O.M.P. (COMM) 249/2023 Page 1 of 15

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 19 January 2026

Judgment pronounced on: 2/2/26

+ O.M.P. (COMM) 249/2023 & I.A. 14284/2025

ZREYAH SEMICONDUCTORS PVT. LTD. .....Petitioner

Through: Mr. Ashish Dholakia, Sr. Adv.

with Mr. Gautam Bajaj, Mr.

Akash Panwar, Ms. Meghna

Jandu, Mr. Lakshay Nagpal &

Ms. Saumya, Advs.

versus

OYO HOTELS AND HOMES PVT. LTD. .....Respondent

Through: Mr. Sumant Nayak, Mr. Ankit

Premchandani & Ms. Smriti

Shukla, Advs.

CORAM:

HON'BLE MR. JUSTICE AVNEESH JHINGAN

J U D G M E N T

1. M/s Zreyah Semiconductors Private Limited has filed the

petition under Section 34 of the Arbitration and Conciliation Act,

1996 (for short „the Act‟) aggrieved of the arbitral award dated

03.04.2023.

FACTS

2. The brief facts are that the petitioner is engaged in the business

of manufacturing and supply of electronic components. The

respondent is a Private Limited Company engaged in the business of

managing hospitality establishments. The respondent placed a

O.M.P. (COMM) 249/2023 Page 2 of 15

purchase order dated 26.09.2019 upon the petitioner (hereinafter „the

PO‟) for supply of 52360 switches valuing Rs.10,34,89,540/-,

inclusive of taxes. Subsequent to the placement of the PO, the parties

entered into a vendor agreement dated 23.12.2019 (hereinafter „the

VA‟). The PO though prior in time was governed by the terms and

conditions of the VA. After the placement of the PO the respondent

paid an advance of fifty percent of the invoice value.

2.1 Prior to the placing of the PO, the parties had business

transactions wherein the petitioner was assembling switches for the

respondent and the entire material was being supplied by the

respondent. The scenario changed and pursuant to the PO the

petitioner had to procure the components for the switches and five

major components were to be procured from vendors specified by the

respondent in Schedule „A‟ to the VA.

2.2 A dispute arose between the parties due to non-delivery of the

switches and arbitration proceedings as provided under the VA were

initiated at the instance of the respondent. The arbitrator framed the

following issues:

(i) Whether the respondent has committed the breach of the Vender

Agreement dated 23.12.2019? If so, its effect.

(ii) Whether the respondent has committed the breach of the P.O.s

dated 26.09.2019 and 22.09.2020? If so, its effect.

(iii) Whether the claimant is entitled to the reliefs as claimed in the

SOC?

2.3 The arbitrator after considering the pleadings and appreciating

the evidence adduced directed the petitioner to deliver 11000 switches

O.M.P. (COMM) 249/2023 Page 3 of 15

claimed to be ready and to pay Rs.2,84,00,000/- along with interest at

the rate of nine percent per annum.

CONTENTIONS

3. Learned counsel for the petitioner relies upon clauses 2.1, 2.3

and 3.1 of the VA to contend that the petitioner was an assembler and

not a manufacturer, the arbitrator erred in holding that the petitioner

was a manufacturer. Reliance is placed upon the correspondence

between the parties to show that the terms and conditions of the

Chinese vendors (hereinafter „the vendors‟) were provided by the

respondent to the petitioner. It is submitted that clause 12.1 of the VA

relied upon by the arbitrator deals with liability of petitioner towards

employees and not with the nature of relationship between the parties

and it was wrongly recorded that there was a principal to principal

relationship between the parties.

3.1 It is argued that the arbitrator relying on clause 14.10 concluded

that all prior discussions, negotiations and agreements were

superseded by the VA, if this is taken to its logical end the PO no

longer existed and consequently no liability could be casted upon the

petitioner.

3.2 The averment is that some of the components were to be

procured from the vendors identified by the respondent and the

advance amount was to be paid by the respondent for these

procurements. On failure of the respondent to make hundred percent

advance payment the components could not be procured and the

switches were not supplied. It is stated that there was no fault on the

part of the petitioner and the fifty percent advance paid by the

O.M.P. (COMM) 249/2023 Page 4 of 15

respondent was utilised for procuring components from which 11000

switches were made. Reliance is placed upon the cross-examination of

CW-1 Nikhil Ranjan to fortify the contention that prior to the PO the

advance payments were made to the vendors.

