ORDER

The petitioners assail an arbitral award dated 15.12.2016 (the Award). In the arbitral proceedings, the petitioners herein were the respondents and the respondent herein was the claimant.

2. A contract was entered into between the first petitioner and the respondent on 07.03.2011 for the construction of residential quarters for the employees of the petitioners (the Contract). The term of Contract was twenty months for completion of the two phases thereof. The first petitioner was under an obligation to provide the site for construction after clearing the trees standing thereon. On account of the fact that the first petitioner was unable to provide a vacant site to the respondent until 29.10.2012 (Exhibit C-41) and other reasons such as failure to provide electricity supply, the respondent issued a notice dated 19.12.2012(Exhibit C-50) informing the petitioners that it had mobilized its men and material and that the said resources were idling at site. On such basis, a claim for escalation was made. In addition, the petitioners were put on notice that the respondent is entitled to overhead charges and loss of profit. The petitioners were also informed that the Contract would stand rescinded if such escalation is not agreed to by the petitioner. Pursuant thereto, it appears that the petitioners also issued a termination notice dated 23.01.2013. In these facts and circumstances, the respondent initiated arbitration proceedings. In such arbitration, the respondent claimed amounts due and payable towards the final bill. In addition, reimbursement claims were made as well as a claim for loss of profit. In oral arguments, the petitioners confined the challenge to the loss of profit claim and the Award in relation thereto. The claim for loss of profit was for a sum of Rs.2,01,92,002/-. As against the said claim, the Arbitral Tribunal awarded a sum of Rs.66,71,000/-.

3. The petitioners assail this part of the Award on the principal ground that a loss of profit claim is a claim for unliquidated damages. Such claim is required to be proved by adducing evidence. The petitioners referred to paragraph 105 of the Award and contended on such basis that it had requested the Arbitral Tribunal to direct the respondent/Contractor to submit the audited income tax returns for the previous ten years so as to ascertain the profit percentage derived by the Contractor from previous projects executed by it. In spite of such specific request, it is stated that the Arbitral Tribunal did not direct the respondent to produce such evidence. The petitioners also referred to paragraph 110 of the Award and pointed out that there was no basis at all to the conclusion in the Award that the respondent is entitled to loss of profit at 5% of the balance value of the Contract.

4. In support of this contention, the petitioners relied upon the following judgments:

(i)Bharat Coking Coal Limited v. L.K. Ahuja [(2014) 5 Supreme Court Cases 109] (Bharat Coking Coal), wherein, at paragraph 24, the Hon'ble Supreme Court held that a person claiming loss of profit should establish that he could have utilised the resources deployed on the contract on some other business through which he could have earned the profit claimed.

(ii)MSK Projects India (JV) Limited v. State of Rajasthan and another [(2011) 10 Supreme Court Cases 573](MSK Projects), wherein, at paragraphs 38 and 39, the Hon'ble Supreme Court referred to the meaning of the expression “reimbursement” and, thereafter, at paragraphs 45 to 47, rejected the claim on the basis that a person cannot be permitted to claim damages in respect of amounts not spent in terms of the contract.

(iii)Oil and Natural Gas Corporation v. Off-Shore Enterprises Inc. [(2011) 14 Supreme Court Cases 147](Off-shore Enterprises), wherein, at paragraphs 16 and 20, the Hon'ble Supreme Court rejected a claim for cost of repair work based on estimates which were revised upwards from time to time.

(iv)Kailash Nath Associates v. Delhi Development Author