Punjab and Haryana High Court Questions Haryana Government's Conduct in Rs 11-Crore Arbitration Dispute
The Punjab and Haryana High Court has expressed strong disapproval and raised alarming questions about the conduct of the Haryana government in a significant arbitration case involving approximately Rs 11 crore. In a recent order, the court highlighted a serious possibility of collusion between state authorities and private respondents, citing the release of nearly the entire awarded amount despite a pending appeal.
Court Observations on Disbursement and Delays
A division bench comprising Justice Ashwani Kumar Mishra and Justice Rohit Kapoor, in an order dated January 20, noted that the appeal filed by the State of Haryana against KCC Buildcon Private Limited and another respondent has been pending since 2023. Shockingly, during this period, about Rs 9 crore out of the total Rs 11 crore arbitral award has already been released to the respondents. The remaining Rs 2 crore, which was deposited and subject to a revision petition, also became liable for release after the petition was dismissed.
The bench pointed out that "almost the entire awarded amount virtually stands released" while the appeal was still under consideration, raising grave concerns about the state's intent. The court reproduced a detailed chronology of orders spanning nearly three years, revealing that the case was adjourned more than a dozen times, almost always at the request of the state counsel. Reasons for these adjournments included non-receipt of files, personal difficulties, absence of arguing counsel, and communication gaps.
Pattern of Disinterest and Possible Collusion
On February 24, 2025, the court recorded that the matter had been adjourned consecutively on eight occasions at the state's request and observed, "Prima facie, it appears that the matter is not being pursued in the right earnest." This pattern continued, leading to the court's sharp remarks in the present order. The bench held that the appeal appeared to have been kept alive merely to create an impression that legal remedies were being exhausted.
In a stinging observation, the court stated, "Prima facie, we find that the matter has been pursued by the State of Haryana with utmost disinterestedness and taking advantage of it, the substantial awarded amount has already been released to the respondents. The appeal appears to have been kept pending only to show that available legal remedies are being exhausted by the state." The court went further to flag the "possibility of collusion on the part of the state authorities," noting that considering the circumstances, such collusion cannot be ruled out.
High Court Directives and Future Proceedings
Before passing further orders, the High Court directed the chief secretary of the Government of Haryana to personally examine the matter and explain the circumstances under which the appeal was conducted in this manner. The court also ordered that any further disbursement of funds to the respondents remain on hold until further orders. The chief secretary has been asked to file an affidavit within two weeks, detailing the state's position and the steps taken, so that appropriate orders can be passed.
The matter is scheduled for further hearing on February 17, 2026. This development underscores the judiciary's vigilance in ensuring transparency and accountability in government dealings, particularly in high-stakes financial disputes.
