Karnataka High Court
Sri M L Shankarlingappa vs M/S Kundur Constructions Pvt Ltd on 4 August, 2026
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COMAP No. 120 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF AUGUST, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VENKATESH NAIK T
COMMERCIAL APPEAL NO.120 OF 2024
BETWEEN:
SRI M.L. SHANKARLINGAPPA
AGED ABOUT 68 YEARS
RESIDING AT NO.12
BASAVESHWARA LAYOUT
JAKKUR ROAD, SHIVANAHALLI
YELAHANKA
BENGALURU-560 064.
...APPELLANT
(BY SRI M.L. SHANKARLINGAPPA, PARTY-IN-PERSON)
AND:
1. M/S. KUNDUR CONSTRUCTIONS PVT. LTD.
HAVING ITS REGISTERED OFFICE AT
FLAT NO G-03, KUNDUR PARK
JAKKUR-AMRUTHALLI MAIN ROAD
JAKKUR, BENGALURU-560 064
Digitally REPRESENTED BY ITS
signed by PROJECT MANAGER
RAKSHA MR. JAGADISH
Location: S/O. MR. SELVARAJU.
High Court
of Karnataka 2. SHRI VISHVANATH V. ANGADI
DISTRICT JUDGE (RETD.)
SOLE ARBITRATOR
ARBITRATOR AND CONCILIATION CENTRE
(DOMESTIC AND INTERNATIONAL)
KHANIJA BHAVAN
RACE COURSE ROAD
BENGALURU-560 001.
...RESPONDENTS
(BY SRI SANTHOSH KUMAR M.B. FOR
SRI CHAMARAJ M., ADVOCATES FOR R-1)
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COMAP No. 120 of 2024
THIS COMMERCIAL APPEAL IS FILED UNDER SECTION
13(1)(1A) OF COMMERCIAL COURT ACT 2015 READ WITH SECTION
37 OF ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO
SET ASIDE THE JUDGMENT DATED 20-1-2024 PASSED BY THE 86TH
ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU (CCH-
87) IN COM.A.P.NO.117 OF 2022 BY ALLOWING THE ABOVE APPEAL
WITH COSTS AND ETC.
THIS COMMERCIAL APPEAL HAVING BEEN HEARD AND
RESERVED ON 08-07-2026, COMING ON FOR PRONOUNCEMENT,
THIS DAY, THE VENKATESH NAIK T. J., PRONOUNCED THE
FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VENKATESH NAIK T
CAV JUDGMENT
(PER: HON’BLE MR. JUSTICE VENKATESH NAIK T)
This appeal arises from the Judgment and Order dated
20.01.2024 passed by the LXXXVI Additional City Civil and
Sessions Judge (CCH-87), Bengaluru, (‘Commercial Court’) in
Com.A.P. No.117/2022, whereby the Commercial Court
dismissed the petition filed by the appellant under Section 34 of
the Arbitration and Conciliation Act, 1996 (for short, “the
Arbitration Act“), seeking to set aside the Arbitral Award dated
08.08.2022 passed by the Arbitral Tribunal in A.C.No.260/2021
and to allow the counterclaim filed by the appellant before the
Arbitral Tribunal in A.C. No.260/2021.
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COMAP No. 120 of 2024
2. For the sake of convenience, the parties are
referred to as per their ranking before the Tribunal. The
appellant herein was the respondent, and respondent No.1
herein was the claimant before the Tribunal.
3. The brief facts of the case of the appellant – party-
in-person, are that he is the owner of the immovable property
bearing Survey No.5BC-306 situated at Hennur Road,
Banasawadi Layout, 3rd Block, Kacharakanahalli, Bengaluru. He
entrusted the construction work of a commercial and residential
apartment on the said property to the first respondent/claimant
under the contract agreement dated 03.10.2016. Pursuant to a
dispute that arose between the parties with regard to the
settlement of the final bill payable by the appellant to the first
respondent/claimant, respondent No.1/claimant approached
this Court in CMP No.247/2020. This Court, by its order dated
27.08.2021, constituted the Arbitral Tribunal and appointed
respondent No.2 to adjudicate the disputes between the
parties. Consequently, the first respondent/claimant filed a
claim statement before the Arbitral Tribunal in
A.C.No.260/2021, claiming a sum of Rs.29,47,570/- with
interest at the rate of 24% per annum from 20.06.2018 till
realization, along with costs, contending that the parties had
entered into the said contract agreement dated 03.10.2016.
