In a notable ruling delivered on 30 September 2025, the Bombay High Court dismissed an appeal filed by Mahindra Defence Systems Limited and upheld an arbitral award in favour of Pune-based micro enterprise Ranjana Industries. Justice Somasekhar Sundaresan, pronouncing the order reserved in July, not only confirmed the award but also directed Mahindra to pay additional costs, highlighting the need for large corporates to rethink aggressive litigation against small suppliers.
Background
The dispute traces back to three purchase orders issued by Mahindra in January 2017 for QTTM assembly components from Ranjana Industries, a sole proprietorship run by Mr. Sunil Palve. While part payments were made, a sum of about ₹16.16 lakh remained unpaid. Ranjana approached the Facilitation Council under the MSME Development Act, seeking the outstanding dues along with statutory interest.
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Mahindra’s defence was that the goods supplied were delayed and did not meet quality standards. It also counter-claimed about ₹61 lakh for alleged losses, including liquidated damages and costs of engaging a replacement vendor. But Ranjana denied that the goods were ever returned, pointing to Mahindra’s input tax credit and lack of debit notes as proof of actual acceptance.
Court’s Observations
The High Court’s judgment paints a detailed picture of the parties’ correspondence. The judge noted that Mahindra’s own records before the Sales Tax authorities showed the goods were “rejected” only on 30 December 2017, several months after delivery. “This stance has been compared with the pleadings to find that… the insinuation that the goods were contemporaneously rejected was held to be untenable,” the court recorded.
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A key issue was the 15-day statutory window under the MSME Act to raise objections after delivery. The court observed that Mahindra’s so-called “observations” from its quality department could not automatically be treated as formal objections. “Where a recipient accepts the goods and seeks further work on them, it cannot be treated as a denial of delivery,” Justice Sundaresan wrote. The bench also underlined that neither party led oral evidence before the arbitral tribunal and Mahindra produced no proof of having paid penalties or actually engaged an alternate vendor.
On Mahindra’s last-minute argument that the orders were “works contracts” and thus outside the Facilitation Council’s jurisdiction, the court called it a “red herring” and affirmed the finding that these were straightforward purchase orders.
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Decision
Concluding that the arbitral tribunal had assessed the evidence “plausibly and reasonably,” the High Court refused to interfere with concurrent findings under Sections 34 and 37 of the Arbitration Act. The appeal was dismissed, and the award of ₹16.16 lakh plus statutory interest in favour of Ranjana Industries was upheld.
Additionally, Mahindra Defence Systems was directed to pay ₹1.5 lakh as costs within four weeks, and any deposits made during the litigation will be released to Ranjana. In a striking end-note, Justice Sundaresan remarked that large corporates should “set an example by adopting a reasonable litigation policy” instead of dragging tiny enterprises into prolonged legal battles.
Case: Mahindra Defence Systems Limited v. Ranjana Industries (through Sole Proprietor Mr. Sunil Palve)
Case Numbers: Arbitration Appeal No. 47 of 2023 with Interim Application No. 17383 of 2023
Reserved On: 23 July 2025
Pronounced On: 30 September 2025