3.3 The plea is that the delay in supply was not attributable to the

petitioner. The revised purchase order for 11000 switches was a

unilateral action of the respondent and was not issued at the request of

the petitioner. Rather the petitioner refused to accept the revised

purchase order on the existing terms and conditions.

4. Per contra the interpretation of the arbitrator of the terms of the

contract is plausible and a possible second view cannot be a ground

for interference under Section 34 of the Act. It is admitted that the

petitioner was an assembler and not a manufacturer but had to procure

the components.

4.1 The plea taken is that the VA superseded all prior discussions,

negotiations, agreements and there was no clause for payment of

hundred percent advance to the petitioner. Further that payment of

fifty percent advance was merely a goodwill gesture. The cross-

examination of RW-4 Rajesh V.K. is relied upon to submit that no

advance was to be paid yet the respondent paid fifty percent advance.

RW-1 Sujan Nailady admitted in cross-examination that the advance

payment to the vendors was to be made by the petitioner.

4.2 The email dated 20.10.2020 is relied upon to substantiate that

the petitioner failed to supply 52360 switches and that the revised

purchase order was issued at the request of the petitioner.

4.3 Lastly it is submitted that the petitioner failed to comply with

O.M.P. (COMM) 249/2023 Page 5 of 15

the PO for more than one year and three months and thereafter the

termination notice was issued on 06.01.2021.

5. Heard learned counsel for the parties at length and perused the

record with their able assistance.

ISSUE

6. The main controversy involved is as to whether the respondent

had to pay hundred percent advance to the petitioner for procurement

of components.

CLAUSES OF VENDOR AGREEMENT

7. The relevant clauses of the VA are reproduced below:

“H. Based on the representations made by the Vendor, the

Client is desirous of purchasing the Products from the

Vendor on the terms and conditions set out in this

Agreement.

xxx xxx xxx

2. AGREEMENT TO SELL

2.1 The Vendor agrees to sell such number of Products as

detailed in Schedule-A and the Client agrees to purchase

the Products, as may be specified in one or more purchase

orders issued by the Client to Vendor in accordance with

this Agreement.

xxx xxx xxx

2.3 The Vendor agrees to purchase the 5 (five) major

components for assembling of the Product from the

supplier identified by the Client. The Vendor will

assemble all the components and supply the product as

detailed in Schedule A to this agreement.

xxx xxx xxx

3.2 Delivery and Delays: Unless, otherwise agreed in

writing by the Parties, the Products shall be delivered at

the place set out in the Purchase Order. The delivery date

O.M.P. (COMM) 249/2023 Page 6 of 15

stated in the Purchase Order shall be the agreed delivery

date ("Agreed Delivery Date") and time for delivery shall

be of the essence, unless Vendor notifies the Client in

writing within 5 (five) days of issuance of a Purchase

Order that it cannot, using best efforts, meet the delivery

date specified in the Purchase Order. In the event that

Vendor is unable to meet the delivery conditions under

the Purchase Order, the Client may, without prejudice to

its rights for refund of the amounts paid and at its sole

option, (a) negotiate in good faith for an alternative

Agreed Delivery Date, or (b) may cancel the Purchase

Order(c)Procure the Products in from a third Party, costs

of which shall be borne by the Vendor on account of non

performance of obligations.

xxx xxx xxx

3.4 Defects and Returns: The Client will be liable to

accept the Products only if the Products comply fully

with the specifications set out by the Client and with

other requirements of this Agreement. The Client shall

notify the Vendor in writing within 15 (Fifteen) business

days following the receipt by the Client of such Products

of any deficiencies in the Products, including any defects

in the Products or of any failure of the Product to comply

with the required specifications in the Purchase Order and

the Agreement. Where the Client provides such notice to

the Vendor, the Vendor shall rectify such deficiencies in

the Products within 10 (ten) days from the date of receipt

of such notice and if the Vendor fails to rectify such

deficiencies, the Client shall be entitled to return the

Products and obtain full refund from the Vendor for the

same if this is attributable to the assembling of the

product or on the component procured from the Vendor's

direct source. If the product is deficient due to the failure

of the components supplied by the Supplier identified by

the Client then the refund will be based on the back to

back refund from that Supplier. The Parties in accordance

with this Agreement shall mutually resolve any

disagreement relating to the defici encies.

