The Rajasthan High Court has expressed serious concern over the delay in arbitral proceedings in a dispute between three State power distribution companies and HCL Infosystems Limited, which has been pending since 2019.
The single-judge Bench of Justice Sameer Jain observed that it was appalling that despite payment of approximately Rs 14.5 crore towards arbitral fees, the tribunal failed to adjudicate the dispute on merits. The Court noted that the proceedings have been repeatedly delayed due to extensions of time, resulting in procedural stagnation.
The arbitration was conducted by a tribunal comprising a former Supreme Court judge and two retired High Court judges. The Court was informed that substantial costs have been incurred by the parties, with fees fixed on an ad hoc basis rather than in accordance with the statutory fee schedule. Taking note of the financial burden and repeated extensions granted to the tribunal, the Court requested assistance from the State Advocate General and listed the matter for further hearing on May 4.
The Court also flagged key legal issues arising in the case, including the applicability of the Fourth Schedule to the Arbitration and Conciliation Act, 1996, questions relating to the independence and impartiality of the arbitral tribunal, and the legality of granting extensions under Section 29A of the Act while related challenges remain pending.
The dispute originated from contracts awarded in 2009 under the Restructured Accelerated Power Development and Reforms Programme. Arbitration was invoked in 2019, and proceedings commenced in 2020.
In their petition, the State power utilities challenged the arbitral fee structure, stating that a fee of ₹2.5 lakh per sitting per arbitrator was fixed without adherence to the prescribed framework under the Arbitration and Conciliation Act. They also submitted that their application challenging the fee structure, filed in 2022, has not been decided.
The utilities further raised objections regarding alleged bias, contending that the tribunal has lost the required standards of independence and impartiality. It was also brought to the Court’s notice that the commercial court had granted multiple extensions for completion of the arbitral proceedings.
Opposing the plea, HCL Infosystems submitted that the arbitration is at an advanced stage and nearing completion. It argued that a limited extension of four months would not cause prejudice and denied allegations of bias.
Emphasising that the objective of the Arbitration and Conciliation Act was to ensure expeditious and effective dispute resolution, the Court stated that the matter requires priority consideration and listed it for final hearing on May 4.
