[Cites 4, Cited by 0]
Madras High Court
The Chairman vs __________ on 23 February, 2026
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
Arb Appeal No. 14 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 20.01.2026 Pronounced on : 23.02.2026
CORAM
THE HON'BLE MR JUSTICE C.V.KARTHIKEYAN
AND
THE HON'BLE MR JUSTICE K.KUMARESH BABU
Arb Appeal No. 14 of 2025
and
CMP No.6208 of 2025
1. The Chairman
Puducherry Housing Board, Anna Nagar,
Nellithoppe, Puducherry – 605 005.
2. The Secretary
Puducherry Housing Board, Anna Nagar,
Nellilthoppe, Puducherry – 605 005.
3. The Executive Engineer
Puducherry Housing Board, Anna Nagar,
Nellithoppe, Puducherry – 605 005.
..Appellants / Petitioners
Vs.
__________
Page1 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
Arb Appeal No. 14 of 2025
1. Mr.Justice K.P.Sivasubramaniam (Deleted)
No.47, Pulla Avenue,
Shenoy Nagar, Chennai – 600 030.
2. M/s Sri Pathy Associates Pvt Ltd
Rep. by its Chairman/Authorised Signatory,
S.Sekar, Civil Engineering Contractors, No.62,
Thanga Perumal Koil Street, Erode – 001.
R1 name deleted. Cause title amended vide
Court order dated 04.08.2025 made in Arb.
Appeal No.14/2025 (CJ and SMJ)
..Respondents /
Respondents
This Arbitration Appeal filed under Section 13(1A) of the
Commercial Courts Act, 2015 r/w. Section 37(1) of the Arbitration &
Conciliation Act, against the order and decreetal order dated 12.08.2024 made
in Arbitration OP.No. 33/2019 on the file of the Court of the Principal District
Judge (Commercial Court), Puducherry.
For Appellant(s): Mr. T.M.Naveen
For Respondent(s): Mr.A.Edwin Prabakar
For Mr. D. Gopal for R2
R-1 deleted vide order of Court dated 4/8/2025
__________
Page2 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
Arb Appeal No. 14 of 2025
JUDGMENT
(Judgment of the Court was delivered by C.V.Karthikeyan J.)
This Arbitration Appeal had been filed questioning the order dated
12.08.2024 in Arb.O.P.No.33 of 2019 on the file of the Principal District Court /
Commercial Court at Puducherry.
2.The respondent herein, M/s.Sri Pathy Associates Private Limited at
Erode, had filed a claim petition before the sole arbitrator in accordance with
Agreement No.2/2002-03 entered into between them and the appellants herein
relating to a contract for Construction of Composite Housing Scheme at
Suthanthira Ponvizha Nagar (Rainbow Nagar) Puducherry, which consisted of
49 units of MIG Flats in 7 Blocks and also included both civil and electrical
works. The tender for the same had been issued on 23.01.2002 for a value of
Rs.3,27,15,868/-. The work order was issued on 19.04.2002. The schedule for
completion was 9 months. The work commenced on 29.04.2002. It should have
been completed as per the work order on 28.01.2003. But it was actually
completed on 05.12.2003 with a delay of 10 months and 7 days. It had been
contended that final extension of time had been granted upto 05.12.2003 by
letter dated 23.07.2004 without levy of compensation.
__________
Page3 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
3.It had been contended in the claim statement that the tender was based
on pre-qualified bid. The appellants had however reduced the scope of the
tender and also subsequently called for open tender for construction of the
remaining blocks without awarding a preferential order to the respondent. It was
contended in the claim petition that since there was reduction in the construction
of blocks, the expected profit was not achieved and there was a loss about 15%.
4.It was further contended that there was poor soil condition which
prevented further construction after the foundation concrete had been laid. It
was further contended that at every stage of the construction variations were
indicated by the appellants and this also contributed to the delay in completing
the project. The first foundation work was abandoned owing to poor soil
investigation by the appellants. The work recommenced after a period of eight
months when permission was given to commence the work in an alternate site.
Additional expenditure had to be incurred since there was rise in level in the
water table and water had to be drained out continuously.
5.It was further contended that the agreement provided for use of Cold
Twisted bars / M.S. bars alone. The respondent, however, procured TMT steel
manufactured from Vizag Steel Plant which according to them were of superior
quality. It was contended that the rate of TMT bars was generally higher by
Rs.3.50 to Rs.4.00 per Kg than the ordinary Cold Twisted bars / M.S. bars. It
__________
Page4 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
was contended that therefore the cost enhanced owing to usage of such TMT
bars. It was further contended that the appellants had failed to settle the bills as
and when submitted and this had also slowed down the construction progress.
