Facts Of The Case:
The case originated from a Joint Development Agreement (JDA) dated 17.12.2004 between respondent landowners and a developer (later amalgamated into the appellant, Lancor Holdings Ltd.) for constructing a building on the landowners’ property in Chennai. The core dispute centered on whether the construction was completed, triggering the “Handover Date” and the obligation for landowners to refund security deposits totaling approximately ₹6.82 crores. The appellant claimed completion by October 2008, supported by an Architect’s certificate and a subsequent Completion Certificate. The respondents disputed this, alleging defects. During the pendency of arbitration, the appellant unilaterally executed registered sale deeds in its own favor in December 2008 using a copy of a power of attorney held in escrow. The sole arbitrator, appointed in 2009, reserved the award in July 2012 but pronounced it only in March 2016, after a delay of nearly four years without explanation. The award declared the sale deeds illegal but left most monetary claims and counterclaims unresolved, directing parties to fresh litigation. The appellant challenged the award under Section 34 of the Arbitration Act, leading to appeals which ultimately reached the Supreme Court.
Procedural History:
The procedural history of the case commenced when Lancor Holdings Ltd. invoked arbitration due to disputes under the Joint Development Agreement. Justice K.P. Sivasubramaniam (Retd.) was appointed as the sole arbitrator. The arbitral proceedings concluded with hearings, and the award was reserved on July 28, 2012. After an unexplained delay of nearly four years, the final arbitral award was pronounced on March 16, 2016. Aggrieved by this award, Lancor Holdings Ltd. filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Madras High Court (OP No. 231 of 2016), challenging the award. The Single Judge, vide order dated December 23, 2016, partly set aside the award. Both parties appealed this order. A Division Bench of the Madras High Court, in OSA No. 39 of 2017, allowed the landowners’ appeal and dismissed the cross-objection filed by Lancor Holdings Ltd., thereby restoring the arbitral award in its entirety. Dissatisfied, Lancor Holdings Ltd. filed the present civil appeals before the Supreme Court of India, which were ultimately allowed, setting aside the award and exercising powers under Article 142 of the Constitution to provide a final resolution.
READ ALSO:Supreme Court Sets Guidelines: What Constitutes an “Accidental Fire” for Insurance?
Court Observation:
The Supreme Court made significant observations on the intersection of procedural delay and substantive justice in arbitration. It held that while delay alone is not a standalone ground to set aside an award under Section 34 of the Arbitration Act, inordinate and unexplained delay can vitiate an award if it explicitly and adversely impacts the findings, rendering it contrary to the public policy of India or patently illegal. The Court strongly criticized the arbitral award for being “unworkable,” as it failed to conclusively resolve the disputes, irreversibly altered the parties’ positions through interim orders, and effectively compelled them to initiate fresh litigation—defeating the very purpose of arbitration as a speedy dispute-resolution mechanism. Finding the arbitrator’s interpretation of the contract clauses to be perverse and the award unsustainable, the Court exercised its extraordinary power under Article 142 of the Constitution to do “complete justice,” thereby conclusively ending the 16-year-old litigation by imposing a financial penalty on the appellant and regularizing the contested property transactions.
Final Decision & Judgement:
The Supreme Court allowed the appeals and set aside the impugned arbitral award. Holding that the inordinate, unexplained delay of nearly four years in pronouncing the award had vitiated its findings and rendered it contrary to public policy and patently illegal, the Court further found the award “unworkable” for failing to resolve the disputes. Exercising its extraordinary jurisdiction under Article 142 of the Constitution to do complete justice and end the protracted litigation, the Court fashioned a final resolution. It directed that the appellant’s unlawfully executed sale deeds be treated as valid, but imposed a penalty of ₹10 crores (comprising forfeiture of security deposits and compensation) payable by the appellant to the respondents. Upon payment, the appellant was entitled to possess its 50% share in the property, finally settling the 16-year-old dispute.
Case Details:
Case Title:M/s. Lancor Holdings Limited vs. Prem Kumar Menon and others Citation:2025 INSC 1277 Appeal Number:Civil Appeal Nos. 10074-10075 of 2024 Date of Judgement:October 31, 2025 Judges/Justice Name:Justice SANJAY KUMAR