Arb.O.P.(Com.Div.)No.134 of 2022

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In the High Court of Judicature at Madras

Reserved on

17.12.2025

Delivered on:

02.1.2026

Coram:

The Honourable Mr.Justice N.ANAND VENKATESH

Arbitration O.P.(Com.Div.) No.134 of 2022

Mr.K.Satyanarayana Raju,

M/s.Om Spun Pipes & Concrete

Works, B-43, Sterling Ganges,

Kattupakkam, Chennai-58. ...Petitioner

Vs

The Union of India, rep.by its

Divisional Railway Manager/

Works, Southern Railways,

Park Town, Chennai-3. ...Respondent

PETITION under Section 34(2)(a)(v) and (b)(ii) of the Arbitration

and Conciliation Act, 1996 praying to set aside the award passed by

the Arbitral Tribunal dated 08.2.2021 and to direct the respondent to

pay the costs.

For Petitioner : Mr.A.Vikash

For Respondent : Mr.P.T.Ramkumar,

Standing Counsel https://www.mhc.tn.gov.in/judis

Arb.O.P.(Com.Div.)No.134 of 2022

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ORDER

The claimant before the Arbitral Tribunal is the petitioner before

this Court and he has assailed the award dated 08.2.2021 passed by

the Arbitral Tribunal.

2. Heard both.

3. The case of the petitioner is as follows:

(i) The respondent called for tenders involving the work for

standardisation of cutting including pitching and construction of side

drain and the work was awarded on 29.12.2006 by issuing a letter of

acceptance.

(ii) Disputes arose between the parties and an Arbitral Tribunal

was constituted on 21.12.2012. At that point of time, even though the

petitioner had raised four claims, the respondent referred only one

claim in the terms of reference and issued a letter dated 04.2.2013 to

the effect that the other three claims were excepted matters and could

not be included in the arbitration proceedings. In the meantime, the

petitioner wrote a letter dated 16.1.2013 to the General Manager of

the respondent to refer all the claims made by the petitioner. The https://www.mhc.tn.gov.in/judis

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communication made by the petitioner to the Arbitral Tribunal also did

not evoke any response.

(iii) Under such circumstances, the petitioner filed O.P.No.832

of 2014 before this Court seeking to appoint an arbitral tribunal to

decide all the claims of the petitioner and in that, an order was passed

on 28.4.2015 with a direction to refer all the claims to the same

Arbitral Tribunal, which has already been constituted and it was further

made clear that the Arbitral Tribunal would deal with the issue of

maintainability of those claims, which were brought within the

excepted matters by the respondent.

(iv) Pursuant to that, the respondent issued an addendum

dated 26.11.2015 following the said order passed by this Court and

referring all the claims of the petitioner to the Arbitral Tribunal for

adjudication.

(v) After the said addendum was issued, there was a change in

the panel of Arbitrators and on 15.3.2016, the petitioner made a

communication to the Arbitral Tribunal to commence the proceedings

and also to inspect the work site to ascertain the real position while

deciding the disputes between the parties. https://www.mhc.tn.gov.in/judis

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(vi) Even thereafter, there was absolutely no response from the

Arbitral Tribunal and only on 21.3.2018, a communication was

received from the respondent intimating that there was a change in

the constitution of of the Arbitral Tribunal and a new co-arbitrator has

been appointed. The petitioner had also taken a stand that from

26.11.2015 to 25.2.2020, almost for a period of more than four years,

no proceedings were held before the Arbitral Tribunal. Thus, the

dispute, which started in the year 2012, did not see any progress till

the year 2020. Ultimately, on 25.2.2020, the hearing commenced

before the Arbitral Tribunal. The next hearing was conducted on

22.12.2020 and this was the only physical hearing that took place.

(vii) In the meantime, before the Arbitral Tribunal, the

petitioner filed the claim statement on 20.2.2020. Later, the

respondent filed a counter containing counter claims also. Two hearing

were conducted through online mode on 05.1.2021 and 21.1.2021.

