The Delhi High Court has determined that a delay of two years in delivering an arbitral award does not, on its own, justify setting aside the award. This decision emerged from the case Unison Hotels Private Limited v. Iffco Tokio General Insurance Company Limited, where the court emphasized that under the Arbitration and Conciliation Act, 1996, mere delay does not constitute sufficient grounds for annulment.
Judgment Details
A Division Bench comprising Justices C Hari Shankar and Vinod Kumar clarified that a delay in rendering an award becomes significant only when it is unexplained and adversely affects the findings of the award. The bench overturned a prior decision by a single judge, which had nullified an arbitral award in favor of Unison Hotels Private Limited due to the two-year delay in its pronouncement.
Background of the Case
The conflict arose following a fire incident at the Grand Hotel in Vasant Kunj, New Delhi, owned by Unison Hotels, on January 26, 2008. The hotel was covered by two insurance policies issued by IFFCO Tokio General Insurance Company Limited. Unison filed claims for ₹68.64 crore and ₹100 crore, but the insurer settled with payments of ₹20 crore and ₹30 crore, asserting that the claims were fully resolved. Dissatisfied, Unison Hotels initiated arbitration to address the shortfall in the settlement.
Arbitral Tribunal’s Decision
A three-member arbitral tribunal reserved its decision on March 6, 2021, and ultimately delivered the award on March 6, 2023. The tribunal awarded Unison Hotels ₹65.12 crore with an annual interest of 9% and an additional ₹50 lakh in costs. IFFCO Tokio contested the award under Section 34 of the Arbitration and Conciliation Act, citing the delay and challenging the arbitrability of the case. The single judge accepted the insurer’s plea and annulled the award.
Division Bench’s Ruling
However, the Division Bench disagreed with the single judge’s ruling. The court noted that the tribunal had justified the delay, attributing it to the COVID-19 pandemic, postponements in written submissions, and challenges in assembling its members. The Division Bench concluded that the award thoroughly addressed the disputes and that the delay did not compromise any specific findings within the award. Consequently, the court set aside the January 30, 2026, order and remanded the insurer’s Section 34 petition for reconsideration by the single judge.
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Representing Unison Hotels were Senior Advocates Darpan Wadhwa and Rajiv Nayar, along with advocates Ajay Bhargava, Shivank Diddi, Arsh Alok, and Sanjana. IFFCO Tokio was represented by Senior Advocate AS Chandhiok, with Advocates Bindu Saxena, Tanpreet Gulati, Aparajita Swarup, and Dhruv Chandra Saxena.
Read the full judgment for more insights on this significant ruling.
