J U D G M E N T

ANUP JAIRAM BHAMBHANI J.

By way of the present petition filed under section 34 of the Arbitration & Conciliation Act 1996 („A&C Act‟), the petitioner impugns Arbitral Award dated 07.03.2012 („Arbitral Award‟) rendered by the learned Sole Arbitrator in relation to the disputes between the parties.

2. Briefly, disputes had arisen between the parties from Memorandum of Understanding dated 20.02.2006 („MoU‟), under which the petitioner was to construct a mall in the name and style of „R-3 Mall‟ in Ahmedabad, Gujarat („Mall‟) in which the respondent was to be provided space for running a multiplex on lease basis. The bone of contention between the parties was, that respondent alleged that the petitioner had committed breach of the terms of the MoU by entering into a contract with a third-party on 09.03.2006, thereby terminating the respondent‟s contract. The respondent claimed that the termination was invalid and illegal, which impelled them to file a claim in arbitration.

3. By way of the Arbitral Award, the petitioner has been directed to pay to the respondent the sum of Rs. 24,54,458.33 alongwith interest at the rate of 12% per annum. The said sum comprises two primary components : (i) the sum of Rs. 4,54,458.33 towards expenses held to have been incurred by the respondent towards advertisement and exhibition charges etc. as detailed in the award; and (ii) the sum of Rs.20,00,000.00 towards „loss of profit‟ suffered by the respondent, as also detailed in the award.

4. Notice on this petition was issued on 08.08.2012; following which reply dated 02.02.2013 and rejoinder dated 19.07.2013 have been filed by the respective parties.

5. The court has heard Mr. Adhitya Srinivasan, learned counsel appearing for the petitioner and Mr. Pravin Bhadur, learned counsel appearing for the respondent, in detail.

6. Both parties have also filed written synopses of their respective submissions in the matter.

PETITIONER’S SUBMISSIONS

7. Mr. Adithya Srinivasan, learned counsel appearing for the petitioner submits that in the petition they have raised two principal contentions impugning the Arbitral Award. The first is that the MoU signed between the parties was merely an „agreement to agree‟ and was therefore not a concluded or enforceable contract; and second, that the award of Rs. 20,00,000.00 in favour of the respondent by way of loss of profit, is untenable since it was based entirely on conjectures and surmises.

8. However, in the course of his submissions, Mr. Srinivasan has restricted the challenge to the award only to the untenability of the loss of profit awarded to the respondent.

9. In this behalf, Mr. Srinivasan has made the following submissions :

9.1. Counsel has first drawn attention to issue No.8 framed in the course of arbitral proceedings, which reads as under :

“8. Whether the respondent is liable to pay to the claimant Rs. 6,33,58,800/- towards loss of the profit?”

9.2. Counsel submits that this issue has been decided by the learned Arbitrator in the following manner :

“Issue No. 8 In this regard the contention raised is that the claimant has lost profit which he has calculated from the period 20th June, 2006 to 20th December, 2008 by calculating an estimated loss of income from the sale of tickets, income from advertisement and income from concession. One must concede that while calculating the loss of profit there has to be certain amount of conjectures that has to be drawn because for future loss of profit there cannot be a straight jacket formula.

Reliance is being placed on the decision of the Supreme Court in the case of M/s A T Brij Paul Singh & Bros. vs. State of Gujarat AIR 1984 SC 1703 would be inappropriate. The said decision pertained to the loss of profit claimed by the contractor of expected profit on balance of work contract. This is not so in the present case. In fact one is constrained to observe that it is speculative if any profit would be made or not. However, it cannot be ignored that it is the respondent