Thereafter, the petitioner filed O.P.No.174 of 2021 before this Court

for termination of the mandate of the Arbitral Tribunal under Section

14 of the Act, on 10.2.2021. When O.P.No.174 of 2021 came up for

hearing on 18.3.2021, it was informed to this Court that the Arbitral

Tribunal already passed an award on 08.2.2021 itself and therefore, https://www.mhc.tn.gov.in/judis

Arb.O.P.(Com.Div.)No.134 of 2022

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O.P.No.174 of 2021 was closed as infructuous.

(viii) The petitioner thereafter issued two legal notices dated

17.6.2021 and 15.7.2021 to the Arbitrators, who formed part of the

Arbitral Tribunal, seeking to send a signed original copy of the award.

On receipt of the said legal notices, a copy of the impugned award was

furnished to the petitioner under a covering letter dated 23.7.2021.

Pursuant to the same, the present original petition came to be filed

before this Court.

(ix) By the impugned award, though the petitioner made four

claims before the Arbitral Tribunal, the first three claims came to be

rejected. Based on the stand taken by the respondent, the earnest

money deposit for a value of Rs.2,07,300/-, the performance bank

guarantee for an amount of Rs.7,00,212/-, the security deposit for a

sum of Rs.4,92,912/- and a further sum of Rs.3,43,740/- towards

additional works done, were allowed and the amounts were directed to

be paid with interest at the rate of 8% per annum in case the amount

was not paid within 60 days from the date of receipt of the copy of the

award.

(x) Further, the counter claim made by the respondent for

forfeiture of the earnest money deposit and the security deposit came https://www.mhc.tn.gov.in/judis

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to be rejected. Challenging the award passed by the Arbitral Tribunal,

the petitioner is before this Court.

4. The main focus of the submissions on the side of the

petitioner was on the issue of the enormous delay in conducting the

arbitration proceedings and passing the final award. According to the

learned counsel for the petitioner, the delay, by itself, vitiates the

entire proceedings and as a result, the claim made by the petitioner

towards the additional works, which were available at the site, was not

even able to be inspected by the Arbitral Tribunal due to lapse of more

than 10 years. Hence, it was contended that the award is liable to be

set aside on this ground alone.

5. At the outset, this Court will focus on the above issue that

has been raised on the side of the petitioner. The finding on this issue

will determine as to whether this Court has to go into the other issues

touching upon the rejection of three claims made by the petitioner.

6. On the ground of delay in passing the award, it will be

relevant to take note of the judgment in Lancor Holdings Ltd. Vs. https://www.mhc.tn.gov.in/judis

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Prem Kumar Menon [reported in 2025 SCC OnLine SC 2319], in

which, the Hon’ble Apex Court was dealing with the specific issue as to

the effect of undue and unexplained delay in the pronouncement of an

arbitral award and how far it would vitiate its validity.

7. The learned counsel for the petitioner, by relying upon the

said judgment of the Hon’ble Apex Court, submitted that the ratio in

the said judgment will apply to the facts of the present case and that

the award passed by the Arbitral Tribunal is liable to be interfered on

the sole ground of delay.

8. The relevant portions in the decision of the Hon’ble Supreme

Court in Lancor Holdings Ltd., read thus:

“18. Similarly, on ‘Duty to act promptly’ in

Chapter 5, titled ‘Powers, Duties, and Jurisdiction

of an Arbitral Tribunal’, Redfern and Hunter

Redfern and Hunter on International Arbitration,

7

th

 Edition (Paras 5.74 and 5.75) states thus:

‘An arbitral tribunal has an obvious moral

obligation to carry out its task with due diligence.

Justice delayed is justice denied. Some systems of

law endeavour to ensure that an arbitration is

carried out with reasonable speed by setting a time https://www.mhc.tn.gov.in/judis

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limit within which an arbitral tribunal must make its

award. The time limit fixed is sometimes as short

as six months (as in the ICC rules), although

generally it may be extended by consent of the

parties, or at the initiative of the institution or the

tribunal. If an award is not made within the time

allowed, the authority of the arbitral tribunal may

be regarded as having terminated, with the risk

that any award will be null and void. Some systems

of law provide that an arbitrator who fails to

proceed with reasonable speed in conducting the

arbitration and making his or her award may be

removed by a competent court, and deprived of

any entitlement to remuneration. The Model Law

provides that the mandate of an arbitrator

terminates if he or she ‘fails to act without undue

delay’.

