Madras HC Upholds ₹2.55 Crore HVAC Balance for Voltas Despite Hotel Hiring Third Parties to Finish Pending Work

In brief

The question

Whether the award of ₹1,01,53,833 as retention money could be set aside separately from the rest of the award, particularly in light of Voltas’s concession that it no longer pressed that claim.

The court held

The petition was partly allowed. The portion of the award directing payment of ₹1,01,53,833 as retention money, together with further interest, was set aside; the award of ₹2,55,51,052 to Voltas, with post-award interest at 18% per annum until realization, was upheld.

It also directed

The parties were directed to bear their own costs, and the pending application was closed.

01Facts

Appu Hotels engaged Voltas to execute HVAC and electrical works for a hotel project under a work order dated 11.05.2009.

pp. 2–6

Disputes arose over completion of the works, the balance payable under Voltas’s final bill, retention money, and Appu Hotels’ counterclaims for excess payment, liquidated damages, and other losses.

pp. 2–6

The sole arbitrator awarded Voltas ₹2,55,51,052 for work executed and ₹1,01,53,833 as retention money, with post-award interest at 18% per annum; the arbitrator rejected Appu Hotels’ counterclaims, including on limitation grounds.

pp. 7–11

Appu Hotels challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. In the High Court, Voltas stated that it no longer pressed its claim to retention money.

p. 14

02Issues

i.Whether the award of ₹1,01,53,833 as retention money could be set aside separately from the rest of the award, particularly in light of Voltas’s concession that it no longer pressed that claim.

p. 17

ii.Whether the award of ₹2,55,51,052 for work executed, together with post-award interest at 18% per annum, disclosed a ground for interference under Section 34.

pp. 18–20

iii.Whether the arbitrator’s findings on breach, completion of the works, and the counterclaims warranted interference, including on the grounds that the findings were contradictory or based on an erroneous assessment of evidence.

pp. 11–13, 18–19

03Law Applied

Section 34(2)(b)(i) and (ii) of the Arbitration and Conciliation Act, 1996 permits setting aside an award on the statutory grounds specified there; a Section 34 court does not sit as an appellate forum to reappreciate evidence or substitute another possible view for the arbitrator’s reasoned findings.

pp. 1, 18–20

The Court relied on Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1, in addressing whether the retention-money portion could be severed and set aside independently.

p. 17

It also referred to Associates Builders v. Delhi Development Authority, (2015) 3 SCC 49, Dyna Technologies v. Crompton Greaves Ltd., (2019) 20 SCC 1, and OPG Power Generation Pvt. Ltd. v. Enexio Power Cooling Solutions India Pvt. Ltd., (2025) 2 SCC 417, cited by Voltas in support of the limited scope of Section 34 review.

p. 16

Provisions in the judgment · 3 · Linked ones open on LawLens

Arbitration and Conciliation Act, 1996 Section 11 Section 32 Section 34

04Reasoning

The Court treated the retention-money award as severable: it could be removed independently without making the remaining award incoherent, and Voltas had expressly conceded that it no longer pressed that claim.

p. 17

As to the balance award, the arbitrator had found that Voltas had not breached or abandoned the contract, while also recognising that some work remained unfinished and that Appu Hotels had engaged third parties to complete it. The arbitrator accounted for that expenditure in assessing the value of Voltas’s work and the amount remaining payable.

pp. 18–19

The Court held that these findings were reasoned and consistent, and that Appu Hotels’ arguments largely sought a reassessment of the evidence, which was outside the proper scope of Section 34 review.

pp. 18–20

It found no basis to disturb the balance award or the post-award interest rate.

p. 20