Himachal Pradesh HC Says State Waived Arbitration Bid After Contesting L&T's Hydro Power Dispute For Seven Years

The Himachal Pradesh High Court has refused to send the ₹84 crore dispute between L&T Himachal Hydro Power Limited and the State government over the Reoli-Dugli hydropower project to arbitration.

The court held that the State waited too long to seek that remedy after contesting the writ petitions for more than seven years.

“As already noticed above, after the amendment carried out in the Act in the year 2015, if the party applies not later than date of submitting the first statement on the substance of the dispute, the Court has to refer the matter for arbitration in view of the arbitration agreement. However, in the present case, the application has been filed after seven years of submitting the first statement of substance. No doubt, the plea has been taken in the reply to the writ petition, but the same is not enough, to get the matter referred for arbitration.." Justice Jiya Lal Bhardwaj held.

The court said the State had filed its reply to the writ petitions in September 2018 but moved applications seeking arbitration only in November 2025, after the matter had substantially progressed and after L&T's senior counsel had concluded arguments.

“If the party has not applied, it has waived off the right to seek reference of dispute to arbitration,” the court said.

The ruling came in writ petitions filed by L&T Himachal Hydro Power Limited, later amended to challenge the State's forfeiture of ₹84 crore paid as an upfront premium for the 420 MW Reoli-Dugli Hydro Electric Power Project in Lahaul and Spiti.

The dispute arose after the Himachal Pradesh Government invited bids in 2008 for the project, which was awarded to L&T. The company entered into a pre-implementation agreement with the State on March 15, 2011, followed by a tripartite agreement on October 18, 2011.

L&T submitted the detailed project report on March 11, 2014, but later sought to withdraw from the project in September 2017, saying it had become techno-economically unviable due to tariff concerns, transmission issues, land acquisition hurdles, environmental conditions, GST implications, and inaccessibility of the site.

Following a meeting between the parties on June 20, 2018, the State cancelled the project on November 23, 2019, re-allotted it to SJVN Limited and forfeited the ₹84 crore upfront premium.

L&T had approached the High Court in August 2018 seeking a declaration that the project had become unviable and a refund of the ₹84 crore with 18% annual interest. The petitions were later amended to also challenge the forfeiture and termination.

The State had raised a preliminary objection in its reply, pointing to the arbitration clause in the agreement, but did not formally seek referral to arbitration at that stage.

Instead, the proceedings continued before the High Court over several years. The court noted that L&T's senior counsel concluded arguments on March 21, 2024, after which the State sought repeated adjournments before eventually filing the arbitration applications in November 2025.

Rejecting the State's contention that its earlier objection was sufficient, the court said merely mentioning the arbitration clause in the reply did not satisfy the legal requirement.

“There is no murmur in the entire application that why did the respondents/applicants earlier not filed the application to seek reference of the dispute,” the court observed.

It said accepting such an interpretation would effectively rewrite the statutory provision. “In case any other view is taken, it would result to rewrite the provision of Section 8 of the Act,” the court said.

The court dismissed both applications and directed that the main writ petitions be listed for hearing on May 28, 2026.

For Petitioner (L&T Himachal Hydro Power Limited): Advocates Viplav Sharma, Senior Advocate, Pratham, Dalip Kumar.

For Respondent (Government of Himachal Pradesh and another): Advocates Gagan Anand, Ramanjit Singh, Simran Arora, Karan Singh.