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COMAP No. 120 of 2024
4. It is stated that the cost of construction of the
building was fixed at Rs.2,40,00,000/- after negotiations
between the parties. As per Clause 2 of the contract, the
appellant was required to make payment of the bills within 15
days from the date of acceptance of the RA bills, after
necessary deductions. After completion of the construction of
the building, respondent No.1 handed over possession of the
building to the appellant and raised the final bill for a sum of
Rs.2,40,47,570.94/- as per the bill dated 20.06.2018. The
appellant occupied the building and also let out the same to
various tenants. The appellant had made payment of
Rs.1,95,00,000/- and was still due to pay a sum of
Rs.45,47,570/- to respondent No.1 as on 30.03.2019.
Thereafter, respondent No.1 called upon the appellant to pay
the balance amount. Accordingly, the appellant paid a further
sum of Rs.16,00,000/-, but was still due to pay a sum of
Rs.29,47,570/-. Hence, respondent No.1 sought the said
amount along with interest from the appellant.
5. Upon receipt of notice from the Arbitral Tribunal,
the appellant appeared and resisted the claim of respondent
No.1/claimant and contended that the work entrusted to
respondent No.1/claimant was not completed within the
stipulated time and that the quality of the work carried out by
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COMAP No. 120 of 2024
respondent No.1/claimant was not in accordance with the
specifications. Consequently, the appellant filed a counterclaim
seeking a sum of Rs.74,17,603/- from respondent
No.1/claimant, together with interest at the rate of 24% per
annum from 03.10.2017 till its realization.
6. On the basis of the claim statement filed by
respondent No.1/claimant and the counterclaim filed by the
appellant, the Arbitral Tribunal framed in all 18 issues and
recorded the evidence. After hearing both the parties, the
Arbitral Tribunal allowed the claim of the claimant and rejected
the counterclaim of the appellant. Being aggrieved by the
same, the appellant – party-in-person, filed
Com.A.P.No.117/2022. In turn, the learned LXXXVI Additional
City Civil and Sessions Judge, Bengaluru, dismissed the
arbitration petition filed by the appellant under Section 34 of
the Arbitration and Conciliation Act, 1996, and confirmed the
award dated 08.08.2022 passed in A.C. No.260/2021. Being
aggrieved by the same, the appellant – party-in-person, has
preferred this appeal.
7. We have heard Sri M.L. Shankarlingappa, appellant
– party-in-person, and Sri Santhosh Kumar M.B., learned
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COMAP No. 120 of 2024
counsel appearing for Sri Chamaraj M., learned counsel for
respondent No.1.
8. The appellant – party-in-person, contended that the
award passed by the Arbitral Tribunal is in conflict with the
fundamental policy of Indian law and morality, the findings of
the Arbitral Tribunal suffer from patent illegality. It is further
contended that the Commercial Court, in its judgment,
observed that Ex.P9, namely the final bill, discloses the balance
amount payable. Ex.P9 consists of the description of the work
carried out by respondent No.1, the measurements, rate per
CFT/SFT, the total quantity of work, the rate per quantity, and
the amount. The Commercial Court failed to appreciate the
oral evidence and exhibited document, which relied upon by the
appellant in support of his arguments.
9. It is further contended that respondent
No.1/claimant quoted exorbitant rates for the respective works
when compared to the prevailing market rates, and the
appellant raised objections with regard to the price quoted by
the respondent. It is further contended that, as per Clauses 26
and 27 of the contract, respondent No.1/claimant himself
undertook to execute the wooden and aluminium work for the
windows of the building/project, but failed to execute the same
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COMAP No. 120 of 2024
and also failed to complete the entire project within the
stipulated time. It is further contended that respondent
No.1/claimant did not construct the building in accordance with
the structural plan and that the roof beams were not laid as per
the structural plan. Consequently, it is contended that the
stability and structural strength of the building constructed by
respondent No.1/claimant are not up to the required standard
as per the approved building plan.
10. The appellant, in his counterclaim, contended that,
as per the valuation certificate, the value of the entire building
constructed by respondent No.1/claimant was Rs.1,69,30,000/-
, whereas respondent No.1/claimant had raised a claim for
Rs.2,40,47,570/-, which was exorbitant. It was further
contended that respondent No.1/claimant had not furnished
any break-up of the amounts while raising the final bill. It was
also contended that the wooden work and aluminium work for
the windows, amounting to Rs.19,17,000/- and Rs.4,26,000/-
respectively, were not entrusted to respondent No.1/claimant.
