Inability to prove exact quantum of loss does not bar award of compensation: Bombay High Court

Inability to prove the precise quantum of loss does not prevent an award of compensation if the fact of loss is proven, the Bombay High Court recently held [Ultra Distributors Pvt Ltd v. Dhariwal Films Pvt Ltd & Ors].

In a judgment delivered on August 29, Justice Arif S Doctor directed Dhariwal Films Pvt. Ltd. to pay around ₹1.9 crores as damages to Ultra Distributors Pvt. Ltd. in a long-pending copyright dispute over the movie ‘Nehle Pe Dehla’.

“Just because in a given case the Plaintiff is unable to prove the precise quantum of loss or damages with exactitude, that would not, in an appropriate case, preclude an award of damages where the fact of loss is established and the available evidence furnishes a reasonable basis for the assessment of damages,” the judgment stated.

The Court held that Dhariwal Films engaged in blatant commercial dishonesty and cheating by assigning the exact same video rights to multiple entities.

“The record plainly discloses that Defendant No. 1 has, at different points in time, taken different and plainly contradictory stands with regard to the creation of competing rights in favour of the Plaintiff and Defendant No. 2 in respect of the same Film... This, in my view, speaks volumes in respect of the lack of credibility and commercial dishonesty on the part of Defendant No. 1,” the Court held. 

The suit was filed by Ultra Distributors in 2007. In 2005, Ultra had entered into an assignment agreement with Dhariwal Films to acquire exclusive video, cable TV and video-on-demand rights of Nehle Pe Dehla for eight years. 

Ultra paid ₹10.01 lakh upfront out of the total ₹42.51 lakh consideration. However, Dhariwal Films failed to deliver master tapes of exploitable quality. Instead, it permitted a rival distributor to exploit the same video rights.

The Court noted that Dhariwal Films repeatedly took mutually contradictory positions across different legal proceedings regarding who actually held the rights.

"Such conduct really amounts to misrepresentation and cheating and exposes the commercial dishonesty of Defendant No. 1 and therefore must be met with punitive damages," the Court held.

Justice Doctor emphasised that punitive damages were necessary to deter parties from entering into contracts on false representations or making double assignments.

Pertinently, the Court ruled that inability to prove exact quantum of loss does not bar award of compensation.

The Court adopted a "rough and ready" reasonable assessment and relied on unfiled consent terms where Dhariwal Films had valued the rights at ₹82.51 lakhs 

Justice Doctor deducted the balance consideration Ultra was yet to pay and calculated ₹50.01 lakh as "expectation damages" to place Ultra in the economic position it would have enjoyed had the contract been performed. 

The Court also took note of the proved publicity expenses and unchallenged witness testimony and upheld the full compensatory claim of ₹1.66 crore.

Thus, the Court decreed the suit and directed Dhariwal Films to pay ₹1.66 crore as compensatory damages, ₹25 lakh as punitive damages, and ₹15 lakh as legal costs within eight weeks.

Advocates Rashmin Khandekar, Pranav Nair, Jyoti Ghag and Shailesh Prajapati briefed by Dua Associates appeared for Ultra Distributors. 

Advocates Amit Dubey, Abdullah Shaikh and Ashok M Saraogi appeared for Dhariwal Films Pvt Ltd. 

[Read Judgment]