The learned authors pointed out that

though the above sanctions may act as a spur to

the indolent arbitrator, they do not compensate a

party who suffered financial loss as a result of

delay in the conduct of the arbitration. It was noted

that delay in the conduct of an arbitration may

have serious financial consequences as awards of

interest rarely compensate a party for the financial

loss suffered in the interim. It was pointed out that

faced with increasing delays in the conduct of

arbitrations, major institutions revised their rules to

improve the speed and efficiency of arbitrations. https://www.mhc.tn.gov.in/judis

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Though the above observations were made in the

context of international arbitrations, the same

principle would hold good for domestic arbitrations

also. Therefore, when the Arbitrator presently took

years together to deliver the Award, the least that

the parties would expect is a quietus being given to

their disputes instead of being relegated to another

round of arbitration/litigation. The Arbitrator,

therefore, failed to live up to that minimal

expectation reposed in him by law and by the

parties themselves.

19. However, the undeniable fact remains

that Section 34 of the Act of 1996 does not

postulate delay in the delivery of an arbitral award

as a ground, in itself, to set it aside. There is no

gainsaying the fact that inordinate delay in the

pronouncement of an arbitral award has several

deleterious effects. Passage of time invariably

debilitates frail human memory and it would be

well-nigh impossible for an arbitrator to have total

recall of the oral evidence, if any, adduced by

witnesses; and the submissions and arguments

advanced by the parties or their learned counsel.

Even if detailed notes were made by the arbitrator

during the process, they would be a poor substitute

to what is fresh in the mind immediately after

conclusion of the hearings in the case. More

importantly, such delay, if unexplained, would give

rise to unnecessary and wholly avoidable https://www.mhc.tn.gov.in/judis

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speculation and suspicion in the minds of the

parties. Absolute faith and trust in the system is

essential to make it work the way it is intended to.

Once that belief is shaken, it would lead to a

breakdown of that system itself. A situation that is

to be eschewed at all costs.

20. That being said, we must also

recognize that, in the usual course, long delay in

the passing of arbitral awards is not the norm.

However, when an instance of undue delay in the

delivery of an arbitral award occasionally crops up,

given the weighty preponderance of judicial

thought on the issue with which we are in

respectful agreement, we are of the considered

opinion that each case would have to be examined

on its own individual facts to ascertain whether the

delay was of such import and impact on the final

decision of the arbitral tribunal, whereby that

award would stand vitiated due to the lapses

committed by the arbitral tribunal owing to such

delay. We are also conscious of the fact that there

must be a balance between the pace of the

arbitration, culminating in an arbitral award, and

the satisfactory meaningful content thereof. In this

regard, in his seminal article, titled ‘Arbitrators and

Accuracy’ Journal of International Dispute

Settlement (February, 2010), Professor William W

Park says thus: https://www.mhc.tn.gov.in/judis

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‘Although good case management values

speed and economy, it does so with respect for the

parties' interest in correct decisions. The parties

have no less interest in correct decisions than in

efficient proceedings. An arbitrator who makes the

effort to listen before deciding will enhance both

the prospect of accuracy and satisfaction of the

litigants' taste for fairness. In the long run, little

satisfaction will come from awards that are quick

and cheap at the price of being systematically

wrong.’

Therefore, keeping in mind these competing

interests, it is only in cases where the negative

effect of the delay in the delivery of an arbitral

award is explicit and adversely reflects on the

findings in the said award, that such delay, and

more so, if it remains unexplained, can be

construed to be a factor to set aside that award.

