TEAM RC - 23

SYMBIOSIS NATIONAL MOOT COURT COMPETITION, 2014

IN THE HONBLE SUPREME COURT OF INDIA

NEW DELHI

______________________________________________________________________




CASE CONCERNING INTERNATIONAL COMMERCIAL ARBITRATION AND INSURANCE LAW



TAKAFLYINGLEAP LTD

PETITIONER

V.

WINO HAUTU CHEET LTD

RESPONDENT


ON SUBMISSION TO THE HONBLE SUPREME COURT OF INDIA




MEMORIAL for theRESPONDENT
WINO HAUTU CHEET LTD.


i

TABLE OF CONTENTS

List of Abbreviations ................................................................................................................ iii
Index of Authorities..iv
Enactments .................................................................................................................. iv
Case Laws.iv - v
Books ............................................................................................................................. v
Statement of Jurisdiction........................................................................................................... vi
Statement of Facts ........................................................................................................... vii - viii
Statement of issues .................................................................................................................... ix
Summary of Arguments ..................................................................................................... x - xii

Arguments advanced ............................................................................................................. 1 - 8

MAINTAINABILITY
CONTENTION I THE PETITION IS NOT MAINTAINABLE IN INDIA
A. INDIAN COURTS DO NOT HAVE JURISDICTION WHRE THE SEAT OF
ARBITRATION IS OUTSIDE INDIA...1
1. Part I of the Arbitration Act, 1996 is not applicable to arbitrations held outside
India..1
2. The parties have excluded the application of Indian arbitration laws....1
3. The Seat of Arbitration is in London
4. Only courts in England and Wales have the exclusive jurisdiction.
B. THE AWARD CANNOT BE SET ASIDE UNDER SECTION 34 OF THE
ARBITRATION ACT, 1996 BY INDIAN COURTS....1
C. THE ARBITRATION AGREEMENT IS NOT AGAINST SECTION 28 OF
THE INDIAN CONTRACT ACT, 1872 ...2

CONTENTION II THE ARBITRAL AWARD IS LIABLE TO BE SET ASIDE
UNDER SECTION 34 OF ARBITRATION ACT.
A. THE RESPONDENT COMPANY IS FRAUDULENT COMPANY....3
ii

1. The respondent is a fraudulent company by applying the doctrine of lifting of
corporate veil..3
2. The respondent company has entered into a contract fraudulently4
B. THE MAKING OF AWARD HAS BEEN INDUCED BY FRAUD BY THE
RESPONDENT...5
C. THE SAID AWARD SHOULD BE SET ASIDE UNDER SECTION 34(2)(b)(ii)..5

CONTENTION III -THE RESPONDENT IS LIABLE TO PAY THE LOSS ARISING
OUT OF THE INDEMNITY IN THE REVISED SHARE PURCHASE AGREEMENT.

A. THE RESPONDENT SHOULD PAY THE INDEMNITY AS SOON AS THE
LIABILITY TO PAY ARISES...6
1. The Respondent is liable to pay as per principles of equity.......6
2. The Respondent has incurred an absolute liability7
3. The Respondent is liable under a breach of contract as per general rules of
indemnity....8


Prayer for Relief ............................................................................................................. ..9



iii

ABBREVIATIONS

1. Paragraph
2. AC Appeal Cases
3. AIR All India Reporter
4. Anr. Another
5. Art. Article
6. Bom. Bombay
7. Co. Corporation
8. ed. Edition
9. HC High Court
10. Honble Honourable
11. Ltd. Limited
12. Nag. Nagpur
13. p. page
14. Pat. Patna
15. P & H Punjab and Haryana
16. Punj. Punjab
17. Pvt.- Private
18. S section
19. SC Supreme Court
20. SCC Supreme Court Cases
21. UK United Kingdom
22. UOI Union of India


iv

INDEX OF AUTHORITIES
ENACTMENTS
S NO. ENACTMENTS YEAR
1. THE CONSTITUTION OF INDIA 1950
2. THE ARBITRATION AND CONCILIATION ACT 1996

