Enforceability of “Shall Endeavour” Clauses and Lost-Revenue Damages in Management Agreements: Commentary on Regus South Mumbai Business Centre Pvt Ltd v. Marie Gold Realtors Pvt Ltd, Bombay High Court (25 November 2025)

1. Introduction

The decision of the Bombay High Court in Regus South Mumbai Business Centre Pvt Ltd v. Marie Gold Realtors Pvt Ltd, Commercial Arbitration Petition No. 439 of 2024 (judgment dated 25 November 2025, Sandeep V. Marne J), is a significant addition to Indian jurisprudence on:

the enforceability of contractual “best endeavours / shall endeavour” clauses,
the use of business-plan projections as a benchmark for damages,
the allocation and shifting of burden/onus of proof under Section 106 of the Evidence Act, and
the limits of judicial interference under Section 34 of the Arbitration and Conciliation Act, 1996.

The case arises out of a Management Agreement for a premium commercial property at Hutatma Chowk, Fort, Mumbai, under which the petitioner Regus (a serviced office operator) was to operate a business centre and share 75% of net turnover with the respondent Marie Gold (the property owner). A detailed “Business Plan” with revenue projections was annexed to the Agreement. When the business substantially underperformed relative to projections, Marie Gold invoked a bank guarantee and terminated the Agreement.

An arbitral tribunal (sole arbitrator) rejected most claims and counterclaims but awarded Marie Gold damages of Rs. 10,10,01,000 (net) as the shortfall between (i) the premium it would have received if business-plan projections were achieved and (ii) the premium actually received, treating this shortfall as damages for Regus’s breach of its contractual obligation to “endeavour to achieve and exceed” the projected net turnover.

Regus challenged the award under Section 34 of the Arbitration Act. The High Court dismissed the petition, upholding both the liability finding and the quantum of damages. In doing so, it articulates and consolidates important principles on:

how “endeavour” clauses operate in commercial contracts,
how damages may be quantified where contractual performance is benchmarked to a business plan, and
how tribunals may legitimately rely on foreign jurisprudence where consistent with Indian law.

2. Factual Background and Procedural History

2.1 The Management Agreement and Business Plan

On 20 December 2010, Regus and Marie Gold entered into a Management Agreement in respect of the ground and mezzanine floors of “Ismail Building” at Hutatma Chowk, Fort, Mumbai. Key features:

Nature of arrangement: Regus was to operate a business centre (serviced offices, conference facilities, ancillary services). Marie Gold would refurbish the premises at its own cost based on Regus’s layout and specifications.
Revenue sharing: Marie Gold was entitled to 75% of the Net Turnover (defined in the contract); Regus retained the balance as “Regus Premium”.
Business Plan: The Agreement defined “Business Plan” as the annual plan drawn up by Regus and annexed as Annexure-3, containing indicative figures, determined on present market conditions for estimated costs and turnover. The annexed plan projected steadily increasing per sq. ft. rents over five years (Rs. 196 to Rs. 458 per sq. ft. per month).
Duration and review: The initial term was three years from “Practical Completion”. Clause 21 gave Marie Gold a right to a Performance Review after three years vis-à-vis the Business Plan, with options:
- if satisfied, renew the Management Agreement for further terms;
- if not satisfied, Regus could either terminate and vacate, or stay on as a licensee on mutually agreed terms.
Bank Guarantee: Regus furnished a bank guarantee of Rs. 2.25 crores (Clause 33).

Two key operative clauses in issue were:

Clause 8.2 (Provision of services by Regus): Regus, in providing services and carrying on business from the premises, shall endeavour to achieve and exceed the estimated Net Turnover as projected and indicated in the Business Plan.
Clause 11.1 (Adherence to Business Plan): Records that Marie Gold agreed to the Agreement based on the projected outflow of Costs and inflow of Turnover made by Regus in the Business Plan; Regus shall endeavour to minimise the Costs and maximise the Gross Turnover as stated in the Business Plan.

2.2 Underperformance, Termination and Arbitration

The premises were handed over in phases (ground floor in April 2011; mezzanine in February 2012). By July 2014 (approximate end of the three-year period), Regus had achieved only about 32.13% of the projected revenue.

Marie Gold’s case before the arbitrator (and as accepted by him) was:

It had spent about Rs. 7.8 crores refurbishing the premises.
If the Business Plan projections had been achieved, its share of premium up to July 2014 would have been Rs. 18,19,76,000.
It actually received only Rs. 5,84,75,000 in premium, plus Rs. 2.25 crores via encashment of the bank guarantee (total receipts Rs. 8.09 crores) – producing an overall loss against its investment and expected returns.

