Delhi High Court Upholds Award Setting Aside ₹8.55 Crore DoT Demand Against Sterlite Technologies

The Delhi High Court has upheld an arbitral award in favour of Sterlite Technologies Limited, rejecting the Union government's challenge to an award that had set aside a ₹8.55 crore demand raised by the Department of Telecommunications (DoT).

Justice Avneesh Jhingan ruled that the arbitrator's finding that Sterlite provided only passive telecom infrastructure, rather than unlicensed end-to-end bandwidth services.

This, according to the court, was a plausible view that did not warrant interference under Section 34 of the Arbitration and Conciliation Act, 1996.

“The view taken by the arbitrator is plausible and suffers from no legal or factual error, much less perversity, and no interference is called for,” the court observed.

Sterlite designs and integrates digital networks and provides technological solutions for fixed and wireless communication networks. It held an Infrastructure Provider Category I registration from DoT permitting it to provide passive telecom infrastructure.

Its wholly owned subsidiary, Sterlite Networks Limited, later renamed Speedon Network Limited, entered into a Master Service Agreement with Citycom Networks Private Limited on January 20, 2012, for providing access infrastructure. Sterlite entered into a similar agreement with Microscan Computers Private Limited on May 25, 2012.

The dispute followed a DoT inspection at Sterlite's Pune premises on February 26, 2015. An inspection report concluded that Sterlite was selling bandwidth beyond the scope of its IP-I registration, managing and operating overall equipment through its wholly owned subsidiary, and evading more than ₹2.5 crore towards National Long Distance licence entry and annual licence fees.

DoT issued a show-cause notice in July 2018 and later raised a demand of ₹8,55,75,236 in August 2020. Sterlite sought reconsideration, but DoT rejected the request on October 21, 2020 and directed it to deposit the amount. Sterlite invoked arbitration in January 2021, and a sole arbitrator was appointed by the Delhi High Court in April that year.

The arbitrator eventually held the demand notice and DoT's October 21, 2020 letter rejecting Sterlite's request for reconsideration illegal, arbitrary, irrational, and unjustified. The Union government then challenged the award under Section 34 of the Arbitration and Conciliation Act.

Before the court, DoT argued that Sterlite was effectively providing end-to-end bandwidth services and that billing under the MSAs was linked to bandwidth utilisation. It also alleged that Sterlite Networks was merely a facade and that Sterlite was the actual beneficiary.

Sterlite maintained that there was no evidence showing that it owned the active equipment or provided end-to-end bandwidth services. It contended that the telecom service providers were responsible for the active infrastructure and bandwidth required to provide services to subscribers.

The court noted that the arbitrator had examined the MSAs in detail. Under the agreements, the telecom service providers were responsible for backhaul equipment and the bandwidth required to provide services to subscribers, while Sterlite provided “access infrastructure," which constituted passive infrastructure.

The court also rejected DoT's argument on billing. The arbitrator had found that the monthly recurring charges were not based on the bandwidth capacity opted for by end subscribers. The court held that this reasoning suffered from no legal or factual error warranting interference under Section 34.

The court further upheld the arbitrator's criticism of the pan-India demand. DoT had inspected only Sterlite's Pune premises and conducted no inspection in any other city.

The arbitrator had “rightly held the creation of pan-India demand on the basis of an inspection conducted at one premises of the respondent at Pune to be pernicious.”

The court also noted that DoT had not identified any statutory provision or clause in the IP-I registration authorising such a demand. It had neither pleaded nor proved the actual loss allegedly suffered.

The court observed that proceedings under Section 34 are not an appeal and that evidence cannot be re-appreciated merely because another view is possible.

The court dismissed the Union government's petition on August 12, 2026, leaving the arbitral award in Sterlite's favour undisturbed.

For Petitioner (Union of India/Department of Telecommunications): Advocates Ruchir Mishra, Sanjiv Kumar Saxena, Mukesh Kumar Tiwari, Reba Jena Mishra and Poonam Shukla.

For Respondent (Sterlite Technologies Limited): Advocates Amit Dhingra, Rohit Mahajan, Siddharth Agrawal and Kesang T. Doma.