Once all the requirements, referred to supra, are

fulfilled in a given case and the arbitral award

therein is clearly riddled with the damaging effects

of the delay, it can be construed to be in conflict

with the public policy of India, thereby attracting

Section 34(2)(b)(ii) of the Act of 1996, or Section

34(2A) thereof as it may also be vitiated by patent

illegality. Further, it would not be necessary for an

aggrieved party to invoke the remedy under

Section 14(2) of the Act of 1996 as a condition

precedent to laying a challenge to a delayed and https://www.mhc.tn.gov.in/judis

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tainted award under Section 34 thereof. Both

provisions would operate independently as the

latter is not dependent on the former. This being

the legal position, we would have to examine

whether the present arbitral award suffers from

any such malady owing to the delay, whereby its

very validity would stand vitiated. Further, we

would also have to see whether the award is liable

to be set aside for falling short, as it did not resolve

the disputes between the parties but their positions

stood altered irreversibly owing to the interim

orders passed during the arbitral proceedings.

Lastly, if the award is liable to be set aside, the

relief to be granted.”

9. A careful reading of the above dictum brings out a ratio that

whenever there is an undue delay in delivery of an arbitral award,

that, by itself, is not a ground to interfere with the award and each

case must be examined on its own individual facts to ascertain as to

whether the delay was of such import and impact on the final decision

of the Arbitral Tribunal, whereby that award would stand vitiated due

to the lapses committed by the Arbitral Tribunal owing to such delay,

that it is only in cases where the negative effect of the delay in the

delivery of an arbitral award is explicit and adversely reflects on the https://www.mhc.tn.gov.in/judis

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findings in the said award, that if such delay remains unexplained, it

can be construed to be a factor to set aside that award and that in

such a case, the award can be construed to be one in conflict with the

public policy of India and is vitiated by patent illegality attracting

Section 34(2)(b)(ii) and Section 34(2A) of the Act.

10. In the case in hand, the letter of acceptance was issued by

the respondent on 29.12.2006 and the work was awarded for

standardization of cutting including pitching and construction of side

drain in SSE/P.Way/PUT Section. A period of nine months was fixed for

completion of the work i.e by 28.9.2007. But, the work was not

completed within the prescribed time and extensions were granted. On

24.9.2007, the parties entered into a contract. It is also seen from the

records that certain additional items of work were done by the

petitioner and those went on till November 2011.

11. The petitioner issued a trigger notice on 17.10.2011 by

referring four claims to the Arbitral Tribunal. It was followed up by two

more letters on the side of the petitioner on 10.11.2011 and

24.3.2012. A reply was received from the respondent on 18.5.2012 https://www.mhc.tn.gov.in/judis

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suggesting the panel arbitrators. The petitioner had chosen the names

of the arbitrators and the nomination letter dated 27.8.2012 was

issued constituting the Arbitral Tribunal.

12. Even though the petitioner made four claims, the terms of

reference were issued by the respondent on 21.12.2012 by referring to

only one claim and also the counter claim made by the respondent.

The respondent took a stand that claim Nos.2, 3 and 4 made by the

petitioner were excepted matters and that they could not be referred

to the Arbitral Tribunal. In the meantime, two co-arbitrators were

changed on 25.11.2013.

13. Since all the claims were not referred to the Arbitral

Tribunal, the petitioner approached this Court by filing O.P.No.832 of

2014 and this Court, by order dated 28.4.2015, directed the Arbitral

Tribunal to examine the issue of maintainability of all the four claims.

After the said order was passed, the petitioner, by letter dated

08.9.2015, informed the respondent to take immediate action and the

respondent, by addendum dated 26.11.2015, included all the claims of

the petitioner before the Arbitral Tribunal. But, there was no progress https://www.mhc.tn.gov.in/judis

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before the Arbitral Tribunal and hence, on 15.3.2016, the petitioner

sent a letter requesting the Arbitral Tribunal to conduct the

proceedings and also to inspect the work site to demonstrate the real

position, which would enable the Arbitral Tribunal to effectively deal

with the claim.

