Team Code: A46

UNIVERSITY INSTITUTE OF LEGAL STUDIES

INTRA DEPARTMENT MOOT COURT COMPETITION 2016

BEFORE THE

HONBLE DELHI COMMERCIAL COURT, TIS HAZARI

AT

NEW DELHI

IN THE MATTER OF:

SWARN KUMAR

.. PETITIONER

V.

AKHIL SINGHAL

.. RESPONDENT

Petition under Section 16 of The Code of Civil Procedure, 1908

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 MEMORIAL FOR PETITIONER
TABLE OF CONTENTS

INDEX OF REFERENCE..

LIST OF ABBREVATIONS..

STATEMENT OF FACTS..

STATEMENT OF JURISDICTION..

ISSUES..

SUMMARY OF ARGUMENTS

ARGUMENTS ADVANCED.

MEMORIAL FOR THE PETITIONER

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LIST OF ABBREVIATIONS

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 INDEX OF AUTHORITIES

STATUTORY COMPILATIONS

1. The Indian Contract Act, 1872.

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2. The Code of Civil Procedure, 1908.

3. The Companies Act, 2013.

4. The Sale of Goods Act, 1930.

5. The Evidence Act, 1872.

6. The Specific Relief Act, 1963.

DICTIONARIES

1. Oxford English Dictionary (2nd ed. 2009).

2. Whartons Pocket Law Dictionary (15th Ed., Universal Law Publishing Co. 2010).

WEBSITES

1. www.manupatra.com

2. www.judis.nic.in

3. www.supremecourtcaselaw.com

4. www.indiankanoon.org

5. www.jstor.org

6. www.legalcrystal.com

BOOKS

1.

2.

3.

4.

5.

6.

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7.

8.

9.

10.

TABLE OF CASES

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2.

3.

4.

5.

6.

7.

8.

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10.

11.

12.

13.

14.

STATEMENT OF FACTS

Mr. Swarn Kumar an influential businessman from Delhi went to Goa on a trip with his
friends including Mr. Aditya Sahni, an esteemed lawyer.

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 While playing poker at Casino Royale, he lost approx. Rs. 3 crores. He borrowed Rs. 5
crores to play further from Mr. Akhil Singhal (money lender of Casino) signing a pre
written form of agreement that he would pay double the loan amount at the table keeping
majority shares of his company as security.
He lost the game and was unable to return the agreed amount. As a consequence he lost
majority shares of his company. He then called Mr. Aditya, who contacted Mr. Singhal
not to take the shares of the company but he refused the offer. Mr. Singhal had acquired a
lot of properties and companies this way.
Immediately Mr. Singhal signed a contract with Delhi based Co. named A & M Pvt. Ltd.
for selling majority shares of the Co.
The video from the Casino shows that Mr. Kumar had consumed eight alcoholic drinks
(8*30 ml) prior to signing the contract.
Mr. Sahni had filed a civil suit on behalf of Mr. Kumar before Delhi Commercial Court at
Tis Hazari to prevent Mr. Singhal from taking over the company.

STATEMENT OF JURISDICTION

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The Prosecution Counsel, hereby submits the memorandum for the Prosecution in Delhi
Commercial Court Tis Hazari which has the requisite territorial and subject matter jurisdiction to
entertain and adjudicate this matter under Sec. 16 (f) of The Code of Civil Procedure, 1908 read
with Sec. 2 (i), 6 & 12 (b) of The Commercial Court Act, 2015 for pecuniary jurisdiction as the
total amount involved is not less than 1 crores.

ISSUES

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 A. Whether the Delhi Commercial Court has jurisdiction to entertain the mater or not?
That the present petition has been rightly filed in Delhi Commercial Court Tis
Hazari.
B. Whether the essentials of a valid contract are fulfilled or not?
That all the essentials of a valid contract are not fulfilled and hence the contract
is void.

C. Whether the wagering contract entered between the parties are enforceable or not?

That the wagering agreement is void and hence is not enforceable between the
parties.

