Karnataka High Court
Mr H L Nagaraja vs M/S Siddhshekha Developers Llp on 8 January, 2026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JANUARY, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
MISCELLANEOUS FIRST APPEAL NO.7153 OF 2024 (AA)
BETWEEN:
MR. H. L. NAGARAJA
AGED ABOUT 74 YEARS,
S/O MR. H.C.LAKSHMIPATHAIAH,
RESIDING AT NO.212, III STAGE,
II BLOCK, JUDGES COLONY,
BASAVESHWARANAGAR
BANGALORE - 560 079.
...APPELLANT
(BY SRI. MITHUN S.K., ADV.,)
AND:
1. M/S. SIDDHSHEKHA DEVELOPERS LLP
(FORMERLY KNOWN AS
M/S. SIDDHSHEKHA DEVELOPERS PVT. LTD.,)
ALSO AT 1/1,
N.V. HOUSE,
1ST FLOOR, H. SIDDHAIAH ROAD,
BANGALORE - 560 002.
2
REPRESENTED BY ITS PARTNER
MR. SHAILESH KUMAR S.
HARAN
2. MR. JUSTICE V. JAGANNATHAN,
RETIRED, SOLE ARBITRATOR,
AT ARBITRATION CENTRE,
KHANIJA BHAVAN NO.49,
3RD FLOOR, EAST WING,
RACE COURSE ROAD,
BENGALURU - 560 001.
...RESPONDENTS
(BY SRI. UDAYA HOLLA, SR. ADV. FOR
SRI. SANJAY H. SETHIYA, ADV. FOR C/R1)
THIS MFA IS FILED UNDER SECTION 37(1)(c) OF THE
ARBITRATION AND CONCILIATION ACT, 1996, AGAINST THE
ORDER DATED 21.09.2024 PASSED IN A.S.NO.25003/2023 ON
THE FILE OF 74TH ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE, MAYOHALL UNIT, BENGALURU (CCH-75), DISMISSING
THE PETITION FILED UNDER SECTION 34 OF THE ARBITRATION
AND CONCILIATION ACT, 1996.
THIS MFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 26.11.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
3
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) This Miscellaneous First Appeal is filed under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, ('the Arbitration Act' for short) against the judgment dated 21.09.2024 passed by the LXXIV Additional City Civil and Sessions Judge, Mayohall Unit, Bengaluru, (CCH-75) ('the trial Court' for short) in A.S. No.25003/2023.
2. We have heard Shri Mithun S.K., learned counsel appearing for the appellant and Shri. Udaya Holla, learned Senior Counsel as instructed by Shri. Sanjay H. Sethiya, learned Advocate appearing for caveator/respondent No.1.
3. The appellant was the claimant in A.C.No.134/2022. The claim was based on a Joint Development Agreement dated 22.10.2012. The claim raised was that respondent No.1 herein/developer had to pay an amount of Rs.47,46,17,454/- as compensation and in the alternative, to direct the developer to hand over 39,551 square feet of Super Built-Up area in the Schedule Property. 4 The project in question was the construction of a multi- storied residential complex in property bearing No.98, Bull Temple Road, Basavanagudi, Bengaluru. The respondents being put on notice had submitted their objections to the claim statement and had also filed a counter claim as follows:-
"a) Declaring that the Owner/Claimant/Petitioner's share of Super Built up Area in the residential project put up on the Schedule Property stands reduced to 45,574.67 sq.ft., and 21,413.33 sq.ft.
sq.ft. of Owner/Claimant/Petitioner's share of Super-Built up Area stands apportioned to the Developer/Respondent's share,
b) Directing the Owner/Claimant/Petitioner to execute fresh Sharing Agreement, incorporating the reduction of the Owner/Claimant/Petitioner's share to 45,754.67 sq.ft. Super-Built up Area, and apportioning 21,413.33 sq.ft. sq.ft. of Super-Built up Area, to the share of the Respondent, in relation to the residential project put up on the Schedule Property.
c) Directing the Owner/Claimant/Petitioner to pay a sum of Rs.4,72,80,130/- (Rupees Four Crores Seventy Two Lakhs Eighty Thousand One Hundred & Thirty only), to the Respondent towards GST, Deposits/Pro-rata Charges, Maintenance Charges and Electricity Charges, 5
d) Directing the Owner/Claimant/Petitioner to pay charges towards DG installation at the rate of Rs.75/sq.ft. of his reduced SBA,
e) Directing the Owner/Claimant/Petitioner to pay the club membership charges at the rate of Rs.5,00,000/- (Rupees Five Lakhs only) per flat, and Rs.10,00,000/- (Rupees Ten Lakhs only) per penthouse, as per the revised sharing agreement to be executed, after reduction of Owner/Claimant/Petitioner's share of SBA,
f) Directing the Owner/Claimant/Petitioner to pay a sum of Rs.10,00,00,000/- (Rupees Ten Crores only) to indemnify the Respondent for the violations committed by the Claimant/Petitioner and
g) Pass such other order/s as this Hon'ble Tribunal deems fit, in the facts and circumstances of the instant case."