However, respondent No.1/claimant had not furnished any
details with regard to the said amount of Rs.23,43,000/-.
11. The appellant further contended that he had
requested respondent No.1/claimant to rectify the incomplete
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COMAP No. 120 of 2024
and defective work in the building. However, till date,
respondent No.1/claimant has not offered any explanation for
the non-performance of the work entrusted to him. However,
respondent No.1/claimant made a false claim before the
Arbitral Tribunal. The Arbitral Tribunal, without properly
appreciating the oral and documentary evidence on record,
allowed the claim of respondent No.1/claimant and rejected the
counterclaim of the appellant – party-in-person. The
Commercial Court also failed to consider the requirements of
Section 34(2) of the Arbitration and Conciliation Act, 1996, and
proceeded to confirm the arbitral award, which is not in
accordance with law. Therefore, the impugned judgment and
the arbitral award require interference by this Court.
12. Per contra, learned counsel for respondent No.1
vehemently supported and justified the judgment and order
passed by the Commercial Court as well as the arbitral award
passed by the Arbitral Tribunal. It was contended that the
Arbitral Tribunal, after framing the necessary issues,
considering the pleadings of the parties, appreciating the oral
and documentary evidence placed on record, and interpreting
the terms and conditions of the contract agreement, had rightly
allowed the claim of respondent No.1/claimant and rejected the
counterclaim of the appellant. It is further contended that the
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COMAP No. 120 of 2024
Commercial Court, while exercising jurisdiction under Section
34 of the Arbitration and Conciliation Act, 1996, has rightly held
that none of the grounds contemplated under Section 34(2) of
the Act were made out for setting aside the arbitral award. It is
also contended that the appellant is seeking a re-appreciation
of the evidence, which is impermissible in proceedings under
Section 34 of the Act and in the present appeal. Therefore, no
case is made out for interference with the well-reasoned
judgment of the Commercial Court or the arbitral award.
Accordingly, prayed to dismiss the appeal.
13. In view of the rival submissions made by the
learned counsel for the parties, the following point arises for
consideration:
1. Whether the order upholding the award
warrants interference by this Court?
14. We have perused the material available on record.
The case of the appellant – party-in-person, is that he and
respondent No.1 entered into a contract agreement for the
construction of a commercial-cum-residential building for a
total consideration of Rs.2,40,00,000/-. After completion of the
construction, i.e., on 20.06.2018, respondent No.1 raised the
final bill for a sum of Rs.2,40,47,560.97/-. It is the case of the
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COMAP No. 120 of 2024
appellant that, as on 30.03.2019, he had paid a sum of
Rs.1,95,00,000/-. Thereafter, respondent No.1 demanded the
balance amount of Rs.45,47,570/-, pursuant to which the
appellant paid a further sum of Rs.16,00,000/-. Even
thereafter, a sum of Rs.29,47,570/- remained due.
15. The notice issued through e-mail dated 02.03.2020
discloses that the appellant herein replied to the reminder
notice through e-mail. Thereafter, respondent No.1 approached
this Court in CMP No.270/2020 seeking appointment of an
Arbitrator. Accordingly, an Arbitrator was appointed, and
respondent No.1 filed a claim petition before the Arbitral
Tribunal in Arbitration Case No.260/2021. The Arbitral Tribunal,
in turn, allowed the claim of respondent No.1 and rejected the
counterclaim filed by the appellant. Being aggrieved by the
award passed by the Arbitral Tribunal, the appellant preferred
an arbitration petition before the Commercial Court. The
Commercial Court dismissed the arbitration petition. Hence, the
appellant has preferred the present appeal before this Court.
16. It is not in dispute that the appellant and
respondent No.1 entered into a contract agreement for
construction work and that the appellant entrusted the
construction work to respondent No.1 under the contract
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COMAP No. 120 of 2024
agreement dated 03.10.2016. It is also not in dispute that the
appellant initially paid a sum of Rs.1,90,00,000/- and
subsequently a further sum of Rs.16,00,000/- to respondent
No.1. It is the case of the appellant that the Arbitral Tribunal
failed to consider the terms and conditions of the contract
agreement marked as Ex.P1. It is further contended that
Clause 3.6 of the agreement was also not taken into
consideration by the Arbitral Tribunal as well as the Commercial
Court.
17. While considering a petition under Section 34 of the
Arbitration and Conciliation Act, 1996, the Commercial Court
can interfere with an award passed by the Arbitral Tribunal only
if the award is in conflict with the fundamental policy of Indian
law or with justice or morality, or if the findings of the Arbitral
Tribunal suffer from patent illegality. A perusal of the arbitral
award clearly demonstrates that the findings recorded by the
Arbitral Tribunal are neither arbitrary, capricious, nor perverse.
