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TEAM CODE: A75

UILS, INTRA-MOOT COMPETITION,2016

UILS INTRA DEPARTMENT MOOT COURT COMPETITION,


2016

BEFORE THE HON’BLE COMMERCIAL DIVISION OF DELHI


HIGH COURT

ORIGINAL JURISDICTION

SECTION 7 OF THE COMMERCIAL COURTS, COMMERCIAL DIVISION AND

COMMERCIAL APPELLATE DIVISION OF HIGH COURTS ACT, 2015 R/W SECTION


20(C)

OF THE CODE OF CIVIL PROCEDURE, 1908

MR. SWARAN KUMAR………………………………………………..PLAINTIFF

VERSUS

MR. AKHIL SINGHAL……………………………...……………..…DEFENDANT

SUBMISSION BEFORE

THE HONOURABLE JUDGE OF THE HONOURABLE DELHI HIGH COURT

MEMORIAL ON BEHALF OF THE PLAINTIFF

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Contents
List of Abbreviations ...................................................................................................................... 4

INDEX OF AUTHORITIES........................................................................................................... 5

Books Referred ........................................................................................................................... 5

Statutes ........................................................................................................................................ 5

DICTIONARIES REFERRED ............................................................................................................ 5

WEBSITES REFERRED ................................................................................................................... 5

Cases Referred ............................................................................................................................ 6

Statement of facts ............................................................................................................................ 7

Issues Raised: .................................................................................................................................. 8

ISSUE I ................................................................................................................................... 8

ISSUE II .................................................................................................................................. 8

ISSUE III ................................................................................................................................ 8

ISSUE IV ................................................................................................................................ 8

Summary of Arguments .................................................................................................................. 9

Whether the Delhi Commercial Court has jurisdiction to entertain the matter or not? .......... 9

Whether the essentials of a valid contract are fulfilled or not?............................................... 9

Whether the wagering contract entered between the parties are enforceable or not? ............. 9

Whether the injunction should be granted against Mr. Singhal from selling majority of the
shares of the company in the present case or not? .................................................................. 9

.Arguments Advanced................................................................................................................... 10

A. Delhi Commercial Court has jurisdiction to entertain the matter .................................. 10

Territorial Jurisdiction .......................................................................................................... 10

Pecuniary Jurisdiction ........................................................................................................... 10

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B. Essentials of Valid Contract are not fulfilled ................................................................. 11

Plaintiff was of unsound mind .............................................................................................. 11

Consent of party is not free ................................................................................................... 12

C. Wagering contract is not enforceable ............................................................................. 13

D. Injunction should be granted .......................................................................................... 14

PRAYER ....................................................................................................................................... 15

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List of Abbreviations
Sec. Section
Acc. According
Rs. Rupees
& and
Mr. Mister
CPC Code of Civil Procedure
b/w Between
ml Milliliter
AIR All India Reporter
Ker. Kerala

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INDEX OF AUTHORITIES

Books Referred
 R.k.Bangia - The Indian Contract Act
 Dr. Avtar Singh – Law of Contracts
 Aquil Ahmad- Specific Relief Act
 A.N. Saha’s – The Code Of Civil Procedure
 Mulla – Code of Civil Procedure
 Dr. K.R. Chandratre- All About Private Limited Companies
 Avtar Singh – Company law
 S.N. Shukla –Transfer Of Property Act

Statutes
 The Indian Contract Act ,1872
 The Specific Relief Act ,1963
 The Commercial Courts, Commercial Division And Commercial Appellate
Division Of High Court Act, 2015
 Sales Of Goods Act ,1930
 Transfer Of Property Act ,1882

DICTIONARIES REFERRED

1. BRYAN A. GARNER, BLACK’S LAW DICTIONARY (8TH ED. 2001).

2. OXFORD ENGLISH DICTIONARY (2ND ED. 2009).

3. WEBSTER’S NEW INTERNATIONAL DICTIONARY.

WEBSITES REFERRED

1. www.airwebworld.com
2. www.indiankanoon.org

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3. www.ipindia.nic.in
4. www.judis.nic.in
5. www.manupatra.com
6. www.scconline.com
7. www.spicyip.com

Cases Referred

1. Gore v. Gibson (1845) 13 M & W 621


2. Merci celine D'souza v. Renie Ferenandez, AIR 1998 Ker 280

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Statement of facts
Mr. Swarn Kumar is an influential businessman from Delhi with a company of Rs. 30 crores
dealing in ice cubes. On a trip to Goa with his friends, Mr. Aditya Sahni, an esteemed lawyer
from Delhi, also accompanied him.