4. The learned sole arbitrator had considered the contentions advanced on both sides and had rejected the claim. The counter claim of the respondent was allowed in part and a total amount of Rs.18,31,82,187/- was directed to be paid by the claimant to the developer with 12% interest per annum from date of claim petition till realization. The said award was challenged by the appellant 6 by filing an application under Section 34 of the Arbitration Act which also came to be dismissed after considering the contentions elaborately.
5. The present appeal is preferred challenging the order of the trial Court dismissing Section 34 application.
6. The learned counsel appearing for the appellant submits that the order of the Trial Court is completely erroneous and the Trial Court had not considered the serious contentions raised by the appellant. It is contended that Section 34 application was dismissed without considering the valid contentions raised by the appellant. The submissions of the appellant were not considered and the errors committed by the learned Arbitrator which were pointed out, were not taken note of. It is contended that the Trial Court disregarded the conspicuous absence of substantive reasoning in the arbitrator's decision and the lack of reasoning amounted to a patent illegality, which vitiated the award. It is contended that Section 34 of 7 Arbitration Act permits the Competent Court to scrutinize whether the award is vitiated by patent illegality or is opposed to public policy. Since the present case comes under the said category, the refusal to interfere was completely unwarranted.
7. It is further contended that the refusal on the part of the trial Court to consider the contentions raised by the appellant that the arbitrator has failed to apply the Real Estate (Regulation and Development) Act, 2016 ('RERA' for short) provisions and to impose penalties on respondent No.1 for its delay amounts to a patent illegality that vitiates the award. It is contended that despite the clear admission that the developer had committed undue delay in obtaining land sanction and in completion of the construction, the claim was rejected without any proper reasoning.
8. Further, it is contended that the action of the learned arbitrator in allowing the unsubstantiated counter claims raised by the developer was completely illegal and unwarranted. It is submitted that these aspects of the 8 matter have also not been considered by the trial Court. The finding of the arbitrator that time was not the essence of the contract is clearly contrary to the express terms of contract and though this aspect was specifically raised before the trial Court, the same is completely ignored. It is further contended that the trial Court has failed to consider the appellant's status as an 'allottee' under Section 2(d) of the RERA Act and the said oversight being corrected, the appellant would have been entitled to compensation applying the provisions of the RERA Act.
9. The learned counsel appearing for the appellant has relied on the following decisions:-
• Priyanka Taksh Sood And Ors. v. Sunworld Residency Pvt. Ltd. and Anr., reported in 2022 SCC OnLine Del 4717;
• Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor, reported in AIR 2022 SC 1824;
• M/s. Imperia Structures Ltd. v. Anil Patni & Anr., reported in AIR 2021 SC 70;
• Projector Director, National Highways No.45E & 220, National Highways Authority of India v. M.Hakeem & Anr., reported in (2021) 9 SCC 1;9
• Skandia Insurance Co. Ltd., v. Kokilaben Chandravadan & Ors., reported in (1987) 2 SCC 654;
• Modern Hotel v. Commissioner of Central Excise and Ors., reported in (2016) 15 SCC 620, and • Gayatri Balasamy v. ISG Novasoft Technologies Ltd., reported in 2025 INSC 605.
10. The learned senior counsel appearing for respondent No.1, on the other hand, submits that this Court, considering an appeal under Section 37(1)(c) of the Arbitration Act is not empowered to go into the merits of the claim and to re-appreciate the evidence. It is further contended that under Section 37 of the Arbitration Act, this Court cannot travel beyond the restrictions laid down under Section 34 of the Arbitration Act and cannot undertake an independent assessment of the merits of the award.
11. It is further contended that the grounds not raised in a petition under Section 34 of the Arbitration Act cannot be raised at the stage of appeal under Section 37 of the Arbitration Act. Further, relying on the Circulars dated 31.10.2019 and 6.11.2019 issued by the RERA, it is 10 contended that individuals/organizations like landowners fall within the term 'Promoter' or 'Promoters' under the RERA Act and cannot claim the status of 'allottees'.
12. It is further contended that an elaborate and in- depth examination of the findings in the award is completely unwarranted in an application under Section 37 of the Arbitration Act and only patent illegalities that are apparent in the award or in the proceedings under Section 34 of the Arbitration Act can be corrected in Section 37 application as well.
