Essar Procurement Services Ltd. vs. Paramount Constructions (25.11.2016 – BOMHC) : MANU/MH/2511/2016

112. In my view, the arbitral award itself shall indicate the evidence referred to, relied upon by the arbitral tribunal while allowing or rejecting the claims made by the parties. This court cannot probe into the mind of the arbitral tribunal and come to the conclusion by considering the evidence produced by the parties which were though on record before the arbitral tribunal but were not referred to and considered by the arbitral tribunal by drawing an inference that such evidence must have been considered by the arbitral tribunal while allowing or rejecting the claim while deciding petition under section 34 of the Arbitration Act.

๐Ÿ‘‰ This view is supported by the judgment of this court in case of Bombay Intelligence Security (India) Ltd. v. Oil & Natural Gas Corporation Limited delivered on 21st August, 2015 in Arbitration Petition No. 822 of 2012 which is adverted by this court in case of M/s. Oil and Natural Gas Corporation Ltd. v. Essar Oil Limited (supra) relied upon by the learned senior counsel for the respondent.

113. The principles laid down by the Supreme Court and this court in the judgments referred to aforesaid while dealing with the claim for loss of overhead would also apply to the claim for loss of profit. A perusal of the impugned award indicates that the claim for loss of profit is also allowed by the arbitral tribunal simplicitor based on the Hudson Formula and not based on any evidence and thus the same also deserves to be set aside.

114. A perusal of the impugned award indicates that though the petitioner had raised an objection that the claim for overheads and loss of profit were overlapping with each other, the arbitral tribunal has not considered this plea of the petitioner in the impugned award at all.

๐Ÿ‘‰ In my view, the profit can be earned only if expenditure on various heads including overhead is incurred. The learned arbitrator thus could not have allowed both the claims i.e. claim for loss of overhead and also claim for loss of profit simultaneously which were overlapping with each other. Both the claims thus deserve to be set aside on this ground also. 


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