HCL Infosystems disclosed that its wholly owned subsidiary, HCL Infotech Limited, received a judgment from the Principal District Judge, Muzaffarpur, Bihar, allowing an objection petition filed by Uttar Bihar Gramin Bank (UBGB). The court set aside portions of an arbitral award dated October 29, 2019, which had previously favored HCL Infotech.

The judgment, passed on September 16, 2026, and received on October 6, 2026, stems from a Section 34 Objection Petition filed by UBGB against HCL Infotech. The original arbitral award had allowed claims of approximately ₹13.41 crore in favor of HCL Infotech, along with interest at 18% per annum and ₹20 lakh in costs, while rejecting UBGB's counterclaims.

Grounds for Setting Aside Award

The Principal District Judge held that the Arbitral Tribunal failed to make a categorical finding that the termination of the Service Agreement dated December 11, 2012, by UBGB was legally invalid. Additionally, the court noted that the tribunal mechanically relied upon Section 31(7) of the Arbitration and Conciliation Act, 1996, to award interest at 18% per annum without examining applicable statutory provisions or recording reasons for treating this rate as reasonable.

However, the judgment clarified that claims of HCL Infotech which are independent of the legality of termination and are legally and factually severable shall remain unaffected.

Litigation Details

Company Response

HCL Infosystems stated that HCL Infotech is currently evaluating the judgment and the remedies available. The company indicated it would take further action as advised and considered appropriate, in accordance with applicable law, before the competent court or High Court at Patna. The disclosure noted that the impugned judgment appears to be ambiguous.

This intimation was made pursuant to Regulation 30 read with Para B of Part A of Schedule III to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

HCL Infosystems has received a penalty of ₹80.22 lakhs from the Additional Commissioner, CGST (Appeals), Noida. The order, dated September 15, 2026, was received by the company on September 24, 2026.

The penalty arises from a dispute over CENVAT credit availed for various cesses in the pre-GST regime. The adjudicating authority initially confirmed a tax demand of ₹80.22 lakhs under Section 74(1) of the CGST Act, 2017, but dropped proposals relating to interest and penalty in its original order dated February 1, 2025.

Appeal Outcome

The Department preferred an appeal against the original order, challenging the dropping of interest and penalty. The Additional Commissioner partially allowed this appeal, modifying the original order to impose the penalty amount on the company.

The core issue involved was the applicability of interest and penalty on the confirmed tax demand. While the tax liability itself remained unchanged from the original assessment, the appellate authority reversed the earlier relief granted regarding penalties.

Company Response

HCL Infosystems stated it is evaluating the Order-in-Appeal and considering available legal remedies in accordance with law. The company filed the intimation with BSE and NSE under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Litigation Details

The company referenced previous disclosures filed on February 5, 2025, and June 4, 2025, regarding the original order and its rectification. The current development marks a shift in the financial implication of the litigation, moving from a tax-only demand to one inclusive of significant penalties.