O R D E R

% 01.06.2018 VIBHU BAKHRU, J

1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‗the Act‘) for setting aside the Arbitral Award dated 03.02.2018 (hereafter ‗the impugned award‘) delivered by the Arbitral Tribunal consisting of Mr Justice B.P. Singh (Retired), Mr Justice Mukul Mudgal (Retired) and Mr Justice Gorigay Bikshapathy (Retired). The impugned award was rendered by the majority with Justice Gorigay Bikshapathy (Retired) entering a dissenting opinion. The controversy between the parties arises in relation to an agreement dated 13.08.2012 – captioned ‗Sub- Contract Agreement‘ (hereafter ‗the Agreement‘) – entered into between the parties for construction of dwelling units in Maldives. In terms of the Agreement, the petitioner was required to furnish two bank guarantees – one for securing an advance ( hereafter ‗ABG‘) and the other for securing the performance of the contract (hereafter ‗PBG‘) – each for a sum equivalent to 10% of the contract value of Rs. 126 Crores. Although, the petitioner furnished the bank guarantees, the same were found to be forged. Accordingly, the respondent terminated the Agreement by a notice dated 11.01.2013. In the aforesaid context, the petitioner raised several claims – seventeen in number – in respect of alleged expenditure/loss incurred by the petitioner in relation to the contract between the parties. In addition, apart from costs of arbitration and interest, the petitioner also raised a claim for loss of profits expected by the petitioner from execution of the contract.

2. By the impugned award, the Arbitral Tribunal (by majority) found that the termination of the Agreement was not wrongful and rejected all claims made by the petitioner.

3. Mr Brij Bhushan Gupta, learned Senior Counsel appearing for the petitioner does not contest the decision of the Arbitral Tribunal in rejecting the petitioner‘s claim that termination of the Agreement was wrongful; he, however, contends that the petitioner would be entitled to its claims for the expenditure incurred in terms of Sections 64 and 65 of the Contract Act, 1972 (hereafter ‗the Contract Act‘). He referred to the impugned award and submitted that the petitioner‘s claims were rejected only on the ground that the expenditure in question was incurred prior to the parties entering into the Agreement or the issuance of the Letter of Intent (LOI). He contended that rejection of the petitioner‘s claims on this ground was not sustainable. 4. In view of the above, the only controversy that falls for consideration of this Court is whether in terms of Section 64 and 65 of the Contract Act, 1972 the petitioner is entitled to the claims made in respect of the expenditure incurred by the petitioner in connection with or in relation to the contract.

Background facts

5. The respondent was awarded a contract by the Government of Maldives for construction of 485 dwelling units out of which 385 units were to be constructed at a place called Hulhumale and 100 dwelling units were to be constructed at a place named Thinadoo. The respondent and the Government of Maldives also entered into a contract dated 26.01.2012 in respect of the aforesaid works.

6. Thereafter, the respondent sought offers from various entities to sub-contract the work for construction of the dwelling units in terms of the contract awarded to it by the Government of Maldives. After the parties had held negotiations and discussions, the respondent issued a Letter of Intent (LOI) dated 27.06.2012 expressing its intention to award the contract for sub-contracting the work of designing and building the housing project at Maldives. The total price of the contract was fixed at ₹126 crores and the project was to be completed within a period of sixteen months from the Commencement date. The LOI further indicated that it was contingent upon the petitioner developing designs and obtaining approvals from the Ministry of Housing a