TEAM CODE:

MOOTCOURT AND CLINICAL LEGAL EDUCATION

IN THE HON’BLE HIGH COURT OF JUDICATURE AT DELHI

SITTING AT NEW DELHI

BOLSHEVIKS AND COMPANY (I), LTD, NEW DELHI

… Applicant

Versus

MAO PRIVATE LIMITED, LUCKNOW

…Respondent

Submitted to the Hon’ble High Court of Judicature at New Delhi

On Behalf of the Applicant

Agent appearing on behalf of the Applicant

 CONTENTS

1. Index of Authorities
2. Statement of Facts
3. Statement of Jurisdiction
4. Issues
5. Summary of Arguments
6. Arguments in Advance
7. Prayer for Relief

FACTS
1. Bolsheviks and Co., in India, is incorporated under the
Companies Act, 1956 as Bolsheviks India Ltd., with their
registered Head Office at August Kranti Marg, New Delhi.
2. The Company manufactures Red Ink. It has franchisees all
over the country. Mao Pvt. Ltd. is its local franchise in the
city of Naxalnagar, Uttar Pradesh. The franchise distributes
the Red Ink as raw material for manufacture of Red Colour
Coats through the city of Naxalnagar.
3. There exists a franchise agreement between the above
named parties with an arbitration clause in the same. The
said agreement was entered into on 09-09-2008.
4. In the beginning of August 2009 the supply route of the
Applicant got erratic due to which supply of material
suffered. The same was intimated to the Company by the
Respondent and the Company duly responded. Thereafter
there was material improvement in the supply.
5. On 10-10-2009, the Board of Directors of the franchise
company resolved to rescind its obligations under the
contract.
6. The communication of this at was dispatched on 11-10-
2009 and was received by the Head Office of the Company
at New Delhi on 17-10-2009.
7. On 25-11-2009, the company moved an application before
the Delhi High Court stating among other things interalia
 since the dispute in question had arisen and it was
necessary to refer to Arbitration to appoint an arbitrator.
8. The application was taken on record and the Delhi High
Court sent a notice of motion to the franchisee at Lucknow
which was received on 15-01-2010. The notice of motion
allowed the franchisee to be present and heard before any
order was passed.

STATEMENT OF JURISDICTION
The Applicants have invoked the jurisdiction of the Hon’ble Court
and by the virtue of “Clause 33.2” of the agreement between the
parties entered into on 09.09.2008.

ISSUES
 1. Whether the Delhi High Court has jurisdiction to appoint
an arbitrator in the present case?
2. Whether the unilateral revocation of contract by Mao Pvt.
Ltd., (hereinafter known as Respondent) is proper under
Indian Contract Act, 1872?

SUMMARY OF ARGUMENTS

1. Whether the Delhi High Court has jurisdiction to appoint an

arbitrator in the present case?
- Clause 33.2 of the Agreement between the Applicant and the
Respondent confers exclusive jurisdiction to the Courts of New
Delhi, moreover the Clause is not subject to anything contained in
Clause 33.1, and therefore, the Delhi High Court can entertain the
application forwarded by the Applicant. Clause 33.2 says that
“Notwithstanding the above the Courts of New Delhi will have
exclusive jurisdiction in any matter arising from the contract.”
Clause 33.1 of the same stipulates that “All disputes arising
directly or indirectly from any part of the agreement shall be
referred to Arbitration. The venue of Arbitration shall be New
Delhi.”
Since the option of settlement of dispute through Arbitration
was not exercised by the Respondent so they resorted to unilateral
revocation of the Contract and this act expressed their intention not
to continue the contractual relationship with the Applicant. The
Applicant respecting the Arbitration clause and with intention of
settlement and continuation of contractual relationship submitted
the Application before the competent Delhi High Court to appoint
arbitrator.
2. Whether the unilateral revocation of contract by Mao Pvt. Ltd.,
(hereinafter known as Respondent) is proper under Indian Contract
Act, 1872?