On 16 January 2014, Marie Gold invoked the bank guarantee, and on 21 January 2014, terminated the Management Agreement. Regus sought interim protection before the Bombay High Court to restrain dispossession; Marie Gold filed its own petition seeking security for its monetary claim. By consent, the disputes were referred to arbitration with interim arrangements for continued operation till 31 July 2014.

2.3 Claims and Counterclaims before the Arbitrator

Regus’s principal claims:

Rs. 2,25,00,000 for alleged wrongful and fraudulent invocation of the bank guarantee, with interest;
Rs. 10 crores as compensation for breach of contract by Marie Gold;
Rs. 30 lakhs for loss of investment opportunity;
Certain operational expense reimbursements.

Marie Gold’s counterclaims (simplified):

Rs. 12,35,01,000 as damages for “misrepresentation” – essentially the shortfall between the projected MG Premium (based on the Business Plan) and actual premium received, minus the Rs. 2.25 crores recovered under the bank guarantee, leaving Rs. 10,10,01,000 as net shortfall.
Rs. 7,78,72,460 for its investment in the premises;
Various smaller heads: wrongful TDS, legal charges, bank interest, property taxes, bad debts, staff bonuses, etc.;
Rs. 10 crores for loss of goodwill and reputation.

The arbitrator framed 25 issues, covering the propriety of bank guarantee invocation, entitlement to each head of claim and counterclaim, and interest/costs.

2.4 The Arbitral Award (18 October 2019)

The sole arbitrator:

Rejected all of Regus’s claims.
Rejected almost all of Marie Gold’s counterclaims except one: he awarded Rs. 12,35,01,000 as the shortfall in MG’s share of premium that would have been payable had business-plan projections been achieved. After giving credit for Rs. 2.25 crores already recovered under the bank guarantee, the net amount awarded was Rs. 10,10,01,000.
Characterised this as damages for breach of Regus’s contractual obligation under Clauses 8.2 and 11.1 to “endeavour to achieve” the business-plan projections.
Awarded interest at 12% per annum from 31 July 2014 till payment/realisation, and costs of Rs. 60 lakhs to Marie Gold.

Crucially, the arbitrator:

Rejected Marie Gold’s case of negligent misrepresentation.
Held that the Agreement was not a minimum-guarantee contract and that the Business Plan was not a warranty or actionable misrepresentation.
Nonetheless held that Regus was in breach of its independent contractual duty to “endeavour to achieve” the projections.

2.5 Section 34 Challenge

Regus challenged the award under Section 34 of the Arbitration Act, contending inter alia:

The arbitrator had “rewritten” the contract by treating projections as binding or by implying a minimum guarantee.
There was no specific contractual obligation breached and no proper finding of breach.
The burden of proof was wrongly reversed; the arbitrator wrongly placed the onus on Regus to prove its endeavours.
The award of damages was unsupported by evidence and contrary to Clause 21 which (allegedly) specified the exclusive consequences of underperformance.
The arbitrator improperly relied on foreign judgments to interpret “shall endeavour”, contrary to Indian “public policy” as explained in ONGC v. Western Geco.

The Bombay High Court rejected all these grounds and dismissed the petition.

3. Key Issues Before the High Court

The Court’s analysis centres around the following legal issues:

Contractual obligation: Whether Clauses 8.2 and 11.1 – using the expression “shall endeavour to achieve and exceed” the Business Plan projections – created an enforceable obligation, the breach of which could attract damages.
Misrepresentation: Whether the Business Plan was a misrepresentation or warranty, and how that affected liability.
Onus of proof: Whether the arbitrator erred in effectively shifting the onus to Regus (the operator) to prove that it made best efforts to achieve the projections, especially in light of Section 106 of the Evidence Act.
Damages and quantification: Whether awarding the entire difference between projected premium and actual premium – net of the bank guarantee – as damages was legally sustainable without additional evidence of “loss”.
Effect of Clause 21: Whether Clause 21 (performance review and consequent options) restricted or excluded the right to claim damages, such that the arbitrator’s award re-wrote the contract.
Reliance on foreign case law and “public policy”: Whether the arbitrator’s reliance on foreign precedents to construe “shall endeavour” violated the “fundamental policy of Indian law” as understood in ONGC v. Western Geco.
Scope of Section 34 review: Whether the alleged errors amounted to “patent illegality” or contravention of “public policy of India” warranting interference with the award.