Further the structural designs were not given immediately after the work order
was given and were furnished after much delay from the date of the work order.
Claiming that there was a clause in the agreement to refer disputes to
arbitration, the claim petition had been filed seeking a total claim of
Rs.71,26,445/-.
6.The sole arbitrator by award dated 09.04.2018 had examined the
dispute relating to the different quality of steel used and had come to a
conclusion that TMT rods were purchased with the knowledge of the appellants
and that there was no specific prohibition by the appellants from usage of such
TMT bars. The claimant was also not informed that the difference in price
would not be paid by the appellants. In view that particular fact, the claim
seeking difference in the rate was adjudicated in favour of the claimant.
7.With respect to the delay in effecting the payments to the claimant, it
had been stated that the delay was also due to the change in the site as a result of
poor soil condition and owing to other factors which were beyond the control of
the respondent. Finally, the arbitrator had granted, a total compensation of
Rs.23,39,961/- which was rounded to Rs.23,40,000/- and also granted interest at
__________
Page5 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
9% per annum for the period during the pendency of the arbitration proceedings
and 18% per annum for the post award period.
8.The appellants challenged this award by filing Arb.O.P.No.33 of 2019
before the Principal District Court (Commercial Court) at Puducherry. By an
order dated 12.08.2024 the said petition was dismissed, necessitating filing of
the present Arbitration Appeal.
9.Heard arguments advanced by Mr.T.M.Naveen, learned counsel for the
appellants and Mr.A.Edwin Prabakar for Mr.D.Gopal learned counsel for the
respondent.
10.Even though in the appeal, the appellants had impleaded the arbitrator
as the 1st respondent, subsequently by order dated 04.08.2025 the 1 st respondent
had been deleted, which only left the claimant as the sole respondent in the
appeal.
11.It is the contention of Mr.T.M.Naveen, learned counsel for the
appellants that in the agreement / work order entered into between the
appellants and the respondent, it had been specifically provided that MS Tor
Steel bars alone should be used for structural steel sections and further that the
appellants would be supplying the materials in accordance with the quantity
__________
Page6 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
required. It had also been provided that the respondent herein should keep in
touch with the day to day position regarding the supply of materials and to
adjust the progress of the work, so that the labour may not remain idle or they
may not raise other claims due to delay in obtaining the materials. It had also
been contended that in the agreement, it had been provided that after the final
bill had been submitted no further claim would be entertained.
12.It had been contended by the learned counsel for the appellants that the
respondent herein had proceeded to utilize TMT bars, the cost of which were
more and also independently procured the steel from Vizag Steel Plant. The
learned counsel disputed the contention that the Cold Twisted bars / MS bars
were not available in the market necessitating purchase of TMT bars by the
respondent from Vizag Steel Plant. He also disputed the contention of the
respondent that permission had been granted to use TMT bars and that there
was an understanding that the enhanced rate would be paid to the respondent.
The learned counsel further contended that after the submission of the final bill,
a further claim was made by the respondent towards the difference in the rates
of the MS bars and TMT bars. It is contended that this claim should not have
been adjudicated and granted by the arbitrator and that this point was also not
considered in the petition filed under Section 34 of the Arbitration and
Conciliation Act. The learned counsel therefore contended that this Court
should reject the claim towards the difference in rate between MS bar and TMT
__________
Page7 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
bar. It had been contended that the award of the arbitrator and the further order
passed in the petition filed under Section 34 of the Arbitration and Conciliation
Act should be interfered with to that extent.
13.The learned counsel for the respondent, however, contended that
though the site had been initially handed over for putting up of construction of
MIG Flats in 7 Blocks, the appellants had failed to conduct soil test before
deciding the location where the MIG Flats were to be put up. When the
foundation was laid the soil was not fit enough to put up construction in that
place. Thereafter, with further delay of about six to eight months an alternate
site had been allotted to the respondent. The works had commenced. The
learned counsel contended that the steel portion was the critical element in the
construction. The respondent had used TMT bars purchased from Vizag Steel
Plant. The bills thereof had been submitted to the appellants herein. The learned
counsel contended that the quality of the TMT bars were of superior quality
than the MS bars suggested by the appellants. He contended that there was no
delay in presenting the bills. The actual cost had been submitted by the
respondent. The learned counsel contended that both the learned arbitrator and
the Court examining the petition under Section 34 of the Act had correctly
adjudicated all issues and therefore, urged that this Court should dismiss the
appeal.
