Rajasthan HC Slams “Lethargic” Arbitration In ₹528 HCL–DISCOMs Dispute, Orders Fast-Track Completion

The Rajasthan High Court on 27 May held that arbitral proceedings must remain aligned with the statutory objective of expedition, efficiency, and cost-effectiveness under the Arbitration and Conciliation Act, 1996, and that procedural delay cannot justify repeated extensions of an arbitral tribunal's mandate under Section 29A.

Justice Sameer Jain, invoking former Chief Justice of India Justice P.N. Bhagwati's observation that “Procedure is but a means to an end, not an end in itself”, partly allowed petitions filed by the Rajasthan DISCOMs and modified the Commercial Court's order that had extended the mandate of a three-member arbitral tribunal in a Rs. 528 crore dispute with HCL Infosystems Limited. He held:

“When factors are viewed cumulatively, a clear picture emerges, as that the high per-session fee structure, when combined with discontinuous hearings, has escalated costs disproportionately; the change in venue has added avoidable financial and logistical strain; the procedural laxity has prolonged the proceedings beyond reasonable limits. These elements, taken together, have undermined the foundational principles of arbitration, namely, efficiency, economy, and expedition, and have resulted in manifest prejudice to the parties, particularly in terms of financial burden and delayed adjudication.”

The case arose from 2009 contracts awarded by Jaipur Vidyut Vitran Nigam Limited (JVVNL), Ajmer Vidyut Vitran Nigam Limited (AVVNL), and Jodhpur Vidyut Vitran Nigam Limited (JdVVNL) to HCL Infosystems under the Restructured Accelerated Power Development and Reforms Programme for power and IT infrastructure works in Rajasthan. Disputes later emerged over execution delays, deductions, and alleged non-performance under work orders dated 30 September 2009, following which HCL invoked arbitration on 27 September 2019 under Clause 8.2 of the General Conditions of Contract.

Arbitral proceedings commenced on 27 July 2020. After expiry of the statutory timeline on 28 February 2023, HCL sought successive extensions under Section 29A of the Arbitration and Conciliation Act, 1996. The Commercial Court granted an extension on 17 September 2024 up to 30 April 2025, and thereafter extended the mandate again on 24 February 2026 up to 30 September 2026.

The DISCOMs challenged the latter extension before the High Court under Article 227, alleging that the tribunal proceeded in a lackadaisical and convenience-driven manner marked by prolonged adjournments, widely spaced hearings, and an unjustified shift of venue from Rajasthan to New Delhi, which significantly increased logistical and financial burden. HCL defended the continuation of the tribunal by citing technical complexity, voluminous documentary record, examination of 22 witnesses, more than 160 sittings, and disruptions caused by the COVID-19 pandemic.

The High Court held that while Section 29A permits extension upon showing sufficient cause, it cannot be invoked to accommodate indolence, tactical delay, or procedural laxity. It further observed that Sections 23(4), 24, and 29A of the Act reflect a clear legislative intent to ensure time-bound arbitration, which stood frustrated in the present case.

The Bench criticised the Rs. 7.5 lakh per-session fee structure, noting that the combination of high per-sitting fees and sporadic hearings created structural incentives that undermined expedition and inflated costs. It recorded that arbitral expenditure had escalated to nearly Rs. 13 crore.

Finding a systemic failure in procedural discipline, the Court partly upheld the Commercial Court's order dated 17 September 2024 while modifying the order dated 24 February 2026. It directed the arbitral tribunal to resume day-to-day hearings from 31 May 2026 at the Jaipur Arbitration and Mediation Centre and conclude the proceedings, including the award, within 45 days.

The Bench also directed a 5% monthly reduction in arbitral fees already paid for delays attributable to the tribunal and restrained any further financial burden arising from such delays from being passed on to the parties.

Accordingly, the High Court granted the aforesaid reliefs and issued directions to ensure expeditious conclusion of the arbitration.

Appearances for JVVNL, AVVNL and JdVVNL: Advocates Rajendra Prasad, Kartik Seth, Shilpa Saini, Dhriti Laddha.

Appearances for HCL Infosystems Limited: Advocates R.N. Mathur, Shailesh Kapoor, Lokesh Atrey, Sakshi Chaturvedi.