4. Summary of the Judgment

In essence, the Bombay High Court:

Affirmed that clauses obliging a party to “endeavour” or “use best endeavours” are enforceable contractual obligations in Indian law, particularly where:
- the other party has invested substantially on the faith of projections, and
- the “endeavour” obligation is expressly tied to those projections (Clauses 8.2 and 11.1).
Upheld the arbitrator’s distinction between:
- mere failure to achieve the projections (which by itself was not a breach), and
- failure to make reasonable/best endeavours to achieve them (which was a breach).
Approved the arbitrator’s use of the Business Plan as a benchmark for measuring damages, once breach of the “endeavour” obligation was established.
Endorsed the arbitrator’s allocation of evidentiary burden: while the initial burden to show non-achievement of projections lay on Marie Gold, the onus then shifted to Regus under Section 106 Evidence Act to show what efforts it had made, because those facts were exclusively in its knowledge. Regus led no evidence.
Rejected the argument that Clause 21 excluded damages, holding that any clause that purports to foreclose or waive the statutory right to damages for breach would be void as contrary to public policy (Indian Contract Act principles).
Found no inconsistency or perversity in the arbitrator’s findings regarding misrepresentation and breach.
Held that reliance on foreign authorities simply to illuminate the meaning of “endeavour” did not offend Indian public policy; it was, in fact, consistent with the Supreme Court’s decision in NBCC (India) Ltd v. Shri Ram Trivedi, which had already recognised the enforceability of “endeavour” clauses.
Concluded that the arbitrator’s award was not only a possible view but the correct view on the record, and therefore unassailable even on an appellate standard – a fortiori under the limited review permitted by Section 34.

The petition was dismissed, and the arbitral award (including interest and costs) was upheld.

5. Detailed Analysis

5.1 Contractual Framework and the “Shall Endeavour” Obligation

The Court begins its analysis by carefully setting out the contractual framework:

Regus prepared the Business Plan, including revenue projections.
Clause 8.2: Regus shall endeavour to achieve and exceed the estimated net turnover projected in the Business Plan.
Clause 11.1: Marie Gold entered into the Agreement based on those projections; Regus again undertook to endeavour to minimise Costs and maximise Gross Turnover as stated in the Business Plan.
Clause 12 fixed the revenue-sharing formula (75% of net turnover to Marie Gold).
Clause 21 set out the performance review mechanism and the options at the end of three years.

The key conceptual move in the arbitrator’s reasoning – expressly endorsed by the Court – is to distinguish between:

the Business Plan itself (which is not a guarantee or warranty), and
the promise to endeavour to achieve that plan (which is a binding contractual obligation).

This distinction enables the Court to:

reject Marie Gold’s misrepresentation/warranty theory, yet
still hold Regus liable for breach of its separate “endeavour” obligation.

5.2 No Actionable Misrepresentation / No Minimum Guarantee

At paragraphs 2.31–2.33 of the award (quoted and accepted by the Court), the arbitrator held:

Although business-plan projections given by a party with special expertise can in some circumstances found a misrepresentation claim, the terms of the Management Agreement in this case precluded such a claim.
The Agreement was not a minimum guarantee arrangement. Drafts had contained a minimum guarantee clause which was consciously dropped in the final executed version.
The Agreement contemplated that projections might not be achieved and built in a performance-review mechanism (Clause 21) as the primary contractual response.
Treating the Business Plan as a de facto minimum guarantee would be to “make for the parties a bargain that they themselves chose not to strike”.
Accordingly, the Business Plan did not constitute either a warranty or actionable misrepresentation making Regus liable in damages on that ground.

The Court explicitly agrees with this reasoning, thereby:

Upholding party autonomy and the sanctity of the written contract (the conscious exclusion of a minimum-guarantee clause).
Rejecting the idea that mere non-achievement of projections per se equals a misrepresentation or breach.

5.3 Enforceability of “Shall Endeavour” / Best-Efforts Clauses

The real battleground was the enforceability and content of the “shall endeavour” obligation in Clauses 8.2 and 11.1. The arbitrator, guided by foreign authorities (Atmospheric Diving Systems Inc v. International Hard Suits Inc, and Astor Management AG v. Atalaya Mining Plc), held that such clauses are meaningful and enforceable.

