The Delhi High Court upholds an arbitral award of ₹43.52 crore in favor of Vihaan Networks Ltd and dismisses BSNL’s appeal under Section 37 of the Arbitration and Conciliation Act, reinforcing the principle of quantum meruit and fair compensation.

Delhi High Court Upholds ₹43.52 Crore Arbitral Award in Favor of Vihaan Networks, Dismisses BSNL’s Appeal

In a significant decision, the Delhi High Court has upheld an arbitral award worth ₹43.52 crore in favor of Vihaan Networks Ltd (VNL), rejecting the appeal filed by Bharat Sanchar Nigam Ltd (BSNL) under Section 37 of the Arbitration and Conciliation Act, 1996. The Division Bench, comprising Justices Vibhu Bakhru and Tejas Karia, ruled that the Single Judge had rightly upheld the arbitrator’s decision.

Case Background: BSNL vs. Vihaan Networks Ltd

The dispute originated from a Notice Inviting Tender (NIT) issued on April 13, 2016, for the supply, installation, and maintenance of a 2G GSM BSS network in remote districts of Assam and uncovered villages in Arunachal Pradesh. The project was initiated at the request of the Universal Service Obligation Fund (USOF), under the Department of Telecommunications, Government of India.

Following successful field testing and negotiations, VNL was issued an Advance Purchase Order (APO) on March 21, 2018, which it fully accepted and acted upon, including providing a Performance Bank Guarantee (PBG). However, BSNL later revoked the APO on February 10, 2020, citing a policy shift toward 4G technology.

Arbitration and the Arbitral Award

Claiming damages due to the withdrawal of the APO, VNL invoked arbitration under Clause 36 of the APO. On June 16, 2023, the Arbitral Tribunal awarded ₹33.69 crore under Claim III(A) and ₹9.83 crore under Claim III(B), along with 10% interest per annum.

The Tribunal dismissed the rest of the claims but held that VNL was entitled to compensation under the principle of quantum meruit, supported by Section 70 of the Indian Contract Act, 1872.

BSNL’s Appeal Under Section 37: Key Arguments

BSNL filed an appeal challenging the Single Judge’s decision under Section 37 of the Arbitration Act, contending that:

• The Respondent had not rendered any benefit to BSNL, making quantum meruit inapplicable.

• Clause 26 of the General Instructions to Bidders (GIB) gave BSNL the right to withdraw the tender at any point.

• The field testing was voluntary, without any payment expectation, and did not result in benefit to BSNL.

Respondent’s Counterarguments

Vihaan Networks countered by arguing that:

• The APO was accepted unconditionally and followed by significant work in difficult terrain near the India-China border.

• BSNL acknowledged the execution of work to USOF.

• The expenses incurred were based on BSNL’s directives, making them liable for compensation.

High Court’s Observations and Final Judgment

The court reiterated that the scope of appeal under Section 37 is limited and does not permit a reevaluation of facts. It emphasized that if the arbitral award presents a plausible interpretation of evidence, interference is not warranted.

The bench also referred to the 2017 ruling in M.C.D. v. Ravi Kumar, supporting the application of Section 70 for recovery based on the value of work done. It affirmed that the award’s application of quantum meruit was sound in law and justified by the facts.

Thus, the court dismissed BSNL’s appeal, reinforcing the legal principle that parties who instruct and benefit from services—explicitly or implicitly—must justly compensate for them.

Conclusion

This judgment strengthens the sanctity of arbitral awards and limits unwarranted judicial interference. It also upholds the importance of honoring commercial commitments, especially in government-driven infrastructure projects.