Synopsis

A memorandum of understanding (mou) was signed for operating a hotel. the respondent claimed ₹1.70 crores, and the petitioner counter‑claimed for refund of ₹1.18 crores paid as advance. the arbitral tribunal rejected both claim and counter‑claim, holding that the project was a non‑starter and neither party adhered to the mou terms. however, the tribunal dismissed the counter‑claim solely on the ground that there was “no clause in the mou for refund”. the high court set aside that part of the award, holding that the dismissal was unreasoned and violated section 31(3) of the arbitration act. without any finding of breach or actual loss, the tribunal could not retain the advance; principles under section 73 of the contract act required proof of loss. the award was set aside only on the counter‑claim (severable part).

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Mr. Justice Avneesh Jhingan (Single Judge)

Date of Judgment: 18th May 2026

Citation: O.M.P. (COMM) 432/2023 (2026:DHC:4386)

Core Law: Arbitration and Conciliation Act, 1996 – Sections 34 (setting aside arbitral award), 31(3) (reasoned award); Indian Contract Act, 1872 – Section 73 (compensation for loss), Section 74 (forfeiture of earnest money).

1. Heading of the judgment

High court of delhi at new delhi

O.m.p. (comm) 432/2023

M/s sarvpriya securities pvt ltd (petitioner) vs. M/s ank hotels pvt ltd (respondent)

Coram: hon’ble mr. justice avneesh jhingan

Reserved on: 11th may, 2026; pronounced on: 18th may, 2026

2. Legal framework

Major laws and provisions involved:

• Arbitration and conciliation act, 1996 – section 31(3) (arbitral award to state reasons), section 34 (setting aside award on grounds of patent illegality and public policy)

• Indian contract act, 1872 – section

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