Summary: The Bombay High Court rejected Mahindra Defence Systems' appeal against Ranjana Industries, supporting an arbitral decision for unpaid money and interest.
Mahindra Defence Systems Limited (Mahindra) and Ranjana Industries, run by Mr. Sunil Palve, had a business deal involving supply orders. Problems came up from three purchase orders issued in January 2017, with Ranjana Industries claiming they were owed about ₹16.16 lakh.
Mahindra said that Ranjana Industries delivered the goods late and that they weren't up to standard. They claimed that two shipments were rejected and wanted to counterclaim ₹61.48 lakh for various costs, including business losses and damages.
"Mahindra argued that the delivery terms required the goods to be provided within 26 days of each Letter of Intent."
Ranjana Industries argued that the goods were never returned by Mahindra and that Mahindra had taken advantage of tax credits without paying for the goods. They faced demands from the Sales Tax Department because of Mahindra's actions.
"Ranjana Industries argued that the goods supposedly returned by Mahindra were never actually sent back."
The Facilitation Council's arbitral tribunal found Mahindra's claims unsupported. The tribunal noted that Mahindra couldn't prove the goods were faulty or returned within the legal time frame.
"The tribunal decided in favor of Ranjana Industries and against Mahindra, granting the claimed amount along with interest."
The High Court, led by Judge Somasekhar Sundaresan, supported the tribunal's decision. It dismissed Mahindra's new argument that the contract was a "works contract" and not under the council's authority. The court stressed the legal deadlines under the MSMED Act, which Mahindra failed to meet.
"The Judgment dismissed the argument on time limits."
The court ordered Mahindra to pay costs and release any deposits to Ranjana Industries. It stressed the importance of big companies having fair legal policies and considering the effects on smaller businesses.
"The interest rate in Section 16 of the MSMED Act is meant to stop making things hard for small businesses."
This case highlights the importance of following legal deadlines and the difficulties smaller businesses face in disputes with bigger companies.
