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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

MEMORIALON BEHALF ON PLAINTIFF

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UILS, INTRA-MOOT COMPETITION,2016

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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UILS, INTRA-MOOT COMPETITION,2016 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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UILS, INTRA-MOOT COMPETITION,2016

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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UILS, INTRA-MOOT COMPETITION,2016

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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UILS, INTRA-MOOT COMPETITION,2016 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. "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. 2

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UILS, INTRA-MOOT COMPETITION,2016 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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UILS, INTRA-MOOT COMPETITION,2016 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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UILS, INTRA-MOOT COMPETITION,2016 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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UILS, INTRA-MOOT COMPETITION,2016 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.

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. 11

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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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