13. The learned senior counsel appearing for respondent No.1 has placed reliance on the following decisions:-
• Larsen & Toubro Ltd. v. Puri Construction Pvt. Ltd. & Ors., reported in 2025 SCC OnLine SC 830;
• Haryana Tourism Ltd. v. Kandhari Beverages Ltd., reported in (2022) 3 SCC 237;
• Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., reported in (2022) 1 SCC 131;11
• UHL Power Co. Ltd. v. State of Himachal Pradesh, reported in (2022) 4 SCC 116;
• S.V.Samudram v. State of Karnataka & Anr., reported in (2024) 3 SCC 623;
• Somdatt Builders - NCC - NEC (JV) v. National Highways Authority of India & Ors., reported in 2025 SCC OnLine SC 170;
• Gopal Krishan Rathi v. Dr. R.Palani, reported in 2025 SCC OnLine Mad 481;
• International Seaport Dredging Pvt. Ltd. v. Kamarajar Port Ltd., reported in 2024 SCC OnLine SC 3112;
• Shri. Lachoo Mal v. Shri. Radhey Shyam, reported in 1971(1) SCC 619;
• The Director of Inspection of Income Tax (Investigation), New Delhi & Anr. v. M/s. Pooran Mal & Sons and Anr., reported in (1975) 4 SCC 568;
• H.R.Basavaraj & Anr. v. Canara Bank & Ors., reported in (2010) 12 SCC 458;
• Commissioner of Customs, Mumbai v. Virgo Steels, Bombay & Anr., reported in (2002) 4 SCC 316;12
• Sepco Electric Power Construction Corporation v. Power Mech Projects Ltd., reported in 2022 SCC OnLine SC 1243; and • Manish v. Godawari Marathawada Irrigation Development Corporation, reported in MANU/SCOR/30132/2018.;
14. The case set up by the appellant in the claim petition was that the appellant, who was the owner of the scheduled property had entered into a Joint Development Agreement with the respondent developer on 22.10.2012. A Power of Attorney was also executed by the appellant in favour of the respondent on 22.10.2012. A supplementary agreement was also entered into on the same day, by which an amount of Rs.10 Crores was paid as non-refundable deposit and a further amount of Rs.15 Crores as refundable deposit to the appellant. However, it was contended that the amounts stated in the supplementary agreement were not paid.
15. Later, a sharing agreement was entered into between the parties on 01.07.2017. It was contended that there was delay in commencement and completion of the 13 construction in terms of the Joint Development Agreement dated 22.10.2012 and without completing the work, an Occupancy Certificate was obtained by the developer on 05.12.2020. Thereafter, the developer required the appellant to make the refund of an amount of Rs.11,12,90,253/-.
16. The appellant claimed that there was an undue delay in completing the project and loss caused to the appellant by the respondent failing to achieve the maximum Floor Area Ratio. It is contended that a Floor Area Ratio of 4.8 could have been achieved, but only a Floor Area Ratio of 4.19 was achieved by the respondent which resulted in loss of Rs.10,05,48,000 /- to the appellant. Further, huge loss was caused due to delay in completion of the project and deducting the refundable deposit of Rs.7,50,00,000/- an amount of Rs.47,46,17,454/- was claimed.
17. The respondents, on the other hand, contended that there were legal issues with regard to ownership and possession of the land and there were outstanding liabilities on the property which could not be cleared by the appellant. 14 It is submitted that the property was mortgaged to the IDBI Bank and on account of non-payment of the loan installments, action had been initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act' for short) against the appellant. The said amounts had to be cleared and the documents released from the mortgagor before possession could be taken by the developer and further steps taken. It was contended that the original title deeds and documents of the schedule property together with possession of substantial portion of the property, was handed over only on 20.07.2013 and the title deeds were released on 22.07.2013. The appellant had retained possession of the old existing house in the schedule property. Thereafter also, the suits filed before the City Civil Court by M/s. Unishire Builtech LLP was withdrawn only on 16.10.2015. The necessary permissions for construction were obtained and a revised plan for construction of two levels of basement with ground plus 22 floors was sanctioned on 11.01.2016. Thereafter, the respondent 15 requested the appellant to execute the sharing agreement as per the Joint Development Agreement; but the appellant refused and disputes arose between the parties.
18. It is submitted that the construction was commenced only in the year 2017 and Completion Certificate was issued on 10.10.2019 and Occupancy Certificate was issued in the year 2020. It was therefore contended that there was no delay on the part of the developer in either commencing or completing the construction and the delay, if any, was occasioned due to the actions of the appellant himself. The respondent had also filed a counter claim contending that the refundable deposit as per the agreement between the parties was not being refunded by the appellant.