14. Once again, there was a lull for nearly two years and on

21.3.2018, the respondent sent a communication for the change of co-

arbitrators. The Arbitral Tribunal, for the first time on 07.2.2020, sent

a communication to the petitioner stating that after the issuance of the

addendum by the respondent, the petitioner did not file the claim

statement and therefore, the Arbitral Tribunal was not able to proceed

further. Accordingly, the petitioner was informed that the Arbitral

Tribunal proposed to hold the hearing on 25.2.2020. On receipt this

notice, the petitioner filed the claim statement on 20.2.2020. The

pleadings were complete by December 2020 and the proceedings were

conducted by the Arbitral Tribunal through online mode since the

covid-19 pandemic had set in by then. https://www.mhc.tn.gov.in/judis

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15. The petitioner, by letter dated 25.1.2021, informed the

Arbitral Tribunal that they wanted the proceedings to be terminated

and that the petitioner also took steps to file a petition for termination

of the mandate of the Arbitral Tribunal. By that time the petition came

up for hearing before this Court, the award was passed by the Arbitral

Tribunal on 08.2.2021.

16. All the above dates and events will have to be necessarily

considered to see if the delay in conducting the proceedings and

passing the final award had a bearing on the final award passed and

whether it adversely reflected on the findings rendered by the Arbitral

Tribunal. As already noted, this test has to be applied on a case to

case basis to ascertain as to whether the delay was of such import and

impact on the final decision rendered by the Arbitral Tribunal. As could

be seen from the above dates and events, the proceedings, which

commenced during October 2011, after issuance of the trigger notice

under Section 21 of the Act, culminated into a final award only on

08.2.2021. https://www.mhc.tn.gov.in/judis

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17. In so far as the delay is concerned, the observations made

by the Arbitral Tribunal will have a lot of significance. For proper

appreciation, the same are extracted as hereunder:

“1. After a lapse of more than ten years

after the completion of the work, the quantum of

work shown by the claimant can be assessed

based only on records available with the claimant

or respondent in this regard. The claimant has

produced the copies of M-Books in this connection.

The exact details regarding earth work lead and

stacking are not available as per records either

with the claimant or the respondent. The only

source of information available for the Tribunal are

the available records maintained by claimant and

respondent. There is no room for any guess work

in this regard since it involves payment of public

money.

2. The decision for not conducting a site

visit was taken purely by the Tribunal and not

based on any objections by the respondent. Such

a decision was taken because a visit to the site

after more than ten years after the completion of

the work would not reveal any details connected

with the disputes under discussion by the

Tribunal.

3. The Tribunal has heard both the claimant

and respondent in matters pertaining to the scope https://www.mhc.tn.gov.in/judis

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of the arbitration. However, as desired by the

claimant it is not possible and fair on the part of

the Tribunal to concede without valid reason to

the request made either by the claimant or the

respondent.

4. Regarding the delay in conduct of the

arbitration it is to be noted that after the

constitution of the Arbitral Tribunal in 12/2012,

the claimant had not attended three sittings of the

Tribunal possibly due to the fact that all the claims

raised by the claimant were not included in the

TOR. It was only after the issue of the revised

TOR during 11/2015 that the claimant started

attending arbitral sittings. It is also pertinent to

note that the claimant could not be contacted for

a major duration of time between 2015 and 2020,

in spite of repeated attempts to reach him at the

last available phone numbers. It can be clearly

seen that the Tribunal had made the utmost

sincere efforts to finalise the Award at the earliest

possible time.”

18. Before the Arbitral Tribunal, the petitioner made the

following four claims:

“Claim No.1 - Idling of labour and

machinery – Rs.2,63,65,200.00; https://www.mhc.tn.gov.in/judis

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Claim No.2 - Additional items of works not

included in the variation statement and not paid –

Rs.3,68,58,590.00;

Claim No.3 - Loss of turn over for not

arranging due payment and claimed @ 15% per

annum – Rs.2,34,97,332.00; and

Claim No.4 - Interest on the above claims @

15% per annum till payment – not quantified.”

19. The above observations made by the Arbitral Tribunal would

show that had the proceedings gone ahead immediately, it would have

had the advantage of making a site inspection and collecting the

relevant records, which, over a period of time, were not available and

that the Arbitral Tribunal certainly faced hardship due to lapse of more

than ten years. The Arbitral Tribunal had also acknowledged the fact

that there was no progress during the period between 2015 and 2020

and the reason assigned by the Arbitral Tribunal was that the

petitioner was not able to be contacted.