- In the present case of Bolsheviks and Company (I), Ltd, New

Delhi vs. Mao Pvt. Ltd., Lucknow, the Respondent revoked the
contract without any prior notice of the same to the Applicant,
thereby violating s. 62 of ICA and the principles of Natural Justice.
Section 62 of the Indian Contract Act, 1872 says that for novation,
rescission or alteration of a contract can only be done with the
agreement of both the parties to the contract. Both the parties have
to agree to set aside the original contract with the new contract or
for rescission or for alteration.

ARGUMENTS IN ADVANCE

1. Whether the unilateral rescission of contract by Mao Pvt. Ltd.,

(hereby known as Respondent) is valid under Indian Contract
Act, 1872?

-The Applicant humbly submits that the act of unilateral

rescission of contract by the Respondent is against the very
essence of sec 62 of the Indian Contract Act, 1872 and also
against the principles of Natural Justice, equity and good
conscience. The term ‘rescission’ is used under the Indian
Contract Act as one of the circumstances under which by
 agreement between parties the obligation need not be
performed.1 This means that there essentially has to be a
mutual agreement, a mutual consent between /of all the parties
to a contract for revocation or rescission of the same. The
decision of the Hon’ble Supreme Court in City Bank, N.A. vs.
Standard Chartered Bank2, is very relevant to the issue in
hand.3 Therefore, there is no difficulty to come to the
conclusion that sec 62 of ICA requires the element of
consensus between the parties to the contract.

Novation, rescission or alteration of the contract under sec

62 of the Indian Contract Act can only be done with the
agreement of both the parties to a contract. Both the parties
have to agree to substitute the original contract with a new
contract or rescind or alter. It cannot be done unilaterally.4
The applicant humbly submits that the act of unilateral
rescission by the respondent is a blatant violation of the
principles of Natural Justice. With the element of consent and
mutual agreement being absent due to the act of the

1
Kamaruddin Saheb vs. K.T. Palamappa Nadar 2007 Mad, para 16
2
2004 (1)SCC 12
3
For the purpose effecting rescission, where in the party to the contract can be
permitted not to perform his obligation under the terms of the contract which
includes the other species, namely, novation and alteration. The same must be
based on the consensus between the parties to the contract, which may arise
either by the subsequent agreement between or a new contract can be created
or the old obligation can be dispensed with.
4
City Bank, N.A. vs. Standard Chartered Bank 2004 (1)SCC 12, para 47
 respondent, they have adhered to the basic principle of Natural
Justice which forms the very platform of the practice of law.
The Respondent before entering into the resolution for
rescinding the contract should have atleast informed the
Applicant. Hereby not doing so, the respondent have denied us
the inherent right to notice.

2. Whether the Delhi High Court has jurisdiction to entertain the

application for appointing an arbitrator forwarded by the
Applicant?

- first, the revocation of contract however, it was not proper and

according to the law but still the arbitration agreement or clause
survives. In the case of Heyman v. Darwine Ltd.5 Viscount Simon,
L.C. observed that If, however, the parties are at one in asserting
that they entered into a binding contract, but a difference has arisen
between them as to whether there has been a breach by one side or
the other, or as to whether circumstances have arisen which have
discharged one or both parties from further performance, such
differences should be regarded as differences which have arisen "in
respect of", or "with regard to", or "under" the contract, and an
arbitration clause which uses these, or similar, expressions, should
be construed accordingly.

I do not agree that an arbitration clause expressed in such terms as

above ceases to have any possible application merely because the
contract has "come to an end", as, for example, by frustration. In
such cases it is the performance of the contract that has come to an
end.

5
(1942) All.E.R. 337; p 343
In Chitty on Contract, 21st Edn., the scope of an arbitration clause
is stated thus, at p. 322:

So that the law must be now taken to be that when an arbitration

clause is unqualified such a clause will apply even if the dispute
involve an assertion that circumstances had arisen whether before
or after the contract had been partly performed which have the
effect of discharging one or both parties from liability e.g.
repudiation by one party accepted by the other, or frustration.
The Branch Manager, Magma Leasing and Finance Limited and Anr.
Vs.
Respondent: Potluri Madhavilata and Anr.
The hire purchase agreement having been admittedly entered into
between the parties and the disputes and differences have since
arisen between them, we hold, as it must be, that the arbitration
Clause 22 survives for the purpose of their resolution although the
contract has come to an end on account of its termination.

