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BEFORE THE HONBLE DISTRICT COURT AT BENGALURU

CASE CONCERNING BREACH OF CONTRACT

FASTER MOTORS Ltd VS SUNNY Ltd

MEMORANDUM ON BEHALF OF THE PETITIONER FASTER MOTORS LTD

2010
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TABLE OF CONTENTS Page Numbers

1. List of Abbreviations 2. Index of Authorities

3. Statement of Jurisdiction 4. Summary of Facts 5. Issues raised

6. Summary of Arguments 7. Body of Arguments

8. Prayer

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LIST OF ABBRIEVATIONS

Pl. Ds OS Honble Sec. Ltd. Tech Rs. Co. Art. AIR V

Plaintiff Defendants Original Suit Honourable Section Limited Technology Rupees Company Article All India reports Versus

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INDEX OF AUTHORITIES 1.Indian Contract Act 2.Indian Evidence Act 3.Law of Jurisdiction

LIST OF BOOKS REFFERED 1. Avatar Singh byContract and specific relief 2. Bhangia by "Contracts I

WEBSITES www.manupatra.com www.lexisnexis.com

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www.indiankanoon.com www.google.com

Cases Refered: -> Mahabir Prashad Rungta vs Durga Datt AIR 1961 SC (1961) 3 SCR 639 , 645: (1961) 1 MLJ 142 SC -> Buddha v. Mansharam A.I.R. 1914 Lah. 83 -> N. Sukumaran Nair And Anr. vs P. Narayanan 6 February, 1996 -> Divisional Forest Officer v. Bishwanath Tea Co. 1981 AIR 1368, 1981 SCR (3) 238 -> The Krishna Jute And Cotton Mills Company Limited vs J. Innes And Ors

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STATEMENT OF JURISDICTION The petitioner approaches the honorable district court of India under the Order VII Rule 1 of read with sec 26 of Civil Procedural Code, 1908. Order VII Rule 1 contains Particulars to be contained in plaint The plaint shall contain the following particulars: (a) the name of the Court in which the suit is brought; (b) the name, age, description, place of residence and the place of business, if any of the plaintiff; (c) the name, age, description, place of residence and place of business, if any, of the defendant, so far can be ascertained by the plaintiff; (d) Where plaintiff or the defendant is a minor, a statement to that effect, and in the case of minor, his age to the best of the knowledge and belief of the person verifying the plaint:
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Provided that where, owing to the large number of defendants or any other sufficient reason, it is not practicable to ascertain with reasonable accuracy the age of the minor defendant, it may be stated that the age of minor defendant is not known." (e) the facts constituting the cause of action and when it arose; (f) the facts showing that the Court has jurisdiction; (g) the relief which the plaintiff claims; (h) where the plaintiff has allowed a set-off or relinquished a portion of his claim, the amount so allowed or relinquished; and (i) a statement of the value of the subject-matter of the suit for the purposes of jurisdiction and of court fees, so far as the case admits.

Section 26 deals with Institution of suits. (1) Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. (2) In every plaint, facts shall be proved by affidavit.
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SUMMARY OF FACTS In December 2007, Faster Motors entered into a contact with Sunny for the purchase of Advanced Machinery along with the software to control it for the production of their new two-seater sports car Foto Fly. The entire cost of the contract was Rs. 19.5 Crore. Mr. Parth, General Manager at Faster Motors drafted an agreement and sent it to Mr. Arjun. Manager (Machineries) at Sunny for the purpose of finalising it. As per the agreement the machinery was to be installed and commissioned within a span of one year. As the new machinery involved many technical advancements, Mr. Arjun made an independent contract with Mr. Varun at Hi-tech for the supply of the software which to be used for controlling the working of the machinery. This contract was of Rs. 2.5 Crores. A copy of this contract was also sent to Mr. Parth at Faster Motors for its records. In January 2008, at the Auto Expo Extravaganza held at Delhi. Faster Motors unveiled Sunny model of Foto Fly in order to publicise before launching in the market. Mr. Parth and Mr. Arjun both marked their personal presence on the occasion. Confident about the
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installation of machines pursuant to the contract, and commencement or production in due time, the company made a public announcement to launch the car in the markets by March 2009. The car being designed specifically for Indian road conditions was applauded in the exhibition and Faster Motors received advance booking requests. It also received massive media coverage as the only Indian Sports car ever launched in the market. Some of the prospective customers even deposited a token amount with Foto Motors for claiming priority in the delivery. In the meanwhile, software engineers at Faster Motors inspected the Contract between Sunny and Hi-tech. They found that the software being developed by Hi-tech for control of the new machinery was not compatible with the existing computer system at Faster Motors. Mr. Parth immediately contacted this Mr. Arjun to communicate this problem. Mr. Arjun being on a business tour was not available in the office. The call was then transferred to Ms. Silver, the Purchase Manager working under Mr. Arjun at Sunny. Mr. Parth explained to her the entire difficulties and requested her to take immediate action in this regard. Ms. Silver asked Mr. Parth for his suggestions. Mr. Parth suggested a higher version which would be compatible with the computer systems at Foto Motors. Ms. Silver realised the urgency and contacted Mr. Varun of Hi-tech and introduced herself as the Purchase
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Manager at Sunny. She explained to him the difficulties faced by Faster Motors if the present software was applied. She asked him if it was possible for them to supply the upgraded version. Mr. Varun agreed for the change in the software specifications and awaited a written confirmation regarding the same from Sunny. The written confirmation was never received. In November 2008, Sunny transported and installed the new machinery at the Faster Motors factory under an assurance that the software to control the machines shall be made available shortly. Faster Motors made part payment for the machine, but reserved the payments for the software. On November 20, 2008, Mr. Arjun returned from his business trip only to find a fax from Mr. Varun regarding the new valuation of the contract. Due to the oral amendment to the contract which mandated the supply of an upgraded version of the software the new valuation of the contract went up to Rs. 3.5 Crores. Mr. Arjun contacted Mr. Varun and enquired about this change in the valuation of the contract. Mr. Varun updated him about the oral amendment thereby justifying then revaluation. Mr. Arjun clearly denied and disapproved of any such amendment by stating that Miss. Silver was not the right person to do it. Further Mr. Arjun denied agreeing to pay the increased amount of the contract.