Further, the appellant has failed to make out any of the
grounds contemplated under Section 34(2) of the Arbitration
and Conciliation Act, 1996.
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COMAP No. 120 of 2024
18. Hence, it is just and necessary to analyse Section
34 of the Arbitration and Conciliation Act, 1996, which reads as
under:
“34. Application for setting aside arbitral
award.– (1) Recourse to a Court against an arbitral
award may be made only by an application for
setting aside such award in accordance with sub-
section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court
only if–
(a) the party making the application [establishes
on the basis of the record of the arbitral tribunal
that]–
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid
under the law to which the parties have
subjected it or, failing any indication thereon,
under the law for the time being in force; or
(iii) the party making the application was not
given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute
not contemplated by or not falling within the
terms of the submission to arbitration, or it
contains decisions on matters beyond the scope
of the submission to arbitration:
Provided that, if the decisions on matters
submitted to arbitration can be separated from
those not so submitted, only that part of the
arbitral award which contains decisions on
matters not submitted to arbitration may be set
aside; or
(v) the composition of the arbitral tribunal or
the arbitral procedure was not in accordance
with the agreement of the parties, unless such
agreement was in conflict with a provision of
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COMAP No. 120 of 2024
this Part from which the parties cannot
derogate, or, failing such agreement, was not in
accordance with this Part; or
(b) the Court finds that–
(i) the subject-matter of the dispute is not
capable of settlement by arbitration under the law
for the time being in force, or
(ii) the arbitral award is in conflict with the public
policy of India.
[(2A) An arbitral award arising out of arbitrations
other than international commercial arbitrations,
may also be set aside by the Court, if the Court finds
that the award is vitiated by patent illegality
appearing on the face of the award:
Provided that an award shall not be set aside
merely on the ground of an erroneous application of
the law or by reappreciation of evidence.](3) An application for setting aside may not be
made after three months have elapsed from the date
on which the party making that application had
received the arbitral award or, if a request had been
made under section 33, from the date on which that
request had been disposed of by the arbitral
tribunal:
Provided that if the Court is satisfied that the
applicant was prevented by sufficient cause from
making the application within the said period of three
months it may entertain the application within a
further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section
(1), the Court may, where it is appropriate and it is
so requested by a party, adjourn the proceedings for
a period of time determined by it in order to give the
arbitral tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the
opinion of arbitral tribunal will eliminate the grounds
for setting aside the arbitral award.
[(5) An application under this section shall be
filed by a party only after issuing a prior notice to the
other party and such application shall be
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COMAP No. 120 of 2024
accompanied by an affidavit by the applicant
endorsing compliance with the said requirement.]
[(6) An application under this section shall be
disposed of expeditiously, and in any event, within a
period of one year from the date on which the notice
referred to in sub-section (5) is served upon the
other party.]”
19. The appellant has filed this Commercial Appeal
under Section 13(1)(1A) of the Commercial Court Act, 2015,
which reads as under:
“13. Appeals from decrees of Commercial
Courts and Commercial Divisions.–
[(1) Any person aggrieved by the judgment or
order of a Commercial Court below the level of a
District Judge may appeal to the Commercial
Appellate Court within a period of sixty days from
the date of judgment or order.
(1A) Any person aggrieved by the judgment or
order of a Commercial Court at the level of District
Judge exercising original civil jurisdiction or, as the
case may be, Commercial Division of a High Court
may appeal to the Commercial Appellate Division of
that High Court within a period of sixty days from
the date of the judgment or order:
Provided that an appeal shall lie from such
orders passed by a Commercial Division or a
Commercial Court that are specifically enumerated
under Order XLIII of the Code of Civil Procedure,
1908 (5 of 1908) as amended by this Act and section
37 of the Arbitration and Conciliation Act, 1996 (26
of 1996).]
20. The appellant also relied upon Section 37 of the
Arbitration and Conciliation Act, which reads as under:
“37. Appealable orders.– (1)[Notwithstanding
anything contained in any other law for the time
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COMAP No. 120 of 2024
being in force, an appeal] shall lie from the following
orders (and from no others) to the Court authorised
by law to hear appeals from original decrees of the
Court passing the order, namely:–
[(a) refusing to refer the parties to arbitration
under section 8;
(b)granting or refusing to grant any measure
under section 9;
(c)setting aside or refusing to set aside an
arbitral award under section 34.](2)An appeal shall also lie to a Court from an
order of the arbitral tribunal.–
(a)accepting the plea referred to in sub-
section (2) or sub-section (3) of section 16; or
(b)granting or refusing to grant an interim
measure under section 17.
