- 1 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 26367 OF 2025 (GM-CPC) BETWEEN: KARNATAKA STATE HIGHWAYS IMPROVEMENT PROJECT (KSHIP-II) PROJECT IMPLEMENTATION UNIT, 1ST FLOOR, PWD ANNEXE BUILDING, K.R. CIRCLE, BENGALURU – 560 001 REPRESENTED BY THE PROJECT DIRECTOR, MR.RAVINDRANATH C., …PETITIONER (BY SRI ARVIND RAO, ADVOCATE FOR SRI GEORGE JOSEPH, ADVOCATE) AND: 1. M/S KMC-VDB(JV) THE TWO ENTITIES THAT COMPRISE THE JOINT VENTURE ARE COMPANIES REGISTERED UNDER THE COMPANIES ACT, 1956 DOOR NO. 1-80/40/SP/58-65, SHILPA HOMES LAYOUT, HYDERABAD. CORPORATE OFFICE NO.842/A, BINNAMANGALA 100FT ROAD, INDIRANAGAR, BENGALURU – 560 038. REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE. Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 2. SRI MADUSOODANAN NAIR (FIE) ARBITRATOR, 'NANDANAM' 42 CRAM, CHAITHANYA GARDENS, PANICKER'S LANE MANNAMOOLA PEROOKADA TRIVANDRUM – 695 005. 3. HON'BLE SRI E. PADMANABHAN ARBITRATOR, RETIRED JUDGE, MADRAS HIGH COURT, NO. 11, MADHA CHURTH ROAD, MANDAIVELIPAKKAM, CHENNAI – 600 028. 4. SRI G.C. TALLUR (BE BA FIE) ARBITRATOR, 'SUSHANTY' PLOT NO. 90, 2ND MAIN, 11TH CROSS, NIRMAL NAGAR, DHARWAD – 580 003. …RESPONDENTS (BY SRI PROMOD NAIR, SR.ADVOCATE FOR SRI ABHISHEK D.S., ADVOCATE FOR C/R1) THIS WP IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DTD. 09.07.2025 IN COM.A.S.NO. 115 OF 2018 (ANNX-A) PASSED ON I.A. FOR WITHDRAWAL (ANNEXURE-B) PENDING ON THE FILE OF THE LEARNED LXXXIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, (COMMERCIAL COURT), BENGALURU (CCH-84) AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court calling in question an order dated 09-07-2025 passed by the Commercial Court which directs release of amount of ₹20,00,00,000 that is in deposit before the concerned court. 2. Heard Sri Arvind Rao, learned counsel appearing for the petitioner and Sri Promod nair, learned senior counsel appearing for caveator/respondent No.1. 3. Facts, in brief, germane are as follows: An Arbitral Award comes to be passed on 05-03-2018, determining that the respondents are entitled to receive an amount of ₹ 35,32,47,734. A petition under Section 34 of the Arbitration and Conciliation Act is filed and the said challenge comes to be turned down. The matter is at large before the Division Bench under Section 37 of the Act. The Division Bench on 13-01-2025 passed the following order: - 4 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 “Mr.Sumit Chatterjee, Advocate appears for the caveator/respondent No.1 and accepts notice. Notice to respondents No.2, 3 and 4 is dispensed with being the Arbitrators. It is agreed by the counsel for parties that they shall file their written submissions along with judgments they intend to rely upon within three weeks from today. During the course of submissions, the learned counsel for the appellant states that respondent No.1 has filed execution proceedings in which warrant to attach attachment of the immovable property has been issued. Learned counsel for respondent No.1 states that no precipitative steps shall be taken by the respondent to seek the implementation of the award dated 05.03.2018. During the course of the hearing, it was informed to the Court that respondent No.1 has filed an application seeking withdrawal of the amount as deposited by the appellant herein. This order shall not come in the way of the Court concerned in deciding the application filed by respondent No.1 for withdrawal of the amount deposited by the appellant with such conditions as deem appropriate. Re-notify on 10.03.2025.” In terms of the order of the Division Bench, the pendency of the appeal under Section 37 of the Act would not come in the way of the respondents filing an application before the concerned Court seeking withdrawal of the amount that is already in deposit, with such conditions as it may deem appropriate. - 5 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 4. Before the concerned Court, an application is filed by the 1st respondent seeking withdrawal of the deposit that was made. The deposit, before the concerned Court, as on that date was ₹ 20,00,00,000/-, as against the award of the Arbitrator. The concerned Court, by the following order, permits the amount to be withdrawn: “ORDERS ON APPLICATION FILED BY THE RESPONDENT DATED 15.11.2024 FOR RELEASE OF DEPOSITED SUM OF RS. 20 CRORES ALONG WITH ACCRUED INTEREST. The facts in brief are that this petition was filed under section 34 of the Arbitration & Conciliation Act by the petitioner herein challenging the arbitral award dated 5-3-2018 passed by the arbitral tribunal consisting of three learned members whereby the arbitral tribunal partly allowed the claim of the respondent herein (who was the claimant before the arbitral tribunal). 