The High Court endorses this approach and anchors it in Indian law by referring to the Supreme Court decision in NBCC (India) Ltd v. Shri Ram Trivedi (2021) 5 SCC 273, where:

A developer had committed to “endeavour” to deliver possession within 2½ years. The Supreme Court held that “endeavour” meant an earnest and reasonable effort to deliver by that date, not an empty formality.
To construe “endeavour” as leaving the delivery date entirely open-ended and within the developer’s whim would make the purchaser hostage to the builder and defeat the purpose of the clause.

Applying that logic, the Bombay High Court holds:

The word “endeavour” must be read in context and as part of the entire contractual scheme.
Here, Regus:
- prepared the Business Plan;
- knew Marie Gold would invest ~Rs. 7.8 crores in refurbishing based on those projections;
- expressly promised to “endeavour to achieve and exceed” those projections and to “endeavour to minimise costs and maximise turnover”.
In such a setting, “endeavour” cannot be reduced to an illusory or non-binding statement. It is an enforceable promise to make all reasonable efforts – indeed, to “do every possible” effort commercially expected in the circumstances.

The Court thus rejects Regus’s attempt to portray the Business Plan as a mere “indicative” piece of paper with no real consequences. By its own conduct (especially, as discussed later, by issuing a “revised” Business Plan when it claimed to discover errors), Regus had treated the projections as a serious benchmark for performance, not a casual estimate.

5.4 Burden vs Onus of Proof and Section 106 Evidence Act

A central plank of Regus’s challenge was that the arbitrator “reversed” the burden of proof by requiring Regus to show what endeavours it made, rather than insisting that Marie Gold prove Regus’s lack of efforts.

The Court gives a clear and useful explanation of the distinction:

Burden of proof (legal burden): the overall responsibility to prove a case; generally does not shift.
Onus of proof (evidentiary burden): the obligation to prove a specific fact at a particular stage; can shift back and forth during proceedings.

Applied to this dispute:

Initial burden lay on Marie Gold to show:
- existence of the contractual “endeavour” obligation (from Clauses 8.2 and 11.1), and
- non-achievement of the Business Plan projections (undisputed: only 32.13% achieved).
Once those foundational facts were established, the onus shifted to Regus to show:
- what efforts it had actually made to achieve or exceed the projections, and
- that, despite such reasonable/best efforts, the underperformance occurred due to factors beyond its control.

This is where Section 106 of the Indian Evidence Act becomes crucial. Section 106 provides that when a fact is especially within the knowledge of a person, the burden of proving that fact is upon him. Here:

Regus alone was in sole management of the business centre – marketing strategy, pricing decisions, staffing, sales efforts, etc. These internal operations were facts “especially within the knowledge” of Regus.
It was therefore entirely proper for the arbitrator to invoke Section 106 and expect Regus to demonstrate its endeavours.
Regus did not lead any oral evidence and did not produce evidence showing what it had done to meet the projections.

The Court explicitly endorses this allocation of evidentiary responsibility, characterising the arbitrator’s approach as not only plausible but correct. It was legitimate to require Regus to prove a positive fact (its own endeavours) rather than demand that Marie Gold prove a negative fact (that Regus made no endeavours).

5.5 The “Revised” Business Plan and Implied Admissions

Regus advanced a defence that the original Business Plan contained “multiplication errors”, discovered only in October 2013, necessitating a revised Business Plan. It used this to argue that it could not reasonably be held to the original projections.

The Court highlights several critical aspects:

Regus failed to plead
It also did not plead that it had issued a revised Business Plan; indeed, it initially denied having done so.
The “revised” Business Plan entered the record through Marie Gold’s evidence, not Regus’s.
Towards the end of the arbitration, Regus made an opportunistic volte-face, attempting to rely on the revised plan to argue that the original plan was erroneous.

The arbitrator – whose reasoning is approved by the High Court – rejected this manoeuvre as a “false and baseless” theory, for two interconnected reasons:

A party cannot credibly rely on an unpleaded defence of error discovered late, particularly when it had all the information at the time of contracting and never corrected or clarified the projections contemporaneously in a formal, pleaded manner.
The very act of issuing a revised Business Plan implies an acknowledgement that Regus believed it was bound to act in accordance with a business plan and that projections mattered contractually. If the Business Plan were a meaningless document, there would be no need to “revise” it.

Thus, the Court treats the revised plan as an implied admission that:

the original Business Plan had contractual significance, and
Regus recognised an obligation to endeavour to achieve such projections (whether original or revised).

