WARAXONE

ISSUE 1
WHETHER CLAUSE 4 OF THE CONTRACT DATED 20.01.18 IS VALID IN
LAW.
CLAUSE 4 OF THE CONTRACT DATED 20.01.18 IS VOID DUE TO THE FOLLOWING REASONS :

ACCORDING TO SECTION 17 (2) OF INDIAN CONTRACT ACT (1872), “THE ACTIVE CONCEALMENT OF A
FACT BY ONE HAVING KNOWLEDGE OR BELIEF OF THE FACT”CAN BE CONSIDERED TO BE FRAUD.IN
THIS CASE, POWERMETALS HAS CONCEALED THE FACT THAT SEVERAL PIL’S WERE FILED IN THE HIGH
COURT AND SUPREME COURT AGAINST THE COMPANY AND THE SUPREME COURT HAD SET UP A
SPECIAL INVESTIGATION TEAM TO INVESTIGATE IF THE COMPANY WAS VIOLATING ANY LAWS AND
CONTRIBUTING TOWARDS ENVIRONMENTAL DESTRUCTION AND CAN BE ASKED TO SHUT DOWN
ANY TIME AND STOP THE OPERATIONS BY THE SUPREME COURT.

SECTION 18 (1) STATES THAT, “MISREPRESENTATION MEANS AND INCLUDES THE POSITIVE
ASSERTION, IN A MANNER NOT WARRANTED BY THE INFORMATION OF THE PERSON MAKING IT, OF
THAT WHICH IS NOT TRUE, THOUGH HE BELIEVES IT TO BE TRUE.”IN THIS CASE,AFTER THE CHIEF
JUSTICE OF INDIA HAD MADE CERTAIN ORAL OBSERVATIONS THAT THE POWERMETALS VIOLATED
SEVERAL LAWS AND CAUSED MASSENVIRONMENTAL DESTRUCTION, POWERMETALS STILL ASSURED
THE COURT THATNO LAWS HAD BEEN VIOLATED AND THAT ALL PRECAUTIONS TO PROTECT THE
ENVIRONMENT WAS UNDERTAKEN BY THEM WHEN THEY WERE ACTUALLY VIOLATING

i) SECTION 7 OF ENVIRONMENT PROTECTION ACT (1986) WHICH STATES THAT, “NO PERSON
CARRYING ON ANY INDUSTRY, OPERATION OR PROCESS SHALL DISCHARGE OR EMIT OR PERMIT TO
BE DISCHARGEDOR EMITTED ANY ENVIRONMENTAL POLLUTANTIN EXCESS OF SUCH STANDARDS AS
MAY BE PRESCRIBED.”

ii)SECTION 12 OF THE FACTORIES ACT (1948) STATES THAT, “EFFECTIVE ARRANGEMENTS SHALL BE
MADE IN EVERY FACTORYFOR THE TREATMENT OF WASTES AND EFFLUENTS DUE TO THE
MANUFACTURING PROCESS CARRIED ON THEREIN, SO AS TO RENDER THEM INNOCUOUS, AND FOR
THEIR DISPOSAL.”

iii) SECTION 64 OF THE MINES ACT, 1952 WHICH STATES THAT, “WHOEVER MAKES OR PRODUCES
OR USE ANY FALSE DECLARATION, STATEMENT OR EVIDENCE KNOWING THE SAME TO BE FALSE,
FOR THE PURPOSE OF OBTAINING FOR THE PURPOSE OF OBTAININGFOR HIMSELFOR FOR ANY
OTHER PERSON A CERTIFICATE, OR THE RENEWAL OF A CERTIFICATE, UNDER THIS ACT SHALL BE
PUISHABLE WITH IMPROSENMENT FOR A TERM WHICH MAY EXTEND TO THREE MONTHS, OR WITH
FINE OR WITH BOTH.”