CODES
S NO. CODE YEAR
1. THE CODE OF CIVIL PROCEDURE 1908


CASE LAWS
S No. Case Citation
1. Bharat Aluminum Company and ors v. Kaiser Aluminum
Technical Services, Inc. and Ors.
AIR (2012) 9 SCC 552
2. Dominent Offset P. Ltd v. Adamovske strajirny AS AIR (1997) 68 DLT 157
3. Reliance Industries Limited & Anr. v. Union Of India 2014(2)ARBLR423(SC)
4. Yograj Infrastructure Limited Vs. Ssang Yong
Engineering and Construction Company Limited
AIR (2011) 9 SCC 735
5. Videocon Industries Ltd. v. Union of India & Anr (2011) 6 SCC 161
6. C v. D EWCA Civ. 1282 (CA)
7. Union of India v. McDonnell Douglas Corporation 1993 (3) Lloyd's Law
Reports 48
8. Naviera Amazonica Peruana S.A v. Compania
Internacionale De Seguros Del Peru
1988 (1) Lloyd's Law
Reports
9. Western India Prospecting Syndicate Ltd. v. Bombay
Steam Navigation Co. Ltd.
AIR 1951 Sau. 83
10. ABC Laminart Pvt. Ltd. v. AP Agencies AIR 1989 SC 1239
11. Hakam Singh v. Gammon (India) Ltd AIR 1971
12. Globe Transport Corporation v. Triveni Engineering
Works
(1983) 4 SCC 707
v

13. Tilakram Chaudhuri v. Kondumal Jethanand Wadha AIR 1928 Bom 175
14. Gopal Das Agarwala v. L Hari Kishan DA AIR 1936 All 514
15. Zamindara Engineering Co. v. Sunil Tractor Co. AIR 1992 SC 1545
16. Kumud Agawalla v. Fertilizer Corpn. of India Ltd. AIR 1985 Cal 89
17. Coringa Oil Co. Ltd. v. Koegler (1876) ILR 1 Cal 466
18. New Zealand Insurance Co. Ltd. v. Nagpal Hosiery
Factory
AIR 1955 Punj. 113

BOOKS
S NO. NAME CITATION
1. M. P. JAIN, CONSTITUTION OF INDIAN
LAW
(6TH EDITION 2010) LEXIS
NEXIS,BUTTORWORTHS
WADHWA NAGPUR
2. O. P. MALHOTRA, THE LAW AND
PRACTICE OF ARBITRATION AND
CONCILIATION
LEXIS NEXIS,
BUTTORWORTHS, WADHWA
NAGPUR
3. PRASAD, B.M, MULLAS THE CODE OF
CIVIL PROCEDURE
(LEXIS NEXIS, ED. 18
TH
, VOL. 1,
2011)
4. BHADBHADE, NILIMA, PULLOCK &
MULLAS THE INDIAN CONTRACT AND
SPECIFIC RELIEF ACTS
(14
TH
ED., LEXIS NEXIS, VOL. 1,
2012).
5. BIRDS, JOHN, BIRDS MODERN
INSURANCE LAW
(ED. 9
TH
, SWEET & MAXWELL,
2013)

6. SINGH, AVTAR, CONTRACT AND
SPECIFIC RELIEF

(ED 11
TH
, EASTERN BOOK
COMPANY, 2013)

