The expectation of profit can be compensated in breach of contract cases without proving actual loss, as established in arbitration and contract law.

ORDER

% 8-8-2008

1. Aggrieved by the judgment and order dated 11^th January, 2008 of the learned single Judge dismissing the appellant's petition under Section 34 of the Arbitration and Conciliation Act, 1996 , the appellant has preferred the instant appeal seeking reversal thereof.

2. The facts leading to this appeal are that the appellant was desirous of importing Tunnel Boring Machine (“TBM” in short) with backup system and associated equipments from Malm, Norway and Bilbao/Spain to Adit-II site of Parbati PB-2 Project site at District Kullu, Himachal Pradesh. The respondent being a leading company in the field of International Freight forwarding with expertise in the movement of such type of heavy machinery submitted its quotations for executing the aforesaid shipment. After discussion and deliberations, revised quotations were submitted. After the preparatory action and submission of offer by the respondent, the appellant issued Letter of Intent on 25^th June, 2003. Formal agreement was executed on 15^th July, 2003 at Delhi. After signing of the agreement dated 15^th July, 2003, certain differences occurred between the parties owing to which the contract was eventually terminated on 2^nd August, 2003.

3. The disputes between the parties resulting from the termination of the contract were referred to arbitration. This Court vide order dated 15thMarch, 2004 appointed Justice Usha Mehra (Retd.) as the sole Arbitrator to resolve the disputes between the parties. The respondent filed a statement of claim before the learned Arbitrator in the sum of Rs.10,00,000/- towards cost incurred and for a sum of Rs.28,28,024/- (10% of the total contract value) as damages along with interest on the total sum @ 24% per annum. In response, the appellant filed its reply to the statement of claims and filed its statement of counter- claims against the respondent.

4. The case of the respondent before the Arbitration was that the appellant had unilaterally terminated the contract dated 15^th July, 2003 as a result of which it had to suffer huge costs and losses. It was alleged that the termination of contract by the appellant was not only illegal but also vitiated by mala fide inasmuch as the appellant wanted to award the contract of transportation to some other freight forwarder by the name of M/s Jai Hind Roadways. Per contra, the case of the appellant before the Arbitrator was that the respondent had tried to make an unlawful gain at the cost of the appellant. It was contended that whereas it was always understood between the parties that the loading and stuffing of cargo would entail no extra cost for the appellant, however, the respondent eventually made an unlawful and unreasonable demand for a lump sum amount of NOK 7,40,000. it was submitted that owing to the fundamental breach of the contract dated 15^th July, 2003 by the respondent, the said contract was mutually terminated by the parties. An objection to the jurisdiction of the arbitration was also raised on the ground that the claims of the claimant are not within the scope of Arbitration Clause No.8 of the contract.

5. The sole Arbitrator upon hearing the rival contentions of the parties and upon examination of the evidence on record, decided the issue of jurisdiction and maintainability in favour of the respondent vide order dated 1^st March, 2006. The other issues qua termination of the contract were decided in favour of the respondent vide award dated 4^th January, 2007.

6. It is seen from the judgment of