R E P O R T A B L E
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2506 OF 2004
K.V. MOHAMMED ZAKIR .......APPELLANT(S)
Versus
REGIONAL SPORTS CENTRE .....RESPONDENT(S)
O R D E R
Heard counsel for the parties.
2. This appeal has been filed impugning the judgment of
the Division Bench of the Kerala High Court dated
13/11/2002 whereby the learned Judges of the High Court, on
an appeal by the respondent from a judgment by the
Subordinate Judge, Ernakulam dated 1/1/1991, were pleased
to disallow part of the claims which were granted in favour
of the appellant by the arbitrator. The relevant facts of
the case are as under.
3. Tender was submitted by the claimant which was
accepted by the respondent. An agreement dated 20/11/1986
was executed. In terms of the agreement, the work was to be
completed within 12 months, i.e. within 19/11/1987. Work
could not be completed by that time and the case of the
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claimant-appellant before us is that it could not be
completed on account of delay on the part of the respondent
in the supply of cement and steel, and also the delay in
making available the drawings and for various other factors.
The matter was referred to the arbitration of a Sole
Arbitrator who was a retired Judge of Kerala High Court.
4. Claims and counter claims were raised before the
arbitrator. After examining the rival contentions, the
arbitrator gave an award dated 16/03/1990 for an amount of
Rs.19,51,334.25 with interest at the rate of 10% on
Rs.18,86,700.23, the principal amount, from the date of
award to the date of decree. The claimant then applied for
making the award into ‘rule of the Court’ and vide order
dated 1/1/1991, the III Additional Sub-Judge, Ernakulam
passed an order making the award ‘rule of the Court’.
5. Challenging the same, an appeal was filed before the
High Court by the respondent herein. In the said appeal,
Division Bench of the High Court was pleased, inter alia,
to hold that the claimant-appellant is not entitled to
receive from the respondent an amount of Rs.3,63,344/- as
compensation for the loss caused to the appellant by way of
gains prevented or loss of profit. In other words it is a
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loss of profit of 15% of the cost of work. Learned Judges
held that it is difficult to accept the reasoning of the
arbitrator in granting the aforesaid part of the award of
the arbitrator and, therefore, the learned Judges were
pleased to set aside the award with regard to claim No.II.
With the rest of the award, learned Judges, however, did
not interfere.
6. We have heard counsel for the parties and we have
perused the award. The award runs into considerable detail
as it is a speaking award. While dealing with this part of
the claim, the arbitrator in paragraph 5.11, 5.12 and 5.13
of the award has given detailed reasons. We are of the
view that the settled position in law is that Court should
not substitute its own view for the view taken by the
arbitrator while dealing with the proceedings for setting
aside an award. It is equally well settled, where the
arbitrator acts within jurisdiction, ‘the reasonableness of
the reasons’ given by the arbitrator is not open to
scrutiny by Courts. However, if the reasons are such as no
person of ordinary prudence can ever approve of them or if
the reasons are so ‘outrageous in their defiance of logic’
that they shock the conscience of the Court, then it is a
different situation. And in an appropriate case the Court
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may interfere. However, the degree of such unreasonableness
must be greater than the standard in a certiorari
proceeding. We find that the arbitrator in this case has
reached a finding of fact on the materials on record about
the delay on the part of the respondent and it has also
been held by the arbitrator that because of such delay the
claimant was put in great difficulty in completing the work
in time. It is nobody’s case that by doing so the
arbitrator has acted beyond his jurisdiction or committed
any legal misconduct.
7. We, therefore, see no reason to interfere with the
award of the arbitrator. We, accordingly, set aside the
judgment of the High Court and uphold the award of the
arbitrator. Appeal is allowed to the extent indicated
above. No order as to costs.
……………………..J.
( MARKANDEY KATJU )
New Delhi; ……………………..J.
September 16, 2009. ( ASOK KUMAR GANGULY )