Here's a rundown of a recent court decision involving Zreyah Semiconductors and OYO Hotels, explaining what went down and why the court ruled the way it did.
Zreyah Semiconductors, a company that makes electronic parts, got into a disagreement with OYO Hotels, which manages hotels and similar places. It all began when OYO placed an order on September 26, 2019, for 52,360 switches, worth over 10 crores. They paid half the amount upfront. However, things got messy when the switches weren't delivered.
The trouble started when Zreyah didn't deliver the switches. A neutral third party, called an arbitrator, was brought in to help solve the issue and asked a few key questions:
The arbitrator decided that Zreyah needed to deliver 11,000 switches and pay a big sum with interest.
"The arbitrator directed Zreyah Semiconductors to deliver 11,000 switches and to pay Rs.2,84,00,000/- along with interest."
Zreyah argued that they were just putting parts together, not making them. They claimed that OYO was supposed to pay the full amount in advance for the parts, which they didn’t, leading to delays.
They also said that the new order for 11,000 switches was a decision made by OYO alone, and they didn't agree to it.
OYO countered that Zreyah was supposed to get the parts themselves, and there was no rule for full advance payment. They also pointed out that the new order was actually requested by Zreyah.
The court looked over the Vendor Agreement (VA) which explained that Zreyah was supposed to deliver on time and fix any problems quickly. Payment was only due after the goods were accepted, which never happened since the switches weren’t delivered.
The court found no proof that OYO was supposed to pay the full amount in advance. The emails Zreyah presented didn’t back up their claim either.
Justice Avneesh Jhingan dismissed Zreyah's petition, stating that the arbitrator's decision was fair and didn’t go against any major rules or policies.
"The view taken by the arbitrator is plausible and is not vitiated by patent legality, perversity or conflict with the public policy of India."
The court decided in favor of OYO, agreeing with the arbitrator's decision. Zreyah was ordered to deliver 11,000 switches and pay a large amount of money with interest. The court emphasized the importance of sticking to the terms of agreements and being clear in contracts to avoid such disputes.