On 3/10/2016, Mr. Kumar was playing poker at the Casino Royale, an offshore casino in Goa.
After losing approximately Rs. 3 crores, he was desperate for more money as he believed he
would have a winning hand. He signed a contract with Mr. Akhil Singhal (money lender of the
casino) & the money lender lent him Rs. 5 crores. The contract contained a
clause that he would pay him double the loan amount (Rs. 10 crores) at the table & in default, he
would sign over his majority shares in his company as security. This was a pre-written form of
agreement. Subsequently, Mr. Kumar lost all the money at the table & was unable to return
double the loan amount & as a consequence lost his majority shares of the company at 2.a.m on
4/10/2016. Thereafter, in a desperate attempt he called Mr. Aditya, who then contacted Mr.
Singhal to take double the loan but not to take majority shares of the company. Mr. Singhal
refused the offer. Mr. Singhal had acquired a lot of properties & companies this way.

Immediately after acquiring majority shares of the company by Mr. Singhal, he signed a contract
with a Delhi based company named A & M Pvt. Ltd. for selling majority shares of the company.

The video from the Casino shows that Mr. Kumar had consumed eight alcohol beverages (8 x 30
ml) prior to signing the contract.

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Issues Raised:
ISSUE I
Whether the Delhi Commercial Court has jurisdiction to entertain the matter or not?

ISSUE II
Whether the essentials of a valid contract are fulfilled or not?

ISSUE III
Whether the wagering contract entered between the parties are enforceable or not?

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

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Summary of Arguments
Whether the Delhi Commercial Court has jurisdiction to entertain the matter or
not?
In this case the Delhi commercial court has jurisdiction to entertain the matter. As territorial
jurisdiction lies in Delhi acc. to sec.6 of Commercial Courts, Commercial Division &
Commercial Appellate Division of High Courts Act, 2015. Delhi commercial has also pecuniary
jurisdiction acc. to sec.2(1) of this act. Moreover the contract for the sale of the shares of
company was signed with Delhi based company. As the affect of this part of cause of action
arises in Delhi. So, Delhi commercial court has jurisdiction to entertain the matter.

Whether the essentials of a valid contract are fulfilled or not?


In this case essentials of valid contract acc. to sec.10 of Contract Act,1872 are not fulfilled. As at
the time of signing the contract plaintiff was of unsound mind. He is under intoxication. As
plaintiff was not in a state to enter into a contract with defendant as he had consumed alcoholic
beverage about 240ml & was not in a stable situation to understand the terms & conditions of the
contracty. The terms of contract are against the public policy. Moreover, he was under mental
distress at the time of signing contract as he had lost almost Rs. 3 crore in poker.

Whether the wagering contract entered between the parties are enforceable or not?
In this case wagering contract is not enforceable. As to wager agreements in sec.30 of Indian
Contract Act, 1872 are two exceptions and this contract does not fall in any of the exceptions of
this sec. So, this contract falls under the definition of wager agreements. As wager agreements
are not enforceable in court of law. So this contract is also not enforceable.

Whether the injunction should be granted against Mr. Singhal from selling
majority of the shares of the company in the present case or not?
In the present case defendant should be granted against the sale of shares. As he has invaded into
the property of plantiff unlawfully. He does not possess rightful possession over shares. He had
acquired the shares in the contract of which terms and conditions are unreasonable.

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.Arguments Advanced

A. Delhi Commercial Court has jurisdiction to entertain the matter

It is humbly submitted that Delhi commercial Court has jurisdiction to entertain the matter.
Firstly, acc. to Sec.6 of Commercial Courts, Commercial Division & Commercial Appellate
Division of High Courts Act, 2015 has territorial jurisdiction(a). Secondly, pecuniary jurisdiction
of Commercial Court acc to sec.2(1) (b).

