I.P.MUKERJI,J. - (1.) The Court: This is an application by the railways to set aside the award dated 26th December 2005 in an arbitration between Deecon India Private Limited and the Union of India.
(2.) The arbitration arose out of a usual works contract dated 18th January 1996 between the parties of an approximate value of Rs. 1,95,83,610/-, involving filling up of railway embankment, construction of wing wall, RCC box culvert and so on.
(3.) In the said arbitration usual claims were made by the claimant respondent claiming the balance of the sums due under the contract, refund of security deposit, reimbursement of the cost of escalation, cost of additional materials, damages in the shape of unutilised materials, machinery, advances paid to the suppliers, infructuous expenses on site, loss of anticipatory profit, interest, cost and so on. The railways also made a counter-claim under five heads. All five heads of their counter-claim were rejected by the learned Arbitrator. The railways have not challenged this part of the award. As far as the claims of the claimant are concerned, a substantial award was made in their favour along with interest and costs. I need not recount the entire details of the award because some parts of it are not seriously challenged by the petitioner railways in this section 34 application. Mr. Bose appearing for the railways attacks the award on a claim for loss of "anticipatory profit". Under this head the learned Arbitrator awarded Rs.15,64,444/-, to the claimant after narrating that she held that the contract had been wrongfully terminated by the railways. It is not in dispute that the contract was determined by the railways under clause 60(1) of their General Conditions of Contract. Clause 60(1) is inserted below: "60. (1) Right of Railway to determine contract.- The Railway shall be entitled to determine and terminate the contract at any time should in the Railway's opinion, the cessation of work become necessary owing to paucity of funds or from any other cause whatever, in which case the value of approved materials at site and or work done to date by the Contractor will be paid for in full at the rates specified in the contract. Notice in writing from the Railway of such determination and the reason therefor shall be conclusive evidence thereof." Clause 60(2) provides - "60. (2) Payment on determination of contract.- Should the contract be determined under sub-clause (1) of this clause and the Contractor claims payment for expenditure incurred by him in the expectation of completing the whole of the works, the Railway shall admit and consider such claims as are deemed reasonable and are supported by vouchers to the satisfaction of the Engineer. The Contractor shall have no claim to any payment of compensation or otherwise, howsoever on account of any profit or advantage which he might have derived from the execution of the work in full but which he did not derive in consequence of determination of the contact. The Railway's decision on the necessity and propriety of such expenditure shall be final and conclusive." Undisputedly, Clause 60(1) determination is not on account of an alleged breach of contract by a party. Only the railways have the right to determine the contract, under this clause, for the reasons mentioned therein. Therefore, if the contract is determined under clause 60(1) a contractor has no right to claim loss of profit, under Clause 60(2). Mr. Majumder very rightly contends that the provision of clause 60(1) provides for limited grounds of termination of the contract and if the contract has been determined on that ground a contractor cannot claim loss of profit. However, if it is proved that the contract was terminated not because of those grounds but because of breach on the part of the railways, clause 60(1) would not apply. The contractor would be able to claim damages. The award in favour of his client is justified, as the railways were in breach, he argues. ;