Partly allowed¶19

M/S G K Ispat Private Limited v. M/S Sai Construction

Karnataka HC18 Mar 2026COMAP/339/2024

Case brief

AI extract

What is this about?

Recovery of advance paid for steel supply; buyer paid principal Rs. 64,36,360/- but contested 24% interest; no agreement for pre-suit interest, so interest allowed only from date of legal notice (Exhibit-P3, 26.09.2022) at 24% per annum, matching seller's 2%-per-month invoice terms to third-party buyer (Best Golden Developers Pvt. Ltd.); decree modified, interest till deposit in Court on 12.03.2025; appeal partly allowed; Section 13(1A) Commercial Courts Act 2015; Karnataka HC COMAP No. 339 of 2024.

What did the court decide?

Decree modified: interest at 24% per annum confined to the period from 26.09.2022 (date of notice Exhibit-P3) till 12.03.2025 (date of deposit of the amount in Court); appeal partly allowed in the aforesaid terms; pending interlocutory application disposed of. ¶19

M/S G K Ispat Private Limited Vs M/S Sai Construction — Karnataka HC (2026) — LawSathi Research

What the court decided

AI extract

Outcome

¶19

Issue for consideration

Whether the plaintiff is entitled to interest at the rate of 24% per annum on the amount of Rs. 64,36,360/- from the date the said amount was advanced by the plaintiff, till realisation. +1 more

¶8

Court's answer

There is no agreement on record which would substantiate that the appellant is liable to pay interest at the rate of 24% per annum on the amount as advanced.

¶9

Ratio / Principle

The appellant is not liable to pay interest from the date on which it had received the payments (pre-suit interest from the date of advance is rejected).

¶11

Key takeaways

Since the plaintiff's legal notice dated 26.09.2022 (Exhibit-P3) demanded repayment with interest at 24% per annum, the appellant is liable to pay interest from the date of that notice, i.e., from 26.09.2022.ratio¶11
The demand of interest at 24% per annum in the notice is not unreasonable and is not out of conformity with the commercial terms on which purchase and supply of goods transactions are usually consummated (the appellant's own invoices to a third-party buyer stipulated 2% per month, i.e., 24% per annum).ratio¶14

Detailed headnote1 paragraphs

Division Bench (Chief Justice Vibhu Bakhru and C.M. Poonacha) of the High Court of Karnataka at Bengaluru, in Commercial Appeal No. 339 of 2024 filed under Section 13(1A) of the Commercial Courts Act, 2015, considered an appeal by M/s G.K. Ispat Private Limited (buyer/defendant) against the judgment and decree dated 28.06.2024 of the LXXXV Additional City Civil and Sessions Judge, Bengaluru (Commercial Court) in Com.O.S.No.245/2023, whereby M/s Sai Construction's (seller/plaintiff) suit was decreed for Rs. 97,83,267/- with interest at 24% per annum from the date of suit till realisation. The appellant had already paid the principal of Rs. 64,36,360/- (balance of a Rs. 74,36,360/- advance paid on 24.12.2020 for 115 MT Tata Steel, after refund of Rs. 10,00,000/- on 08.04.2021) on 12.03.2025 and did not challenge the decree for that amount; the dispute was confined to interest. Held: (i) there was no agreement on record substantiating liability to pay interest at 24% per annum on the amount as advanced, hence the appellant was not liable to pay interest from the date it received the payments; (ii) the appellant was liable to pay interest from the date of the plaintiff's legal notice dated 26.09.2022 (Exhibit-P3) demanding repayment with 24% interest; (iii) the demanded 24% per annum rate was neither unreasonable nor inconsistent with usual commercial terms, since the appellant's own invoices (Exhibits D.5 to D.13) to a third-party buyer, Best Golden Developers Private Limited, stipulated interest at 2% per month (24% per annum) from the due date. The decree was modified so that interest runs from 26.09.2022 till 12.03.2025, the date the amount was deposited in Court. Appeal partly allowed; pending interlocutory application disposed of.

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NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 18^TH DAY OF MARCH, 2026

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PRESENT

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THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE

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AND

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THE HON'BLE MR. JUSTICE C.M. POONACHA

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COMMERCIAL APPEAL NO. 339 OF 2024

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BETWEEN:

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M/S G.K. ISPAT PRIVATE LIMITED HAVING ITS OFFICE AT NO.44 BRIGADE BUSINESS SUITES 5^TH FLOOR, T. MARIYAPPA ROAD (100 FEET ROAD) JAYANAGAR II BLOCK

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BENGALURU - 560 011 REPRESENTED BY ITS AUTHORIZED SIGNATORY MR. VINAY M S/O MARIYAPPA

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…APPELLANT

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(BY SRI P.B. RAJU, ADVOCATE)

