Summary
The Supreme Court upheld setting aside a construction contractor’s loss-of-profit award. Employer-caused delay and Hudson’s formula did not substitute for credible evidence of lost profitable opportunities. The arbitrator had also repeated reasoning rejected in the binding remand order. The no-evidence award was perverse and conflicted with public policy under the applicable arbitration framework. The appeal failed, but the Single Judge’s costs award was made easy.
Issues
- Whether employer-caused delay and Hudson’s formula alone established loss of profit.
- Whether the arbitrator could repeat the rejected basis of an award despite a binding judicial remand.
Provisions considered
- Section 34(2)(b)(ii), Arbitration and Conciliation Act, 1996Under the framework applicable to this award, disregard of the binding remand and a perverse award unsupported by evidence justified setting aside for conflict with public policy. (¶¶ 10–14, 20)
Held
- A tribunal considering a limited judicial remand must respect the court’s binding determination. Recasting the same rejected reasoning in different language did not cure the defect and improperly overreached that determination. (¶ 13–14)
- A delay-related loss-of-profit claim required proof of delay not attributable to the claimant, its position as an established contractor handling substantial projects, and credible evidence of lost profitability. The last requirement was absent here. (¶ 15–19)
- Evidence might include available projects, declined tender opportunities, financial statements or relevant contractual provisions. Its form depended on the facts; the illustrative list was not exhaustive. (¶ 16–17)
- Hudson’s and similar formulae estimate loss once an evidentiary foundation is established. They do not by themselves prove that delay deprived the contractor of profitable work elsewhere. (¶ 18–20)
- The award was based on no evidence establishing the claimed injury and was patently illegal and perverse. The High Court’s interference was therefore sustained. (¶ 19–21)
Result
Appeal dismissed; setting aside of the loss-of-profit award sustained. The costs awarded by the Single Judge were made easy.