This significantly undercuts Regus’s narrative that the Business Plan was merely indicative and non-binding.

5.6 Use of the Business Plan as a Benchmark for Breach

Once the arbitrator discarded the “error” theory and confirmed that the Business Plan annexed to the Agreement remained the operative document, he held:

Regus had failed to meet those projections (accepted fact).
Regus had failed to show that it made reasonable/best efforts to meet them.
Regus was therefore in breach of its obligations under Clauses 8.2 and 11.1.

Crucially, the arbitrator did not treat non-achievement itself as breach; only failure to endeavour was the breach. The Business Plan was used as a “touchstone” to assess:

what Regus was aiming at, and
whether its conduct (had evidence been led) would reasonably be expected to achieve those aims.

With zero evidence of endeavour from Regus, the tribunal was left to proceed on the basis that the promise to “endeavour” had been breached.

5.7 Quantum of Damages: Shortfall in Business-Plan Premium

The damages calculation, as upheld by the Court, proceeds in straightforward steps:

Had the Business Plan projections been achieved, Marie Gold’s share of MG Premium (75% of net turnover) for the period up to 31 July 2014 would have been Rs. 18,19,76,000.
In reality, Marie Gold received Rs. 5,84,75,000 as MG Premium from Regus.
Shortfall: Rs. 18,19,76,000 – Rs. 5,84,75,000 = Rs. 12,35,01,000.
Of this, Rs. 2.25 crores had already been recovered via bank guarantee; net balance claimed: Rs. 10,10,01,000.

The arbitrator treated this shortfall as the measure of damages caused by Regus’s breach of its “endeavour” obligation. The High Court upholds this approach, making several important points:

The damages represent contractual expectation loss – essentially what Marie Gold would have received under the agreed revenue-sharing formula if Regus had properly performed its obligations.
Since this directly mirrors the amounts payable under the contract, it is akin to recovery of a debt due, rather than an abstract or speculative claim of lost profits.
It was therefore unnecessary for Marie Gold to lead separate, granular evidence of “loss of profit” beyond:
- the agreed Business Plan and contractual formula, and
- the admitted shortfall in actual premium.
The arbitrator specifically rejected more remote or overlapping claims:
- Rs. 7.78 crores for cost of investment in the premises; and
- Rs. 10 crores for loss of goodwill and reputation.
This shows a cautious, not extravagant, approach to damages.

The Court also notes that, when compared with the notional licence fee the premises could have earned (even at modest market rates), the awarded damages were not unreasonable. It calculates that, even at a median Rs. 300 per sq. ft. on a large premium property, Marie Gold could have earned roughly Rs. 19 crores over three years on a leave-and-license basis, whereas it actually received about Rs. 8.09 crores in total (premium plus bank guarantee).

In that light, awarding Rs. 10.10 crores as damages is described as being on the “conservative side”.

5.8 Clause 21: Does It Exclude Damages?

Regus argued that Clause 21 (performance review) stipulated the only consequences of underperformance:

non-renewal of the Management Agreement;
option for Regus to terminate and vacate; or
conversion into a leave and licence on mutually agreed terms.

On this view, no monetary damages could be awarded for non-achievement of projections; to do so would be to “rewrite” the contract.

The Court rejects this argument decisively:

Clause 21 provides additional contractual mechanisms for dealing with performance issues; it does not expressly or impliedly exclude the statutory right to damages for breach (Section 73 of the Contract Act).
A contractual provision that waives or forecloses damages for breach would, in any event, be void as contrary to public policy (reflecting the ratio of decisions like MBL Infrastructures Ltd v. DMRC, Delhi High Court).
To hold that Clause 21 leaves Regus free to underperform egregiously, pay nothing, and simply exit or convert the arrangement, would be an absurd commercial result that no reasonable party – particularly a landlord investing Rs. 7.8 crores – would accept.
Thus, Clause 21 co-exists with the general law of damages; it does not displace it.

The Court emphasises “common business sense”: under Regus’s interpretation, Regus could potentially:

never commence serious operations,
generate negligible revenue,
pay virtually nothing to Marie Gold, and
yet suffer no monetary consequence beyond termination/non-renewal.

Such an interpretation was rightly rejected as commercially irrational and legally unsustainable.

