Published on: November 08, 2023 at 00:01 IST
Court: Supreme Court of India
Citation: Unibros V. All India Radio (2023)
Honourable Supreme Court of India has held that damages for the loss of profit to the litigant must be based on the cogent evidence as produced on record of the Hon’ble Court. It is held that a claim for damages, whether general or special, cannot as a matter of course result in an award without proof of the claimant having suffered injury. It is held that Hudson’s Formula can be used to calculate claims for loss of off-site overheads and profit.
18. Hudson’s formula, while attained acceptability and is well understood in trade, does not, however, apply in a vacuum. Hudson’s formula, as well as other methods used to calculate claims for loss of off-site overheads and profit, do not directly measure the contractor’s exact costs. Instead, they provide an estimate of the losses the contractor may have suffered. While these formulae are helpful when needed, they alone cannot prove the contractor’s loss of profit. They are useful in assessing losses, but only if the contractor has shown with evidence the loss of profits and opportunities it suffered owing to the prolongation.
19. The law, as it should stand thus, is that for claims related to loss of profit, profitability or opportunities to succeed, one would be required to establish the following conditions : first, there was a delay in the completion of the contract; second, such delay is not attributable to the claimant; third, the claimant’s status as an established contractor, handling substantial projects; and fourth, credible evidence to substantiate the claim of loss of profitability. On perusal of the records, we are satisfied that the fourth condition, namely, the evidence to substantiate the claim of loss of profitability remains unfulfilled in the present case.
Drafted By Abhijit Mishra