identified any particular argument that the tribunal had actually forgotten or failed to consider. A mere possibility that submissions may have been forgotten, the Court said, was insufficient to invalidate the award.

The Delhi High Court held that the Single Judge had not applied the applicable principles governing delayed arbitral awards. It found no basis to conclude that the delay had adversely affected the tribunal’s findings.

The Bench therefore quashed and set aside the Single Judge’s judgment dated January 30, 2026, and remanded the Section 34 petition, OMP (Comm) 197/2023, for fresh consideration.

The Court directed that the matter be decided afresh without being influenced by the observations or findings in the impugned judgment.

The appeal was accordingly allowed with no order as to costs.