5.9 Interest on Damages

Regus criticised the award of interest on damages, arguing that damages typically become payable only on determination. The Court clarifies that:

The awarded amount effectively represented contractual sums that ought to have been paid as MG Premium during the currency of the Agreement.
It thus had the character of a debt or a series of overdue contractual payments, not purely discretionary damages like those for loss of reputation.
Accordingly, awarding interest at 12% per annum from 31 July 2014 is both commercially and legally justified.

5.10 Use of Foreign Precedents and “Fundamental Policy of Indian Law”

Regus invoked the Supreme Court’s decision in ONGC v. Western Geco International Ltd, arguing that the arbitrator’s reliance on foreign cases to construe “shall endeavour” was inconsistent with the “fundamental policy of Indian law”.

The High Court rejects this argument for multiple reasons:

Western Geco primarily elaborated on:
- the arbitrator’s duty to adopt a judicial approach,
- to comply with natural justice, and
- to avoid perversity or irrationality.
The arbitrator in this case fully complied with those duties: he considered pleadings, evidence (or the lack of it), applied his mind, and arrived at a reasoned conclusion.
The reliance on foreign judgments (British Columbia and English High Court decisions) was merely persuasive, to support an interpretation of “endeavour” that is entirely consistent with Indian law as later explained in NBCC (India) Ltd v. Shri Ram Trivedi.
The arbitrator did not import any alien public-policy concept; he merely aligned his interpretation with principles already acceptable in Indian jurisprudence.

Therefore, no question of violation of “fundamental policy of Indian law” or “public policy of India” arose.

5.11 No Patent Illegality or Perversity: Section 34 Threshold

Finally, the Court reiterates the limited nature of Section 34 review, as consistently articulated in Supreme Court decisions (like Associate Builders v. DDA, Patel Engineering Ltd v. NEEPCO, PSA Sical Terminals v. V.O. Chidambranar Port Trust, etc.):

Courts do not sit in appeal over arbitral awards; they do not re-appreciate evidence or substitute their own interpretation merely because another view is possible.
Interference is warranted only if the award:
- ignores vital evidence,
- is perverse or irrational,
- conflicts with fundamental policy of Indian law, or
- contains patent illegality on the face of the award.

On the facts, the Court goes further than the usual deference; it states that even if it were sitting as an appellate court, it would uphold the award as being “unexceptionable” and, indeed, the only possible view on the record.

This emphatic endorsement underlines that the petition was essentially an attempt at re-arguing the arbitration under the guise of a Section 34 challenge, which the Court rightly refused to entertain.

6. Precedents and Authorities Cited

6.1 Cases Invoked by Regus (Petitioner)

Rajasthan State Road Transport Corporation v. Bajrang Lal (2014) 4 SCC 693 – cited for general propositions on burden of proof. The High Court accepts the general principle but holds that, in this case, the onus shifted legitimately under Section 106 Evidence Act after Marie Gold established foundational facts.
KS Energy Services Ltd v. BR Energy (M) Sdn Bhd (2014) SGCA 16 (Singapore CA) – relied on for the idea that one must first identify specific obligations before shifting burden. The Court holds this requirement was met: the arbitrator clearly identified Clauses 8.2 and 11.1 as the obligations in question.
Maa Ashish Textile Industries Pvt Ltd v. National Insurance Co Ltd (2019 SCC OnLine Bom 887) and Rakesh S. Kathotia v. Milton Global Ltd (Bom HC, 2025) – cited on contradictory findings/patent illegality. The Court finds no true contradiction: the arbitrator’s rejection of misrepresentation and minimum guarantee is fully consistent with his acceptance of breach of the separate “endeavour” obligation.
PSA Sical Terminals Pvt Ltd v. V.O. Chidambranar Port Trust (2023) 15 SCC 781, Patel Engineering Ltd v. NEEPCO (2020) 7 SCC 167 – cited for the prohibition on arbitrators re-writing contracts. The Court holds the arbitrator did not rewrite the contract; he gave effect to Clause 8.2 and 11.1 as written and refused to convert the Business Plan into a minimum guarantee.
Associate Builders v. DDA (2015) 3 SCC 49 – cited to suggest the arbitrator ignored vital evidence (revised Business Plan). The Court disagrees; the arbitrator considered it, found the plea unpleaded and opportunistic, and drew reasonable inferences against Regus.
ONGC Ltd v. Western Geco International Ltd (2014) 9 SCC 263 – invoked regarding “fundamental policy of Indian law” and public policy. The Court holds that Western Geco is inapplicable; no violation of fundamental policy occurred.
Bharat Coking Coal Ltd v. L.K. Ahuja (2004) 5 SCC 109; UNIBROS v. ALL INDIA RADIO (2023 SCC OnLine SC 1366); New India Assurance Co Ltd v. Pyarelal Textile Ltd (2013) 2 Bom CR 740 – on proof of loss of profits and damages. The Court distinguishes them: in this case, the damages are essentially the unpaid contractual premium under an agreed formula, directly tied to the Business Plan, not speculative profits.

