Madras High Court Allows Telecom Contractor To Bid In Fresh BSNL Tender Pending Arbitration

The Madras High Court has granted interim relief to Universal Tele Services by allowing it to submit a bid in a fresh Bharat Sanchar Nigam Limited (BSNL) tender for telecom operations.

The dispute over the termination of its contracts will meanwhile be decided through arbitration. The court directed that BSNL should process the bid only after the arbitrator passes orders.

Justice K. Kumaresh Babu passed the order. The court also clarified an earlier order appointing former High Court judge Justice V. Bharathidasan as sole arbitrator. It made clear that he would adjudicate disputes arising under two agreements covering BSNL's North and Central operational areas. The arbitrator was also given the discretion to deal with both disputes jointly or simultaneously.

The court observed, "This Court is of the view that the applicant could be permitted to submit the tender and the same shall be processed only after orders are passed by the learned Arbitrator."

The dispute stems from two agreements between Universal Tele Services and BSNL for telecom operations in the North and Central operational areas.

According to Universal Tele Services, BSNL terminated both contracts. This led to disputes between the parties.

In relation to one agreement, the contractor challenged termination orders dated November 27, 2025, April 2, 2026 and April 20, 2026. It also challenged the debarment order dated April 20, 2026. Separately, it sought to restrain BSNL from invoking, encashing or otherwise giving effect to a performance bank guarantee of about ₹8.7 lakh issued on July 30, 2025.

The second agreement gave rise to disputes over termination orders dated October 30, 2025, November 24, 2025 and November 27, 2025.

Universal Tele Services approached the High Court seeking the appointment of an arbitrator. It also sought interim injunctions restraining BSNL from acting on the termination, debarment and proposed blacklisting orders. Another request sought to restrain BSNL from invoking or encashing the bank guarantee.

On June 4, 2026, the court appointed Justice Bharathidasan as the sole arbitrator.

Considering the urgency of the matter, the court requested the arbitrator to enter upon the reference immediately. It directed him not to wait for formal communication from the Registry. The court also requested the arbitrator to decide the interim applications proposed to be filed before him on or before June 18, 2026.

The last date for submitting bids in the fresh BSNL tender was June 9, 2026. The court therefore permitted Universal Tele Services to participate in the bidding process. It directed that the bid should not be processed until the arbitrator passed orders.

The matter came up again on June 22, 2026. Counsel for Universal Tele Services submitted that the arbitrator had observed there was no specific reference enabling him to enter upon the disputes arising under the second agreement.

The contractor therefore sought a clarification that the arbitrator's mandate extended to disputes arising under both agreements.

BSNL opposed the request. It contended that the earlier reference related to different agreements and different termination orders. It therefore argued that no clarification was required.

The court then asked whether the same arbitrator could decide disputes arising under both agreements. Counsel for both sides stated that they had no objection.

Recording the consensus, the court appointed Justice Bharathidasan to also adjudicate disputes arising under the second agreement. It directed the Registry to issue a corrected order reflecting the expanded reference.

The court further observed, "The Arbitrator is requested to enter upon the reference and shall have the discretion to deal with the disputes referred to him jointly / simultaneously in respect of North operation area and Central operation area."

For Petitioner (Universal Tele Services): Advocates Haja Mohideen Gisthi for S.M. Vivek Anandh.

For Respondent (Bharat Sanchar Nigam Limited): Advocate N. Umapathy.