abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 390 OF 2007 Reliance Energy Ltd. .. Petitioner V/s Joy Construction Co. .. Respondent Mr.E.P. Bharucha for the petitioner. Mr.S.U. Kamdar for the respondent. CORAM : D.G. KARNIK, J. DATE : 10TH JUNE 2008 P.C. P.C. P.C. : 1. Heard the learned counsel for the parties. 2. By this petition under section 13 of the Arbitration Act, 1940, the petitioner seeks to challenge the award dated 30th June 2007 passed by the learned Umpire. 3. On 15th April 1993, the petitioner awarded a contract for land filling to the respondent. According to the petitioner, the respondent did not carry out any work, save and except the preliminary work, during the - 2 - prescribed time. Therefore, on 3rd June 1993, the petitioner issued notice of termination and eventually the contract was terminated with effect from 25th June 1993. According to the respondent, the contract was wrongfully terminated. The respondent therefore invoked the arbitration clause and referred the dispute to the arbitration. There were several change of arbitrators in between. Suffice it to say that the matter was referred ultimately to the Umpire in July 1998. Evidence was led before the Umpire and by award dated 30th June 2007, the learned Umpire passed the impugned award. 4. A bare look at the award shows that the award is a non-speaking award. However, in view of the decision of a Constitution Bench of the Supreme Court in Raipur Development Authority v. Chokhamal Contractors - (1992) 1 SCC 508, Mr.Bharucha for the petitioner rightly did not challenge the award on the ground that it was a non-speaking award. 5. It is settled principles of law that in respect of non-speaking award, the court cannot speculate as to the reasons that weighed with the arbitrator for passing of the award. The non-speaking award can be challenged only on limited grounds like misconduct of an arbitrator or arbitration proceedings or violation of principles of - 3 - natural justice, etc. In my view, none of the grounds exists for challenge of the award. 6. Mr.Bharucha for the petitioner, however, submitted that there were inherent inconsistencies in the award which would show that the award was patently illegal and contrary to law on the face of it. He submitted that the learned Umpire rejected almost all the claims of the respondent including the claim for money for the work allegedly done and yet he chose to award the claim of loss of profit. If no work was done by the respondent, submitted Mr.Bharucha no claim could be awarded for loss of profit. I am unable to agree for the reasons below. 7. When a contract is terminated, the arbitral tribunal would be required to see whether the contract had been wrongfully terminated. Once the arbitral tribunal reaches the conclusion that the contract was wrongfully terminated, consequences for the breach would necessarily follow. One of the consequences for the breach would be awarding of damages and/or claim for loss of profit. The learned Umpire has recorded a finding of fact (see issues no.1 and 2) that the petitioner had prevented the respondent from carrying out its obligations under the contract. In other words, the breach was by the petitioner and, therefore, the - 4 - termination was wrongful. Once the termination of the contract is held to be wrongful, the respondent was entitled to make a claim for damages irrespective of the fact that its claim for part of the work done was rejected. It may have been rejected because the work was not done being prevented by the petitioner and/or because the proportionate payment was made for the work done. 8. Mr.Bharucha then submitted that no evidence was adduced on record by the respondent to show the measure of damages, that is to say what was the amount of loss of profit suffered by the respondent. In particular, he invited my attention to the finding of the learned Umpire on issue no.6 that the documents at Exhibit C-1 (E) to C053(E) were not proved by the respondent. He submitted that the said document was the only evidence adduced by the respondent in support of the claim of damages or measure of the loss of profit. Since the learned Umpire has recorded a finding of fact that the documents were not proved, he could not have taken them into consideration. As there was no other evidence on record to show the extent of loss of profit, submitted Mr.Bharucha, the award was based on no evidence and liable to be set aside. 9. Per contra, Mr.Kamdar for the respondent invited - 5 - my attention to the decision of the Supreme Court rendered in M/s A.T. Brij Paul Singh & Bros. v. State of Gujarat - AIR 1984 SC 1703. There, one of the questions before the Supreme Court was the measure of damages on account of breach of contract. The High Court rejected the claim of damages on the ground that there was no sufficient evidence as to the measure of damages and the damages by way of loss of profit at 20% (or for that matter at any particular percentage) of the estimated cost cannot be awarded. Reversing the decision of the High Court, the Supreme Court awarded 15% of the estimated cost of work as loss of profit and damages. Mr.Kamdar submitted that a contractor, almost invariably makes certain profit in a work done and the profit usually is certain percentage of estimated cost of the work. The percentage may vary from case to case depending upon the nature of the contract, nature and extent of competition in the tendering process and several other factors. However, calculating profit at certain percentage of total cost of unfinished work is an accepted method of calculating loss of profit. Since the award is not a non-speaking award, the court cannot go into the question in what manner the learned Umpire has calculated the loss of profit and what method was adopted by him as it would amount to reading the mind of the learned Umpire. The submission is accepted. The court cannot go into the method adopted by the learned - 6 - Umpire, and what was in his mind in accepting certain amount as loss of profit. 10. No other point was urged. 10. In the circumstances, there is no merit in the petition, which is hereby rejected. (D.G. KARNIK, J.)