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Informist, Monday, Apr. 28, 2025

 

NEW DELHI – A division bench of the Delhi High Court Monday upheld a 2023 arbitral award that asked Bharat Sanchar Nigam Ltd. to pay INR 435.2 million to Vihaan Networks Ltd. The court said a single judge in October 2023 had rightly concluded that no grounds were made out to interfere with the award under Section 34 of the Arbitration and Conciliation Act, 1996.

 

The dispute arose out of a tender floated by BSNL in 2016 for survey, planning, and integration with the existing network of second generation global system for mobile communications base station subsystem of villages lacking mobile coverage in Arunachal Pradesh and in Assam's Karbi Anglong and Dima Haso districts. BSNL invited bids after being asked to do so by the Universal Services Obligation Fund, Department of Telecommunication. In 2017, Vihaan Networks was declared the successful bidder.

 

In 2018, BSNL directed Vihaan Networks to initiate preparatory actions and give unequivocal and unconditional acceptance for a field test with live traffic for three months. In its response, Vihaan Networks accepted the additional field test requirement and sought the issuance of an advance purchase order, which was later issued by BSNL. Thereafter, Vihaan Networks also submitted a performance bank guarantee.

 

Upon allocation of sites, Vihaan Networks started deploying resources in the target area and performed all project-related works as per the requirements of the tender and BSNL's testing mandate. However, BSNL withdrew the advance purchase order in 2020. Consequently, Vihaan Networks claimed that it had suffered a loss and sought damages by invoking arbitration.

 

BSNL said that in 2019, the Universal Services Obligation Fund, Department of Telecommunication, had informed it that the Digital Communication Commission had decided to float a fresh tender on fourth generation technology and so the fund had terminated the agreement signed between it and BSNL. Consequently, the advance purchase order to Vihaan Networks had to be withdrawn and the performance bank guarantee for INR 297.3 million was returned to the company.

 

In June 2023, the arbitral tribunal gave its award and said there was no enforceable contract between the parties and withdrawal of the advance purchase order by BSNL was not arbitrary. Accordingly, it rejected all claims of Vihaan Networks except one, for which it awarded an amount of INR 336.90 million and INR 98.30 million with interest of 10% per annum from the date of invocation of arbitration till the date of payment. The award was upheld by the single judge in October 2023, following which BSNL moved the division bench.

 

The petitioner argued that the award towards claim for reimbursement of salary and claim for reimbursement of cost of purchases for carrying out testing was "perverse" and "contrary to settled law" and the provisions of the contract and hence, flew "in the teeth of public policy". Vihaan Networks said the award was granted on the basis of evidence and material on record, specifically BSNL's own letter, as the respondent had carried out work in pursuance to specific instructions given by the petitioner.  End 

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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