Loss of profits in works contracts is a direct consequence of breach requiring no additional evidence.

AMPL Resources (“Petitioner/Claimant”) was awarded a contract by NTPC (“Respondent”) on 17.12.2019 for coal transportation for one year.

On 13.04.2020, NTPC directed AMPL to suspend transportation due to low coal requirements but did not terminate the contract.

AMPL initiated arbitration seeking recovery of fixed costs, office expenses, retention money, and loss of profit.

The Sole Arbitrator’s award dated 19.12.2024 allowed the claims for loss of profit and retention money but rejected claims for fixed costs and office expenses.

Both parties filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the parts of the award decided against them.

Whether the Arbitrator’s rejection of "fixed costs" and "fixed office expenses" was perverse given the finding that such costs were actually incurred.

Whether the award of loss of profits at 15% was patently illegal or lacked evidentiary basis.

Whether the Arbitrator erred in calculating damages based on the full contract quantity despite a +/- 30% deviation clause.

Whether the grant of 50% legal expenses and 12% interest was within the Arbitrator's discretion.

The court applied Section 34 of the Arbitration and Conciliation Act, 1996, noting that interference is limited to "patent illegality" or contravention of the "fundamental policy of Indian law," as established in *Associate Builders v. DDA* and *Delhi Metro Rail Corp v. Delhi Airport Metro Private Ltd.*

Regarding damages, it applied Section 73 of the Indian Contract Act, 1872, and the principle from *A.T. Brij Paul Singh v. State of Gujarat* that a reasonable expectation of profit is implicit in works contracts.

For costs, Section 31A of the Act grants the tribunal discretion based on success/conduct.

The Court held that the Arbitrator’s rejection of fixed costs was a "possible view" because the contract price was intended to encompass such expenses; thus, awarding them separately would constitute double recovery.

Regarding the 15% loss of profit, the Court found the Arbitrator relied on Chartered Accountant certificates and auditor reports, satisfying the evidentiary requirement for "expected profits" in a breached works contract.

The Court dismissed the challenge regarding the 30% deviation clause, reasoning that in the "ordinary course of events," a tribunal may assume full contract performance rather than speculating on negative contingencies.

Finally, the Court upheld the interest and legal costs as discretionary exercises permitted under Sections 31(7) and 31A, as the Petitioner had achieved partial success.

It held that the findings were neither perverse nor patently illegal under Section 34.

The Arbitrator’s interpretation of the contract and the assessment of damages were deemed legally tenable views that do not warrant judicial interference.

No order as to costs was made for the present petitions.