Arb O.P(COM.DIV.) No. 62 of

2021

IN THE HIGH COURT OF JUDICATURE AT MADRAS

ORDERS RESERVED ON : 09.02.2026

ORDERS PRONOUNCED ON : 17.02.2026

CORAM

THE HONOURABLE MR JUSTICE N. ANAND VENKATESH

Arb O.P(COM.DIV.) No. 62 of 2021

AND

EP SR. NO. 123007 OF 2023

M/s Annai Builders Real Estate

Pvt Ltd

Rep. by its Special Officer

K.Prabhakaran, 150-151, Alpha

Centre, North Usman Road,

T.Nagar, Chennai 600 017.

Petitioner (s)

Vs

G.B.Sarath Kumar

Kalpataru Apartments, H-3B,

Koyambedu, Chennai 600 107.

Respondent(s)

PRAYER

Petition filed under Section 34(2) of the Arbitration and Conciliation

Act, 1996 r/w Section 10 of the Commercial Courts Act, 2014 (Act

No.4 of 2016) praying to set aside the award dated 30.11.2020 passed

by the learned Sole Arbitrator Mr.G.M.Akbar Ali (Retd.,) in

A.F.No.195/2017 in the matter of dispute and differences between the https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

2021

petitioner and the respondent and to direct the respondent to pay the

cost of the proceedings.

For Petitioner (s):Mr. K.Satheesh Kannan

Party in person

For

Respondent(s):

Mr.Avinash Wadhwani

ORDER

The petitioner has assailed the award passed by the Sole

Arbitrator dated 30.11.2020 by filing the present petition under

Section 34 of the Arbitration and Conciliation Act (for brevity

hereinafter referred to as the “Act”).

2.The brief facts of the case are the respondent / claimant

entered into a building contract agreement with the petitioner on

02.02.2011 for the construction of Plots, Smart Homes at

Anagaputhur containing 92 Plots. As per the contract, the Contractor

should construct in accordance with the detailed drawings given by

the owner which was appended as Annexure I to the agreement and

the specifications appended as Annexure II to the agreement. https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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3.During the execution of the Contract, the claimant raised

30 running bills, out of which 28 bills were cleared. However while

raising bill Nos.29 and 30, disputes arose between the parties and

according to the claimant, the amounts were not settled. Apart from

the above, the contract envisaged completion within a period of one

year. The provisional estimate, based on the working drawings was

calculated at approximately Rs.12.58 Crores. Out of every running

bill, 3% can be retained as retention amount and the same has to be

paid within three months of the completion of the contract. Thus, 3%

of the retention amount which was retained towards 28 bills which

were cleared, was also not released.

4.The further case of the claimant is that on 19.03.2012 due

to non payment of bills and pendency for over six months, a request

was made to clear the pending bills. It was also informed by the

contractor that due to non-availability of funds, the work on site is

affected. The bill that was raised towards minor alterations /

additions as required by the petitioner was raised on 28.05.2012 and

this amount also remained unpaid. https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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5.Since the amounts were not settled, the dispute was

referred to the sole arbitrator and the claimant raised the following

claims :-

a. Rs.48,03,763/- (Forty Eight Lakhs Three Thousand

and seven Sixty Three) towards outstanding

payment of Running Bill Nos.29 and 30.

(b) Rs.33,36,432/- (Thirty Three Lakhs, Thirty Six

Thousand and Four Hundred Thirty Two), being the

retention amount of 3% on the running bills paid.

(c) Rs.70,66,022/- (Seventy Lakhs Sixty Six Thousand

and Twenty Two) for the extra increase of the

basement height by two feet

(d) Rs.9,80,000/- (Nine Lakhs Eighty Thousand) to

the material at Site

(e) Rs.11,00,000/- (Eleven Lakhs) being outstanding

payments towards the extra work carried out at the

instance of the respondent.

(f)Rs.2,44,000/- (Two Lakhs and Forty Four

Thousand) for the purchase of grills made, to be

installed in the Windows. https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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Amounting to Rs.1,75.30,217/- (One Crore Seventy

Five Lakhs Thirty Thousand and two Hundred and

Seventeen) together with interest @ 24% p.a. until

date of payment. The payment of Rs.50,00,000/- (Fifty

Lakhs) as damages on account of loss of Business

account of the mental harassment and cost of

proceedings.