Territorial Jurisdiction

Acc. to sec.20(c)1 of CPC,1908 territorial jurisdiction lies with Delhi Commercial Court. This
sec deals with the cause of action whether wholly or partly arises.

In this case when plaintiff was unable to return the money at table, in consequence of which he
signed majority of shares on the name defendant. When defendant has acquired majority of
shares, he signed the contract for sale of with Delhi based company (A&M Pvt. Ltd.). As the
contract for sale of shares is the part of cause of action arises in Delhi.

Pecuniary Jurisdiction
Sec.2(1)2 of Commercial Courts, Commercial Division & Commercial Appellate Division of
High Courts Act, 2015 deals with the pecuniary jurisdiction of commercial courts. It states
minimum amount for the suit is One crore rupees.

In this case, the value of suit is more than one crore rupees. As amount of loan is advanced in
this Rs. 5 crores and value of shares for which sale of injunction is demanded is also of more
than Rs. 15 crores.

1
Sec.20(c):- the cause of action, wholly or in part, arises.
2
"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 sec. 12 which shall not be less than one crore rupees or such higher value, as
may be prescribed.

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B. Essentials of Valid Contract are not fulfilled

It is humbly submitted that essentials of valid contract acc. to sec. 103 are not fulfilled. As in this
case, Firstly, the plaintiff was of unsound mind, & thus, was not competent to enter into any
contract(a). Secondly, consent of the party is not free at the time of signing the contract(b).

Plaintiff was of unsound mind


Sec.114 states about the person who is competent to contract. One of the essentials to competent
to contract is that the person must be of sound mind." A person is said to be of sound mind for
the propose of making a contract, if, at the time when he makes it, he is capable of understanding
it & of forming a rational judgement as to its effect upon his interest"5.The contract of a man,
who was totally drunk & incable at the time, is not voidable merely, but void6.

In this case plaintiff was under the state of intoxication. As plaintiff was not in a state to enter
into a contract with defendant as he had consumed alcoholic beverage about 240ml & was not in
a stable situation to understand the terms & conditions of the contract & was not competent for
the same so the contract is not valid in the eyes of law. Also the fact that a party was drunk when
he purported to enter into a contract may be a defense to an action on the contract; & it has been
said that drunkenness is in this respect on the same footing as unsoundness of mind.

3
Sec.10 of Indian Contract Act,1872:- All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration & with a lawful object, & are not hereby expressly declared to be
void. Nothing herein contained shall affect any law in force in India, & 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.
4
Sec.11 of Indian Contract Act,1872:- Every person is competent to contract who is of the age of majority according
to the law to which he is subject, & who is sound mind & is not disqualified from contracting by any law to which
he is subject
5
Sec.12 of Indian Contract Act,1872
6
Gore v. Gibson (1845) 13 M & W 621.

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Consent of party is not free


One of main essentials to enter into a contract is that the consent of party must be free. Acc. to
sec.147 of Indian Contract Act,1872 states various essentials that must not be present for free
consent.

A mentally infirm person, incapable of protecting his interest and totally dependant on defendant
for his existence, contract with defendant in his favour. Defendant has obtained an unfair
advantage8.

In this case Mr. Kumar suffered from mental distress, A person said to be in mental distress
when his mental capacity is temporarily or permanently affected. It may be due to extreme old
age or mental or bodily illness or any other cause. Such a person is easily persuaded to give
consent to a contract which may be unfavourable to him. If a contract is made with him by taking
advantage of his distress, it is voidable on the ground of undue influence9.

In this case when Mr. Kumar had lost all his money (3crores) then he was desperate to get the
money to play poker as he want to recover it & win the game of poker. In this he was not in a
state to handle the situation & act wisely & accordingly so it can be understood that he was not
competent for the contract, as he was not able to understand the risk & he was made to enter into
the contract of which terms & conditions are unreasonable. As all the terms & conditions were
acc. to the choice of defendant. So, it is not valid contract.