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Digitally signed by K P SWETHA Location: High Court of Karnataka

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AND:

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M/S SAI CONSTRUCTION HAVING ITS REGISTRATION OFFICE AT NO.13, 1^ST BLOCK NARAYANAGAR ANJINAPURA MAIN ROAD DODDAKALLASANDRA POST KANAKAPURA ROAD BENGALURU - 560 062 REPRESENTED BY ITS CHAIRMAN MR. RAVI G

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…RESPONDENT

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(BY SRI GANAPATI BHAT VAJARALLI, ADVOCATE FOR C/R)

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NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

¶24

THIS COMMERCIAL APPEAL IS FILED UNDER SECTION 13 (1A) OF THE COMMERCIAL COURTS ACT, 2015, PRAYING TO CALL FOR THE RECORDS IN COM O.S. NO.245/2023 PASSED BY THE HON'BLE LXXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE COMMERCIAL COURT (C.C.H. NO.86) & SET ASIDE THE IMPUGNED JUDGMENT AND DECREE DATED 28.06.2024 PASSED IN COM.O.S. NO.245/2023 PASSED BY THE LXXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE COMMERCIAL COURT (C.C.H. NO.86) BENGALURU & ETC.

¶25

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

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CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE and HON'BLE MR. JUSTICE C.M. POONACHA

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ORAL JUDGMENT

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(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

¶29

The appellant has filed the present appeal impugning the judgment and decree dated 28.06.2024 passed by the LXXXV Additional City Civil and Sessions Judge, Bengaluru [ Commercial Court ] in Com. O.S.No.245/2023.

¶30

¶31

NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

¶33

The respondent [ the plaintiff ] had filed the said suit for

¶34

recovery of an amount of 64,36,360/- along with interest for the period 24.12.2020 to 26.09.2022, quantified at 27,03,271/-. Additionally, the plaintiff also sought interest from 26.09.2022 till the date of filing of the suit, that is till 16.02.2023, quantified at `6,43,636/-.

¶35

The learned Commercial Court decreed the said suit for a sum of `97,83,267/- along with interest at the rate of 24% per annum from the date of suit till realisation.

¶36

It is the plaintiff's case that it had paid a sum of 74,36,360/to the appellant on 24.12.2020 as an advance payment for purchasing 115 metric tons of steel (Tata Steel). The plaintiff claimed that the material was required to be delivered at the construction site at Yeshwanthpura. Although the appellant had received the entire amount in advance, it failed to supply the agreed material. The plaintiff claimed that it sent repeated reminders calling upon the appellant to either supply the steel or refund the amount. The appellant refunded an amount of 10,00,000/- on 08.04.2021, leaving a balance amount of

¶37

4 - NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

¶39

`64,36,360/- as outstanding. The plaintiff claimed that the appellant

¶40

was liable to pay the said amount with interest at the rate of 24% per annum.

¶41

The plaintiff issued a legal notice dated 26.09.2022 (Exhibit-P3) calling upon the appellant to pay a sum of 90,10,827/along with interest at the rate of 24% per annum from the date of notice ( that is, from 26.09.2022). The said amount of 90,10,827/comprised of an amount of 64,36,360/-, which remained outstanding and 25,74,467/- being the interest quantified at the rate of 24% per annum on the said amount from 24.12.2020 till the date of issuing the notice that is, till 26.09.2022.

¶42

The appellant filed a written statement denying that the plaintiff had placed the purchase order dated 24.12.2020 or that it had undertaken to pay the amount as claimed.

¶43

It is not necessary to examine whether the appellant is required to pay interest on the amount of 10,00,000/-, which was refunded. The plaintiff does not claim any interest on this amount. Further, the appellant has paid the sum of 64,36,360/- on 12.03.2025 and does not challenge the decree for the said amount.

¶44

¶45

NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

¶46

HC-KAR

¶47

The appellant has confined the dispute to the decree for the payment of interest.

¶48

The only question to be examined is whether the plaintiff is entitled to interest at the rate of 24% per annum on the amount of `64,36,360/- from the date the said amount was advanced by the plaintiff, till realisation.

¶49

It is material to note that in its statement, the appellant has denied that there was any agreement between the parties for payment of interest on the amount advanced. Concededly, there is no agreement on record which would substantiate that the appellant is liable to pay interest at the rate of 24% per annum on the amount as advanced.

¶50

In the written statement filed by the appellant, as well as in the affidavit in lieu of examination in chief, Sri Vinay M (DW.1) expressly affirmed that the calculations of interest as claimed were highly exaggerated and were not a part of any agreement between the parties. DW.1 was cross-examined. However, no question was put to DW.1 regarding any understanding or agreement regarding pre-suit interest.