20. The above finding rendered by the Arbitral Tribunal is

unsustainable for the simple reason that the petitioner, after the order

was passed by this Court in O.P.No.832 of 2014 on 28.4.2015 and https://www.mhc.tn.gov.in/judis

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after the addendum was issued by the respondent on 26.11.2015, sent

a communication on 15.3.2016 to the Arbitral Tribunal to make a site

inspection before conducting the arbitration proceedings. In fact, the

letter that was addressed by the respondent on 21.3.2018 on the

change of co-arbitrator was also received by the petitioner in the same

address. Therefore, the finding of the Arbitral Tribunal to the effect

that the petitioner was not able to be contacted for the period from

2015 to 2020 is far from satisfactory and it runs contrary to the

materials available on record. It is the petitioner, who was making the

claims and therefore, there was no need for the petitioner to protract

the proceedings and evade notices.

21. The claim statement itself was not able to be filed by the

petitioner till 2020. It was filed only after the Arbitral Tribunal issued a

notice dated 07.2.2020 to the petitioner fixing the date of hearing as

25.2.2020. If this notice was able to be served on the petitioner, it

defies common sense as to why the earlier notices were not able to be

served on the petitioner in the same address for the period from 2015

to 2020. https://www.mhc.tn.gov.in/judis

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22. The Arbitral Tribunal, while dealing with claim Nos.1 and 2,

rejected them and one of the main reasons assigned is the lapse of ten

years, as a result of which, the Arbitral Tribunal was not in a position

to make a site inspection and to get the relevant records. Therefore,

claim Nos.1 and 2 were decided with the limited records available.

23. If the Arbitral Tribunal had decided the claims at the

earliest point of time, at least after the order was passed by this Court

in the year 2015 in O.P.No.832 of 2014, the Arbitral Tribunal would

have had the advantage of the relevant records and also could have

conducted the site inspection for proper appreciation of the claims

made by the petitioner. Therefore, the lapse of more than ten years

certainly had an adverse effect on the findings of the Arbitral Tribunal.

The Arbitral Tribunal, which was reconstituted in the year 2020, hardly

conducted three hearings and all these happened during the covid-19

pandemic period and the award was passed on 08.2.2021. Therefore,

the unexplained exorbitant delay in conducting the proceedings is not

attributable to the petitioner and it is purely attributable only to the

respondent, which thought it fit to keep the claims in limbo for more

than ten years. https://www.mhc.tn.gov.in/judis

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24. The whole object of resorting to arbitration proceedings is

to speed up the process of adjudication and to grant relief to the party,

which, otherwise, will be forced to spend years together before a civil

court. Unfortunately, in the case in hand, more than ten years had

lapsed before the impugned final award was passed by the Arbitral

Tribunal and the whole purpose of having an alternative dispute

resolution mechanism has been defeated. This delay in the conduct of

the arbitration proceedings seriously affects the rights of the petitioner

and at one stage, the petitioner, out of sheer frustration, sought for

termination of the mandate of the Arbitral Tribunal. However, the

award came to be passed by then.

25. In the light of the above discussions, this Court holds that

the exorbitant unexplained delay in conducting the arbitration

proceedings and passing the impugned final award has certainly

impacted the findings of the Arbitral Tribunal adversely and as a

consequence, vitiated the final decision of the Arbitral Tribunal. In view

of the same, such an award has to be construed to be in conflict with

the Public Policy of India thereby attracting Section 34(2)(b)(ii) of the

Act and is also vitiated by patent illegality under Section 34(2A) of the https://www.mhc.tn.gov.in/judis

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Act.

26. In the result, the impugned award passed by the Arbitral

Tribunal dated 08.2.2021 is hereby set aside and the above original

petition is allowed with costs of Rs.2,50,000/- (Rupees two lakhs

and fifty thousand only) payable by the respondent to the

petitioner. It is left open to the petitioner to take immediate steps to

reconstitute an arbitral tribunal by filing a proper petition before this

Court to enable the claims made by the petitioner to be referred to the

newly constituted arbitral tribunal.

02.1.2026

RS https://www.mhc.tn.gov.in/judis

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N.ANAND VENKATESH,J

RS

Arb.O.P.(Com.Div.) No.134 of 2022

02.1.2026 https://www.mhc.tn.gov.in/judis