2. During the pendency of the present petition, by orders dated 9-10-2023, the operation of the arbitral award was stayed subject to the petitioner depositing Rs.20 crores. In pursuance of said orders, the petitioner deposited said sum of Rs.20 crores into this court. By orders dated 20-07-2024, this court directed the office to keep the deposited sum of Rs. 20 crores in FD in SBI, Kandaya Bhavan Branch, for a period of six months renewable every six months. 3. Thereafter, by judgment dated 29-10-2024, present petition was dismissed and thereby confirmed the arbitral award. Thereafter, on 15-11- 2024 present application is filed by the Respondent seeking release of the deposited amount along with accrued interest, in favour of the Respondent, towards partial satisfaction of the arbitral award. - 6 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 4. At this stage, it is to be noted that, the judgment of this court dismissing the present petition is challenged before Hon'ble High Court of Karnataka in Commercial Appeal No. 584 of 2024. In the said commercial appeal, Hon'ble High Court of Karnataka has passed orders, dated 13/1/2025, inter-alia, observing as follows; "During the course of the hearing, it was informed to the Court that respondent No.1 has filed an application seeking withdrawal of the amount as deposited by the appellant herein. This order shall not come in the way of the Court concerned in deciding the application filed by respondent No. 1 for withdrawal of the amount deposited by the appellant with such conditions as deem appropriate." 5. After filing of the present application, on several occasions, the respondent has filed affidavits and indemnity bonds and documents in respect of immovable property furnished as security for release of the deposited amount and various lacunae were found therein. In the earlier orders dated 25-04-2025, essentially, this court has held that as security for release of the deposited amount, the respondent has to furnish indemnity bonds of all the directors of VDB, which is one of the constituents of respondent-JV and also furnish the security of immovable property of sufficient value and deposit the original title deeds of the said immovable properties into this court and in the indemnity bonds, the directors of VDB shall undertake to personally indemnify in case the petitioner succeeds at any stage of the litigation and in addition the directors of VDB shall undertake not to alienate or encumber the immovable properties offered as security. 6. In pursuance of the orders of this court, on 4-6- 2025, the counsel for respondent has filed a list of documents detailing the various title deeds in respect of various immovable properties which the respondent is prepared to deposit into court as - 7 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 security for release of the deposited amount. In addition, the affidavit of one of the directors of VDB, namely Mr. M. Abhinav Reddy, is filed mentioning the particulars of the various immovable properties offered as security. Further, along with the said affidavit, the indemnity bond of the three directors of VDB, namely Mr. Abhishek Reddy, Mr. Abhinav Reddy and Mrs. Sridevi are filed. On this basis, it is the submission of counsel for respondent that the respondent has fulfilled all the conditions for release of deposited amount. 7. To the above documents, the counsel for petitioner has filed detailed objections. Essentially, in the objections, it is contended that even as per the affidavit of the respondent, the guidance value of the immovable properties given as security is only Rs. 12.60 crores, whereas the deposited amount sought to be released is Rs. 20 crores along with accrued interest. Therefore, it is contended that the immovable properties offered as security are not sufficient for release of the deposited amount. Secondly, it is contended that even the calculation of the guidance market value is flawed because in the absence of material to show the nature of the immovable properties, i.e. whether it is dry land or irrigated / wetland or garden land, the lowest of the prescribed guidance values has to be taken, whereas the respondent has chosen to take the highest guidance value and on that basis, the guidance value of Rs. 12.60 crores for the properties is unacceptable. Thirdly, certain contentions are raised that in respect of individual properties, in the RTC there is a discrepancy between the sale deed furnished and the date of conveyance as noted in the RTC. And further, in respect of one particular property, it reflects a mortgage in favour of Canara Bank. On these grounds, it is contended that the court should not release the deposited amount and instead call upon the respondent to furnish more valuable property as security for release of the deposited amount. 