Rajasthan High Court Criticizes Arbitral Tribunal Delay in Power Sector Dispute Despite ₹14.5 Crore Fee
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TL;DR
- Rajasthan High Court reviewed long delay in arbitration between state power companies and HCL Infosystems.
- Court noted parties paid ₹14.5 crore in arbitral fees, but the dispute remains unresolved since 2019.
- Key issues include fee structure, repeated procedural extensions, and claims of tribunal bias.
- The matter has been scheduled for final hearing on May 4, with the State Advocate General's assistance requested.
Overview
The Rajasthan High Court addressed a significant delay by an arbitral tribunal in resolving a dispute dating back to 2019 between three Rajasthan state electricity distribution companies and HCL Infosystems Limited. Despite arbitration fees totaling ₹14.5 crore, the case remains unresolved, with concerns raised over fee practices, procedural extensions, and the independence of the arbitral tribunal.
What Happened
The dispute originates from the award of the Restructured Accelerated Power Development and Reforms Programme (RAPDRP) contract to HCL Infosystems in 2009. Arbitration proceedings formally began in 2020 after HCL Infosystems invoked arbitration in 2019.
The arbitral tribunal is composed of a former Supreme Court judge and two retired High Court judges. The parties agreed to a fee of ₹2.5 lakh per sitting for each arbitrator, outside the fee structure prescribed by Schedule IV of India's Arbitration and Conciliation Act, 1996.
Three state power companies - Jaipur Vidyut Vitran Limited, Jodhpur Vidyut Vitran Limited, and another Jaipur Vidyut Vitran Limited - submitted that they filed an application challenging the fee in 2022, which remains unresolved. They also alleged bias and loss of independence by the tribunal members. Additionally, numerous time extensions were granted for the resolution of the proceedings.
HCL Infosystems contended that the arbitration process is nearing completion and argued that a four-month extension, recently granted, would not cause prejudice. The company rejected allegations of bias against the arbitrators.
The High Court called the delay 'appalling' considering the high fees paid and procedural slowdowns. The Court requested the State Advocate General to assist in the matter and scheduled a priority hearing for May 4, 2026.
Context
The Arbitration and Conciliation Act, 1996, stating the need for efficient, timely dispute resolution, is central to the case. Schedule IV of the Act prescribes a fee structure to promote transparency and control costs in arbitration. Section 29A governs time extensions for completing arbitral proceedings.
The petitioners are public sector entities, and the Court noted that the dispute's unique facts may have broader implications for the administration of public sector arbitration in India.
Why It Matters
- The proceedings highlight ongoing concerns within India's arbitration regime regarding fees, procedural efficiency, and tribunal impartiality.
- As the parties are major state-owned electricity distribution companies, prolonged resolution involves significant public funds and may affect broader infrastructure governance.
- The outcome may clarify procedural practices in Indian arbitration, including compliance with Schedule IV fee structures and tribunal accountability.