McDermott International Inc. v. Burn Standard Company Limited, (2006) 11 SCC 181 has referred to various methods of computation of damages. In particular, reference has been made to Hudson’s formula, Emden’s formula and Eichleay’s formula. The computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party. The computation of damages should not be disingenuous. The damages should commensurate with loss sustained. The usage of formulae such as Hudson’s, Emden’s or Eichleay’s formulae has been judicially approved in English cases. The three formulae deal with theoretical mathematical equations, but are based on factual assumptions, and therefore can produce three different and unrelated compensation/damages. Inaccuracies in Hudson’s computation should not be overlooked and should be accounted and neutralized. Hudson’s formula when applied should be with full care and caution not to over-award damages.

We have extensively analysed patent flaws and illegalities which emanate, like manifest lack of reasoning in arriving at calculation of amounts, which, in fact, amount to double or part-double payments, besides being contradictory.

– Hon’ble Justice Sanjiv Khanna, Batliboi Environmental Engineers v. Hindustan Petroleum Corporation Limited, [Civil Appeal No. 1968 of 2012].