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Infuriated by this, Hi-tech halted the development and supply of the software. On November 25, 2008 consequently, Sunny communicated to Faster Motors that thre could be an apprehension of delay in supplying the software. On November 28, 2008, faster Motors approached Super-tech, a leading software company and enquired if software could be made available at the earliest. Supertech delivered the software and Faster Motors had to pay an additional amount of Rs. 2.5 Crores in procuring the same. Foto fly was ultimately launched in June 2009.

Apart from that the plaintiff(Faster motor Ltd.) also was forced to spend a huge sum to the tune of Rs.50 lakhs for organizing the alternative supplier for implementing the said launching in time which was only due to the negligence on the part of the defendant and also due to the non supply of required systems in time.

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ISSUES RAISED 1.Wether there is a breach of contract from the side of the defendant? 2.Wether the defendant is responsible for the Plaintiffs reputation loss ? 3.Whether the plaintiff is entitled for the quantum of the amount claimed.?

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SUMMARY OF ARGUMENTS 1. The defendant has breached the contract that he had entered into with

the plaintiff in December 2007 for providing Advanced Machinery along with the software to control it. 2. By the breach of contract from the defendant side the plaintiff had to

face many criticisms which lead to the loss of reputation of the plaintiff. 3. Due to delay from the defendant side, the plaintiff had to take

necessary steps for the launch of their product without any further delay to avoid further defamation.

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BODY OF THE ARGUMENTS

1.

Wether there is a breach of contract from the side of the

defendant? In January 2008, at the Auto Expo Extravaganza held at Delhi the Plaintiff unveiled their new sports car Foto Fly in order to publicise before launching in the market. . Confident about the installation of machines pursuant to the contract, and commencement or production in due time, the company made a public announcement to launch the car in the markets by March 2009. Some of the prospective customers even deposited a token amount with the plaintiff for claiming priority in the delivery. But due to the delay in providing the compatible software by the defendant,as demanded by the plaintiff the new car of the plaintiff could not be launched and delivered on the said March 2009.Because of the delay the plaintiff had to convince and apologise their customers and even had to take upon various defamatory statements thus having to loose their reputation. Moreover only part of the contract was fulfilled i.e only the machinery was supplied within the time mentioned as per the terms of the contract.Hence the defendant is solely responsible for the loss of reputation of the plaintiff Co..

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In Mahabir Prashad Rungta vs Durga Datt

the

supreme court held that in commercial transactions time is ordinarily of the essence of the contract and was made so in the contract and when this important condition of the agreement was broken, Sec 55 of the Indian Contract Act could be invoked by the aggrieved party and he was entitled to rescind the contract. Section 55 of the Indian Contracts Act of 1872, Effect of failure to perform at fixed time, in contract in which time is essential - When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

2. loss ?

Wether the defendant is responsible for the Plaintiffs reputation

1 AIR 1961 SC (1961) 3 SCR 639 , 645: (1961) 1 MLJ 142 SC

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In December 2007 the Plaintiff and the defendant entered into a contract and as per the contract the defendant had to supply Advanced Machinery along with the software to control it for the production of the plaintiffs new two-seater sports car Foto Fly with one year as per terms in the contract. The defendant entered into another independent contract with Hi-tech Technologies Limited for the supply of the software needed for the working of the Advanced Machinery. Trusting the defendant the plaintiff unveiled their new sports car Foto Fly at the Auto Expo Extravaganza held at Delhi. Some of the prospective customers even deposited a token amount with the plaintiff for claiming priority in the delivery. But due to contractual misunderstanding between the defendant and Hi-Tech the supply of software to the plaintiff was delayed beyond the time prescribed in the term of their contract. Hence this clearly accounts to breach of contract from the side of defendant and the defendant is solely responsible for the loss incurred by the plaintiff due to loss of reputation. In Buddha v. Mansharam A.I.R. 1914 Lah. 83, the court was of the opinion that in assessing damages, annoyance, loss of reputation and resulting injury may all be taken into consideration apart from the loss incurred by way of expenses.

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3.

Whether the plaintiff is entitled for the quantum of the amount Because the defendant did not supply the software in time, as

claimed.? mentioned according to the terms of the contract, the plaintiff had to enter into another independent contract with supertech for the supply of software to control the advanced machienary and hence to avoid further delay in the launch of their product. The plaintiff has proved the payment of additional cost of Rs.2.5 crore to the alternative supplier Supertech which is due to the non performance of the terms of the contract by the defendants and the plaintiff also submitted necessary proof for payment for the additional cost and hence the defendant is liable to pay the claim amount of the plaintiff along with the permissible interest and quantum of damages.

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PRAYER

The Plaintiff therefore pray before this Honble Court to direct the defendants (a) to a pay a sum of Rs.2.5 crore being the additional cost paid by the plaintiff to the alternative supplier M/s.Supertech along with the interest at the rate of 18% from the date of payment by the plaintiff , (b) directing the defendant to pay a sum of Rs.50 lakhs towards damages to the plaintiff, (c) cost of the suit (d) such other cost as this Honble Court may deem fit and proper in the circumstances of the case and render justice. Dated at Bengaluru on this.day of November 2010

Counsel for the Plaintiff

Plaintiff

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