6.2 Cases Invoked by Marie Gold (Respondent) and Relied on by the Court

NBCC (India) Ltd v. Shri Ram Trivedi (2021) 5 SCC 273 – cornerstone for interpreting “endeavour” obligations as enforceable best-efforts clauses.
MBL Infrastructures Ltd v. Delhi Metro Rail Corporation, O.M.P. (COMM) 311/2021 (Del HC, 12 Dec 2023) – for the principle that a clause purporting to bar or unduly restrict damages is void/unenforceable.

The Court’s use of these precedents strengthens and harmonises the arbitrator’s reasoning with the broader trajectory of Indian arbitration and contract law.

7. Key Legal Principles Emanating from the Decision

“Shall endeavour” / best-efforts clauses are enforceable obligations.
When a contract provides that a party “shall endeavour” to achieve specified targets (e.g., revenue projections in a business plan), particularly where the counterparty has invested heavily in reliance on those projections, such clauses impose a real, justiciable duty to make reasonable/best efforts.
Failure to achieve projections ≠ breach; failure to endeavour to achieve them = breach.
A fine but crucial distinction: mere non-achievement of business-plan figures is not necessarily a breach, but failing to exert the promised best efforts to achieve those figures is.
Business plans can be a legitimate benchmark for damages where they form the contractual basis of the bargain.
When a business plan is annexed to a contract, expressly referred to in operative clauses, and is the foundation for the other party’s investment decision, the projected figures can be used as a benchmark to quantify expectation damages if the “endeavour” obligation is breached.
Section 106 Evidence Act supports shifting the onus of proof to the performing party.
Once the non-performing party’s obligation and non-achievement are shown, the onus shifts to that party to explain (by evidence) what efforts were made, as these facts are especially within its knowledge.
Performance-review clauses do not impliedly exclude damages for breach.
A contractual clause like Clause 21, providing review and termination/conversion mechanisms, does not bar or supplant the statutory right to claim damages for breach of other obligations (e.g., best-efforts clauses).
Contracts cannot oust the right to damages for breach.
Any attempt to contractually insulate a party from damages for breach (beyond the legitimate use of limitation/exclusion clauses consistent with the Contract Act) would be void as contrary to public policy.
Arbitrators may refer to foreign jurisprudence as persuasive, so long as it aligns with Indian law.
Reliance on foreign cases to illuminate the meaning of expressions like “endeavour” does not offend the “fundamental policy of Indian law” where the outcomes are consistent with Indian precedents.
Section 34 courts will not entertain disguised appeals.
Mere disagreement with an arbitrator’s interpretation, or desire for re-appreciation of evidence, is not a ground for interference. Where the arbitrator’s view is reasonable – and especially where it is the most reasonable view – the award stands.

8. Complex Concepts Simplified

8.1 “Endeavour” / Best-Efforts Clause

A “best endeavours” or “shall endeavour” clause means:

You are not guaranteeing a particular result (e.g., exact revenue figures or delivery by a fixed date).
But you are promising to make all reasonable efforts that a prudent, competent operator in that field would make to try and achieve that result.

You must:

Act diligently and proactively,
Allocate adequate resources (staff, marketing, etc.),
Use commercially sensible strategies,
Not simply sit back and do nothing.

If you fail to do so, you can be held liable for breach, even if the desired outcome might have been inherently uncertain.

8.2 Burden of Proof vs Onus of Proof

Burden of Proof: The overall obligation to prove one’s case (e.g., the claimant must prove breach and loss). It generally doesn’t shift.
Onus of Proof: The obligation to prove a particular point at a particular stage (e.g., the defendant must explain facts uniquely within its knowledge). This can shift as evidence comes in.

Section 106 Evidence Act allows courts and tribunals to require a party to prove facts that are especially within its knowledge (such as internal operations, decision-making, or efforts taken), rather than forcing the other side to prove a negative.