SECTION 55 STATES THAT, “WHEN A PARTY TO A CONTRACT PROMISES TO DO A CERTAIN THING AT

OR A SPECIFIED TIME, OR CERTAIN THINGS AT OR BEFORE A SPECIFIED TIME , AND FAILS TO DO ANY
SUCH THING AT OR BEFORE THE SPECIFIED TIME, THE CONTRACT , OR SO MUCH OF IT AS HAS NOT
PERFORMED, BECOMES VOIDABLE AT THE OPTION OF THE PROMISEE.”THIS IS APPLICABLE IN THIS
CASE AS IT WAS A TIME BOUND CONTRACT AS POWERMETALS HAD AGREED TO DELIVER 50 TONNES
OF VIBRANIUM ON 5TH DAY OF EVERY MONTH FOR A PERIOD OF TEN MONTHS FROM 5.02.2018 TO
5.12.2018.THEREFORE, CLAUSE 4 IS NOT VALID IN LAW.

SECTION 18 (2) STATES THAT”MISREPRESENTATION MEANS AND INCLUDES ANY BREACH OF DUTY
WHICH, WITHOUT AN INTENT TO DECEIVE, GAINS AN ADVANTAGE OF THE PERSON COMMITTING IT,
OR ANY ONE CLAIMING UNDER HIM; BY MISLEADING ANOTHER TO HIS PREJUDICE, OR TO THE
PREJUDICE OF ANY ONE CLAIMING UNDER HIM.” IN THIS CASE, EVENTHOUGH POWERMETALS DID
NOT HAVE AN INTENTION TO DECEIVE WARAXONE BEFORE THE CONTRACT WAS FRUSTRATED, THEY
WERE ABLE TO GET THE PAYMENTS ON THE FIRST TWO INSTALLMENTS OF VIBRANIUM ON
05.02.2018 AND 05.03.2018.

SECTION 29 OF INDIAN CONTRACT ACT (1872), STATES THAT “AGREEMENTS THE MEANING OF
WHICH IS NOT CERTAIN, OR CAPABLE OF BEING MADE CERTAIN, ARE VOID.”IN THIS CASE,
EVENTHOUGH THE SUPREME COURT HAS PERMITTED POWERMETALS TO CONTINUE TO RUN AND
OPERATE THE MINES TILL THE REPORT OF THE SPECIAL INVESTIGATION TEAM (SIT) AND FINAL
JUDGEMENT OF THE SUPREME COURT IN THE MATTER, THEY WERE NOT CERTAIN IF THE SUPREME
COURT WOULD ASK THEM TO SHUT DOWN THEIR MINES OR GO ON WITH THE BUSINESS IN THE
FUTURE AND HENCE THERE WAS UNCERTAINITY IN FULFILLING THE CONTRACT AND HENCE IT IS
VOID.

SECTION 56 OF THE INDIAN CONTRACT ACT (1872) STATES THAT “A CONTRACT TO DO AN ACT
WHICH, AFTER THE CONTRACT IS MADE, BECOMES UNLAWFUL OR IMPOSSIBLE, OR BY REASON OF
SOME EVENT WHICH THE PROMISOR COUKD NOT PREVENT, UNLAWFUL, BECOMES VOID WHEN THE
ACT BECOMES IMPOSSIBLE OR UNLAWFUL.”IN THIS CASE, THE SUPREME COURT JUDGEMENT
ASKING POWERMETALS TO SHUT DOWN WAS AFTER POWERMETALS AND WARAXONE ENTERED
INTO AN AGREEMENT.THE CONTACT HAS NOW BECOME IMPOSSIBLE AS THE MINES HAVE BEEN
SHUT DOWN. THE CONTRACT WILL BECOME UNLAWFUL IF POWERMETALS STILL GO ON WITH THEIR
BUSINESS EVEN AFTER THE SUPREME COURT JUDGEMENT.IN THE CASE SUSHILA DEVI AND
ANOTHER VS. HARI SINGH AND ORS, THE COURT HELD THAT “IF THE PERFORMANCE OF THE
CONTRACT HAS BECOME IMPOSSIBLE OR USELESS HAVING REGARD TO THE OBJECT AND PURPOSE
THE PARTIES HAD IN VIEW THEN THE PERFORMANCE OF THE CONTRACT HAS BECOME
IMPOSSIBLE.”THEREFORE, CLAUSE 4 IS VOID.