¶51

6 - NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

¶53

In view of the above, we are unable to accept that the appellant was liable to pay interest from the date on which it had received the payments. However, the plaintiff had sent a legal notice dated 26.09.2022 (Exhibit-P3) calling upon the appellant to refund the said amount along with interest at the rate of 24% per annum. Thus, clearly, the appellant would be liable to pay interest from the date of the said notice that is, from 26.09.2022.

¶54

The only question remaining is whether the demanded rate of interest is reasonable or exaggerated.

¶55

The plaintiff had referred to the

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(Exhibit D.5 to Exhibit D.13) raised by the appellant on a third-party buyer (Best Golden Developers Private Limited). The said invoices provided that interest at a rate of 2% per month would be payable

¶57

from the due date. It is thus not disputed that the appellant supplied goods on the condition that if the payments were not made within time, the buyers would be liable to pay 2% interest (which amounts to 24% per annum).

¶58

7 - NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

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HC-KAR

¶60

In this view, we are unable to accept that the demand of interest at the rate of 24% per annum in the notice served by the plaintiff is unreasonable or otherwise not in conformity with the commercial terms on which transactions relating to the purchase and supply of goods, are usually consummated.

¶61

In view of the above, we are unable to accept that the plaintiff would not be entitled to interest from the date of the notice demanding repayment, that is, 26.09.2022, till the date of payment of the said amount.

¶62

In view of the above, we find no ground to interfere with the decree insofar as it relates to interest, except to the extent that the interest would run from 26.09.2022, being the date of the notice demanding interest (Exhibit-P3), till 12.03.2025, being the date on which the amount was deposited in the Court.

¶63

The learned counsel appearing for the respondent (plaintiff) fairly states that the plaintiff is not claiming any interest on the sum of `10,00,000/-, which was paid on 08.04.2021.

¶64

The decree is modified to the aforesaid extent.

¶65

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NC: 2026:KHC:15867-DB COMAP No. 339 of 2024

¶67

HC-KAR

¶68

The appeal is partly allowed in the aforesaid terms.

¶69

The pending interlocutory application stands disposed of.

¶70

SD/(VIBHU BAKHRU) CHIEF JUSTICE

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SD/(C.M. POONACHA) JUDGE

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KPS List No.: 2 Sl No.: 11

Procedural history

How this case reached the court

AI extract

Order under challenge
Judgment and decree dated 28.06.2024 in Com.O.S.No.245/2023 decreeing the plaintiff's recovery suit for Rs. 97,83,267/- with interest at 24% per annum from the date of suit till realisation.¶1
LXXXV Additional City Civil and Sessions Judge, Bengaluru (Commercial Court), C.C.H. No.86 · 28.06.2024
Prior proceeding
Plaintiff paid Rs. 74,36,360/- to the appellant on 24.12.2020 as advance payment for purchasing 115 metric tons of steel (Tata Steel), to be delivered at Yeshwanthpura.¶4
Prior proceeding
Appellant refunded Rs. 10,00,000/- on 08.04.2021, leaving a balance of Rs. 64,36,360/- outstanding.¶4
Prior proceeding
Plaintiff issued legal notice dated 26.09.2022 (Exhibit-P3) demanding Rs. 90,10,827/- (principal Rs. 64,36,360/- plus interest Rs. 25,74,467/- at 24% per annum) with interest from the date of notice.¶5
Prior proceeding
Respondent (plaintiff) filed Com.O.S.No.245/2023 for recovery of Rs. 64,36,360/- along with interest for 24.12.2020 to 26.09.2022 quantified at Rs. 27,03,271/-.¶2
Prior proceeding
Plaintiff additionally sought interest from 26.09.2022 till the date of filing of the suit (16.02.2023), quantified at Rs. 6,43,636/-.¶2
Prior proceeding
Appellant filed a written statement denying the purchase order dated 24.12.2020 and denying undertaking to pay the amount as claimed.¶6
Prior proceeding
In written statement and affidavit in lieu of examination in chief, Sri Vinay M (DW.1) affirmed that the interest calculations claimed were highly exaggerated and not part of any agreement between the parties.¶10
Prior proceeding
DW.1 was cross-examined, but no question was put regarding any understanding or agreement on pre-suit interest.¶10
Prior proceeding
Appellant's invoices (Exhibits D.5 to D.13) to third-party buyer Best Golden Developers Private Limited stipulated interest at 2% per month from due date; not disputed that goods were supplied on condition that late payment attracts 2% monthly (24% per annum) interest.¶14
Prior proceeding
Appellant paid the sum of Rs. 64,36,360/- on 12.03.2025 and does not challenge the decree for that amount; dispute confined to the decree for interest.¶7

M/S G K Ispat Private Limited v. M/S Sai Construction

Case brief

What is this about?

What did the court decide?

M/S G K Ispat Private Limited v. M/S Sai Construction

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

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