D. Whether the injunction should be granted against Mr. Singhal from selling majority of
the shares of the company in the present case or not?

That the injunction should be granted against Mr. Singhal to prevent him from
selling majority of the shares of the Co.

SUMMARY OF ARGUMENTS

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 ARGUMENTS ADVANCED

Respectfully showeth:

1. Delhi Commercial Court has jurisdiction to entertain the matter.

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 1.1 Provisions in support of the argument:

(A) Sec. 16 (f) of CPC on Suits to be instituted where subject-matter situate-

Sec 16 (f) of CPC read as, Subject to the pecuniary or other limitations prescribed by the
law, suits for the recovery of movable property actually under distraint or attachment, shall be
instituted in the Court within the local limits of whose jurisdiction the property is situate:
Explanation. In this section "property" means property situate in India.

In this context movable property means every kind of movable property other than actionable
claims and money; and includes stock and shares, growing crops, grass, and things attached to or
forming part of the land which are agreed to be severed before sale or under the contract of sale;

So Shares being movable property of company resides in Delhi and hence suit is rightly
instituted in Delhi Commercial Court.

(B) Sec. 2 (i) & 12 (b) of the Commercial Court Act on matter related to Specified
Value.

Sec. 2 (i) of Commercial Court act read as, Specified Value, in relation to a commercial
dispute, shall mean the value of the subject-matter in respect of a suit as determined in
accordance with section 12 which shall not be less than one crores rupees or such higher value,
as may be notified by the Central Government.

Sec. 12 (1) (b) The Specified Value of the subject-matter of the commercial dispute in a suit,
appeal or application shall be determined where the relief sought in a suit, appeal or application
relates to movable property or to a right therein, the market value of the movable property as on
the date of filing of the suit, appeal or application, as the case may be, shall be taken into account
for determining such Specified Value;

In this context value of the majority of shares is more than 1 crores, so accordingly this
case lies under the jurisdiction of Commercial Court.

(C) Sec 6 of the Commercial Court Act regarding jurisdiction of Commercial Courts

Sec.6 of Commercial Courts Act reads as The Commercial Court shall have
jurisdiction to try all suits and applications relating to a commercial dispute of a
Specified Value arising out of the entire territory of the State over which it has been
vested territorial jurisdiction.

Explanation.For the purposes of this section, a commercial dispute shall be considered to arise
out of the entire territory of the State over which a Commercial Court has been vested
jurisdiction, if the suit or application relating to such commercial dispute has been instituted as
per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908.

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2. Essentials of a valid contract are not fulfilled.

2.1 Provisions in support of the argument:

A. Meaning of Contract
According to Sec 2 (h) of the Indian Contract Act, 1872:
An agreement enforceable by law is a contract.

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 B. Essentials of a valid contract
Sec. 10 of the Indian Contract Act states that, All agreements are contracts if they
are made by the free consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby expressly declared to be
void.
Nothing herein contained shall affect any law in force in India, and not hereby
expressly repealed, by which any contract is required to be made in writing or in
the presence of witnesses, or any law relating to the registration of documents.

For the validity of a contract, Section 10 requires the following essentials to be

satisfied requires the following essential to be satisfied.
(1) There should be an agreement between two parties. An agreement arises when
one party makes a proposal or offer and the other party accepts the offer.
(2) The parties to the agreement should be competent to contract.
(3) There should be lawful consideration and lawful object in respect of the
agreement.
(4) There should be free consent of the parties, when they enter into the
agreement.
(5) The agreement must not be one, which has been declared to be void.
(1) There should be an agreement between two parties.
There was no agreement between the parties as it defeats the provision of
Standard form of Contract, which states that the term of the contract
should be reasonable.
It is not enough that the terms of contract have been brought to the
knowledge of the other party by a sufficient notice before the contract is
entered into, it is also necessary that the terms of the contract themselves
should be reasonable. If the terms of the contract are unreasonable and opposed
to public policy, they will not be enforced merely because they were printed on
the receipt or have been expressly or impliedly agreed upon between the
parties.
In Central Inland Water Transport Corporation Ltd. v. Brojo Nath, one of
the clauses in a contract of employment provided that the employer
(Corporation) could terminate the services of a permanent employee by giving
him a 3 months notice or 3 months salary. In accordance with the above
clause, the services of the respondent Brojo Nath and another were terminated
instantly by giving them the notice, accompanied by a cheque for 3 months
salary. It was held by the Supreme Court that such a clause in the service