19. The learned Arbitrator considered the contentions of the parties and came to the definite conclusion that there was no inordinate delay occasioned on the part of the developer. It was specifically found that there were valid reasons for the delay in commencement and completion of the project which were not referable to the developer. The 16 learned Arbitrator specifically found that the period for completion of the project is 30 months plus 6 months from the date of issuance of Commencement Certificate. The date of Commencement Certificate - Ex.R32 was found to be 19.01.2017. As such, it was found that the period of completion as per the terms of the Development Agreement will be 18.01.2020. Relying on Ex.R41 - Completion Certificate dated 10.10.2019, the learned Arbitrator came to the conclusion that the project was completed well within time and that there was no delay in construction on the part of the developer.
20. On the basis of the pleadings, the evidence adduced and the elaborate arguments advanced on both sides, the sole Arbitrator found at paragraph No.61 of the arbitral award, which reads as follows:-
"61. The main questions which require to be considered in the light of the material on record, arguments advanced are;
(i) Who is responsible for the delay in the completion of the project, the owner or the developer?
(ii) Whether the Claimant has made out a case for the claim towards delay compensation as per Section 18 of RERA 2016?17
(iii) Whether the developer has failed to achieve FAR of 4.8?
(iv) Whether the Claimant is entitled to the amounts claimed?
(v) Whether the Respondent is entitled to the counterclaim?"
Thereafter, each of the aspects raised was considered elaborately on the basis of the evidence placed on record. Thereafter, it was specifically found that the respondent - developer cannot be held responsible for the delay in completion of the project and that the claimant has by his conduct contributed to the delay.
21. Further, the question of Floor Area Ratio was specifically considered in the Award. It was found that the Floor Area Ratio achieved was 4.256 and that it was not on an account of any fault of the respondent - developer that the Floor Area Ratio of 4.8 could not be achieved. Further, the question whether the appellant was entitled to be treated as an allottee for payment of compensation under the RERA Act was also specifically considered and rejected by the learned Arbitrator. It was further found that though claims for damages had been raised, no evidence was placed 18 by the claimant to support his contentions. It was therefore found that without clear proof of the loss caused to the claimant, he could not claim compensation or damages from the developer in terms of the agreements entered into between the parties. It was also found that the claimant had specifically agreed to refund of the security deposit and he could not produce any evidence to show that he had refunded the said amount. Accordingly, the claim was rejected and counter claim was partly allowed.
22. In the application under Section 34 of the Arbitration Act, filed by the appellant also, the same contentions were raised by the appellant. The District Court considering the challenge specifically adverted to the contentions raised by the appellant and found that there was no patent illegality vitiating the award which justifies interference in terms of Section 34 of the Arbitration Act. The contention that the appellant is to be considered as an allottee under the RERA Act was also specifically considered by the District Court as well.
19
23. Having considered the contentions advanced on either side, we notice that the Arbitral Award was passed after considering the voluminous documents produced by the parties on either side. The contentions of the parties have been specifically considered by the learned Arbitrator. In Section 34 application before the District Court also, the contentions raised have been considered and it has been found that there is no patent illegality vitiating the award. It is a trite law that an examination in an appeal under Section 37 of the Arbitration Act, cannot travel beyond the scope of an application under Section 34 of the Arbitration Act.
24. We have given our anxious consideration to the pleadings and the materials on record in the instant case. We have also taken note of the decisions relied on by both sides. It is abundantly clear that in view of the provisions of the Arbitration Act, specifically Sections 34 and 37 thereof, this Court, or for that matter, the District Court under Section 34 of the Arbitration Act can interfere with an award only in case, the specific grounds provided under Section 34(2) of the Arbitration Act are available. In the instant 20 case, we find that the appellant has not been able to substantiate that the award was vitiated by any patent illegality or that any of the other grounds provided in Section 34 were made out. It is therefore clear that there can be no re-appreciation of evidence or independent assessment of the disputes raised before the arbitrator by this Court exercising power under Section 37 of the Arbitration Act.
25. After considering the pleadings of the parties, the Arbitral Award, the order of the trial Court, on an earnest appraisal of the pleadings and the materials on record, we find no error or patent illegality which requires a correction in the award of the learned Arbitrator. The appeal fails and the same is accordingly dismissed.
All pending interlocutory applications shall stand disposed of.
Sd/-
(ANU SIVARAMAN) JUDGE Sd/-
(VIJAYKUMAR A. PATIL) JUDGE cp*