Nayara suit against SAP over software service halt in Delhi HC next week

New Delhi, Mar 8 (PTI) The Delhi High Court will next week hear Nayara Energy's lawsuit against German software company SAP's India unit suspending software services critical to its operations.

Nayara had approached the Delhi High Court in September last year after SAP India Pvt Ltd suspended services citing European Union sanctions. The Court, which had denied urgent relief, is scheduled to hear the petition on March 16, people aware of the matter said.

The European Union (EU) had last year imposed sanctions on Nayara for its ties to Russia and for refining Russian oil.

Nayara Energy argued before the Court that its agreement is with SAP India, an Indian entity, and therefore, not subject to the EU sanctions. However, SAP India contended that its parent company is based in Germany and it cannot provide its services without their support.

This, it argued, is an "extraterritorial application of law" threatening Indian energy security, as they produce a significant portion of India's petroleum.

Such a move leaves Indian companies and their operations at the mercy of foreign entities' interpretation of law and its applications.

Nayara's petition before the High Court terms SAP move as "sudden, unilateral and illegal suspension of support services" in relation to software the refiner had licensed for a "valuable consideration." "The illegal suspension and disruption are ostensibly based on sanctions imposed by a foreign jurisdiction (the EU), which has no legal effect in India, especially to a contract governed by Indian law," it said in the petition. SAP's "software is fully integrated and customised to every operation of (Nayara) over a period of 18 years and (Nayara) cannot change to any alternative." It has sought permanent injunction against the move and sought specific performance by SAP.

Nayara is the second largest single-site refinery in the country with a capacity of 20 million tonnes a year. It also operates and maintains an extensive retail fuel network comprising about 7,000 petrol pumps.

The SAP ERP Central Component, which is a system that supports critical modules including finance and accounting, material management, supply and distribution, plant maintenance, quality management, treasury management and human resources, was tailored for industry-specific functionalities of Nayara.

In addition, SAP is the backbone for supply chain management and tax compliance (direct and indirect), and interface with external entities, supplies and employees.

The SAP ECC has become "the central nervous system" of Nayara, the petition said.

SAP had on September 2, 2025, issued an email communication to Nayara stating that they have suspended the services of Nayara in order to comply with certain sanctions imposed by the EU.

"The illegal actions of SAP has resulted in the denial of several services," the petition said, adding Nayara's access to SAP Services Marketplace portal, which serves as the exclusive portal for procuring and downloading supplementary software, products and updates, has been blocked.

Also, SAP Enterprise Support, which is critical assistance provided by technical experts for resolving operational queries, system troubleshooting, maintenance exigencies and cyber security, too has been denied.

"These illegal, unilateral and arbitrary action" have resulted in "systemic vulnerabilities and operational downtime arising from the unavailability of enterprise-level maintenance, including patches, bug fixed and performance operations, resulting in heightened risks of software failures, data inconsistencies,and inefficiencies across refinery, supply chain and retail network," it added. PTI ANU ANU