6.The petitioner filed statement of defence and took a

specific stand that the respondent has paid much higher than the

actual work that was carried out at the site by the claimant.

According to the petitioner, the total value of the contract was

Rs.12,58,55,050/- and the total amount that was paid to the claimant

was Rs.10,83,44,952/-. This amount was 86% of the contract price

and whereas, the work carried out was only 60%. The petitioner took

a further stand that the claimant had stopped the work as early as

on 19.07.2012 and the claimant had also agreed to complete the work

only on payment of pending bills. The petitioner directed the

claimant to rectify several defects identified. However, the claimant

denies any defective work and was insisting for the payment of https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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nearly Rs.1.95 Crores.

7.The petitioner made a counter claim of Rs.97,24,495/-

towards excess payment with 12% interest from the date of

abandonment of work, penalty of a sum of Rs.1,38,44,155/- towards

delay, Rs.6,59,55,664/- towards completion of the construction

through another contractor and Rs.15,00,000/- towards damages

including mental agony and a cost of Rs.10,00,000/-.

8.The sole Arbitrator based on the pleadings framed the

following issues:-

1.Whether the claimant was forced to stop the

work by the actions of the respondent?

2. Whether the claimant has committed any breach

of contract?

3. Whether the claimant has caused delay in

execution of the contract?

4. Whether the claimant have submitted the last two

running bills 29 and 30?

5. Whether the respondent has paid excess payment

over the running bills of the claimant?

6. whether the claimant is entitled for a sum of

Rs.48,03,763/- towards outstanding payment towards https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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running bill Nos.29 and 30?

7. Whether the claimant is entitled for the return of

the retention amount of Rs.33,00,000/-?

8. Whether the claimant is entitled for a sum of

Rs.70,66,022/- towards extra increase of basement

height by 2 feet?

9. Whether the claimant is entitled for a sum of

Rs.11,00,000/- towards the extra work carried out at

the instance of the respondent?

10.Whether the claimant is entitled for a sum of

Rs.9,80,000/- towards the cost of materials left at site

and a sum of Rs.2,44,000/- for the grills made and

left at side?

11.Whether the claimant is entitled for a sum of

Rs.50,00,000/- towards damages on account of loss of

business and costs?

12. Whether the respondent is entitled for a sum of

Rs.97,24,495/- being the excess amount paid?

13. Whether the respondent is entitled for a sum of

Rs.1,38,44,155/- being the penalty for delay in

execution of the contract?

14. Whether the respondent is entitled for a sum of

Rs.6,59,55,664/- towards the cost incurred for the

completion of the construction?

15. Whether the respondent is entitled for any https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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damages at Rs.15,00,000/- and a cost of

Rs.10,00,000/-.

16. To what relief the parties are entitled to?

9.The claimant examined CW1 and CW2 and filed four

volume of documents. The petitioner relied upon three volumes of

documents. Apart from that, the valuers report and the objection

filed by the claimant was also taken on record.

10.The sole arbitrator on considering the facts and

circumstances of the case and on appreciation of evidence passed an

award dated 30.11.2020 directing the petitioner to pay to the

claimant a sum of Rs.1,10,07,441.80/- within three months from the

date of award failing which the same will become payable with

interest at the rate of 18% per annum from the date of award till the

date of payment.

11.Aggrieved by the above award, the present petition has

been filed before this Court.

12.The petitioner appeared in person and made his

submissions. The respondent is represented through a counsel and https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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the learned counsel made his submissions.

13. This Court has carefully considered the submissions made

on either and the materials available on record and also carefully

went through the award passed by the Sole Arbitrator.

14. The main ground that was raised by the petitioner was

that insofar as running bill Nos.29 and 30 are concerned, duplicate

claims have been made towards claims which had already been

settled earlier. To substantiate the same, the petitioner pointed out

instances where there was discrepancy in terms of the correct built

up area and works which were already completed and paid once

again claimed in these bills etc., The same has been explained in the

brief written statement that was filed on behalf of the petitioner.

