Delhi High Court denies urgent relief to Nayara in suit against SAP over software service halt due to EU sanctions

The Delhi High Court on Tuesday denied urgent relief to Indo-Russian oil refining company Nayara Energy in its lawsuit against SAP India Private Limited (SAP) over the suspension of software services [Nayara Energy Limited v SAP India Private Limited & Anr]. 

Justice Amit Bansal said that he will consider a written response by SAP before passing orders on the interim relief application. 

“At this stage, I am of the view that a reply be placed on record before the court considers the grant of interim relief,” the Court said.

Nayara Energy was sanctioned by the European Union (EU) earlier this year for its ties to Russia and for refining Russian oil.

Senior Advocates Rajiv Nayar and Dayan Krishnan appeared for Nayara Energy before the Court and argued that the company's agreement is with SAP India, an Indian entity, and therefore, not subject to EU sanctions.

They stated that SAP’s services are critical for Nayara to issue invoices.

Krishnan stated that with the implementation of the GST 2.0 regime from September 22, the company is not able to issue any invoices because changes need to be made to the software which can only be done with SAP’s help. 

“I cannot invoice because my entire accounting is through SAP. I can’t make a manual change… With the change in the GST regime, I have to download the Indian specific module, which has been blocked,” Krishnan argued. 

Further, Nayar said that Nayara is generating 8.5% of the petroleum revenue for India, and its work is critical to the energy security of the country. 

However, SAP India contended that its parent company is based in Germany and it cannot provide its services without their support. 

Senior Advocate Amit Sibal appeared for the tech giant and said that its officials would end up in a German jail for violating the EU sanctions if it were to restore the services to Nayara.

SAP further stated that it has not released any GST 2.0-related software patch to any company. 

“I don’t have it. The services have been suspended from Germany because the contractual framework is such that the supply and support is not done purely from India by me,” it was stated. 

Further, the Court was told that the agreement between Nayara and SAP is subject to EU sanctions. 

After considering the arguments, Justice Bansal said that he would decide the interim relief application only after considering SAP’s written response. 

“It is not a straightforward issue. I will need to have them put their reply. It is not a case for an ad interim order. Sorry. I have heard you [Nayara] patiently. He [counsel for SAP] has made some valid points. I want him to file a reply. Things are not in his [SAP] control,” the Court said. 

Therefore, it issued notices on the interim relief application and the summons on the suit. 

The case will be heard next on October 29.