7. MARKANDA, P.C., THE LAW OF
CONTRACT
(ED. 3
RD
, LEXIS NEXIS, VOL.1,
2013)

vi


STATEMENT OF FACTS

1. Fliyem Offacliffe Private Ltd., is an airline operating low-cost and luxury domestic flights
in India having its corporate office in Mumbai and registered office in Wankaner,
Gujarat. Speculations arose that the company was run solely to show losses, in 2002, the
company made as their CEO Mr. Goodweather Ray.
2. Wino Hautu Cheet Ltd. (herein referred to as the Respondent) a company that was set
up by Mr. Ray with four other persons to function as a holding company after Fliyem
Offacliffe Private Ltds IPO.
3. In July, 2012, the Respondents came under the scanner due to allegations of fraud and
money laundering with regard to investors. SEBI directed INR 23,000 crore to be paid
back to investors, whereby in December, 2012 this Honble Court directed that the
monies be repaid through the SEBI, since the company claims it is unable to pay the
money directly to the investors.
4. The Respondent in the month of February, 2013 announced that it will be exiting the
Airline business and the same will be transferred to Taka Flyingleap Ltd. (herein referred
to as the Petitioner). The Respondents business was transferred entirely to the
Petitioner by way of a Share Purchase agreement with a consideration of USD 500mn.
5. The agreement provided for dispute settlement to arbitration in London Court of
International Arbitration and the agreement would be governed by Laws of England. The
agreement also provided for an indemnity clause which would indemnify the Petitioner in
respect of any loss or expenses in excess of Rs. 50 Crore incurred, attributable to a period
prior to 2009.
6. Owing to certain differences regarding valuation of the share price the share purchase
agreement was revised with the consideration to USD 300mn (herein referred to as the
Revised Share Purchase Agreement) and the terms of previous agreement were
incorporated.
7. Due to the inaccurate filing of tax returns by a holding company of the Respondent for the
assessment year 2002 - 2003 and 2003 - 2004 an amount of Rs. 124.43 crore was
demanded towards payment of Tax liability from the Petitioner by the Income Tax
Department via notice dated 10
th
October, 2014.
vii

8. The Respondent refused any payment to the Petitioner on the ground that the indemnity
clause in the agreement was only against loss which will occur when the Petitioner will
pay the tax demands. The Petitioner took this as a non compliance with the condition
precedent and went for automatic cancellation as per the agreement.
9. The Respondent initiated arbitration proceedings for specific performance. The tribunal
granted an award of specific performance in favour of the Respondent. The Petitioner
filed a petition u/s 34 of the Arbitration and Conciliation Act, 1996 before the District
Court, Wankaner which was subsequently rejected on the basis of lack of jurisdiction
since the seat of arbitration was outside India.
10. After an unsuccessful attempt u/s 37 before the High Court the Petitioner filed a special
leave petition before this Hon'ble Court. The petition was allowed and an appeal, being
Civil Appeal No. 96812 of 2014 was registered and the parties are present for the final
hearing.














1

STATEMENT OF ISSUES
1. THE PETITION IS NOT MAINTAINABLE.
2. THE AWARD CANNOT BE SET ASIDE UNDER SECTION 34 OF THE
ARBITRATION ACT, 1996 BY INDIAN COURTS
3. THE ARBITRATION AGREEMENT IS NOT AGAINST SECTION 28 OF THE
INDIAN CONTRACT ACT, 1872.


















2

SUMMARY OF ARGUMENTS
I. THE PETITION IS NOT MAINTAINABLE IN INDIA.
A. INDIAN COURTS DO NOT HAVE JURISDICTION WHERE THE SEAT OF
ARBITRATION IS OUTSIDE INDIA.
B. THE AWARD CANNOT BE SET ASIDE UNDER SECTION 34 of ARBITRATION
ACT, 1996 BY INDIAN COURTS.

C. THE ARBITRATION AGREEMENT IS NOT AGAINST SECTION 28 OF THE
INDIAN CONTRACT ACT, 1872.












3



ARGUMENTS ADVANCED
I. THE PETITION IS NOT MAINTAINBLE IN INDIA.
A. INDIAN COURTS DO NOT HAVE JURISDICTION WHERE THE SEAT OF
ARBITRATION IS OUTSIDE INDIA.
1. Part I of the arbitration act, 1996 is not applicable to arbitrations held outside India.
Section 2 of Arbitration Act, 1996 provides that Part I shall apply where the place of
arbitration is in India.
1
Part I confines itself to domestic arbitrations.
2
The Arbitration Act,
1996 consolidates the law on domestic arbitrations by incorporating the provisions to
expressly deal with the domestic as well as international commercial arbitration; by taking
into account the 1985 UNCITRAL Model Laws.
3
The UNCITRAL Rules adopted strict
territorial principle.
4
Similarly, the Arbitration Act, 1996 has also adopted the territorial
principle, thereby limiting the applicability of Part I to arbitrations, which take place in India.
5