O.M.P. (COMM) 249/2023 Page 7 of 15

Notwithstanding anything to the contrary, failure by the

Client to give notice of or particularize the Deficiencies

within the Inspection Period shall not constitute the

Client‟s acceptance of the Products.

xxx xxx xxx

4. PAYMENT TERMS

4.1 For the Products purchased under this Agreement, the

Vendor shall raise invoices on the Client for the amounts

specified in the Purchase Orders executed between the

Parties from time to time and in accordance with the

terms of this Agreement and the relevant Purchase Order.

Subject to Clause 3.2 below, all undisputed invoices shall

be paid by the Client within thirty (30) working days of

the receipt of the undisputed invoice. In case of any delay

then the Client agrees to pay @2% (two percent) for

every week of delay. All invoices shall be mandatorily

submitted to the Client in hard copy. The Client may,

without limiting any other rights and remedies that it may

have under applicable law, contract and equity, set off

any amounts owed to it by the Vendor against either the

amount payable to Vendor by the Client under the subject

Purchase Order, or against any other invoice raised under

any future. Purchase Orders with Vendor, at the Client‟s

discretion. The Client may ask Vendor to submit

necessary documentary proof in order to make the

payment of the invoices. If Vendor fails to fulfil its

obligations under this Agreement and the relevant

Purchase Order, the Vendor may be liable to pay damages

to the Client amounting to up to 2% (two percent) per

week of the latest invoice raised under this Agreement for

such delay, in addition to other remedies available to the

Client. Such damages shall be deducted in accordance

with this Clause.

4.2 If the Client disputes an invoice raised by the Vendor,

it may withhold any disputed sum until the dispute is

resolved, but shall pay the undisputed portion as per the

terms of this Agreement. The Vendor shall not be

O.M.P. (COMM) 249/2023 Page 8 of 15

excused from performing its obligations under this

Agreement while an invoice is disputed by the Client.

xxx xxx xxx

4.4 The Vendor shall raise an invoice for supply of the

Products purchased under the relevant Purchase Order as

per invoice rules applicable under GST Laws after

appropriate communication of acceptance on the Products

is given by the Client to the Vendor. However, in case of

continuous supply or provision of Products/ Services, the

invoices shall be raised at the end of the agreed payment

cycle as per the terms of this Agreement. In addition to

the above, if any advance payments apply under this

Agreement, Vendor shall issue an advance receipt note

(''ARN").”

ANALYSIS

8. From perusal of the VA, it emerges that the respondent on the

basis of the representations made by the petitioner desired to purchase

products. The petitioner agreed to sell the products detailed in

Schedule „A‟ and in accordance with the terms of the VA. The

petitioner agreed to procure five major components from the vendors

identified by the respondent.

8.1 As per clause 3.2, the delivery date of the PO was to be agreed

and the time for delivery was of the essence. The petitioner was

entitled within five days of issuance of the PO to notify the respondent

that the delivery date cannot be met. In such circumstances, the

respondent without prejudice to the right to seek refund of the amount

could negotiate for an alternative delivery date, cancel the PO or

procure the product from a third party and the cost was to be borne by

the petitioner.

O.M.P. (COMM) 249/2023 Page 9 of 15

8.2 Clause 3.4 deals with defects and return of the goods. It states

that acceptance of the goods by the respondent was subject to

compliance of the products with the specifications prescribed. The

respondent shall notify the deficiencies in the products within fifteen

days of receipt of the goods. The petitioner had to rectify the

deficiencies within ten days of receipt of notice. Failure on the part of

the petitioner to remove the defects entitled the respondent to return

the product and seek refund in case deficiencies were attributable to

assembly or to products directly procured by the petitioner from direct

sources. In case of defect in a component procured by the petitioner

from the vendors identified by the respondent, the refund was based

on a back-to-back refund from the vendors. Failure of the respondent

to notify the deficiencies within fifteen days of receipt of the goods

shall be treated to be acceptance of the product.

8.3 Clause 4 deals with the payment terms. The petitioner subject to

clause 3.2 had to raise invoices for the amounts specified in the PO.

The payment of undisputed invoices was to be made by the

respondent within thirty working days of receipt of the invoices.

Clause 4.4 provides that the invoice for the PO shall be issued after

communication of acceptance of the products by the respondent.