ISSUE 2
WHETHER CONTRACT DATED 19.01.2018 HAD BECOME VOID DUE TO
INTERENING EVENTS AND CIRCUMSTANCES AND THEREFORE WARAXONE NOT
BEING ENTITLED TO SPECIFIC PERFORMANCE OR DAMAGES UNDER THE
CONTRACT.
IT IS HUMBLY SUBMITTED BEFORE THE HON’BLE COURT THAT THE CONTRACT DATED 19.01.2018 IS
A VALID FORM OF CONTRACT AND IT SATISFIES ALL THE PRE REQUISITES ESTABLISHED UNDER THE
INDIAN CONTRACT ACT, 1872.WITH REFERANCE TO THE FACTS AND CIRCUMSTANCES OF THE CASE,
RESPONDENT IS TRYING TO ESCAPE THE LIABILITY OF THE BREACH OF CONTRACT BY TRYING TO
PROVE A VALID CONTRACT VOID AND IN THE PROCESS WASTING THE TIME OF THE COURT.

SECTION 73 STATES THAT, “WHEN A CONTRACT HAS BEEN BROKEN, THE PARTY WHO SUFFERS BY
SUCH BREACH IS ENTITLED TO RECEIVE, FROM THE PARTY WHO HAS BROKEN THE CONTRACT,
COMPENSATION FOR ANY LOSS OR DAMAGE CAUSED TO HIM THEREBY, WHICH NATURALLY AROSE
IN THE USUAL COURSE OF THINGS FROM SUCH BREACH, OR WHICH THE PARTIES KNEW, WHEN
THEY MADE THE CONTRACT, TO BE LIKELY TO RESULT FROM THE BREACH OF IT.”IN THE CASE OIL
AND NATURAL GAS CORPORATION LTD v. SAW PIPES LTD (2003), IT WAS HELD THAT IF THE TERMS
ARE CLEAR AND UNAMBIGOUS STIPULATING THE LIQUIDATED DAMAGES IN CASE OF BREACH OF
THE CONTRACT, THE PARTY WHO HAS COMMITTED THE BREACH IS REQUIRED TO PAY THE
COMPENSATION.

ACCORDING TO CLAUSE XII OF THE CONTRACT, “UPON FAILURE OF POWERMETALS TO COMPLY

WITH IT’S OBLIGATION UNDER THIS AGREEMENT, WARAXONE WILL BE ENTITLED TO A SUM OF
RS.50, 00,000 FOR EVERY FAILED INSTALLMENT.”THEREFORE, WARAXONE IS ENTITLED TO DAMAGES
UNDER THE CONTRACT.

IN THE CASE, PRAFUL KUMAR MOHANTY V. ORIENTAL INSURANCE CO LTD (1997), AN INSURED
MOTOR VEHICLE WAS LOST BY THEFT.THE INSURANCE POLICY REQUIRED THE ASSURED TO SEND
NOTICE TO THE INSURER IMMEDIATELY AFTER THEFT.BUT, THE ASSURED MADE A POLICE REPORT
IMMEDIATELY AND INFORMED THE INSURER ONE MONTH LATER.THE COURT HELD THAT THE
EXPRESSION IMMEDIATELY IMPLIES NOTICE TO BE GIVEN WITH PROMPTITUDE AVOIDING
UNNECESSARY DELAY.IMMEDIATE POLICE REPORTS SHOWED THE BONA FIDES OF THE ASSURED IN
THE MATTER.INDEMNIFICATION COULD NOT BE DENIED.IN THIS CASE TOO,WARAXONE HAD
ADDRESSSED SEVERAL COMMUNICATIONS TO POWERMETALS BEFORE GIVING A NOTICE TO
RRF.THEREFORE, WARAXONE IS ENTITLED TO RELIEF OF SPECIFIC PERFORMANCE OR DAMAGES
UNDER THE CONTRACT.