In the instant case the arbitration proceedings were held in London.
6

2. The parties have excluded the application of Indian arbitration laws.
The definition under section 2(2) of arbitration act, 1996 is an inclusive definition and does
not exclude the applicability of Part I to arbitrations which are not being held in India.
7
This
Court in Reliance Industries Limited & Anr. v. Union Of India,
8
held that to find a conclusive
answer to the issue as to whether Part I of the Arbitration Act is applicable irrespective to the
fact that the seat of arbitration is outside India, it has to be seen whether the parties have
excluded the applicability of Part I and for that it would be necessary to discover the intention
of the parties.
9


1
Section 2(2) of Arbitration Act, 1996.
2
Pg 115, rs bachawats
3
Bharat Aluminium Company and ors v. Kaiser Aluminium Technical Services, Inc and ors, AIR (2012) 9 SCC
552.
4
Report of the UNCITRAL, 18th Session in Vienna between 3rd to 21st June, 1985.
5
Bharat Aluminium Company and ors v. Kaiser Aluminium Technical Services, Inc and ors, (2012) 9 SCC 552.
6
Compromis, 12, pg 4.
7
Dominent Offset P. Ltd v. Adamovske strajirny AS, (1997) 68 DLT 157;
8
2014(2)ARBLR423(SC) 34, 45, 47.
9
Id
4



3. The seat of arbitration is in London.
The parties entered into Revised Share Purchase Agreement on 7
th
September 2014 and
incorporated an arbitration agreement.
10
Clause 1.81 of the agreement provided the laws of
England as the Law of substance and Clause 37.1 provided for the reference of disputes
relating to agreement to arbitration in London, England in accordance with the rules of the
London Court of International Arbitration.
11
Once the parties had consciously agreed that the
juridical seat of the arbitration would be London and that the arbitration agreement will be
governed by the laws of England, it is no longer open to the appellant to contend that the
provisions of Part I of the Arbitration Act would also be applicable to the arbitration
agreement.
12
Hence it is submitted that by choosing English Law to govern their agreement to
arbitration and expressly agreeing to London seated arbitration, the parties have necessarily
excluded the application of Part I of the Arbitration Act, 1996.
13

4. Only courts in England and Wales have the exclusive jurisdiction.
The parties have agreed to the London as the seat of arbitration. According to English
arbitration act, 1996 only courts of England and Wales have exclusive jurisdiction to
entertain any challenge to the award given by an arbitration tribunal in England.
14
An
agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any
claim for a remedy as to the validity of an existing interim or final award is agreed to be
made only in the courts of the place designated as the seat of arbitration.
15
Also, in cases of
international commercial arbitrations held out of India provisions of Part I would apply
unless the parties by agreement express or implied, exclude all or any of its provisions. In that
case the laws or rules chosen by the parties would prevail.
16
Hence, it is submitted that courts

10
Compromis, 7, pg 3.
11
Compromis, pg 6.
12
Reliance Industries Limited & Anr v. Union of India, 2014(2)ARBLR423(SC) ; Yograj Infrastructure Limited
Vs. Ssang Yong Engineering and Construction Company Limited, (2011) 9 SCC 735.
13
Videocon Industries Limited Vs. Union of India & Anr., 33, (2011) 6 SCC 161
14
Section 2(1) of English Arbitration Act, 1996.
15
Videocon Industries Limited Vs. Union of India & Anr., (2011) 6 SCC 161; A v. B
16
Bharat Aluminium Company and ors v. Kaiser Aluminium Technical Services, Inc and ors, (2012) 9 SCC
552, 32, Reliance Industries Limited & Anr v. Union of India, 2014(2)ARBLR423(SC), 36.
5

in England and Wales have the exclusive jurisdiction to decide the case and thus Indian
courts cannot interfere.