__________
Page8 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
14.We have carefully considered the arguments advanced and perused the
material records.
15.The appellants herein / Puducherry Housing Board had invited tenders
for Construction of Composite Housing Scheme at Suthanthira Ponvizha Nagar
(Rainbow Nagar) Puducherry – MIG Flats 49 units (M8 – 7 Blocks) including
civil and electrical works. The total estimated cost was Rs.2,06,51,434/-. There
is not dispute over the fact that the respondent herein, Sri Pathy Associates
Private Limited, had participated in the tender and was declared as the
successful bidder. Thereafter, issues were raised relating to the site over which
the flats had to be constructed. The soil was unfit for putting up construction
and an alternate site had been located and handed over to the respondent who
had to commence work afresh.
16.But however, the central point raised in this appeal is about the
difference in rate claimed by the respondent in purchase of TMT steel bars vis-
a-vis MS bars as recommended and suggested by the appellants herein. No
ground had been raised that TMT bars utilized by the respondent are of
substandard quality. On the other hand, it the consistent stand of the respondent
that they are of superior quality. Naturally, in any construction, the steel bars
provide the core strength in the construction and in the longevity of the
construction. By usage of higher quality of steel bars the appellants should not
__________
Page9 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
have entertained any grievance except for the fact that probably the cost was
higher.
17.It is the specific case of the respondent that MS bars, which should not
have been supplied by appellants, had not been supplied in time and when
required and was also not available in the open market. The respondent had
therefore purchased TMT bars from Vizag Still Plant. It is also the specific case
of the respondent that this fact had been informed to the officials of the
appellants and objections were not raised for the usage of TMT bars. There was
also no indication that the bills raised would be rejected or not processed. These
facts had been established both by the Arbitrator and by the Court examining
the petition under section 34 of the Act. The scope of an appeal under Section
36 of the Act on that ground is extremely narrow.
18.This Court cannot revisit the facts already established. This Court can
never step into the shoes of the arbitrator to determine or grant an alternate
finding. Even if two particular views could be drawn it would not mean that the
view drawn by the arbitrator has to be necessarily set aside, unless perversity is
established. The appellants had not stated that the award of the arbitrator suffers
from perversity. The only ground of appeal is that, the respondent could not
have laid a claim for the difference in price between the TMT bars purchased by
them and the MS bars suggested by the appellants. However, as a fact, TMT
__________
Page10 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
bars had been used. Bills in that regard had been produced and submitted. This
fact cannot be denied or disputed by the appellants. Naturally, when such TMT
bars had been purchased and had been used in the construction, the respondent
is entitled to be paid for the value of such TMT bars. There is no
correspondence produced or evidence adduced that the appellants had protested
at the usage of TMT bars. It must therefore be held that they had acquiescenced
to the usage of the TMT bars in the construction. Having given their consent,
either directly or indirectly, they cannot now turn around and question the bills
which had been submitted for consideration and the claim for the difference in
price.
19.We hold that both the learned arbitrator and the Court in the petition
under Section 34 of the Act had correctly adjudicated the said claim as
admissible.
20.The appellants had also raised an issue of a further bill being presented
after the final bill. But however, even though, there is a specific clause that no
further bills should be raised after the final bill had been presented, the bill so
presented is strictly not an additional claim but an explanation to the final bill
regarding the TMT bars which had been purchased. Both the issues are
interlinked. The claim had been made only for the difference in rate between the
cost of the TMT bars purchased and the cost of the MS bars as suggested by the
__________
Page11 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
appellants. We find no infirmity in the bills presented. We also find no infirmity
or perversity in the award of the learned Arbitrator or in the order passed in the
petition filed under Section 34 of the Act.
21.In view of these reasons, we find no ground to allow the appeal.
Accordingly, the Arbitration Appeal stands dismissed with costs. Consequently,
connected Civil Miscellaneous Petition is closed.
(C.V.K.,J.) (K.B.,J.)
23-02-2026
smv
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
__________
Page12 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
C.V.KARTHIKEYAN, J.
AND
K.KUMARESH BABU, J.
smv
Pre-delivery Judgment made in
23-02-2026
__________
Page13 of 13
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/02/2026 03:02:30 pm )