ISSUE 3
IN THE EVENT POINT B IS ANSWERED POSITIVELY, THEN WHETHER
POWERMETALS WAS AWARE OF THE INTERVENING EVENTS THAT MADE
CONTRACT DATED 19.01.2018 VOID AND HENCE WARAXONE IS ENTITLED TO
DAMAGES.
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POWERMETALS
ISSUE 1
WHETHER CLAUSE 4 OF THE CONTRACT DATED 20.01.2018 IS VALID IN LAW.
IT IS A WELL STATED PRINCIPLE HELD IN BIHAR STATE ELECTRICITY BOARD, PATNA AND ORS v GREEN
RUBBER INDUSTRIES AND ORS THAT “A STANDARD FORM OF CONTRACT IS ONE IN WHICH THE
CONDITIONS ARE FIXED BY ONE OF THE PARTIES IN ADVANCE AND ARE OPEN TO ACCEPTANCE BY
ANYONE.”A PERSON WHO SIGNS THE DOCUMENT WHICH CONTAINS CONTRACTUAL TERMS IS
NORMALLY BOUND BY THEM EVENTHOUGH HE IS IGNORANT OF THE PRECISE LEGAL EFFECT.IN THE
CASE RAMESWAR NATHANY v. NURUL HAQ CHAUDHARY, IT WAS HELD THAT, WHEN A PERSON
SIGNS OR AGREES TO TERMA AND CONDITIONS OF A CONTRACT AFTER STATING THAT HE HAD
UNDERSTOOD THE TERMS, HE IS BOUND BY THE CONTRACT AND THE CONTRACT IS VALID IN
LAW.THE APPELLANT KNEW ABOUT THE CONTRACT AND DID NOT ACT AGAINST IT AND NEITHER DID
THEY ASK ANY QUESTIONS REGARDING THE SAME.THE SAME WS CONSIDERED AS AN ACCEPTANCE
ON THE PART OF THE APPELLANT BY THE RESPONDENT.

ACCORDING TO CLAUSE 4 OF THE CONTRACT,” A NOTICE OR CLAIM HAS TO BE SERVED ON RRF

BEFORE THE EXPIRY OF 20 DAYS FROM THE DATE OF DEFAULT BY THE SUPPLIER.IF NO DEMAND IS
MADE WITHIN THE SPECIFIED PERIOD, THEN CLAIM UNDER THIS GUARANTEE SHOULD NOT BE
MADE.”IN THIS CASE, POWERMETALS FAILED TO SUPPLY VIBRANIUM ON 5.04.2018 AS THE
SUPREME COURT HAD ORDERED FOR THE CLOSURE OF THE MINES ON 20.03.2018.HERE, A PER THE
CONTRACT, WARAXONE WAS SUPPOSED TO SEND A NOTICE TO RRF DEMANDING THE
COMPENSATION BUT INSTEAD, ADDRESSED COMMUNICATIONS TO POWERMETALS ON 10.04.2018,
14.04.2018, 18.04.2018 AND 25.04.2018.AS WARAXONE DID NOT GIVE A NOTICE TO RRF WITHIN 20
DAYS OF THE DATE OF DEFAULT.THAT IS BY 25.04.2018, THEY ARE NOT ENTITLED TO
COMPENSATION.

SECTION 24 OF SPECIFIC RELIEF ACT, 1963 STATES THAT, “THE DISMISSAL OF SUIT FOR
PERFORMANCE OF A CONTRACT OR PART THEREOF SHALL BAR THE PLAINTIFF’S RIGHT TO SUE FOR
COMPENSATION FOR THE BREACH OF SUCH CONTRACT OR PART, AS THE CASE MAY BE, BUT SHALL
NOT BAR HIS RIGHT TO SUE FOR ANY OTHER RELIEF TO WHICH HE MAY BE ENTITLED, BY REASON OF
SUCH BREACH.”IN THIS CASE, THE DISTRICT COURT HAD DISMISSED THE SUIT FILED BY WARAXON
ON 18.06.2018 ON THE GROUNDS THAT CLAUSE 4 OF THE CONTRACT DATED 20.01.2018 WAS VALID
AND IN ABSENCE OF NOTICE WITHIN THE STIPULATED TIME, WARAXONE IS NOT ENTITLED TO
ENCASH THE GUARANTEE.HENCE, WARAXONE WAS NOT ENTITLED TO ANY DAMAGES OR THE
RELIEF OF SPECIFIC PERFORMANCE.GOKUL V KARAM

