HC upholds arbitral award ordering UP assembly secretariat to pay ₹5.37 cr to TCS

The Uttar Pradesh Legislative Assembly Secretariat had illegally terminated its contract with TCS to conduct a recruitment examination, the arbitrator had ruled

MUMBAI: The Bombay High Court on Tuesday upheld a 2023 arbitral award which directed the Uttar Pradesh (UP) Legislative Assembly Secretariat to pay ₹5.37 crore to Tata Consultancy Services (TCS) for illegally terminating a contract to conduct a recruitment examination.

HC upholds arbitral award ordering UP assembly secretariat to pay ₹5.37 cr to TCS

“The findings recorded by the learned arbitrator are well supported by evidence on record. They cannot be treated as perverse in any manner,” justice NJ Jamadar said while dismissing the assembly secretariat’s appeal against the arbitral award dated.

The UP Assembly had in December 2015 hired TCS to conduct an examination for recruitment of review officers and assistant review officers for its secretariat. As per terms of the agreement, TCS was supposed to manage applications, conduct the exam online in 15 cities, assess the candidates and declare the results online at the rate of ₹350 per candidate.

Accordingly, online exams were held on December 29, 2015 and December 30, 2015 for 77,804 candidates. But the assembly secretariat did not clear the initial invoices issued by TCS. On June 27, 2016, the secretariat issued a letter to the company, saying that its contract had been terminated on account of anomalies in the online exam it had conducted for the Railway Recruitment Board (RRB).

When TCS sought its payment, the secretariat refused to process it, saying that since the contract had been terminated before the result could be declared, work relating to the exam could not be considered completed. The secretariat also pointed out that a probe by the Special Task Force (STF) of UP police had found serious anomalies in the RRB examination conducted by TCS, including allegations of connivance between the candidates and TCS staff.

Eventually, in July 2018, TCS invoked the arbitration clause in its agreement with the assembly secretariat while in November 2019, the high court appointed an arbitrator to resolve the dispute.

After a round of litigation reaching up to the Supreme Court, on 24 November, 2023, the arbitrator allowed the claim of TCS and held that the termination of the contract was illegal. It also noted that the UP STF had clarified to the government that it had not found any direct or indirect role of TCS employees in the alleged irregularities in the RRB examination.

The arbitrator observed that TCS had almost completely performed its obligations under the contract and only the administrative work of declaring the merit list/ result was pending. It directed the assembly secretariat to pay TCS ₹5.37 crore, along with interest at the rate of 1.5% per month from the date of arbitral proceedings till recovery, and litigation cost of ₹11 lakh.

On Tuesday, justice Jamadar upheld the arbitral award, observing that the examination was cancelled by the speaker of the assembly “as a matter of choice and election”, without TCS being responsible for breach of any condition of the contract or any malpractices in the exam.