Appellants: National Agricultural Co-op. Marketing Federation

India Ltd.
Vs.
Respondent: Gains Trading Ltd.

[Vide : Heymen v. Darwins Ltd. 1942 (1) All ER 337, Union of

India v. Kishori Lal Gupta and Bros. MANU/SC/0180/1959 :
[1960]1SCR493 and The Naihati Jute Mills Ltd. v. Khyaliram
Jagannath MANU/SC/0348/1967 : [1968]1SCR821 ]. This
position is now statutorily recognized. Sub-section (1) of Section
16 of the Act makes it clear that while considering any objection
with respect to the existence or validity of the arbitration
agreement, an arbitration clause which forms part of the contract,
has to be treated as an agreement independent of the other terms of
the contract; and a decision that the contract is null and void shall
not entail ipso jure the invalidity of the arbitration clause. The first
contention is, therefore, liable to be rejected.

The Naihati Jute Mills Ltd.

Vs.
Respondent: Khyaliram Jagannath
In cases of frustration it is the performance of the contract which
comes to an end but the contract would still be in existence for
purposes such as the resolution of disputes arising under or in
connection with it. The question as to whether the contract became
impossible of performance and was discharged under the doctrine
of frustration would still have to be decided under the arbitration
clause which operates in respect of such purposes. (Union of India v.
Kishorilal) [1960] 1 S.C.R. 514.

Clause 33.2 of the Agreement between the Applicant and the

Respondent contains that “Notwithstanding the above the
Courts of New Delhi will have exclusive jurisdiction in any
matter arising from the contract.” Clause 33.1 of the same
stipulates that “All disputes arising directly or indirectly from
any part of the agreement shall be referred to Arbitration. The
venue of Arbitration shall be New Delhi.” Clause 33.2 confers
exclusive jurisdiction to the Courts of New Delhi, moreover the
Clause is not subject to anything contained in Clause 33.1, and
therefore, the Delhi High Court can entertain the application
forwarded by the Applicant.
The application forwarded by the Applicant is only put
on record and not admitted by the Delhi High Court. Unilateral
revocation of the Contract by the Respondent expressed their
intention not to continue the contractual relationship with the
Applicant though they always had the option of settlement of
dispute through Arbitration.
The Respondent acted in contravention of the Franchise
Agreement in as much as Clause 33.1 of the said Agreement
clearly stated that all disputes arising directly or indirectly from
any part of the Agreement shall be mandatorily referred to
arbitration, however, the Respondent without any consultation
with the Applicant revoked the contract.
The Applicant humbly submits that its act of moving an
application for appointment of an arbitrator before the Delhi
High Court clearly falls within the ambit of the phrases
‘amongst other things’ and ‘any matter arising from the
contract’ of the respective clauses. Hence, the Delhi High
Court is competent to entertain the application.
Clause 33.2 clearly states that notwithstanding anything the
Delhi High Court shall have exclusive jurisdiction in any
matter arising from the contract and since the dispute in
question is one which has arisen from the contract hence, the
said court’s jurisdiction to entertain the application stands
unchallenged.
 The notice of motion sent by the Delhi High Court to the
Respondent is for intimating them and giving them chance to
duly represent their stand in as much as to be present and
heard before any order is passed by the Court.
The Applicant humbly submits that even if there is rescission
of the contract the existence of Arbitration clause cannot be
denied, therefore, the Delhi High Court has jurisdiction to act
under the Arbitration Clause for appointing the arbitrator.

PRAYER FOR RELIEF

In the Light of Issues Raised, Arguments advanced and

Authorities cited, the Applicants humbly request the Hon’ble

Court to declare that:

A. The unilateral revocation of the contract by the

Respondent is not proper, hence, invalid.

B. After hearing the contentions of the respondent, pass a

suitable order appointing of the arbitrator.

C. Any other remedies which the Hon’ble Court thinks fit.

For this the Applicants shall ever pray.

/s/

Agents on behalf of the Applicants

Submitted on behalf of the Applicants