9. The only possible interpretation of the VA is that payment was

to be made by the respondent to the petitioner after acceptance of the

goods. The respondent had to point out deficiencies in the products

within fifteen days of receipt of goods and thereafter the petitioner had

to rectify the defects within ten days. Failure of the respondent to

particularise the deficiencies within a period of fifteen days of receipt

O.M.P. (COMM) 249/2023 Page 10 of 15

of the goods would be deemed to be acceptance of the products. It is

not disputed that in the case in hand no products were supplied.

10. In view of the undisputed fact that the petitioner had to procure

components and make switches, the issue as to whether the petitioner

was a manufacturer or an assembler and whether there was principal

to principal relationship between the parties or not loses relevance.

11. The petitioner set up a case that prior to the PO hundred percent

advance was being paid by the respondent and the VA would not

affect the PO placed prior in time. None of the parties raised an issue

that clauses of the VA were not applicable to the PO rather for

resolving the dispute submitted to arbitration in consonance with

clause 13.1 of the VA. The arbitrator rightly concluded that there was

no clause for payment of hundred percent advance payment by the

respondent. Moreover, earlier all components were being supplied by

the respondent but now for the PO the components were to be

procured by the petitioner with the condition that five components

were to be procured from vendors specified by the respondent.

12. Be that as it may the petitioner failed to substantiate that even

under the PO there was a term or condition providing for payment of

hundred percent advance to the petitioner for procurement of

components. The finding recorded by the arbitrator suffers from no

factual or legal error much less perversity.

13. The emails dated 25.07.2019 and 28.10.2019 sent by the

respondent mentioning the terms and conditions between the vendor

and the respondent and instructing the petitioner to proceed with

procurement of the components as the advance had been paid, does

O.M.P. (COMM) 249/2023 Page 11 of 15

not come to the rescue to take home the claim that the respondent had

to make hundred percent advance payment.

14. It is not the case of the petitioner that 52360 switches were

ready or the petitioner was in a position to comply with the PO, rather

the non-payment of hundred percent advance by the respondent is

stated to be the reason for non compliance of PO. Vide email dated

13.08.2020 the petitioner requested the respondent to pick up the

inventory procured for the manufacture of switches which was lying

in its stores. There is no mention in the email that the switches as per

the PO were ready for delivery.

15. The argument that in view of the clause 14.10, if all prior

discussions, negotiations and agreements have come to an end then the

PO does not survive, lacks merit. Clause 14.10 is reproduced below:

“14.10 Entire Agreement. This Agreement and the

schedules hereto shall constitute the entire and final

statement of the Agreement between the Parties with

respect to the subject matter hereof and supersedes all

prior and contemporaneous discussions, communications,

negotiations and agreements, written or oral, with respect

to the subject matter hereof.”

From the reading of the clause it is evident that it does not cancel the

purchase orders placed earlier but settle the terms and conditions for

supply of material.

16. The challenge to the findings of the arbitrator that the products

were not to be procured from the identified vendors and that no

advance was to be given to the petitioner, lacks merit. The

identification of the vendors for procurement of five components does

not lead to the conclusion that hundred percent advance was to be paid

O.M.P. (COMM) 249/2023 Page 12 of 15

by the respondent. In cross-examination, the CW-1 Nikhil Ranjan

stated that the respondent while procuring the components used to

make advance payments to the vendors, it was admitted that the

petitioner was aware that advance payment was to be made to the

vendors. There is no deposition by the witness that the hundred

percent advance payment was to be paid by the respondent.

17. The issue as to whether the revised purchase order for 11000

switches was a unilateral decision of the respondent or was issued at

the request of the petitioner need not be dilated upon. The dispute

referred to the arbitrator arose out of the termination of the PO and for

refund of fifty percent advance paid to the petitioner.

18. It cannot be lost sight of that the 11000 switches claimed by the

petitioner to be ready were directed by the arbitrator to be supplied to

the respondent and while allowing the claim proportionate deduction

of value of 11000 switches was made in the award.

SCOPE UNDER SECTION 34 OF THE ACT

19. It is trite law that upon re-appreciation of evidence a possible

second view cannot be a ground for interference under Section 34 of

the Act unless the conclusion arrived at is perverse. The interpretation

of the terms of the contract by the arbitrator in normal course is not to

be interfered with. Reliance in this regard be placed on the following

decisions of the Supreme Court:

19.1 In Prakash Atlanta (JV) v. National Highways Authority of

India 2026 INSC 76 held as under:-

“59. (vi) If an arbitral tribunal‟s view is found to be a

possible and plausible one, it cannot be substituted

O.M.P. (COMM) 249/2023 Page 13 of 15

merely because an alternate view is possible.