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 agreement between persons having gross inequality of bargaining power was
wholly unreasonable and against public policy and therefore void under
Section 23 of the Contract Act.
In another case Lilly White v. Munuswami, an action was brought by a
customer of a firm of launders and dry cleaners, M/s Lilly White, to whom the
customer had given a new saree costing Rs. 220 for cleaning but the same was
lost. The plaintiff claimed full price of the saree, i.e., Rs.220 but the defendant
offered to pay only 50% of the price on the ground that there was a printed
term on the back of the receipt given to the customer stipulating that in case of
loss of garment, the customer would be entitled to only 50% of the market
price or value of the same. It was held that such a term of the contract was
unreasonable and against the public policy and therefore unenforceable,
because if such a condition is enforced, any laundry owner will try to
misappropriate new clothes.
The same was held in this case where the terms of the contract was
unreasonable as it contained a clause that Mr. Kumar had to pay double
the loan amount at the table and in default, he would sign over his
majority shares in his company as security.
2. The parties to the agreement must be competent to contract.
According to Sec. 11, every person is competent to contract:
(i) Who is the age of majority, and
(ii) Who is of sound mind and
(iii) Who is not disqualified from contracting by any law to which he is
subject.

Position of a person of unsound mind.

For the validity of a contract, the parties to it should be of sound mind. If a
person of unsound mind makes an agreement, the same is void just like
agreement by minor.
Sec. 12 of Indian Contract Act states that A person is said to be of sound
mind for the purpose of making a contract, if at the time when he makes it, he is
capable of understanding it and of forming a rational judgment as to its effect
upon his interest.
Soundness of mind is needed only at the making of contract. If a person is
usually of unsoundness mind, but occasionally of sound mind, he may make a
contract when he is of sound mind. Thus a patient in a lunatic asylum may
make a valid contract during lucid interval i.e. when he is of sound mind.

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 Thus a sane man, who is delirious from fever or who is so drunk that he
cannot understand the terms of contract or form a rational judgment as to its
effect on his interest, cannot contract whilst such delirium, or drunkenness
lasts.
In Chacko v. Mahadevan, the appellant executed a sale deed of his land in
favour of the respondent when he was suffering from alcoholic psychosis, the
fact medically certified. The deed in question also showed that valuable land
was sold at a very paltry amount. Referring to the Latin maxim res ipsa
loquitur (i.e., the matter speaks for itself ), the Apex Court set aside the sale,
being by a person who was not of sound mind.
In another Case Indar Singh v. Parmeshwardhari Singh, it has been held that
a person may to all appearances, behave in a normal fashion, but, at the same
time, he may be incapable of forming a judgment of his own, as to whether the
act he is about to do is to his interest or not, and to the contracts of such a
person the law gives protection. In this case, on the death of his father, the
defendant No. 1 purpoted to sell some properties to the plaintiff for a
consideration of Rs. 7000 and executed a sale deed for the purpose. The
properties purpoted to be sold under the deed were worth Rs. 25000. Mother of
defendant No. 1 pleaded that her son was a congenital idiot, incapable of
understanding transactions relating to transfer of properties, and that he is man
of unsound mind and therefore the transaction made by him is void. It was held
that defendant No. 1 was incapable of understanding business and forming a
rational judgment as to its effect upon his interest at the relevant time and,
therefore, the sale deed executed by him in favour of the plaintiff did not confer
any title to him.

