AAI’s Settlement Talks With Contractor Help Delhi HC Condone 24-Day Delay In Challenging Arbitral Award Within 30-Day Extension

The arbitral award was received by the Airports Authority of India (AAI) on 17 March 2026.

AAI explored settlement while also considering a challenge to the award.

Its Award Review Committee recommended a challenge on 8 June 2026, but further negotiations were sought; approval to challenge was granted on 2 July, and the Section 34 petition was filed on 10 July 2026—24 days beyond the initial three-month period, but within the further 30-day period permitted by Section 34(3).

AAI sought condonation, relying on the internal decision-making process and settlement efforts.

The respondent opposed the application, arguing that the delay was inadequately explained and that periods of inactivity remained unexplained.

Although the application itself lacked detailed particulars, AAI’s rejoinder included file notings and a chronology of events.

Section 34(3) of the Arbitration and Conciliation Act, 1996 requires a challenge to an arbitral award to be filed within three months of receipt of the award; the court may, on sufficient cause, allow a further period not exceeding 30 days, but no more.

The court applied the principles on “sufficient cause” from Shivamma (Dead) by LRs v. Karnataka Housing Board & Ors., Civil Appeal No. 11794 of 2025, holding that government departments receive no special consideration and must satisfactorily explain delay.

It also considered Delhi Development Authority v. Varindera Construction Limited, 2021 SCC OnLine Del 2845, on a reasonable and pragmatic application of “sufficient cause,” and M/S Tirupati Structurals Ltd. v. Indian Oil Corporation Ltd. & Anr., FAO No. 29/2017, on condonation within the further 30-day period.

The court held that Shivamma’s principles were not confined to the Land Acquisition Act and applied to “sufficient cause” under Section 34(3).

On the record, AAI had pursued both settlement and a possible challenge: negotiations and ARC deliberations occupied approximately 33 days, the ARC recommended challenging the award on 8 June, and approval and preparation of the petition followed in July.

The court found no deliberate delay and considered the settlement efforts legitimate, while noting that the three-month period and the subsequent delay had been satisfactorily explained.

It nevertheless cautioned that AAI’s application was deficient because the detailed explanation appeared only in the rejoinder.

The court held that Shivamma’s principles were not confined to the Land Acquisition Act and applied to “sufficient cause” under Section 34(3).

The delay-condonation application was allowed, with a caution that government departments should include detailed reasons in such applications.

The court also issued notice on the Section 34 petition and set timelines for pleadings and subsequent listing.