Construction and interpretation of a contract and its terms

is a matter for the arbitral tribunal to determine. Unless

the same is found to be one that no fair-minded or

reasonable person would arrive at, it cannot be interfered

with. If there are two plausible interpretations of the

terms of a contract, then no fault can be found if the

arbitrator accepts one such interpretation as against the

other. To be in conflict with the public policy of India,

the award must contravene the fundamental policy of

Indian law, which makes it narrower in its application.”

19.2 In Ramesh Kumar Jain v. Bharat Aluminium Company

Limited (BALCO) 2025 INSC 1457 held as under:-

“28. The bare perusal of section 34 mandates a narrow

lens of supervisory jurisdiction to set aside the arbitral

award strictly on the grounds and parameters enumerated

in sub-section (2) & (3) thereof. The interference is

permitted where the award is found to be in contravention

to public policy of India; is contrary to the fundamental

policy of Indian Law; or offends the most basic notions of

morality or justice. Hence, a plain and purposive reading

of the section 34 makes it abundantly clear that the scope

of interference by a judicial body is extremely narrow. It

is a settled proposition of law as has been constantly

observed by this court and we reiterate, the courts

exercising jurisdiction under section 34 do not sit in

appeal over the arbitral award hence they are not

expected to examine the legality, reasonableness or

correctness of findings on facts or law unless they come

under any of grounds mandated in the said provision. In

ONGC Limited. v. Saw Pipes Limited

14

, this court held

that an award can be set aside under Section 34 on the

following grounds: “(a) contravention of fundamental

policy of Indian law; or (b) the interest of India; or (c)

justice or morality, or (d) in addition, if it is patently

illegal.”

O.M.P. (COMM) 249/2023 Page 14 of 15

19.3 In Parsa Kente Collieries Limited. v. Rajasthan Rajya

Vidyut Utpadan Nigam Limited (2019) 7 SCC 236 held as under:-

“9.1. In Associate Builders [Associate Builders v.

DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , this

Court had an occasion to consider in detail the

jurisdiction of the Court to interfere with the award

passed by the Arbitrator in exercise of powers under

Section 34 of the Arbitration Act. In the aforesaid

decision, this Court has considered the limits of power of

the Court to interfere with the arbitral award. It is

observed and held that only when the award is in conflict

with the public policy in India, the Court would be

justified in interfering with the arbitral award. In the

aforesaid decision, this Court considered different heads

of “public policy in India” which, inter alia, includes

patent illegality. After referring Section 28(3) of the

Arbitration Act and after considering the decisions of this

Court in McDermott International Inc. v. Burn Standard

Co. Ltd. [McDermott International Inc. v. Burn Standard

Co. Ltd., (2006) 11 SCC 181] , SCC paras 112-113 and

Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran

[Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran,

(2012) 5 SCC 306] , SCC paras 43-45, it is observed and

held that an Arbitral Tribunal must decide in accordance

with the terms of the contract, but if an Arbitrator

construes a term of the contract in a reasonable manner, it

will not mean that the award can be set aside on this

ground. It is further observed and held that construction

of the terms of a contract is primarily for an Arbitrator to

decide unless the Arbitrator construes the contract in such

a way that it could be said to be something that no fair-

minded or reasonable person could do. It is further

observed by this Court in the aforesaid decision in para

33 that when a court is applying the “public policy” test

to an arbitration award, it does not act as a court of appeal

and consequently errors of fact cannot be corrected. A

O.M.P. (COMM) 249/2023 Page 15 of 15

possible view by the Arbitrator on facts has necessarily to

pass muster as the Arbitrator is the ultimate master of the

quantity and quality of evidence to be relied upon when

he delivers his arbitral award. It is further observed that

thus an award based on little evidence or on evidence

which does not measure up in quality to a trained legal

mind would not be held to be invalid on this score.”

(emphasis supplied)

CONCLUSION

20. The view taken by the arbitrator is plausible and is not vitiated

by patent legality, perversity or conflict with the public policy of

India. No case is made out for interference by this Court under Section

34 of the Act.

21. The petition is dismissed. Pending application stands dismissed.

AVNEESH JHINGAN ,J.

FEBRUARY 02, 2026

‘ha’

Reportable:- Yes