15.Apart from that, the petitioner also pointed out that for

running bill Nos.1 to 28, the respondent had collected excess

payments more than the work that was actually completed in the

site. To establish this issue, the petitioner tabulated all the payments

made and for proper appreciation, the same is scanned and extracted

hereunder :- https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

2021 https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

2021 https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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16.The petitioner further stated that admittedly the

respondent had not completed the work and therefore, there is no

question of making the 100% payment since the payments are made

at different stages based on the percentage of the work completed. In

fact the petitioner had made excess payments for 86% and whereas

the claimant had completed only 60% of the work. The petitioner has

also raised a ground that the additional claim for the increase of the

basement height by two feet, which was allowed by the sole

arbitrator was not in accordance with the agreement and the usual

trade practice. The petitioner also pointed out to certain findings of

the sole Arbitrator which runs contrary to the evidence available on

record. Finally, the petitioner questioned the rejection of the counter

claim made by the petitioner and sought for the interference of the

award and to reject the claims made by the respondent/ claimant and

grant the counter claim sought for by the petitioner.

17.The learned counsel for respondent has taken a stand that

the Sole Arbitrator had taken into consideration the oral and

documentary evidence and has rendered findings which is certainly a https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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possible view taken by the Sole Arbitrator and that none of the

ingredients under Section 34 of the Act has been satisfied warranting

the interference of this Court.

18.This Court will first deal with the two running bill Nos.29

and 30 and also consider as to whether the petitioner had made

excess payments over and above the running bills raised by the

respondent/ claimant.

19.As per the agreement between the parties, Contractor

shall be paid at the rate of Rs.950 per Sq.ft inclusive of all taxes and

all other charges on the plinth area including balconies. As per

Annexure 3, the mode of payment was agreed upon and for proper

appreciation, the same is extracted hereunder:-

ANNEXURE III

Anagaputhur Provisional Estimate:-

Total plots - 92 Plots (6 Blocks)

Total Area - 1,32,479 x 950 = 12,58,55,050/-

[Rupees Twelve Crores

Fifty Eight Lakhs Fifty Five Thousand

and fifty only) https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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Advance - Rs.20,00,000

(Rupees Twenty Lakhs Only)

Contractor Payment Mode:-

Sl.No.Description Percentag

e %

1.Mobilisation Advance 1.5%

2.Completion of Foundation 5.5%

3.Completion of basement 8%

4.Completion of GF Roof

Slab

10%

5.Completion of GF Brick

Work

7%

6.Completion of GF

Plastering

8%

7.Completion of FF Roof

Slab

10%

8.Completion of Brick Work 7%

9.Completion of FF

Plastering

8%

10.Completion of External

Plaster

4%

11.Completion of Carpentry 5%

12.Completion of Electricity5%

13.Completion of Flooring 10%

14.Completion of Sanitary

Fixtures

5%

15.On Handing over 6%

Total 100%

Retention money will be deducted @ 3% on every bill,

payable 3 months after issuable of completion certificate. https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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20.From every bill, retention money will be deducted at 3%

payable three months after issuance of completion certificate. The

contractor’s final bills will be scrutinised for payment after

satisfactory completion and handing over the project and the same

will be paid within two weeks. The payments towards running bills

will be made after verification / certification. Keeping the above in

mind, this Court went through the entire materials and found that

insofar as running RA Bill Nos.1 to 28 are concerned, the same has

been raised by providing all the necessary particulars and supporting

documents which has also been verified and certified before the

payments was made for RA Bill Nos.1 to 28. While making this

payment, the retention charges of 3% has been deducted.

21.Insofar as RA Bill Nos.29 and 30 are concerned, even as

per the Sole Arbitrator, it has not been presented in the same

manner the earlier bills were presented. Admittedly, these bills were

not certified and the petitioner raised an objection that there is

duplication of claims since some of the claims were already made in

the previous bills and had also taken a stand that excess payments https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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have been made even towards the previous bills in terms of the work

that was actually completed and the actual payments that was made

in excess by the petitioner and the Sole Arbitrator has not gone into

the evidence and discussed about the same and has straight away

come to the conclusion that since these two bills were received by the

petitioner and the payment was not made, the petitioner is liable to

make the payments against bill Nos.29 and 30.

22.The above finding rendered by the Sole Arbitrator is bereft

of any reasons and unintelligible.

23.The Apex Court in [Dyna Technologies Pvt. Limited

Vs. Crompton Greaves Limited] reported in 2019 20 SCC Page 1

held that the mandate under Section 31(3) of the Act is to have

reasoning which is intelligible and adequate. Considering the fact

that the sole Arbitrator in this case is a legally trained mind,

compliance with this requirement becomes even more important. In

the case in hand, the abrupt finding that has been rendered by the

sole Arbitrator insofar as Bill Nos.29 and 30 by not even discussing

the grounds raised by the petitioner and the materials relied upon by https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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the petitioner, is unintelligible and the same would be equivalent to

not providing any reasons at all.

