Contractual damages require cogent proof of loss and cannot rest on presumptions.

The parties contracted for the supply, installation and commissioning of a lift for ₹1,80,000, with completion due within 20–32 weeks. The plaintiff paid the defendant ₹1,44,000, but the lift was not completed.

The plaintiff sued for damages, alleging lost profits and other losses. The trial court awarded ₹14,84,000 with interest at 9% per annum from the suit date. The defendant appealed, challenging the evidentiary basis and proportionality of the award. The plaintiff also sought adjustment for materials it had purchased and supplied to the defendant.

Whether the trial court’s award of damages was supported by evidence establishing the loss, its connection to the breach, and a reasonable basis for the amount awarded.

Whether the plaintiff was entitled to recover the cost of materials purchased locally and supplied to the defendant.

Whether the Bharuch court had territorial jurisdiction despite the agreement’s Ahmedabad-jurisdiction clause.

Section 73 of the Indian Contract Act, 1872, permits compensation for loss caused by breach but excludes remote and indirect loss; the claimant must establish the loss and its causal connection to the breach.

The Court relied on ITC Limited v. Aashna Roy, 2026 INSC 135, for the principle that damages cannot be awarded merely on presumptions and require trustworthy evidence, particularly for substantial claims.

It also relied on H.J. Baker & Bros. Inc. v. Minerals and Metals Trading Corporation Ltd., 2023 INSC 747, which emphasises supporting evidence in assessing contractual damages.

Under Section 20 of the Code of Civil Procedure, 1908, a court may entertain a suit where the cause of action arises; the Court held that the contractual work and cause of action arose within Bharuch.

Although the defendant’s failure to complete the lift was established, the plaintiff did not produce cogent evidence demonstrating the claimed hotel profits, actual business loss, or the basis for the trial court’s substantial awards for interest and special damages.

Assertions about hotel bookings and anticipated earnings were insufficient to establish loss attributable to the breach under Section 73.

By contrast, the defendant did not dispute the plaintiff’s purchase and supply of materials valued at ₹25,000, so that amount was recoverable. The Court also concluded that the Bharuch court had jurisdiction because the cause of action arose there.

The ₹5,00,000 deposited by the defendant was ordered to be refunded with accrued interest, after deducting the ₹25,000 and accrued interest; the deducted amount was to be paid to the plaintiff upon verification and identification.