Nayara Energy has filed a lawsuit against Microsoft in Delhi High Court after the tech giant suspended cloud services over EU sanctions. The case raises major questions about corporate overreach, India’s energy security, and digital sovereignty.
New Delhi – In a case that underscores the rising tension between international sanctions, corporate accountability, and national sovereignty, Nayara Energy, one of India’s largest private oil refiners, has filed a lawsuit against Microsoft Corporation in the Delhi High Court. This legal move follows Microsoft’s sudden suspension of essential cloud-based services, including Microsoft Outlook and Teams, used daily by Nayara’s 20-million-tonne capacity refinery in Gujarat.
Nayara Energy, part-owned by Russia’s state-run oil giant Rosneft, has accused Microsoft of unilateral action, taken without prior notice or legal mandate under Indian law. The fallout from the service suspension has severely impacted Nayara’s operations and triggered a broader debate over foreign corporate influence and India’s digital dependency.
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Why Did Microsoft Cut Off Services to Nayara Energy?
On July 18, 2025, Microsoft abruptly suspended Nayara’s access to its Microsoft 365 enterprise tools following the European Union’s 15th sanctions package against Russia. The EU’s latest round of sanctions explicitly named Nayara’s Vadinar refinery, citing its ownership structure as a conduit for revenue generation for Russia, which is engaged in a prolonged conflict in Ukraine.
Though Rosneft owns 49.13% of Nayara, the company is headquartered in India, regulated under Indian law, and operates independently. India has not adopted EU or U.S. sanctions and continues to trade with Russia in the energy sector to ensure affordable oil supply for domestic needs.
Nayara’s Legal Action and Court Response
On July 28, Nayara filed an urgent petition in the Delhi High Court, seeking an interim injunction directing Microsoft to restore all services immediately. The refinery emphasized the disruption to internal communications, operational workflows, and data access, calling Microsoft’s move “arbitrary, extraterritorial, and dangerous.”
The court responded on July 29, issuing a notice to Microsoft and scheduling a preliminary hearing to examine the facts. Legal observers say the case could have major ramifications for how multinational tech companies engage with Indian clients amid global geopolitical tensions.
Operational Impact: India’s Energy Sector Feels the Heat
The suspension has forced Nayara Energy to scramble for alternatives. The company has temporarily partnered with Indian firm Rediff.com for communication services. However, Rediff has been unable to access stored data on Microsoft’s cloud servers, causing operational delays at Nayara’s 20-MTPA refinery in Vadinar, which contributes 8% of India’s refining capacity and supplies over 6,500 retail outlets nationwide.
Energy experts warn the issue could ripple through fuel supply chains if not resolved quickly.
Broader Implications: India’s Tech and Energy Sovereignty in Question
This dispute raises pressing questions about India’s over-reliance on foreign cloud service providers. The Indian IT industry, already advocating for digital Atmanirbharta (self-reliance), sees the Nayara-Microsoft standoff as a wake-up call.
Industry insiders report a growing demand for homegrown enterprise solutions, especially in sectors like oil, defense, and public utilities.
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Microsoft’s Silence Fuels Speculation
As of publishing, Microsoft has not issued a formal statement regarding the suspension or the lawsuit. However, sources close to the matter suggest the company acted in anticipation of secondary sanctions penalties under U.S. and EU law.
Still, experts point out that Nayara is not a sanctioned entity under Indian or U.S. law, and unilateral action based on ownership ties without legal basis in the host country may be legally indefensible.
Geopolitical Backdrop: India-Russia Energy Ties in the Crosshairs
India continues to buy discounted Russian crude, shielding domestic consumers from global price shocks. Nayara has played a pivotal role in refining Russian crude into affordable fuel for Indian markets. The EU’s decision to sanction an Indian company—based solely on partial Russian ownership—has drawn criticism from several quarters in New Delhi.
Recent high-level meetings between Prime Minister Modi and Russian President Putin further signal India’s commitment to independent foreign and energy policy, despite growing pressure from Western allies.
What’s Next in the Nayara Energy-Microsoft Battle?
The Delhi High Court’s upcoming ruling could either set limits on foreign corporate overreach or embolden more multinational firms to act unilaterally in India based on global sanction regimes.
A verdict in Nayara Energy’s favor may force Microsoft to reinstate services, offer damages, or renegotiate contractual obligations. A loss, however, could jeopardize Indian access to global tech ecosystems, especially in sensitive sectors like energy, banking, and defense.