ISSUE 2
WHETHER CONTRACT DATED 19.01.2018 HAD BECOME VOID DUE TO
INTERVENING EVENTS AND CIRCUMSTANCES AND THEREFORE WARAXONE
NOT BEING ENTITLED TO RELIEF OF SPECIFIC PERFORMANCE OR DAMAGES
UNDER THE CONTRACT.
THE VERY BASIC BEDROCK OF ANY CONTRACT IS THE INTENTION TO ENTER INTO A LEGAL
RELATIONSHIP AND THAT THERE SHOULD BE ‘MEETING OF MINDS’.BUT IN MOST OF THE
CONTRACTS, THE PARTY ASSENTING TO THE TERMS DOES IT WITHOUT KNOWING OR HAVING
INTENTION TO ENTER INTO ANY CONTRACT AND EVEN IF HAS KNOWLEDGE OF THE TERMS HAS NO
MEANINGFUL CHOICE BUT TO ADHERE TO CERTAIN STANDARD CLAUSES PUT BY THE OTHER PARTY,
THEREBY FRUSTRATING THE VERY CONCEPT OF ‘MEETING OF MINDS’.

THE APPELLANT SHOULD HAVE ASKED OR CHECKED IF THE RESPONDENT HAD ANY CASE AGAINST
THEM IN THE HIGH COURT AND THE SUPREME COURT BEFORE ENTERING INTO AN AGREEMENT.THE
APPELLANT IS TAKING ADVANTAGE OF THE FACT THAT THEY HAVE NOT DONE THEIR DUTY
PROPERLY.IN THE CASE, GALLIE v. LEE (1969), IT IS STATED THAT NO MAN CAN TAKE ADVANTAGE OF
HIS OWN WRONG.

CHITTY ON CONTRACTS, 28TH EDITION (PAGE 343, PARA 60)STATE THAT, “MERE NON DISCLOSURE
DOES NOT CONSTITUTE EITHER FRAUD OR MISREPRESENTATION FOR THERE IS NO DUTY ON THE
PARTIES TO DISCLOSE MATERIAL FACTSTO EACH OTHER HOWEVER DISHONEST SUCH NON-
DISCLOSURE MAY BE IN THE PARTICULAR CIRCUMSTANCES”.

SECTION 23 STATES THAT “THE CONSIDERATION OR OBJECT OF AN AGREEMENT IS LAWFUL, UNLESS

IT IS FORBIDDEN BY LAW; OR IS OF SUCH A NATURE, THAT IF PERMITTED, IT WOULD DEFEAT THE
PROVISIONS OF ANY LAW.”IN THIS CASE, CLAUSE XVIII STATES THAT, “THIS AGREEMENT SHALL NOT
BE CONSIDERED VOID OR IMPOSSIBLE ON ACCOUNT OF ANY INTERVENING EVENT VIS MAJOR,
INUNDATION OF RAIN WATER, AND OPERATION OF LAW ETC.”THIS CLAUSE IS AGAINST SECTION
23.THEREFORE, THE AGREEMENT IS VOID.HENCE, WARAXONE IS NOT ENTITLED TO RELIEF OF
SPECIFIC PERFORMANCE OR DAMAGES UNDER THE CONTRACT.

ACCORDING TO CLAUSE 4 OF THE CONTRACT “A NOTICE OR CLAIM UNDER THE GUARANTEE HAS TO
BE SERVED ON RRF BEFORE THE EXPIRY OF 20 DAYS FROM THE DAY OF DEFAULT BY THE SUPPLIER.IF
NO DEMAND IS MADE WITHIN THE SPECIFIED PERIOD, THEN CLAIM UNDER THIS GUARANTEE
CANNOT BE MADE.”AS WARAXONE DID NOT GIVE THE NOTICE WITHIN 20 DAYS OF THE DATE OF
DEFAULT, WARAXONE IS NOT ENTITLED TO RELIEF OF SPECIFIC PERFORMANCE OR DAMAGES UNDER
THE CONTRACT.

