New Delhi: Supreme Court arbitration dispute has come into focus after former Supreme Court judge Justice Deepak Verma approached the Supreme Court against a Rajasthan High Court order that described an arbitral tribunal headed by him as “lethargic” and reduced arbitral fees.
The case arises from a long-running ₹528 crore commercial dispute involving power distribution companies in Rajasthan and HCL Infosystems. The matter is now scheduled to be heard by the Supreme Court.
Background of the JVVNL-HCL Arbitration Dispute
The dispute relates to contracts awarded in 2009 by Jaipur Vidyut Vitran Nigam Limited (JVVNL), Ajmer Vidyut Vitran Nigam Limited (AVVNL), and Jodhpur Vidyut Vitran Nigam Limited (JDVVNL) to HCL Infosystems.
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These contracts were part of the Restructured Accelerated Power Development and Reforms Programme (R-APDRP), aimed at improving power and IT infrastructure in Rajasthan.
Disagreements later arose over delays, deductions, and alleged non-performance under the contracts. As a result, HCL invoked arbitration in September 2019, and arbitral proceedings formally began in July 2020.
Why Did The Rajasthan High Court Criticise The Tribunal
After the statutory timeline for completing arbitration expired in February 2023, HCL sought extensions under Section 29A of the Arbitration and Conciliation Act, 1996.
The Commercial Court granted extensions, allowing the tribunal to continue functioning. However, the power distribution companies challenged the later extension before the Rajasthan High Court.
The High Court observed that the tribunal’s proceedings were moving slowly, with repeated adjournments and widely spaced hearings. It also noted that the venue had shifted from Rajasthan to New Delhi, increasing costs and logistical difficulties for the parties.
JVVNL-HCL Arbitration Dispute: Tribunal’s Defence
HCL defended the continuation of the tribunal. According to submissions before the court, the arbitration involved complex technical issues, a large documentary record, examination of 22 witnesses, over 160 sittings, and disruptions caused by the COVID-19 pandemic. The company argued that these factors contributed to the time taken in completing the proceedings.
High Court Orders Fee Reduction
The Rajasthan High Court was not fully convinced by these explanations. The court said Section 29A cannot be used to justify unnecessary delays or lack of procedural discipline.
It stressed that arbitration law is intended to ensure timely dispute resolution and that prolonged proceedings defeat that objective. The High Court also criticised the fee structure.
It noted that high per-sitting fees combined with infrequent hearings created a system that discouraged speedy completion of arbitration proceedings.
As a result, the court ordered a 5% reduction in arbitral fees already paid and directed the tribunal to complete the proceedings within a strict timeline.
JVVNL-HCL Arbitration Dispute: Former Supreme Court Judge Moves Supreme Court
Justice Deepak Verma, who headed the arbitral tribunal, has now challenged the Rajasthan High Court’s order before the Supreme Court. Other members of the tribunal have also joined the challenge.
The petition questions the High Court’s observations regarding the functioning of the tribunal and its decision to reduce arbitral fees.
Supreme Court To Hear Matter
The matter is expected to come up before a Supreme Court bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice V. Mohan. The Supreme Court’s decision could have important implications for arbitration proceedings in India, especially regarding judicial oversight of arbitral tribunals, time limits, and arbitrators’ fees.
Why JVVNL-HCL Arbitration Dispute Matters
The case highlights the continuing debate between ensuring speedy dispute resolution and allowing sufficient time for complex commercial disputes. A Supreme Court ruling may clarify how courts should deal with delays in arbitration proceedings.
Significance For Commercial Disputes
Large infrastructure and technology contracts often involve thousands of documents and multiple witnesses. The judgment could influence how future tribunals manage such complex disputes while remaining within statutory timelines.
Questions Around Arbitrators’ Fees
The challenge also raises important questions about whether courts can reduce arbitral fees when they find delays attributable to the tribunal. A ruling on this issue may shape future arbitration practices across India.
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