B. THE AWARD CANNOT BE SET ASIDE UNDER SECTION 34 of ARBITRATION
ACT, 1996 BY INDIAN COURTS.
Since, Part I of Indian Arbitration Act, 1996 is not applicable to the instant case the arbitral
award cannot be set aside under section 34 of Indian Arbitration Act, 1996.
In the case of C v. D
17
, the court of appeal in England held that held if the parties had agreed
that any proceedings seeking to attack or set aside the partial award would only be those
permitted by English Law. It was not, therefore, permissible for the parties to bring any
proceedings elsewhere to attack the partial award.
18

A choice of seat for the arbitration must be a choice of forum for remedies seeking to attack
the award.
19
It is humbly submitted to this court that the award is not liable to be set aside
under section 34 of Arbitration Act, 1996 as parties have agreed to English law as lex arbitri
hence the appellant cannot seek remedy under Indian Arbitration laws.

C. THE ARBITRATION AGREEMENT IS NOT AGAINST SECTION 28 OF THE
INDIAN CONTRACT ACT, 1872.
Section 28 of Indian Contract Act, 1872 provides that any agreement in restraint of any legal
proceedings is void. This section does not apply where the restriction is not absolute.
20
Where
one out of two competent jurisdictions is excluded by agreement, it does not amount to
absolute ouster of jurisdiction, and such a clause does not violate section 28.
21
Where two or
more courts have jurisdiction to try a suit, the agreement between the parties limiting the
jurisdiction to one court is neither opposed to public policy nor a contravention of section 28

17
EWCA Civ 1282 (CA)
18
Union of India v. McDonnell Douglas Corporation, 1993 (3) Lloyd's Law Reports 48
19
Bharat Aluminium Company and ors v. Kaiser Aluminium Technical Services, Inc and ors, (2012) 9 SCC
552, 116,Naviera Amazonica Peruana S.A v.Compania Internacionale De Seguros Del Peru, 1988 (1) Lloyd's
Law Reports 116
20
Western India Prospecting Syndicate Ltd. v. Bombay Steam Navigation Co.Ltd., AIR 1951 Sau 83.
21
ABC Laminart Pvt. Ltd. v. AP Agencies, AIR 1989 SC 1239.
6

of the Contract Act.
22
Such a clause, restricting jurisdiction, applies also to proceedings in
courts under the arbitration laws.
23
Further a contract where the parties have agreed that no
action shall be brought until some questions of amount have been first decided by the
arbitrators is an exception to this section.
24
A party after the settlement by the arbitral tribunal
may challenge the award in a court of law. In the instant case there is no absolute restriction.
The parties have subjected themselves to the laws of England.
25
Only courts in England have
the exclusive jurisdiction. The parties may appeal before the courts in England. It is therefore
humbly submitted before this court that the agreement is in consonance with section 28 of
Indian Contract Act as the parties can seek remedy at the courts at England.


















22
Hakam Singh v. Gammon (India) Ltd., AIR 1971;Globe Transport Corporation v. Triveni Engineering works,
(1983) 4 SCC 707;Tilakram Chaudhuri v. Kondumal Jethanand Wadha, AIR 1928 Bom 175; Gopal Das
Agarwala v. L Hari Kishan DA, AIR 1936 All 514.
23
Zamindara Engineering Co. V. Sunil Tractor Co., AIR 1992 SC 1545; Kumud Agawalla v. Fertilizer Corpn.
of India Ltd., AIR 1985 Cal 89.; Hakam Singh v. Gammon (India) Ltd., AIR 1971.
24
Coringa Oil Co. Ltd. v. Koegler, (1876) ILR 1 Cal 466; New Zealand Insurance Co. Ltd. v. Nagpal Hosiery
Factory, AIR 1955 Punj 113.
25
Clause 37.1, Revised Share Purchase Agreement.
7

PRAYER FOR RELIEF

WHEREFORE, in light of the issues raised, arguments advanced and authorities cited it is
most humbly and respectfully requested that this Honble Court to adjudge and declare that:

1. The Jurisdiction of this Honble Court is maintainable.
2. The Arbtiral Award should be set aside.
3. The Respondent should be liable to pay the indemnity.

The Court may also be pleased to pass any other order, which this Honble Court may deem
fit in light of justice, equity and good conscience.






Sd/-
1.
2.
(Counsels for the Petitioner)