7
Consent is said to be free when it is not caused by -
(1) coercion, as defined in sec. 15, or (2) undue influence, as defined in sec. 16, or (3) fraud, as defined in sec. 17, or
(4) misrepresentation, as defined in sec. 18, or (5) mistake, subject to the provisions of sec. 20,21, & 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue
influence, fraud, misrepresentation, or mistake.
8
Merci celine D'souza v. Renie Ferenandez, AIR 1998 Ker 280
9
Sec.16 of Indian Contract Act,1872.

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C. Wagering contract is not enforceable

It is humbly submitted that wagering contract enter between the parties is not enforceable.
Sec.3010 states about wager agreements. All agreements which are done by the way of wager are
void. It only give two exceptions:- (1) Horse race, (2) Based on skill .

In the present case both exceptions are not present. As poker is not the part of horse race &
moreover poker is not the game of skill. It is a game of skill because in this there is distribution
of cards and player will get the cards according to his mere luck. In this each player has to make
the set of three cards, this will depend on the type of cards he get. He don't know about the card
of opponent players, he can only assume certain things in game. One must know the rules and
the mathematical odds. He must know how to read their opponents "tells" and styles. One must
know when to hold and fold and raise. One must know how to manage their money. As to
possess this skill is not present in every person. So, the game is mostly based on the chance
factor.

As in this case money which is lend by defendant is impliedly for playing poker. Loan which is
to be returned is done by winning the poker. As above it is proved poker is not the game of skill.
It is the game of skill. It does not fall in any exceptions of wagering agreement. So, this wagering
contract falls under the definition of Sec.30 of Indian Contract Act, 1872. So, this wagering
contract is not enforceable in court of law.

10
Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on
any wager, or entrusted to any person to abide the result of any game or other uncertain event on which may wager
is made. Exception on favour of certain prizes for horse-racing: This sec. shall not be deemed to render unlawful a
subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate,
prize or sum of money, of the value or amount of five hundred rupees or upwards, to be rewarded to the winner or
winners of any horse-race.

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D. Injunction should be granted

A perpetual injunction can only be granted by the decree made at the hearing and upon the merits
of the suit: the defendant is therefore perpetually enjoined from the assertion of a right or from
the commission of an act which would be contrary to the rights of the plaintiff.

Acc. To sec.38(3)(b)11 of the Specific Relief Act, 1963 there is no standard to ascertain the
actual damage caused by the invasion of the defendant.

In this particular case the defendant has invaded wrongfully into the property of the plaintiff and
has no right over the possession of the plaintiff. By selling the majority shares of the company
the plaintiff would suffer a great loss as by continuous change of the share holders the
company’s reputation would go into a state of turmoil. The persons holding minority shares and
having interest in the company will lose their interest and goodwill of the company will fall
down. Such damage cannot be ascertained in terms of money as goodwill is the reputation
earned by a company over a long period of time and the damage caused by such sale of shares
cannot be ascertained but the plaintiff would suffer a great loss and also the value of shares
would fall in the market.

Acc. To sec. 38(3)(c)12 of the specific relief act , 1963 it states about the compensation in terms
of money which is not a adequate relief caused by such invasion .

In this particular case the invasion caused by the defendant into the property of the plaintiff and
the loss suffered by the same cannot be recovered in terms of money as the reputation of the
company is fermented and the same is irrecoverable in terms of money.

11
When the defendant invades or threatens to invade the plaintiff’s right to, or enjoyment of, property, the court may
grant a perpetual injunction in the following cases, namely,-
(b) where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion;
12
(c) where the invasion is such that compensation in money would not afford adequate relief.

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PRAYER

Wherefore in the light of facts of the case, arguments advanced and authorities cited, it is most
humbly prayed before the Hon’ble Court that it may be pleased to hold, adjudge and declare-

Ø That the Delhi Commercial Court has Jurisdiction to entertain the Matter.

Ø That the Essentials of a Valid Contract are not fulfilled.

Ø That the wagering contract entered between the parties is not enforceable.

Ø That the injunction should be granted against Mr. Singhal from selling majority shares of the
company.

And/or any other relief that this Hon’ble Court may be pleased to grant in the interest of justice,
Equity and Good conscience.
And in these premises the Plaintiff as duty bound shall forever pray.

Sd/-

Counsels on behalf of the Plaintiff

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