M/S Subramanya Construction And vs M/S B K G Enterprises Llp
2025 Latest Caselaw 4714 Kant

Karnataka High Court

M/S Subramanya Construction And vs M/S B K G Enterprises Llp on 5 March, 2025

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                                                     NC: 2025:KHC:9439-DB
                                                   COMAP No. 548 of 2024




                   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 5TH DAY OF MARCH, 2025

                                         PRESENT
                       THE HON'BLE MR JUSTICE V KAMESWAR RAO
                                            AND
                            THE HON'BLE MR JUSTICE T.M.NADAF
                           COMMERCIAL APPEAL NO.548 OF 2024
                   BETWEEN:

                      M/S SUBRAMANYA CONSTRUCTION AND
                      DEVELOPMENT COMPANY LIMITED
                      A COMPANY REGISTERED UNDER THE
                      PROVISIONS OF COMPANIES ACT, 1956
                      NO.42, 2ND MAIN, 3RD CROSS,
                      INDUSTRIAL SUBURB,
                      YESHWANTHPURA, BENGALURU - 560 022
                      REP. BY ITS DIRECTOR SIGNATORY
                      MR.ARJUN BALASUBRAMANYAM
                                                             ...APPELLANT

Digitally signed   (BY SRI. SAMPATH A, ADVOCATE)
by
MADHUSHREE H
Location: High     AND:
Court of
Karnataka
                      M/S B K G ENTERPRISES LLP
                      A COMPANY REGISTERED
                      UNDER THE PROVISIONS OF
                      COMPANIES ACT, 2013
                      NO.2198, BKG HOUSE,
                      KHB COLONY, SANDUR TALUK,
                      BELLARY DISTRICT - 583 119
                      REP. BY ITS PARTNER
                      SRI B. RUDRA GOUDA
                                                           ...RESPONDENT
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                                            NC: 2025:KHC:9439-DB
                                          COMAP No. 548 of 2024




(BY SMT. MONICA PATIL, ADVOCATE)

     THIS COMAP IS FILED UNDER SECTION 13 (1)(a) OF THE
COMMERCIAL COURTS ACT, 2015 PRAYING TO SET ASIDE THE
JUDGMENT DATED 15.10.2024 PASSED IN COM. O.S.
NO.265/2020 BY THE LEARNED LXXXV ADDITIONAL CITY CIVIL
AND    SESSIONS    JUDGE   AT   BENGALURU      (CCH-86)
(COMMERCIAL COURT), ETC.

    THIS APPEAL COMING ON FOR ADMISSION THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:


CORAM:   HON'BLE MR JUSTICE V KAMESWAR RAO
         and
         HON'BLE MR JUSTICE T.M.NADAF


                    ORAL JUDGMENT

(PER: HON'BLE MR JUSTICE V KAMESWAR RAO)

The challenge in this appeal is to the judgment and

decree dated 15.10.2024 in Com.OS.No.265/2020

whereby, the learned LXXXV Additional City Civil &

Sessions Judge, at Bengaluru (CCH-86) (Commercial

Court) has decreed the suit in favour of the respondent

herein by stating as under:-

"Suit of the plaintiff is decreed in part with costs.

The defendant is directed to refund the advance sale consideration of Rs.1,00,00,000/- with interest at the rate of 18% per annum from the date of suit till realization.

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The defendant shall also pay liquidated damages of Rs.10,00,000/- to the plaintiff.

The claim of the plaintiff for additional interest at 2% per month on the advance amount of Rs.1,00,00,000/- from 28.12.2016 till realization is rejected.

Draw decree accordingly."

2. At the out set, learned counsel for the appellant

would submit that the appellant is liable to pay the

respondent an amount of Rs.1,00,00,000/- as has been

granted by the trial Court. His only submission is the

grant of interest of 18% per annum by the trial Court from

the date of suit till realization is untenable. No

submissions have been made by the learned counsel for

the appellant on the grant of liquidated damages of an

amount of Rs.10,00,000/- to the respondent herein. Since

the issue which falls for consideration is on the grant of

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

suit till realization on the amount of Rs.1,00,00,000/-, we

have, with the consent of the counsel for the parties,

heard them on the said issue.

