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Checking relevance for Unibros VS All India Radio...
Unibros VS All India Radio - 2023 7 Supreme 176 : An arbitrator may grant loss of profits due to the short closure of works (i.e., delay in completion of a contract) only if four conditions are met: (1) there was a delay in completion of the contract; (2) such delay is not attributable to the claimant; (3) the claimant is an established contractor with a history of handling substantial projects; and (4) there is credible evidence to substantiate the claim of loss of profitability. This standard, known as ''''Hudson’s formula'''', requires proof of actual injury and is not awarded as a matter of course. The claim must be supported by evidence, particularly regarding the claimant’s ability to have taken up alternative work during the delayed period and the profitability of such opportunities.Checking relevance for Batliboi Environmental Engineers Limited VS Hindustan Petroleum Corporation Limited...
Batliboi Environmental Engineers Limited VS Hindustan Petroleum Corporation Limited - 2023 0 Supreme(SC) 986 : An arbitrator may grant loss of profits due to the short closure of works when the contractor''''s profit earning capacity is affected because they are retained longer in the contract without a corresponding increase in monetary benefit and without being free to move elsewhere to earn profit that they might otherwise be able to do. This applies specifically when there is a delay in completion caused by the employer, and the contractor can demonstrate that they were unable to deploy resources elsewhere and had no possibility of recovering overhead costs from other sources. The claim must also satisfy the assumptions underlying formulae such as Hudson’s or Eichleay’s, including that the profit was realistic at the time, there was no market fluctuation affecting profitability, and the contractor was constrained from taking on alternative work due to the delay. Additionally, such claims are only valid if the delay constitutes a breach of contract and not merely a temporary interruption.Checking relevance for STATE OF RAJASTHAN VS FERRO CONCRETE CONSTRUCTION PVT. LTD. ...
STATE OF RAJASTHAN VS FERRO CONCRETE CONSTRUCTION PVT. LTD. - 2009 0 Supreme(SC) 809 : An arbitrator may award loss of profits due to the short closure of works when the closure is caused by the employer''''s breach of contract, such as failure to release mobilization advance in a timely manner, which prevents the contractor from executing work. In this case, the arbitrator awarded loss of profit (Rs. 33,06,500) under Claim No. 1 because the employer''''s delay in releasing mobilization advance (8.5 months) prevented the contractor from commencing production and executing one-third of the contract work. The arbitrator found that the delay was attributable to the employer, and the contractor was entitled to compensation for the loss of profit on the work that could have been completed during the delay period. However, the Supreme Court later set aside this award, holding that the employer did not breach the contract as the terms of the agreement (including the work order and amendment) required the mobilization advance to be released in instalments, and the contractor had not provided a single bank guarantee as required. The court found the arbitrator committed legal misconduct by ignoring the contractual terms and the contractor''''s own conduct. Therefore, while the arbitrator initially granted loss of profits based on the short closure due to employer delay, the award was ultimately invalidated on grounds of legal error.Checking relevance for J. G. Engineers Pvt. Ltd. VS Union of India...
J. G. Engineers Pvt. Ltd. VS Union of India - 2011 4 Supreme 531 : An arbitrator can grant loss of profits due to the short closure of works when the termination of the contract by the other party is found to be illegal and unjustified. In this case, the arbitrator awarded Rs.39,12,000/- for loss of anticipated profit on the unexecuted portion of the work, which was based on a finding that the respondents (the government) were responsible for the delay in execution and that the contractor was not in breach. The arbitrator concluded that the termination of the contract was wrongful, and as a result, the contractor would have legitimately completed the work and earned a profit. The award was upheld by the Supreme Court, which affirmed that the arbitrator was competent to decide questions of delay, breach, and the legality of termination, and that loss of profits could be awarded when termination is found to be illegal and the contractor is not responsible for the delay.Checking relevance for SAYEED AHMED & CO. VS STATE OF U. P. ...
Checking relevance for Sayeed Ahmed VS State of U P...
Sayeed Ahmed VS State of U P - 2009 5 Supreme 348 : An arbitrator can award loss of profits due to short closure of works only if the contract does not contain an express bar on interest or damages. In cases where the contract explicitly prohibits interest (such as clause G-1.09 in the document, which bars interest for any dispute, delay in payment, or other reasons), the arbitrator cannot award interest for the period from the date the cause of action arose to the date of the award (including both pre-reference and pendente lite periods). However, the arbitrator may award interest from the date of the award to the date of payment at a rate not exceeding 18% per annum, unless otherwise specified in the award. Therefore, loss of profits (as a form of damages) due to short closure of works may be recoverable only if the contract does not contain a clear and comprehensive bar on such claims. If such a bar exists, the arbitrator lacks jurisdiction to award interest or damages for the period before the award, but may still award interest post-award at a reasonable rate.
