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Compensation only given if losses are proven: Supreme Court

Lamya Abdulla
28 April 2021, MVT 13:17
The Supreme Court: Compensation is nt something that is awarded to one party as an award for having adhered to the contract, the Supreme Court said. -- Photo: Mihaaru File
Lamya Abdulla
28 April 2021, MVT 13:17

Supreme Court decided on Monday that even if a party goes against an agreement, if the losses they suffered cannot be proven they will not be recompensed by court.

This decision was made when Umet Construction went to court asking for compensation after the ongoing port project of L. Kurendhoo by Umet was cancelled on March 18, 2013, before it was handed over to MTCC.

Umet construction and Works Corporation signed a joint venture contract in January 27, 2011 regarding the port project of Kurenddhoo. As the Housing Ministry, Finance Ministry and the corporation kept saying the work would be transferred to be under the Housing Ministry, Umet Construction trusted them while Works Corporation kept the project going until it was annulled.

Umet asked for 36 million Rufiyaa in compensation.

However, when the case was initially presented to civil court, they sentenced that after the MVR 7.9 million Umet Construction received from the contract, the remaining MVR 13.4 million is owed to Umet Construction by Work Corporation and Housing Ministry.

When this case was appealed to the High Court, the sentence was annulled and it was declared the state owed 13.4 million Rufiyaa to Umet Construction. Supreme Court supported this sentence.

The sentence by the supreme court stated that the law regarding contracts clearly states proving one party did not follow the contract or went against it, and proving that due to such actions of one party another party suffered losses and would suffer losses are two different things.

Therefore if loss cannot be proven, Umet Construction will not be compensated.

"If it is proven one party that signed the contract goes against the contract, one does not always have to see if those actions lead to a another party to suffer losses. If the losses were due to another party, the losses have to be proven. If one party goes against the the contract and losses are not proven, the court cannot help the other party get compensation," the sentence stated.

The sentence further stated compensation is not something given as an award to the party that stayed adhering to the contract. Compensation is given only after certain things are proven in court, it stated.

The one overlooking this case was Judge Mahaaz Ali Zahir. Judge Ali Rasheed and Judge Mohamed Ibrahim was on the bench along him.

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