Appalling: Rajasthan HC on arbitral tribunal’s delay in deciding 2019 dispute despite payment of ₹14.5 crore fee

The Rajasthan High Court has taken a serious view of an arbitral tribunal’s failure to conclude proceedings in a dispute pending between three State power companies and HCL Infosystems Limited since 2019 [Jaipur Vidyut Vitran Nigam Limited v HCL Infosys. Limited]

The Court was told that in the arbitration pending before a tribunal comprising a former Supreme Court judge and two retired High Court judges, the parties have paid about ₹14.5 crores towards arbitration fees.

In an order passed on April 21, Justice Sameer Jain said it was  “appalling” that despite payment of such huge amount by the parties over the years, the dispute is yet not adjudicated, with the substantive merits of the case getting entirely bogged down by procedural time extensions.

Considering the expenditure incurred by the parties as well as grant of repeated extensions to the arbitral tribunal, the Court requested the State Advocate General to assist it in the matter on May 4.

“While the life of the impugned extension order is merely four months i.e.,   up   to 30.09.2026, and that time is the essence of arbitral proceedings, crucial questions pertaining to the applicability of Schedule IV, the independence and impartiality (biasness) of the Arbitral Tribunal, and the legality of passing an extension order under Section 29A of the Act of 1996, during the pendency of such critical applications, are of vital importance, and taking note of the fact that the petitioner is a public sector entity and the unique facts of the case will have writ large ramifications, this Court deems it necessary to hear the matter at length,” the Bench said. 

The dispute has its origin in the award of Restructured Accelerated Power Development and Reforms Programme (RAPDRP) works to HCL Infosystems Limited in 2009.

Following a dispute, the private company invoked arbitration in 2019. The arbitration proceedings began in 2020.

In a recent petition before the Court, State’s three electricity distribution companies – Jaipur Vidyut Vitran Limited, Jodhpur Vidyut Vitran Limited and Jaipur Vidyut Vitran Limited – said that an arbitral fee of ₹2.5 lakh per sitting was fixed on an ad-hoc basis for each arbitrator, exclusive of other ancillary expenses, rather than adhering to the fee structure prescribed under Schedule IV of the Arbitration and Conciliation Act of 1996.

It was further submitted that an application against the fee was moved in 2022, but the same has been kept in abeyance. The power companies also said that they have raised specific plea of bias, alleging that the arbitrators have lost their independence and impartiality.

The Court was also told that the commercial court granted multiple extensions for the conclusion of arbitration proceedings.

However, HCL Infosystems Limited said that arbitration proceedings between the parties are on the verge of culmination and no prejudice will be caused if a brief extension of four months is granted. It also said that allegations of bias against the arbitrators were baseless.

Considering that the fundamental aim and object of the Arbitration and Conciliation Act is the speedy and effective service of justice, the Court said that the matter will be heard on priority for its final disposal on May 4. 

Advocates Kartik Seth and Shilpa Saini represented the State power companies.

Senior Advocate RN Mathur with Advocates Shailesh Kapoor, Arif Jamwal, Lokesh Kumar Atrey, Shantanu Gupta and Rahul Pandit represented the HCL Infosystems Limited.

[Read Order]