24.The above finding of this Court is further substantiated by

the fact that the sole Arbitrator while dealing with the claim made by

the respondent towards extra work, cost of materials left at site etc.,

has concluded that the bills raised by the claimant has not been

verified or certified and therefore, the claimant is not entitled for any

uncertified or unverified bill amounts. This finding completely

contradicts the finding rendered by the sole Arbitrator while allowing

Bill Nos.29 and 30 which also admittedly was not verified or certified.

This glaring contradictions also makes this Court to come to the

conclusion that the finding rendered by the Sole Arbitrator is

unintelligible.

25.There is yet another glaring illegality in the award passed

by the sole arbitrator. The specific case of the petitioner is that the

claimant had completed only 60% of the work and whereas, excess

payments have been made for 86%. In order to ascertain the actual

work that was completed on the site, an expert was appointed who https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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submitted a report which runs to nearly 242 pages. In this report, it

talks about the actual work that was completed. If admittedly only

80% of the work was completed even according to the claimant,

there is no question of settling the entire final bill and there is also

no question of releasing the retention amount since the retention

amount retained can be returned only if the entire work is completed

to the satisfaction of the petitioner. Even this issue has not been

property appreciated and dealt with by the Sole Arbitrator.

26.The Sole Arbitrator does not go into the report and deal

with the same and straight away discarded the entire report with an

observation that an expert opinion is only meant to assist the Court

and it cannot be considered as a conclusive proof. It is quite

unfortunate that the Sole Arbitrator even without dealing with the

detailed report submitted by the expert choose not to even make a

reference to it. It is true that the report of the expert may not be a

conclusive proof. But, however, it is a very relevant fact which will

have a bearing while dealing with the issue of the alleged excess

payments said to have been made by the petitioner. Thus, the

material evidence that was available was not considered by the Sole https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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Arbitrator and it was rejected on the ground that already bill Nos.1

to 28 have already been verified and certified and paid and therefore,

there is no need to consider this report. This finding was rendered

inspite of detailed materials placed by the petitioner to establish

that work was actually completed only to the tune of about 60% and

whereas payments made towards the same were to the tune of about

86%.

27.There is another claim pertaining to extra work said to

have been done by the claimant to increase the basement height by

two feet. The specific stand taken by the petitioner is that it forms

part of the basement work and it cannot be construed as an

additional work. However, the sole arbitrator considered the same as

extra work and awarded a sum of Rs.28.67 lakhs.

28.The counter claims made by the petitioner has been

rejected. https://www.mhc.tn.gov.in/judis

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29.Considering the manner in which the Sole Arbitrator has

proceeded in this case while dealing with the main issues, this Court

finds that it is difficult to separate / severe the valid portion of the

award from the invalid portion. Hence, this Court is not inclined to

go into the counter claims made by the petitioner since the above

findings rendered by the Sole Arbitrator will have a bearing while

deciding the counter claims also.

30.On an overall reading of the award passed by the Sole

Arbitrator, this Court finds that the findings rendered for the main

issues are unintelligible and it was given in complete disregard to

the evidence available on record and the findings are also mutally

contradictory. Hence, this Court is inclined to interfere with the

entire award on the ground of perversity and patent illegality. It will

be left open to the parties to refer the dispute afresh to the new

Arbitrator in accordance with law.

https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

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31.In the result, the award passed by the Sole Arbitrator

dated 30.11.2020 is hereby set-aside and this petition stands allowed.

No costs. Consequently, the EP D No.123007 of 2023 is closed.

17-02-2026

rka

Index:Yes/No

Speaking/Non-speaking order

Internet:Yes

Neutral Citation:Yes/No

To

G.B.Sarath Kumar

Kalpataru Apartments, H-3B,

Koyambedu, Chennai 600 107.

https://www.mhc.tn.gov.in/judis

Arb O.P(COM.DIV.) No. 62 of

2021

N.ANAND VENKATESH J.

rka

Arb O.P(COM.DIV.) No. 62 of

2021

EP SR. NO. 123007 OF 2023

17-02-2026 https://www.mhc.tn.gov.in/judis