K.V. Mohd. Zakir vs Regional Sports Centre

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

.......2.

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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 .....3.

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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 ......4.

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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 )