8.3 Expectation Damages and Lost Revenue

“Expectation damages” aim to put the innocent party in the position it would have been in if the contract had been properly performed. In a revenue-sharing arrangement based on a business plan:

If one party promised to use best efforts to achieve certain revenue,
and the other structured its investment and business model based on that revenue,
then damages can be calculated as the difference between:
- what the innocent party would have received had the efforts been properly made (based on the agreed projections), and
- what it actually received.

This is not “speculative” where:

the projections form part of the contract, and
there is a clear revenue-sharing formula in the contract.

8.4 Section 34 of the Arbitration Act: Limited Review

Section 34 does not allow the Court to:

reargue the case,
review every factual finding, or
substitute its own interpretation because it thinks it is “better”.

Interference is permitted only where the award:

is perverse or irrational,
ignores vital evidence,
contradicts fundamental legal principles or statutes, or
contains obvious errors on the face of the award (patent illegality).

Even serious legal errors are not enough if they merely reflect a possible interpretation of the contract or law.

9. Likely Impact on Future Cases and Commercial Drafting

9.1 High Impact on Management and Revenue-Share Agreements

This decision is particularly relevant for:

serviced office and co-working centre arrangements,
hotel and hospitality management contracts,
retail mall management and revenue-share leases,
franchising and distribution arrangements based on projected business volumes.

Key practical implications:

Parties preparing business plans that are annexed to contracts and referred to in operative clauses should assume that:
- these projections can be legally significant, and
- words like “shall endeavour” will be treated as enforceable commitments to use reasonable/best efforts.
Operators (like Regus) must maintain robust documentation of their marketing strategy, staffing, pricing decisions, etc., because in any dispute they may bear the onus to demonstrate they genuinely tried to meet the agreed projections.
Landlords/investors can take comfort that they are not left remediless where:
- projections are drastically missed, and
- the operator cannot show serious efforts to meet them.

9.2 Drafting “Best-Efforts” and Performance Review Clauses

After this judgment:

Drafters should be explicit about:
- the standard of efforts expected (e.g., “commercially reasonable efforts”, “best commercial endeavours”),
- whether the business plan is only indicative or forms a binding benchmark, and
- how performance shortfalls will affect renewal, termination, and damages.
Attempting to draft clauses that exclude damages altogether for breach of performance obligations is risky and likely void.
Where parties wish to cap or limit exposure, they should do so clearly and consistently with Indian contract law; vague or indirect attempts (like relying solely on performance-review clauses) may not suffice.

9.3 Arbitration Strategy and Evidence

From an arbitration perspective, the case underscores:

The importance for claimants to:
- plead clearly the specific contractual obligation allegedly breached (here, the "endeavour" obligation), and
- link their damages computation tightly to the contract (here, Business Plan + revenue share formula).
The danger for respondents who:
- do not lead evidence,
- rely on unpleaded defences (such as alleged errors in key documents), or
- change positions opportunistically at late stages.
Tribunals will be supported by courts when:
- they draw adverse inferences from such conduct, and
- apply Section 106 Evidence Act to place the onus of explanation on the party with exclusive knowledge.

10. Conclusion

The Bombay High Court’s decision in Regus South Mumbai Business Centre Pvt Ltd v. Marie Gold Realtors Pvt Ltd is a strong affirmation of:

best-efforts (“shall endeavour”) clauses as meaningful and enforceable contractual obligations,
the use of contractually integrated business plans as benchmarks for expectation damages,
a pragmatic but principled application of burden and onus of proof (especially via Section 106 Evidence Act), and
judicial restraint and deference to arbitral tribunals under Section 34 of the Arbitration Act.

By carefully distinguishing between non-achievement of projections (not per se a breach) and failure to make the promised efforts to meet those projections (a breach), the Court preserves commercial flexibility while ensuring accountability for performance obligations that parties deliberately assume.

For commercial actors, the message is clear: if you put forward a business plan to secure a high-stakes management or revenue-share contract, and you commit to “endeavour” to achieve it, you must:

treat that commitment as real,
act accordingly in the conduct of the business, and
be prepared to demonstrate your efforts if the matter ever reaches a tribunal.

For arbitration practice, the case confirms that well-reasoned, commercially sensible awards will receive strong protection from the courts, and that parties who seek, in effect, an appeal on facts and contract interpretation under Section 34 will find little sympathy.

Best-Efforts Clauses, Business Plans and Damages: Commentary on Regus South Mumbai Business Centre Pvt Ltd v. Marie Gold Realtors Pvt Ltd (Bombay High Court, 25 Nov 2025)