8. Having considered the rival contentions, at the outset, it is to be noted that, notwithstanding the - 8 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 fact that judgment of this court dismissing the present petition is challenged before Hon'ble High Court of Karnataka, there is no embargo for this court to release the deposited amount in favour of the respondent, in view of the specific observation of Hon'ble High Court of Karnataka in the orders dated 13-01-2025 in Commercial Appeal No. 584 of 2024 that, the said order will not come in the way of this court deciding the application filed by respondent herein for withdrawal of the amount deposited "with such conditions as deem appropriate". 9. Therefore, in this case, it is only a question of this court imposing case appropriate conditions to secure the interest of the petitioner in case petitioner ultimately succeeds in the litigation and subject to such conditions, this court has to release the deposited amount in favour of the respondent, towards partial satisfaction of the arbitral award. 10. What are the appropriate conditions to be imposed by this court for releasing the deposited amount to the respondent has already been delineated by this court in the earlier orders. Essentially, the conditions already imposed are that, all the directors of one of the constituents of respondent namely VDB should file indemnity bond undertaking personal liability to indemnify the petitioner in case petitioner succeeds in the litigation and the respondent shall also furnish security of sufficient value immovable property belonging to the directors of VDB and in the indemnity bond, the directors of VDB shall undertake not to alienate or encumber such immovable property furnished as security and thirdly, the original title deeds of such immovable properties furnished as security shall be deposited in this court. 11. The question is whether the Respondent has complied with above conditions. 12. Firstly, as already noted on 4-6-2025, the counsel for respondent has filed indemnity bonds of all the - 9 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 three directors of VDB namely Mr. M. Abhishek Reddy, Mrs. M. Sridevi and Mr. M. Abhinav Reddy. The company master data is already produced to show that these 3 are the only directors of VDB. 13. In the indemnity bond of all the three directors, they have undertaken to personally indemnify to the extent of deposited amount with accrued interest sought to be released, in the event petitioner is successful in the pending litigation. They have also undertaken not to alienate or create third party encumbrance in respect of those immovable properties which have been offered as security as per paragraph 12 of separate affidavit of even date viz. 4-6-2025 filed by Mr. M.Abhinav Reddy. Therefore, the indemnity bonds of all the directors of VDB is on record. 14. The next question is whether the respondent has furnished security of sufficiently valuable immovable property for release of the deposited amount. In this regard, as per paragraph 12 of affidavit of Mr. M. Abhinav Reddy dated 4-6-2025, various immovable properties are offered as security. The total guidance value of the said immovable properties is stated to be Rs. 12.60 crores whereas the market value of the said properties is stated to be Rs. 36.45 crores. As already noted in the objections of petitioner, it is contended that in the absence of bringing on record the nature of the properties, i.e. whether it is dry land or wetland or garden land, the lowest of the applicable guidance value has to be taken and on this ground, the valuation of the properties given by Respondent is disputed by Petitioner. However, at this stage, it is not possible for this court to hold a mini-trial to ascertain the nature of the immovable properties. Admittedly, various immovable properties are furnished as security. Admittedly, the calculation of the sub-registrar guidance value of the said properties is made as per the relevant notification which is also on record. The only dispute by the petitioner is that the guidance value applicable to another nature of land is applied in arriving at Guidance Value valuation of - 10 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 Rs. 12.60 crores. However, the petitioner obviously has no knowledge about the nature of the land. The respondent being the owner of the immovable properties furnished as security, the guidance value as selected by the respondent will have to be accepted. Therefore, I am of the view that, the guidance value of the immovable properties furnished as security which is stated to be Rs. 12.60 crores as per the affidavit of one of the directors of respondent will have to be accepted. 