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Informist, Friday, Nov. 14, 2025

 

NEW DELHI – A division bench of the Delhi High Court ordered its single judge to hear afresh Mahanagar Telephone Nigam Ltd.'s challenge against arbitral awards asking the company to pay INR 1 billion to Motorola Inc., with 15% interest, and to return the latter's bank guarantees. The division bench set aside the single judge's 2017 order, which had upheld the arbitral awards of 2013 and 2015.

 

The division bench of Justice Anil Kshetarpal and Harish Vaidyanathan Shankar said that the single judge's verdict cannot be sustained insofar as it failed to address certain central objections. The single judge's order does not meaningfully engage with or decide Mahanagar Telephone Nigam's substantive challenges, the division bench said. 

 

The bench said that Mahanagar Telephone Nigam had specifically contended that the second purchase order was an independent, self-contained contract, and that the arbitral tribunal's award of interest at 15% per annum on both the foreign currency and rupee components was illegal and unsustainable. These contentions, though squarely raised, remain unexamined and unsupported by any reasoned analysis in the single judge's order. The failure to deal with these objections is not merely a procedural shortcoming but a material error in the exercise of jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, the division bench said.

 

"If the appellant's plea regarding the non-arbitrability of PO2 (second purchase order) is accepted on its face, the entire arbitral award may be rendered unsustainable in law, as the doctrine of severability would not be capable of application in the peculiar facts and circumstances of the present case," the division bench said. The submissions advanced by Mahanagar Telephone Nigam, particularly on the issue of arbitrability of the second purchase order, cannot be treated as peripheral or inconsequential, the bench added.

 

The case has its genesis in Mahanagar Telephone Nigam issuing a tender inviting offers for a project from manufacturers and suppliers of wireless local loop, Code Division Multiple Access IS 95A technology in 1999. Motorola emerged as the successful bidder in 2000.

 

Over the years, several communications and meetings took place between the parties to resolve issues arising during the execution of the project. In 2008, Motorola invoked arbitration to seek the release of outstanding payments, along with interest. In 2013, the arbitral tribunal awarded in favour of Motorola, directing Mahanagar Telephone Nigam to pay $8.77 million and INR 222.92 million, which totalled INR 1 billion. The arbitrator further awarded interest at 15% per annum. Subsequently, by an additional award in 2015, the arbitrator directed Mahanagar Telephone Nigam to release Motorola's bank guarantees. Challenging both the arbitral awards, Mahanagar Telephone Nigam moved the single-judge bench of the high court.

 

Friday, the shares of Mahanagar Telephone Nigam Ltd. ended 0.7% higher at INR 41.05 on the National Stock Exchange.  End

 

US$1 = INR 88.74

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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