Case Note & Summary
The dispute arose from a work contract awarded to M/s Unibros by All India Radio for the construction of Delhi Doordarshan Bhawan, which was delayed significantly beyond the stipulated period. The appellant claimed loss of profit due to this delay, leading to arbitration proceedings where the Arbitrator initially awarded a sum for loss of profit. However, the respondent challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, leading to its annulment by the High Court, which found insufficient evidence to support the claim. The appellant's subsequent appeal to the Division Bench was dismissed, affirming the lack of credible evidence for the claimed losses. The Supreme Court, upon reviewing the case, upheld the lower court's decisions, emphasizing the necessity of adequate evidence to substantiate claims for loss of profit. The court reiterated that claims for loss of profit must be supported by credible evidence demonstrating that the contractor could have earned profits elsewhere had the contract been executed timely. Ultimately, the appeal was dismissed, and the costs awarded by the Single Judge were made easy.
Headnote
A) Arbitration Law - Grounds for Setting Aside Award - Public Policy - Award set aside for being in conflict with public policy - Arbitration and Conciliation Act, 1996, Section 34 - The court found that the arbitral award was based on insufficient evidence and ignored judicial directions, thus conflicting with public policy. Held that the award was perverse and illegal (Paras 20-21).
Issue of Consideration
Whether the arbitral award for loss of profit was justified given the lack of evidence.
Final Decision
The Supreme Court dismissed the appeal, affirming the High Court's decision to set aside the arbitral award due to lack of evidence supporting the claim for loss of profit.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 34
- public policy of India
- loss of profit
- Hudson's formula
- evidence requirement
