The present invention relates to the field of evaluating clinical diagnostic models. Conventional metrics does not consider context dependent clinical principles and is unable to capture critically important features that ought to be present in a diagnostic model. Thus, present disclosure provides a method and system for evaluating clinical efficacy of multi-label multi-class computational diagnostic models. Diagnosis for a given dataset of diagnostic samples is obtained from the diagnostic model which is then classified as wrong, missed, over or right diagnosis, based on which a first penalty is calculated. A second penalty is calculated for each diagnostic sample using a contradiction matrix. The first and second penalties are summed up to compute a pre-score for each diagnostic sample. Finally, the diagnostic model is evaluated using a metric that is based on sum of pre-scores, and scores from a perfect and a null multi-label multi-class computational diagnostic model.