HCL Infosystems' subsidiary, HCL Infotech, has received an adverse judgment from a Muzaffarpur court regarding a 2019 arbitration award of Rs 13.41 crore against Uttar Bihar Gramin Bank. The court challenged the original award's validity and interest calculations, casting uncertainty over the potential recovery of the funds. The company is now evaluating its legal options to challenge the decision, likely by approaching the Patna High Court.
HCL Infosystems Subsidiary Receives Adverse Court Ruling in UBGB Dispute
The Principal District Judge in Muzaffarpur has set aside a 2019 arbitration award favoring HCL Infotech.
The award originally granted approximately Rs 13.41 crore, plus interest, against Uttar Bihar Gramin Bank (UBGB).
Reader Takeaway: Court overturned Rs 13.41 crore arbitration award; HCL is weighing an appeal to the Patna High Court.
What just happened
HCL Infosystems Limited informed the exchange that its wholly-owned subsidiary, HCL Infotech Limited, received an unfavorable judgment on October 6, 2026. The Principal District Judge at Muzaffarpur ruled in favor of UBGB, allowing their Section 34 petition under the Arbitration and Conciliation Act. This petition challenged an arbitration award originally issued in October 2019, which had initially favored HCL Infotech.
Why this matters
The 2019 award had recognized claims of Rs 13.41 crore plus an 18% annual interest rate and Rs 20 lakh in costs. By setting aside this award, the court has effectively stalled the recovery of these dues. The court specifically criticized the tribunal for failing to clearly address the legality of the service agreement termination and for applying a high 18% interest rate without sufficient statutory justification.
Risks to watch
Investors should note that the company describes the judgment as "ambiguous." While the court suggested that some portions of the claims may be "severable" and potentially still valid, the exact financial impact remains unclear. The primary risk is the potential loss of the entire award if legal appeals are unsuccessful or if the court forces a lengthy re-arbitration process.
What to track next
The company is actively consulting legal experts. Shareholders should monitor upcoming filings for any movement toward filing an appeal at the Patna High Court or further clarifications on which specific portions of the original claim the court considers to be independent of the primary dispute.