In a recent development, the Bombay High Court has canceled an arbitration decision involving Nexus Infratech and Sikco Engineering Services. Let's explore what happened and why the court made this choice.
Nexus Infratech, a company working under the MSMED Act, was hired to set up a solar power plant at a naval station. They hired Sikco Engineering Services (SESL) to do part of the work. However, problems arose when Nexus ended SESL's job, saying SESL didn't finish on time. Nexus claimed they paid SESL around Rs. 8.08 crores, but SESL argued they were owed more money.
"Nexus ended the job because SESL didn't finish on time."
The two companies ended up in arbitration after failing to settle the issue through discussion. The Facilitation Council's decision focused on three invoices totaling Rs. 2.05 crores, which Nexus said were fake. They claimed these invoices were made up to avoid giving back extra money.
"Nexus said the invoices were fake and not even made for Nexus."
Judge Somasekhar Sundaresan looked at the decision and found it lacking. The court noted that SESL didn't take part in the final hearing, and the Facilitation Council's explanation was weak. The decision focused too much on whether GST was paid, ignoring Nexus's claims about fake invoices and late GST returns.
"The explanation in the decision is weak and not detailed."
The court decided the arbitration decision was flawed because it didn't properly address Nexus's concerns about the invoices. The Facilitation Council didn't consider important evidence, like the timing of GST payments and the vehicle capacities for deliveries.
"The explanation does not cover these issues. The reasons are weak and not detailed."
The court canceled the decision, allowing Nexus to get back their deposit. Both parties can still choose to go back to arbitration if they want. The court emphasized that the Facilitation Council should look at the case more carefully if it goes back to arbitration.
"The parties are free to go back to the arbitration panel if they decide to continue the dispute."
This case shows how important it is to have clear and detailed reasoning in arbitration decisions, especially in complicated business disputes.