(3) No second appeal shall lie from an order
passed in appeal under this section, but nothing in
this section shall affect or take away any right to
appeal to the Supreme Court.”
21. Insofar as the claim for damages is concerned,
respondent No.1 claimed a sum of Rs.29,47,570/- together
with interest at the rate of 24% per annum towards the
outstanding invoice payable by the appellant in terms of the
agreement. The Arbitral Tribunal awarded the said claim in
favour of respondent No.1, together with interest.
22. The principles governing compensation for breach
of contract have been succinctly laid down by the Hon’ble
Supreme Court in Kailash Nath Associates v. Delhi
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COMAP No. 120 of 2024
Development Authority and Another, reported in (2015) 4
SCC 136, wherein the Hon’ble Apex Court held as under:
43. On a conspectus of the above authorities,
the law on compensation for breach of contract
under Section 74 can be stated to be as follows:
43.1. Where a sum is named in a contract as a
liquidated amount payable by way of damages, the
party complaining of a breach can receive as
reasonable compensation such liquidated amount
only if it is a genuine pre-estimate of damages fixed
by both parties and found to be such by the court. In
other cases, where a sum is named in a contract as a
liquidated amount payable by way of damages, only
reasonable compensation can be awarded not
exceeding the amount so stated. Similarly, in cases
where the amount fixed is in the nature of penalty,
only reasonable compensation can be awarded not
exceeding the penalty so stated. In both cases, the
liquidated amount or penalty is the upper limit
beyond which the court cannot grant reasonable
compensation.
43.2. Reasonable compensation will be fixed
on well-known principles that are applicable to the
law of contract, which are to be found inter alia in
Section 73 of the Contract Act.
43.3. Since Section 74 awards reasonable
compensation for damage or loss caused by a breach
of contract, damage or loss caused is a sine qua non
for the applicability of the section.
43.4. The section applies whether a person is
a plaintiff or a defendant in a suit.
43.5. The sum spoken of may already be paid
or be payable in future.
43.6. The expression “whether or not actual
damage or loss is proved to have been caused
thereby” means that where it is possible to prove
actual damage or loss, such proof is not dispensed
with. It is only in cases where damage or loss is
difficult or impossible to prove that the liquidated
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COMAP No. 120 of 2024
amount named in the contract, if a genuine pre-
estimate of damage or loss, can be awarded.
43.7. Section 74 will apply to cases of
forfeiture of earnest money under a contract. Where,
however, forfeiture takes place under the terms and
conditions of a public auction before agreement is
reached, Section 74 would have no application.
[Emphasis supplied]
23. A perusal of the aforesaid observations makes it
clear that the said principles were subsequently referred to with
approval by the Hon’ble Supreme Court in Sudha Gupta v.
Delhi Land and Finance Limited, reported in (2019) 14
SCC 266.
24. Thus, in the present case, it was possible to prove
the actual damages or loss. Such proof is not dispensed with
and, therefore, respondent No.1/claimant is required to adduce
evidence in support of his claim. It is well settled that where
the loss, in terms of money, can be ascertained, the party
claiming compensation has to prove the loss sustained by him.
25. As per the contention raised by the appellant, who
appeared as party-in-person, insofar as the building is not yet
completed and the respondent has claimed the entire amount
under the agreement, the appellant has not placed any material
to show that his building is still under construction and has not
been completed. The burden was cast on the appellant to prove
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COMAP No. 120 of 2024
this contention, but he has not proved it. It is settled law that a
contention or assertion made in a pleading that is not
supported by evidence is of no consequence and cannot be
used by a Court to establish a fact. Hence, the Tribunal
answered this issue in the negative.
26. Insofar as the contention of the appellant in respect
of the wooden and aluminium work for the windows of the
building is concerned, the respondent himself admitted that he
did not commence or complete the work and that the same was
got done by the appellant himself. The evidence clearly
demonstrates that the respondent has not included any
expenditure incurred in respect of the wooden and aluminium
work. The expenses incurred by the appellant towards the
wooden and aluminium work for the windows of the building
have been deducted from the total claim. Thus, there is no
merit in the contention of the appellant in this regard.