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3. The submission of learned counsel for the

appellant is primarily by drawing our attention to clauses

28, III(ii) and III(xiv) which reads as under:-

"28. WHEREAS, the Purchaser has accepted the said offer made by the Vendor for the offered sale price and agreed to purchase the schedule property subject to the execution of Indemnity Bond by the Vendor undertaking the refund of the advance amount paid during along with cost and expenditure with interest @ 18% p.a. in case of any litigation accrues or arise after execution of this agreement.

xxx

III. ii) The vendor shall get the sale deed registered in its name from BDA within the end of December 2016 in respect of the schedule property and execute the sale deed in favour of the purchaser within 31st January, 2017, if the same is delayed, it shall pay interest at the rate of 2% per month on the advance amount of Rs.1,00,00,000/- (Rupees One Crore only) from the date of receipt of the amount to the purchaser, till execution of sale deed registered in favour of the purchaser.

xxx

III. xiv) If the vendor fails or neglects to perform his part of the contract, he shall pay a sum of Rs.10,00,000/- (Rupees Ten lakhs only) as liquidated damages along with the amount paid under this agreement to the purchaser."

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4. He contends that in terms of clause 28, the

amount of 18% interest is payable in the eventuality, any

indemnity bond has been executed by the appellant herein

undertaking the refund of the advance amount along with

cost and expenditure with interest at 18% and as no such

indemnity bond was executed, the interest of 18% p.a. is

not payable. That apart, it is his submission that when the

agreement between the parties contemplate in the

eventuality that the appellant neglects to perform his part

of the contract, he shall pay an amount of Rs.10,00,000/-

as liquidated damages, the grant of interest at the rate of

18% per annum is totally untenable.

5. Suffice to state the trial Court while granting

interest at the rate of 18% per annum has stated as

under:-

"18. Having observed that the defendant has breached the conditions of the agreement of sale as per clause 28 of the agreement the defendant is liable to refund the advance sale consideration with interest at 18% per annum. In fact the learned counsel appearing for the defendant in the course of his argument fairly

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conceded that the defendant is liable to refund the advance sale consideration but there is no liability to pay the interest as claimed.

19. With regard to the payment of the interest amount for refund of the advance sale consideration the learned counsel for the plaintiff referred to clause 3(ii) of the agreement which provides for payment of interest at 2% per month on the advance sale consideration if execution of sale deed is denied after 31.01.2017. Further clause of the agreement also provides that where the 2(14) of the agreement also provides that where the seller fails to perform his part of the contract he is required to pay damages. Clause 28 of the agreement of sale at Ex.P.3 provides that the seller undertakes to refund the advance amount together with cost and expenditure with interest at 18% per annum in case any litigation accrues or arises after execution of the agreement. The payment of interest at 2% per month in only with respect to delayed execution of the sale deed. In the case on hand pursuant to coming to know about the filing of the litigation in O.S.No.3193/2018 the plaintiff vide letter dated 22.06.2017 which is produced at Ex.P.8 has called upon the defendant to execute the sale deed on or before 30.06.2017 failure to which the defendant has been called upon to return the advance sale consideration of Rs.1,00,00,000/- with interest at 12% per annum from the date of receipt of the amount till payment. Also the defendant has been called upon to pay Rs.10,00,000/- as liquidate damages. Neither in the letter at Ex.P.8 nor under any clause of the agreement there is a stipulation with respect to payment of additional interest at 2% per month in case of cancellation of the agreement. The

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agreement has been virtually cancelled with effect from 30.06.2017 as evident in the letter at Ex.P.8 and also the notice at Ex-P11. Therefore payment of additional interest at 2% per month from 28.12.2016 by the defendant on the advance sale consideration of Rs.1,00,00,000/- will not arise. On the other hand the plaintiff would be entitled for refund of the advance sale consideration of Rs.1,00,00,000/- with interest at 18% per annum from 28.12.2016 till realization. Hence for the aforesaid reasons, I answer Issue No.1 partly in the Affirmative."

6. The above reveals, the grant of interest at 18% is

only from the date of suit till realization. In other words,

the trial Court has not granted pre-suit interest in favour

of respondent herein. It is a conceded position that the

breach of agreement had taken place on 30.06.2017. The

suit was filed in the year 2020 which ultimately got

decreed in the year 2024. It is the submission of the

learned counsel for the respondent that during the

pendency of the suit, no attempt was made by the

appellant to refund the amount of Rs.1,00,00,000/- to the

respondent. Even when the parties were relegated to the

mediation process, no such stand was taken by the

appellant. It is because of the fact that the amount was

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not paid by the appellant, during the pendency of the suit,

the trial Court has granted the pendente lite interest. So,

there is justification for grant of interest that too at 18%.

7. Further the grant of liquidated damages of

Rs.10,00,000/- has no bearing on interest. In fact, the

agreement has separate/independent stipulation on both

the aspects. The Court below has by granting interest and

liquidated damages has given effect to the stipulations in

the agreement. As such, there is no illegality.

8. We are of the view that the impugned judgment

and decree insofar as the limited challenge to the grant of

interest, cannot be interfered with. We do not find any

merit in the appeal. The same is dismissed.

Sd/-

(V KAMESWAR RAO) JUDGE

Sd/-

(T.M.NADAF) JUDGE