The same was held in this where although Mr. Kumar had attained the age of majority but
he was not of sound mind at the time of signing of contract due to Intoxication which
renders the agreement void. This can be proved by the following circumstances:-

(a) At 2 a.m. on night when he realized that he had lost majority shares of his company then
he called Mr. Aditya which proves that at that time he was of sound mind and at the time
of signing of the contract he was of unsound mind.
(b) Despite losing 1/10th worth of his company he takes a loan of 5 crores on keeping
majority shares of his company as security which proves his unsoundness of mind at the
time of signing of contract. A normal person would not play at the stake of his business.

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 (c) The other party was aware of the fact of intoxication at that time. (Lucy v. Zehnur
(1954)).
(d) He was incapable of making a rational judgment as the Terms & Conditions of the
Contract were not made by both the parties on the spot. It was a pre written form of
agreement.

3. There should be lawful consideration and lawful object in respect of the

agreement,

For the validity of contract, it is also essential that the consideration and object should be
lawful. According to Sec. 23, the considerations or object of an agreement should is lawful
unless:-

(i) It is forbidden by law, or

(ii) Is of such a nature that it would defeat the provision of law or
(iii) It is fraudulent, or
(iv) It involves or implies injury to the person or property of another, or
(v) The Court regards it as immoral or opposed to the public policy.
In each of the cases, the consideration or object of an agreement is said to be
unlawful. Every agreement of which the object or consideration is unlawful is
void.

Although inadequacy of consideration by itself is not a ground for treating the contract as invalid
but it may be a factor which the court may take into consideration to know whether the consent
of a party was free or not. For example, A agrees to sell a horse worth Rs. 1000 for Rs. 10. A
denies that his consent to the agreement was freely given. The inadequacy of the consideration is
a fact which the Court may take into account in considering whether or not As consent was
freely given.

In this case consideration or object is not lawful because it defeats the following provisions of
Sec. 23 of Indian Contract Act:

(i) Forbidden by law

When something is forbidden by law, an agreement to do that is unlawful. An
agreement to do what has been prohibited by the Indian Penal Code or by some other
law cannot be enforced. An agreement offending a statute or public policy is void
from the beginning and the same cannot be come valid even if the parties agree to the

effect.

The Public Gambling Act of 1867 is a Central law that prohibits running or being in charge
of a public gaming house. Penalty for breaking this law is fine of Rs. 2 lacs or imprisonment

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up to 3 months. The contract was void because the main object behind taking loan was
gambling.

(ii) Defeats the provision of any law

If the object or consideration of an agreement is such of a nature that, if it is
permitted, it would defeat the provisions of any law, such an agreement is void.
Certain acts may not be expressly forbidden by law, but if they result in
circumventing any law, they cannot be encouraged.

We have to write about Wagering Agreement.

(iii) Fraudulent Purpose

If the consideration or object of an agreement is to commit fraud, the agreement is
void.
We have to write about how Mr. Singhal had acquired many properties this way.

(iv) Agreement injurious to the person or property of another.

If the consideration or object of an agreement is to cause an injury to the person or
property of another, the agreement is unlawful and therefore void. Injury here means
harm which is unlawful, for example, an agreement to commit fraud, or a tort. If the
borrower of money is made to execute a bond requiring him to do manual labour until
repayment, and imposes a heavy penalty on default in the form of a exorbitant rate of
interest, agreement contained in bond virtually amounts to slavery, and therefore such
an agreement is opposed to public policy and hence void.
In J.M.D. Alloys Ltd. v. Bihar State Electricity Board the Board, finding the
Electric Meter tampered with, raised a punitive bill. The appellant, having no option
but to accept the electric supply on the terms and conditions imposed by the Board,
even unreasonably, it being a monopoly supplier, on account of loss which stoppage
of such supply would entail for a manufacturer or other commercial consumer,
accused to make payment in installments. The raising of punitive bill was held
improper by the Patna High Court and held the agreement to pay by installment was
said to be void under Sec. 23 of the Indian Contract Act, 1872.
In this case also the Terms & Conditions were also not favorable which render the
agreement void.
(v) Immoral or opposed to public policy.
If the consideration or object of an agreement is regarded by the Court

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PRAYER

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