27. Insofar as the contention of the appellant with
regard to the valuation of the entire building is concerned, he
has contended that, as per the valuation report at Ex.R3, the
cost of the entire building is Rs.1,69,30,000/-, whereas
respondent No.1/claimant has claimed an amount of Rs.2.4
crores as if he had completed the entire building. Insofar as
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COMAP No. 120 of 2024
this contention is concerned, the appellant has not examined
the valuer who inspected the building and filed report as
requested by the appellant. However, a copy of the valuation
report of M/s. S.M. Engineers and Valuers dated 29.01.2022
was marked as Ex.R3 before the Arbitral Tribunal, and the
author of Ex.R3 was not examined to substantiate the
contention of the appellant. The contents of Ex.R3 clearly
demonstrate that, while conducting the valuation of the
building, the claimant and the appellant’s architect were not
present. Though RW2 speaks about the contents of Ex.R3, but
who is not competent to speak with regard to contents of
Ex.R3. If a building valuer is not examined as a witness, the
valuation report generally loses its legal efficacy and primary
evidentiary value, leaving the fact unproved unless supported
by other direct evidence. A written valuation report is an expert
opinion under Section 45 of the Indian Evidence Act, but the
document itself is typically hearsay or inadmissible unless the
expert steps into the witness box to prove it. Without the
expert’s examination and the opportunity for cross-
examination, the report carries no evidentiary weight.
Therefore, the appellant has failed to prove that the valuation
of the entire building was Rs.1,69,30,000/-. On the other
hand, the respondent/claimant has produced oral and
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COMAP No. 120 of 2024
documentary evidence to show that the valuation of the
appellant’s building exceeds Rs.2.4 crores. Hence, the appellant
has failed to prove his contention before the Arbitral Tribunal as
well as before the Commercial Court.
28. The aforesaid findings of the Arbitral Tribunal in
awarding compensation and the findings of the Commercial
Court in affirming the same are based on the ground that the
appellant failed to establish that the arbitral award suffers from
patent illegality or that it is contrary to the public policy of
India. Therefore, when the appellant is found liable for breach
of the contract, respondent No.1 is entitled to damages.
29. Insofar as interest is concerned, the Arbitral Tribunal
has awarded interest at the rate of 18% per annum in favour of
respondent No.1-claimant. The quantum of interest to be
awarded, if it is to be awarded, will depend on the facts and
circumstances of the case. In the present case, respondent
No.1 constructed the building way back in the year 2018, and
the appellant has taken possession of the building soon after its
completion. However, the appellant has not paid the remaining
amount of Rs.29,47,570/- along with interest till date.
30. In the present case, the interest awarded by the
Commercial Court at 18% per annum is excessive. Section
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COMAP No. 120 of 2024
31(7)(a) of the Arbitration and conciliation Act, 1996, states
that, unless otherwise agreed by the parties, the Arbitral
Tribunal may include in the sum awarded, interest at such rate
as it deems reasonable on the whole or part of the money, for
the whole or part of the period commencing from the date on
which the cause of action arose until the date on which the
award is made. In respect of post-award interest, Section
31(7)(b) states that, unless the award otherwise provides, the
sum directed to be paid by the award shall carry interest at a
rate of 2% higher than the current rate of interest prevailing on
the date of the award, from the date of the award till the date
of payment.
31. The Hon’ble Apex Court in case of Gayatri
Balasamy v. ISG Novasoft Technologies Ltd., reported in
(2025) 7 SCC 1 has elaborately dealt with the issue of interest
in commercial transactions and awarded current interest, and
held that the sum awarded shall carry interest at a rate of 2%
higher than the current rate of interest prevailing on the date of
the award, from the date of the award till the date of payment.
32. In the facts and circumstances of the case, interest
at the rate of 11% per annum would be fair and reasonable.
Accordingly, the impugned order stands modified to the extent
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COMAP No. 120 of 2024
that the rate of interest is reduced from 18% per annum to
11% per annum.
33. In the result, the impugned judgment and order
dated 20.01.2024 in Com.A.P.No.117/2022 passed by the
Commercial Court, as well as the arbitral award dated
08.08.2022 passed in A.C.No.260/2021 by the Arbitral
Tribunal, insofar as it relate to the grant of damages on account
of the outstanding invoice, are hereby confirmed. Insofar as it
relate to the interest is concerned, it is reduced from 18% per
annum to 11% per annum. Accordingly, the Commercial
Appeal is allowed in part.
All pending Interlocutory Applications, if any, shall stand
disposed of.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/
(VENKATESH NAIK T)
JUDGE
AM
