Court Directs Compulsory Fee Reduction and Resumption of Arbitration for Persistent Delays Attributable to the Tribunal

The dispute arises from a contract awarded in 2009 to HCL for the Restructured Accelerated Power Development and Reforms Programme (RAPDRP), valued at approximately ₹528.20 crores.

In 2019, HCL invoked arbitration seeking recovery for alleged arbitrary deductions.

A three-member tribunal was constituted and began effective proceedings in March 2022.

The mandate was extended by consent until 31.08.2023.

On 17.09.2024, the Commercial Court granted a first extension until 30.04.2025, finding HCL largely responsible for delays and imposing conditions such as cost-capping and interest restrictions.

While these conditions were challenged and stayed in a separate writ, HCL filed a second extension application on 22.04.2025.

The Commercial Court, via an order dated 24.02.2026, extended the mandate further until 30.09.2026 without imposing the previous rigorous conditions.

The State DISCOMs challenged this second extension under Article 227 of the Constitution.

1. Whether the writ petition is maintainable under Article 227 of the Constitution against an order passed under Section 29A of the Arbitration Act?

2. Whether a successive (second) application for extension of the arbitral mandate under Section 29A is maintainable?

3. Whether "sufficient cause" existed for the extensions and whether the Tribunal’s conduct adhered to statutory discipline under Sections 24 and 29A?

4. Whether the financial structure (per-sitting fees) and change in venue contributed to unjustifiable delay and prejudice?

The Court applied the principles of Article 227 regarding supervisory jurisdiction over tribunals where no statutory appeal exists.

It primarily relied on Section 29A of the Arbitration and Conciliation Act, 1996, which mandates that extensions be granted only for "sufficient cause" and permits the court to reduce fees if delay is attributable to the tribunal.

Sections 24 and 18 were applied regarding the requirement for day-to-day hearings and equal treatment of parties.

Key precedents included Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. (2025), establishing that Section 29A applications are maintainable post-expiry but must meet the "sufficient cause" threshold.

ONGC v. Afcons Gunanusa JV (2024), regarding the rationalization of arbitral fees and party autonomy.

Union of India v. Singh Builders Syndicate (2009), cautioning against exorbitant per-sitting fees in ad hoc arbitrations.

The Court observed that while successive extensions are maintainable in law, they cannot be granted mechanically.

In this case, the Tribunal's conduct reflected a "lethargic and casual approach," with hearings often spaced five months apart despite the mandate of Section 24 for day-to-day proceedings.

The Court found that the substantial delay was squarely attributable to the Arbitral Tribunal, which ignored the Commercial Court's earlier direction to conclude within 14 sittings.

Furthermore, the shifting of the venue from Rajasthan to Delhi contrary to the agreement (GCC Clause 8.2) imposed an unfair financial burden on the State entities.

The Court noted that ₹13 crores had already been spent on fees for a ₹528 crore dispute, creating a "perverse incentive" for delay under a per-sitting fee model.

The second extension order was found to be an impermissible review of the first order's conditions without fresh "sufficient cause".

It directed the Tribunal to resume proceedings in Jaipur (not Delhi) on 31.05.2026 on a day-to-day basis, with a final deadline of 30.06.2026 to conclude arguments and 15 days thereafter to pass the award.

Finding the Tribunal responsible for the delay, the Court ordered a 5% monthly reduction in arbitral fees for the period beyond 30.04.2025, to be refunded to the parties.

The petitioners were granted liberty to raise objections regarding arbitrator impartiality under Sections 12-14 as a preliminary issue.

All future expenses were capped at actual pocket expenses with no additional session fees permitted.