Does a delay of more than four-and-a-half years, by itself, spoil an arbitral award? Not by itself, the Bombay High Court has said, yet it has set aside the award against a guarantor because the delay left his defences unaddressed.
Mumbai: The Bombay High Court has set aside an award against guarantor Manish Mehta, holding that his material defences had been left unanswered after a prolonged delay, while the award against the other parties stands undisturbed [Manish Mehta v. India Cements Capital & Finance Limited and Others].
In a judgment pronounced on October 29, 2026, Justice Arun R. Pedneker found that the arbitrator had not addressed Mehta’s submissions on discharge of his liability under Sections 133 and 139 of the Indian Contract Act, 1872. The relief was confined to Mehta, who had challenged the award.
Delay is not a ground by itself
India Cements Capital & Finance Limited argued that delay was not an independent ground under Section 34 of the Arbitration and Conciliation Act, 1996, and that the award had considered the parties’ contentions.
The Court accepted the distinction between delay itself and what delay does to an award. Applying the Supreme Court’s decision in M/s. Lancor Holdings Limited v. Prem Kumar Menon, it explained in paragraphs 20 and 21 that each case must be tested on its own facts, to see whether the delay affected the arbitrator’s assessment of the material. On this record, the Court found that it had: paragraph 27 links the prolonged delay to the failure to examine the material and defences specific to the guarantor.
What the guarantor said, and what the award did not answer
Mehta contended that changes to the hire-purchase arrangement had been made without his consent and that the creditor’s conduct impaired his eventual remedy against the principal debtor. He relied on Sections 133 and 139 of the Contract Act, which concern discharge of a surety in those circumstances.
His objections also covered the agreement’s execution and stamp papers, the notice invoking arbitration, and his liability after variations in the agreement. These were his defences; the High Court did not finally decide that he stood discharged on their merits.
The Court found, in paragraph 25, that the award was virtually unreasoned. It recorded that an affidavit had been filed and requested to be treated as examination-in-chief, yet it was subsequently stated that no evidence had been led. The judgment further noted that the arbitrator had not dealt with the specific objections concerning the documents, the invocation notice and the guarantor’s liability.
Arguments closed in 2008, award came in 2012
Mehta stood guarantor for a loan facility that India Cements Capital & Finance Limited extended to Munis Forge Limited under a hire-purchase agreement executed on January 7, 1998. Arbitration was invoked in 2003.
The matter was reserved for decision on January 30, 2008. The sole arbitrator delivered the award only on August 4, 2012, and the High Court noted that no reasons had been recorded for that delay.
Mehta also said the award had not been served on him. According to the judgment, the High Court received a packet containing a certified copy from the arbitrator in earlier proceedings, and Mehta received the copy on March 19, 2014.
Appointment objection rejected; relief limited to the guarantor
Not every ground succeeded. Because the arbitration predated the 2015 amendments, the Court held that Mehta’s failure to raise the appointment objection at the initial stage amounted to waiver. That finding did not cure the award’s failure to address his substantive defences.
On whether the award could be set aside only against the challenging guarantor, the Court relied on the severability principles discussed in Gayatri Balasamy v. ISG Novasoft Technologies Limited, (2025) 7 SCC 1, along with decisions granting relief confined to the party whose challenge succeeded.
In paragraphs 31 and 32, the Court set aside the August 4, 2012 award only to the extent of Manish Mehta and disposed of the arbitration petition. The judgment does not set aside the award against the borrower or the other parties.
Case Title: Manish Mehta v. India Cements Capital & Finance Limited and Others
Case Number: Arbitration Petition No. 1469 of 2014
Court: Bombay High Court, Ordinary Original Civil Jurisdiction
Bench: Justice Arun R. Pedneker
Citation: 2026:BHC-OS:23458
Reserved: October 13, 2026
Pronounced: October 29, 2026
Outcome: Arbitral award set aside only against the petitioner-guarantor; petition disposed of