The Delhi High Court allowed MTNL’s appeals, setting aside the Single Judge’s order upholding two arbitral awards in favour of Motorola, and remanded the matter for a fresh decision on MTNL’s Section 34 petitions.
The dispute between Mahanagar Telephone Nigam Limited (MTNL) and Motorola Inc. originated from a 1999 tender by MTNL for the supply and installation of CDMA telecom equipment. Motorola was awarded contracts through three purchase orders (PO1 in 2000, PO2 in late 2000, and PO3 in 2002).
Disagreements soon arose over equipment performance, including network coverage and acceptance testing, leading Motorola to invoke arbitration in 2008 to claim outstanding payments and interest. In the arbitral award dated 26 August 2013, the arbitral tribunal awarded Motorola approximately USD 8.77 million and INR 222.92 million with 15% interest, and an additional award dated 21 January 2015 ordered release of Motorola’s bank guarantees.
MTNL challenged both awards under Section 34 of the Arbitration Act, but the Single Judge dismissed the petitions in 2017. MTNL then appealed under Section 37, highlighting failure of the judgment to address material objections. The key contention was that one of the contracts (PO2) had no arbitration clause and therefore could not lawfully be adjudicated by arbitration.
MTNL disputed the approach of the arbitral tribunal to have clubbed PO1, PO2, and PO3 as a single transaction while the parties to each contract were different (PO1 and PO3 were entered into with Motorola Inc, and PO2 was entered into with Motorola India, the Indian subsidiary of Motorola Inc.) and PO2 explicitly lacked an arbitration clause.
Motorola responded that the contracts formed part of a single transaction arising from the same tender, and that the inclusion of PO2 was necessary and justified. The respondent also emphasized the extremely narrow grounds for interference with arbitral awards under Sections 34 and 37.
The Bench comprising Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar scrutinized whether the Single Judge’s order meaningfully addressed MTNL’s substantive objections and found that several were simply recorded but not adjudicated. The Court reaffirmed the law that all objections must be considered on their merits and that reasons must be given for rejecting arguments.
The judgment found the Single Judge’s order to be unreasoned on key points, notably the arbitrability of PO2 and the propriety of interest awarded. The Court directed a remand for fresh judicial consideration by a different Judge, restricting the parties to existing pleadings and arguments.
In result, the Court allowed both appeals, set aside the Single Judge’s order upholding the arbitral awards, and reinstated the Section 34 petitions for fresh adjudication. The order explicitly bars parties from expanding their arguments or introducing new matters.
Cases relied on:
1. Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills, 2024 SCC OnLine SC 2632
2. Larsen Air Conditioning & Refrigeration Co. v. Union of India, (2023) 15 SCC 472
Cases referred to:
1. Ajay Singh v. KAL Airways Private Limited, 2024:DHC:3990-DB
2. Kalanithi Maran v. Ajay Singh and Another, 2024 SCC OnLine SC 1876
3. National Project Construction Corporation Limited v. M/s S.S. Sharma and Company, 2025:DHC:5244-DB
Appearances:
For the Appellant: Mr. Arun Bharadwaj, Senior Advocate with Mr. Vikalp Mudgal and Mr. Arun Sanwal, Advocates.
For the Respondent: Mr. P. C. Sen, Senior Advocate with Mr. Nishant Joshi, Mr. Kunal Singh and Ms. Rashi Goswami, Advocates.
