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  

.......2.

- 2 -

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.

- 3 -

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.

- 4 -

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 )