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Supreme Court to Hear Former SC Judge Justice Verma's Challenge to Rajasthan HC Fee Cut
The is set to hear a significant challenge by former Supreme Court judge Justice Deepak Verma (Retd.) against a order that reduced the arbitral fees already paid to a tribunal headed by him, while castigating the tribunal as "lethargic" and lacking procedural discipline. The matter, listed before a bench led by Chief Justice of India Surya Kant, will be heard alongside cross-appeals filed by the disputing parties— and the —who have also challenged different aspects of the High Court's May 27 order.
Background of the Arbitration Dispute
The arbitration stems from contracts awarded in 2009 by three Rajasthan power distribution companies—Jaipur Vidyut Vitran Nigam Limited, , and —to under the Restructured Accelerated Power Development and Reforms Programme. The contracts involved power and IT infrastructure works. Disputes over execution delays, deductions, and alleged non-performance arose, leading HCL to invoke arbitration on , under Clause 8.2 of the General Conditions of Contract. The arbitral proceedings commenced on , with a three-member tribunal comprising Justice Deepak Verma (former SC judge), Justice Dinesh Chandra Somani (retired judge), and Justice N. Kumar (retired High Court judge).
After the expiry of the statutory timeline for arbitration on , HCL sought successive extensions under . The granted an extension on , up to , and later extended the mandate again on , up to . The DISCOMs challenged the latter extension before the under , 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 increased logistical and financial burdens.
's Stern Observations and Directions
On
, a Single Judge of the
passed a strongly worded order criticising the arbitral tribunal's conduct. The High Court described the tribunal's approach as "lethargic" and a "casual approach" that
"undermined the very spirit of arbitration"
and demonstrated a "lack of procedural discipline." The court observed that while Section 29A permits extension upon showing
, it cannot be invoked to accommodate indolence, tactical delay, or procedural laxity. The High Court further noted that the legislative intent of
under Sections 23(4), 24, and 29A stood frustrated in this case.
The High Court particularly criticised the Rs. 7.5 lakh per-session fee structure, stating 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. The court then issued several directions: it partly upheld the 's September 2024 order but modified the February 2026 extension, directing the tribunal to resume day-to-day hearings from , at the and conclude proceedings within 45 days. It also ordered a 5% monthly reduction in arbitral fees already paid for delays attributable to the tribunal and restrained any further financial burden from such delays from being passed on to the parties.
Justice Verma's Challenge Before the Supreme Court
Aggrieved by the High Court's order, the tribunal members approached the Supreme Court. Justice Verma's appeal, filed through , raises a fundamental challenge to the High Court's jurisdiction. The appeal contends that the High Court exceeded its authority under Section 29A of the Arbitration and Conciliation Act. While Section 29A empowers the High Court to extend the mandate of an arbitral tribunal, it does not authorise the court to dictate the manner, schedule, or pace of proceedings. According to the appeal, directions to conduct day-to-day hearings and to pronounce the award within a specific period amount to impermissible .
Justice Verma further argues that there is no statutory provision allowing a court to reduce fees already paid to arbitrators at a rate of 5% per month of delay, nor to order refunds of such reduced fees. The High Court's directive to return the fee after adjusting the revised fee is, therefore, without legal foundation.
The tribunal strongly disputes the finding that it was responsible for the delay. The appeal states that the arbitral record runs over 50,000 pages, with approximately 22 witnesses cross-examined over 88 sessions. The tribunal adjudicated more than 13 interim applications involving complex legal questions and delivered an interim award on . Proceedings were also affected by the death of one of the co-arbitrators—a circumstance beyond the tribunal's control—and a mid-proceeding change of counsel by JVVNL during final arguments, which required rescheduling. The tribunal claims that it consistently reserved four to five hearing days every month and that both parties repeatedly sought adjournments. Therefore, any delay was attributable to the parties and circumstances, not the tribunal.
Supreme Court Proceedings and Status
The appeal was initially listed before a bench led by Chief Justice of India Surya Kant on Friday. Instead of issuing notice on Justice Verma's plea, the bench directed that it be heard on Monday alongside the appeals filed by and JVVNL challenging different aspects of the High Court's order. HCL is aggrieved by the timeline to conclude arbitration and deliver the award, while JVVNL argues that if the High Court found the tribunal responsible for delay, it should have reconstituted the tribunal with new members.
A partial vacation bench of the Supreme Court had, in the last week of June, stayed the operation of two directions of the High Court—the requirement to pronounce the award within 15 days and the refund of arbitral fees. This interim stay provides some relief to the tribunal members pending the final hearing.
Legal Analysis and Implications
The case raises critical questions about the extent of judicial oversight over arbitral proceedings under Section 29A. The power to extend the mandate has been interpreted by various High Courts and the Supreme Court as a mechanism to ensure without interfering with the tribunal's . The 's order, which not only fixed a timeline but also imposed financial penalties on the tribunal, represents an aggressive assertion of that may be seen as encroaching on the independence of arbitrators.
Justice Verma's challenge highlights a tension between the need for efficient, and the respect for arbitral discretion. If the Supreme Court upholds the High Court's approach, it could embolden courts to micromanage arbitration proceedings, potentially deterring retired judges from accepting arbitral appointments. Conversely, if the appeal succeeds, it may reinforce the principle that courts should not dictate the pace or method of arbitration beyond granting extensions.
The fee reduction directive is particularly novel. There is no express provision in the Arbitration Act empowering courts to reduce fees already paid. The High Court relied on an to ensure that the arbitration process is not abused. However, the Supreme Court may need to clarify whether such are permissible and, if so, under what circumstances.
Impact on the Arbitration Ecosystem
This case has already drawn attention to the broader issue of delay in arbitration and the role of high per-sitting fees. The 's observation that the fee structure created "structural incentives" for delay resonates with criticisms that arbitration in India is becoming "luxury litigation." The outcome of the Supreme Court's hearing could influence how courts balance the need for expedition with the rights of arbitrators to fair compensation.
For legal practitioners, the case underscores the importance of maintaining a clear record of hearings and adjournments. Tribunals must be able to demonstrate that delays are not attributable to them. The Supreme Court's decision will also clarify the limits of a court's power under Section 29A, potentially setting a precedent for numerous pending arbitration matters.
Conclusion
The Supreme Court's upcoming hearing will address fundamental issues regarding judicial interference in arbitration, the enforceability of fee penalties, and the autonomy of arbitral tribunals. Both parties and the tribunal members await a definitive ruling that could reshape the landscape of institutional arbitration in India. The legal community will closely watch how the apex court navigates the tension between time-bound justice and procedural fairness.