15. No doubt, as rightly contended by the petitioner, the amount sought to be released is Rs. 20 crores with accrued interest whereas the property furnished as security has the guidance value of only Rs. 12.60 crores. However, in this regard, it has to be noted that, it is well known that normally the market value will be much higher than the guidance value. 16. Therefore, I am of the view that the immovable property of the guidance value of Rs. 12.60 crores coupled with the personal indemnity bonds furnished by the directors of VDB will be sufficient security to the petitioner in case the petitioner succeeds in the litigation between the parties. 17. The objection raised by petitioner that there is some discrepancy with respect to the date of conveyance between the sale deeds (copies) produced and the entries in the RTC is inconsequential because it is admitted that the RTCs as well as the title deeds produced in respect of the immovable properties stand in the name of either one of the directors of VDB. 18. The other contention that in respect of one particular property a mortgage in favour of Canara Bank is reflected is also inconsequential because it was submitted by counsel for respondent that said mortgage is discharged and even otherwise, the said mortgage is reflected only in respect of one of the immovable properties, whereas totally as many as 28 immovable properties are furnished as - 11 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 security. Therefore, the fact that in respect of one of the 28 properties a mortgage in favourof Canara Bank is reflected will not come in the way of accepting the said immovable properties as security for release of the deposited amount. 19. Accordingly, I hold that except for producing the original title deeds in respect of the immovable properties, all other conditions have been satisfied by the respondent. Therefore, subject to production of the originals of the immovable properties to be kept in safe custody of this court, there is no embargo for directing release of deposited amount along with accrued interest in favour of the respondent. 20. However, in my view, by way of abundant precaution, since the matter is pending before the Hon'ble High Court in Com. Appeal No. 584/2024, time period of 30 days should be given to the petitioner to challenge the present orders of this court, if so advised. Therefore, for respondent to produce the original title deeds as per the list of documents dated 4-6-2025 and for appropriate orders for release of the deposited amount, call on 11-8-2025. Sd/- 09/7/25 (SUDINDRANATH.S.) LXXXIII ACCJ, B'LURU. (09.07.2025) (CCH-84)” The concerned Court details the title deeds of the properties that are placed as deposit before the concerned Court in lieu of the amount that is sought to be withdrawn, as well as the indemnity of all the three directors of the 1st respondent. - 12 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 5. The petitioner has now rushed to this Court on the score that the SR value of the properties which form part of title deeds is far less than the ₹20,00,00,000/- that the 1st respondent is seeking to withdraw. 6. The learned senior Counsel Sri Promod Nair representing the 1st respondent would contend that the title deeds and indemnity bonds are placed before the concerned Court indemnifying any loss later, as well as the originals of the title deeds. The market value of the property that is so placed is far beyond ₹20,00,00,000 in deposit. The learned senior Counsel would further submit that, as on today the 1st respondent is entitled to receive around ₹80,00,00,000/-. Be those submissions as they are. 7. In the light of the order of the Division Bench, the concerned Court has not committed any error in directing release of ₹20,00,00,000/- that is in deposit, taking title deeds and indemnification of the directors. Finding no error that would entail interference at the hands of this Court under Section - 13 - HC-KAR NC: 2025:KHC:34325 WP No. 26367 of 2025 Article 227 of the Constitution of India, the petition stands rejected. Sd/- (M.NAGAPRASANNA) JUDGE BKP List No.: 2 Sl No.: 8