2009 (9) TMI 590 - SC - Companies Law

Award of the arbitrator - Held that - Appeal allowed. 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 - As 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.

Summary

Issues:
Impugning the judgment of the Division Bench of the Kerala High Court regarding disallowance of part of the claims granted in favor of the appellant by the arbitrator.

Analysis:
The case involved a tender accepted by the respondent, leading to an agreement for work completion within a specified time frame. Due to delays attributed to the respondent in the supply of materials and other factors, the work was not completed on time. The matter was referred to arbitration, resulting in an award in favor of the claimant. The award was challenged by the respondent before the High Court, which disallowed a portion of the claim related to compensation for loss of profit. The High Court set aside the award in this regard but did not interfere with the rest of the award.

Upon review, the Supreme Court found that the arbitrator had provided detailed reasons for the award, and it was a speaking award. The Court emphasized that it should not substitute its view for that of the arbitrator, especially when the arbitrator acts within jurisdiction. The Court highlighted that unless the reasons given by the arbitrator are so unreasonable that they shock the conscience of the court, interference is not warranted. In this case, the arbitrator's finding on the delay caused by the respondent was based on the materials on record and did not amount to legal misconduct or jurisdictional error.

Consequently, the Supreme Court upheld the award of the arbitrator, setting aside the judgment of the High Court. The Court concluded that there was no basis for interference and allowed the appeal, without issuing any order as to costs.