Loss of profit claims need credible evidence of actual lost opportunity; unsupported arbitral awards may be set aside.

A claim for loss of profit in a delayed contract requires credible evidence of actual lost opportunity, not merely proof that the work was prolonged. Quantification tools such as Hudson's formula may assist, but cannot replace proof that resources would have been deployed elsewhere and profit earned. An arbitral award granting such compensation without supporting evidence was treated as perverse and vulnerable to interference for patent illegality and conflict with public policy, especially where it departed from binding remand directions. The challenge to the award failed, and the rejection of the loss-of-profit claim was upheld.

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Issues: (i) whether the arbitral award granting loss of profit could be sustained in the absence of credible evidence; (ii) whether the award was liable to be interfered with as being in conflict with the public policy of India and contrary to the binding remand directions of the High Court.

Issue (i): whether the arbitral award granting loss of profit could be sustained in the absence of credible evidence.

Analysis: A claim for loss of profit in a delayed contract is not established merely by showing prolongation of the work. The claimant must prove that, had the contract been completed in time, it could have deployed its resources elsewhere and earned profit, and that such loss is supported by credible evidence. Formulae such as Hudson's formula may assist in quantification, but they cannot substitute proof of the underlying loss. On the record, the required evidence of alternative opportunities and actual loss of profitability was not produced.

Conclusion: The claim for loss of profit was not proved and could not be sustained.

Issue (ii): whether the award was liable to be interfered with as being in conflict with the public policy of India and contrary to the binding remand directions of the High Court.

Analysis: An arbitral award that disregards the evidence-led basis required by law, or effectively ates an earlier set-aside award despite a limited remand, is vulnerable under the public policy and patent illegality standards. A subordinate adjudicator must abide by the binding effect of a superior court's determination, and an award that seeks to overreach such direction, while resting on no evidence, is perverse and contrary to the fundamental policy of Indian law.

Conclusion: The award was rightly interfered with as being perverse and in conflict with the public policy of India.

Final Conclusion: The challenge to the arbitral award failed, and the rejection of the loss-of-profit claim was upheld with costs left undisturbed except as eased by the Court.

Ratio Decidendi: A claim for loss of profit in delayed-contract disputes succeeds only on credible evidence of actual lost opportunity, and an arbitral award that grants such compensation without proof, or in disregard of binding remand directions, is perverse and liable to be set aside for patent illegality and conflict with public policy.

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