ISSUE 3
IN THE EVENT POINT B IS ANSWERED POSITIVELY, THEN WHETHER
POWERMETALS WAS AWARE OF THE INTERVENING EVENTS THAT MADE
CONTRACT DATED 19.01.2018 VOID AND HENCE WARAXONE IS ENTITLED TO
DAMAGES.
POWERMETALS COULD NOT FORSEE THE EVENT OF THEIR MINES BEEN ASKED TO SHUT DOWN BY
THE COURT AS THEY HAD NOT VIOLATED ANY LAWS AND ALL MEASURES TO PROTECT THE
ENVIRONMENT WAS TAKEN BY THEM.AT THE TIME OF THE CONTRACT,THE DID NOT EXPECT THE
SUPREME COURT TO GIVE SUCH A JUDGEMENT.SO, THE DEFENCE OF OF SECTION 56 WHICH IS AN
“AGREEMENT TO DO AN IMPOSSIBLE ACT IS VOID CANNOT BE TAKEN HERE.AND, THE DEFENCE OF
AN “AGREEMENT TO DO AN UNLAWFUL ACT IS VOID” ALSO CANNOT BE TAKEN HERE AS THE
SUPREME COURT HAD GIVEN POWERMETALS TO GO ON WITH THEIR BUSINESS TILL THE REPORT OF
THE SPECIAL INVESTIGATION TEAM (SIT) AND THE FINAL JUDGEMENT OF THE SUPREME COURT IN
THE MATTER.

ACCORDING TO SECTION 56, “WHERE ONE PERSON HAS PROMISED TO DO SOMETHING WHICH HE
KNEW, OR, WITH REASONABLE DILIGENCE, MIGHT HAVE KNOWN, AND WHICH THE PROMISEE DID
NOT KNOW, TO BE IMPOSSIBLE OR UNLAWFUL, SUCH PRO,ISOR ,UST MAKE COMPENSATION TO
SUCH PROMISEE FOR ANY LOSS WHICH SUCH PROMISEE SUSTAINS THROUGH THE NON
PERFORMANCE OF THE PROMISE.”THEREFORE, WARAXONE IS NOT ENTITLED TO COMPENSATION
AS POWERMETALS AT THE TIME OF ENTERING INTO AN AGREEMENT WITH WARAXONE DID NOT
EXPECT THE SUPREME COURT TO GIVE A JUDGEMENT TO SHU DOWN THE MINES.

BOOKS REFERRED

CONTRACT – 1 GENERAL PRINCIPLES OF CONTRACT (SECTION 1-75) AND SPECIFIC RELIEF ACT – DR
KAILASH RAI – CENTRAL LAW PUBLICATIONS

CONTRACT – 2 – DR K S BANGIA – ALLAHABAD LAW AGENCY LAW PUBLISHERS

CIVIL PROCEDURE WITH LIMITATION ACT, 1963 – C K TAKWANI - EIGHTH EDITION – EBC

THE ENVIRONMENT (PROTECTION) ACT, 1986 – PROFESSIONAL BOOK PUBLISHERS

THE MINES ACT, 1952 – PROFESSIONAL BOOK PUBLISHERS

THE FACTORIES ACT (1948) – PROFESSIONAL BOOK PUBLISHERS

THE INDIAN CONTRACT ACT , 1872 – BARE ACT – ASIA LAW HOUSE

CONTRACT AND SPECIFIC RELIIEF – AVTAR SINGH – 11TH EDITION

ACTS AND STATUTES

THE INDIAN CONTRACT ACT 1872

CIVIL PROCEDURE ACT

THE MINES ACT 1952

THE ENVIRONMENT PROTECTION ACT 1986

THE FACTORIES ACT 1948

CONSTITUTION OF INDIA