Rajasthan High Court Flags Arbitration Excess | Kartik Seth Represents JVVNL in ₹528 Crore Dispute

Kartik Seth Assists Advocate General in Landmark Rajasthan High Court Ruling Curbing Arbitration Delays and Escalating Costs

Advocate Kartik Seth recently assisted Advocate General Rajendra Prasad, along with advocates Shilpa Saini and Dhriti Laddha, in representing Jaipur Vidyut Vitran Nigam Limited (JVVNL) before the Rajasthan High Court in a ruling that has since become one of the most widely discussed arbitration judgments of the year. The case has put a spotlight on a growing concern within the Indian legal and corporate community: that institutional and ad hoc arbitration, intended to be a faster and cheaper alternative to litigation, is increasingly being weighed down by escalating fees, indulgent extensions, and procedural delay.

Background of the Dispute

The underlying dispute traces back to 2009, when HCL Infosystems Limited was awarded a contract under the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) — a central scheme aimed at modernising electricity infrastructure across Rajasthan, spanning works across dozens of towns and hundreds of locations, with a project value of approximately ₹528 crore. Disagreements over execution and payment led HCL to invoke arbitration in 2019, with proceedings before a three-member tribunal — comprising one former Supreme Court judge and two former High Court judges — commencing the following year. Despite the passage of several years and multiple extensions of the tribunal’s mandate under Section 29A of the Arbitration and Conciliation Act, 1996, the dispute remained unresolved.

The Court’s Observations

In its judgment dated May 27, 2026, Justice Sameer Jain examined the cumulative effect of the tribunal’s fee structure and hearing pattern. The Court noted that each hearing session attracted a fee of ₹7.5 lakh for the tribunal — based on ₹2.5 lakh per arbitrator per sitting — exclusive of reading fees, travel, accommodation, and stationery charges. Combined with infrequent and discontinuous hearings, this fee structure had pushed total arbitral costs to nearly ₹13 crore in a dispute valued at roughly forty times that amount in proportion to the fees incurred. The Court held that such a pattern effectively converted arbitration into what has come to be described as “luxury litigation,” running contrary to the statutory objectives of speed, efficiency, and economy that underpin the arbitration framework.

Holding that procedural indulgence cannot override the legislative intent behind Section 29A, the bench modified the Commercial Court’s order extending the tribunal’s mandate, directed a retrospective reduction in arbitrator fees from April 2025, ordered proportionate refunds to the parties, restrained further charges beyond actual out-of-pocket expenses, and directed that hearings proceed on a day-to-day basis to bring the long-pending matter to closure.

Representation and Significance

JVVNL’s case was argued by Advocate General Rajendra Prasad, with Kartik Seth, Shilpa Saini, and Dhriti Laddha assisting in the matter, while HCL Infosystems Limited was represented by Senior Advocate RN Mathur along with advocates Shailesh Kapoor, Lokesh Atrey, and Sakshi Chaturvedi.

Beyond its outcome for the parties involved, the ruling carries broader significance for arbitration practice in India, reinforcing judicial willingness to intervene where tribunal fee structures and procedural conduct undermine the very purpose arbitration is meant to serve. For practitioners and corporates alike, the judgment serves as a reminder of the importance of cost discipline, timeline adherence, and active judicial oversight in high-value commercial arbitrations.