Delhi High Court Refuses To Stay Order Directing SAP India To Restore Software Support Services To Nayara Energy

The Delhi High Court on Thursday refused to stay the Single Judge's order directing SAP India to restore the position that existed before July 24, 2025, and immediately resume enterprise and software support services for Nayara Energy under their contractual arrangements.

Nayara had filed a plea for an interim mandatory injunction after SAP blocked its access to the SAP Support Portal on July 24. SAP's Global Export Control Team later told Nayara that it was covered by EU sanctions and that business with the company was prohibited.

A Division Bench of Justices Prathiba M. Singh and Dinesh Bhatt observed that the matter required consideration, particularly because the SAP support system was essential to Nayara's operations. The Bench noted that the software support was akin to an essential service and directed that the services ordered by the Single Judge should continue.

The Division Bench issued notice on SAP India's appeal and directed that the support services continue during its pendency, granting SAP liberty to approach the Court if there was any change in circumstances concerning the European Union sanctions.

It also directed SAP to continue providing the support services during the pendency of the appeal, while granting it liberty to approach the Court if there was any change in circumstances concerning the European Union sanctions.

"The Court has heard the learned Senior Counsel for the parties. The matter requires consideration. However, considering the fact that the SAP system would be literally like an essential commodity, accordingly, issue notice in the appeal to the respondent/plaintiff. In the meantime, however, the services, as directed by the learned Single Judge, shall continue to be provided by SAP. If there is any change of circumstances, SAP is free to approach this Court.", the court said. 

Appearing for SAP India, Senior Advocates Neeraj Kishan Kaul and Jayant Mehta argued that the central question was whether a party could be compelled to continue performing a contract when its performance was intertwined with that of its parent company in Europe, which was subject to EU and German export-control restrictions.

Kaul submitted that the European regulations prohibited SAP's German parent company from dealing with entities having links to Russia, including companies involved in supplying oil to Russia, and that violations could attract penal consequences under German law.

He argued that the nature of SAP's services was such that they could not be independently provided by another company without access to SAP's proprietary software ecosystem. The issue, therefore, was not merely one of replacing a service provider, but of continuing support for an entire software infrastructure.

Kaul submitted that the contractual arrangements themselves contained provisions addressing situations where export-control laws prevented the provision of support services.

He told the Court "That categorically provided that if the export laws of Germany or any other country do not permit the support system to be given, it will not be given and we will not be held liable."

He further argued that SAP's case was not that Indian law should not govern the contractual relationship. Rather, Indian contract law itself recognised situations in which performance could become impossible or a contract could be frustrated.

"Our case is that Indian law itself provides that if a contingency occurs, which makes the performance of a contract impossible, or frustrated, it cannot be performed," Kaul submitted.

He contended that the relevant contingency had been expressly incorporated into the contract through the provision dealing with restrictions imposed by export-control laws of the EU, Germany or other concerned countries.

Kaul also informed the Court that SAP had approached the European authorities seeking a derogation from the restrictions. He submitted that the European Council had permitted the continuation of support services subject to Nayara reducing its dealings with Russia.

According to Kaul, SAP had subsequently written to Nayara seeking confirmation regarding the reduction of its Russian dealings, to which Nayara had responded that it was making efforts in that direction. The German authorities had thereafter permitted SAP to continue providing support services.

However, Kaul expressed concern that the permission was time-sensitive and could be withdrawn or not extended. He submitted that SAP could face contempt proceedings if it was unable to comply with the Single Judge's order following a change in the position under European law.

He clarified that SAP was continuing to provide the services under the existing permission but sought liberty to approach the Court if the European authorities subsequently prohibited further support.

The Court then posted the matter on January 11, 2027 for consideration.