ALTERNATIVE DISPUTE RESOLUTION

Dr. STHITA PRAJNA MOHANTY

MEMORIAL FOR CLAIMANT

TEAM-G

KUMAR ANKIT -1682051

ANAMIKA -1682014

ARPIT KHANDELWAL-1682028

TENZIN DORJI -1682066

1
 IN THE MATTER OF ARBITRATION TO BE
ADJUDICATED BY ARBITRATORS BETWEEN:

Ms. Khyati……………………………………………………………Claimant;

And

Mr. Gautam, Independent Contractor…………………………….... Respondent.

(Bhubaneswar, Orrisa, India)

MEMORIAL FOR CLAIMANT

TABLE OF CONTENTS

TABLE OF ABBREVIATIONS

INDEX OF AUTHORITIES

STATEMENT OF JURISDICTION

STATEMENT OF FACTS

ISSUES RAISED

SUMMARY OF ARGUMENTS

ARGUMENTS ADVANCED

[1] THAT THE CLAIMANT HAS A DEFINED LEGAL RELATIONSHIP W.R.T TO

THE DISPUTE AND HAS LOCUS STANDI IN OTHER STATUTORY RIGHTS

[A] THE CLAIMANT IS BOUND TO RECEIVE DAMAGES UNDER SEC. 74

OF THE INDIAN CONTRACT ACT.

[B] THE RESPONDENT HAS OBLIGATION TOWARDS THE CLAIMANT

UNDER S. 37 OF THE INDIAN CONTRACTS ACT.

[C] THE CLAIMANT HAS SPECIFIC RELIEF UNDER SEC. 9 OF THE

SPECIFIC RELIEF ACT, 1963

[2] THAT THE NON-COMPLETION OF WORK IN STIPULATED TIME HAS

CAUSED GRAVE DAMAGE TO THE CLAIMANT.
2
[3] THAT THE PERFORMANCE OF THE CONTRACT HAS NO DIRECT
RELATION WITH PANDEMIC ISSUES.

[4] THAT THE CLAIMANT IS FACING SEVERE FINANCIAL CONSTRAINTS DUE

TO LOAN TAKEN FOR THE CONSTRUCTION OF THE BUILDING.

[5] THAT THERE IS NO DIRECT RELATION BETWEEN ENVIRONMENT

REALTED ISSUES AND NON-PERFORMANCE OF THE CONTRACT.

PRAYER

TABLE OF ABBREVIATIONS

ABBREVIATION FULL FORM

& And
Arb Arbitration
Cl Clause
w.r.t. With respect to
SOGA Specific Relief Act
Sec. Section
u/s. Under Section
r/w Read with
Sq/ft Square/feet
LR Law report
Ltd. Limited
Ors Others
Rep Report

INDEX OF AUTHORITIES

CASES

Hayes v. Dodd
Satyabrata Ghose V Mugneeram Bangur AND CO. (AIR 1954 SC 44)
M/S Univabs Sleepers Pvt. Ltd vs Union Of India ARBA No. 43 of 2017
Carus-Wilson and Greene, Re (1886) 18 QBD 7CA
M/S Univabs Sleepers Pvt. Ltd vs Union Of India ARBA No. 43 of 2017
Enercon ( India ) Ltd . and Ors . vs . Enercon GMBH Civil Appeal No. 2086 of 2014
Bhanumati Jaisukhbhai Bhuta and Ors. vs. Ivory Properties and Hotels Private Limited and
Ors. (28.01.2020 - BOMHC): Commercial Arbitration Petition Nos. 350 of 2017 and 812 of
2019
Hayes v. Dodd (1978) 10 Build LR 19
The Southern Gas Ltd. vs. Visveswaraya Iron & Steel Ltd. (24.10.1997 - SC): SLP(C)
No. 10490 of 1997
State of U.P. vs. Allied Constructions (31.07.2003 - SC): Civil Appeal No. 14152 of 1996
Paradine v Jane [KB (1674) Aleyn 26]
3
 Paradine v Jane [KB (1674) Aleyn 26]
Steamline Ltd. v Imperial Smelting corp. (1941) 2 All ER 165]
(1941) 2 All ER 165]
Sachindra Nath v Gopal Chandra (AIR 1949 cal 240)
Satyabrata Ghose V Mugneeram Bangur AND CO. (AIR 1954 SC 44
M/S Univabs Sleepers Pvt. Ltd vs Union Of India ARBA No. 43 of 2017
Shiva Jute Baling Limited vs. Hindley and Company Limited (21.08.1959 - SC):1959 AIR
1357: 1960 SCR (1) 569
Twentsche overseas trading co. Ltd v Uganda sugar factory Ltd. (AIR 1954 PC 144)

STATUTES
Arbitration and conciliation act 1996 S. 35
Arbitration and conciliation act 1996 S.7
Arbitration and conciliation act 1996 S.8
Arbitration and conciliation act 1996 S.1,2
Specific relief Act 1963 S. 10
Specific relief Act 1963 S. 21
Indian contract Act 1872 S.74
Indian contract Act 1872 S.75
Indian contract Act 1872 S.73
Indian contract Act 1872 S.37
Indian contract Act 1872 S.56

BOOKS
DR. P. C. MARKANDE ET AL., LAW RELATING TO ARBITRATION AND
CONCILIATION 207 (9TH ed. LEXIS NEXIS 2016)
OXFORD ENGLISH DICTIONARY 711 (Angus Stevenson, 3ed ed Oxford University Press
2010)
C.K. TAKWANI; CIVIL PROCEDURE CODE
MULLA THE INDIAN CONTRACT ACT (13TH EDITION,2011)
Law of CONTRACT & Specific Relief Paperback; Dr. Avtar Singh – 1 January 2017

4
 STATEMENT OF JURISDICTION

The parties, Ms. Khyati and Mr. Gautam, Independent Contractor have agreed to submit the
present dispute to the arbitrators pursuant to clause (13) of the Construction Agreement, dated
1st January 2019 and subsequently clause (8) of the arbitration agreement, dated 7th January,
2019 read with Arbitration and Conciliation Act, 1996.

The parties agree to accept the decision of the arbitral tribunal as final and binding.

STATEMENT OF FACTS

[1] The Parties.

Ms. Khyati [Claimant] is the owner of the residential plot on which the contract for constructing
a building has been made. Mr. Gautam [Independent Contractor] who has to construct a
building as per the contract agreement.

[2] The Construction Agreement

Ms. Khyati and Mr. Gautam signed an agreement for the construction of a building in ½ Acre
[21780 Sq/ft] of land in Bhubaneswar for a total consideration of 50 Lakh and an advance of
30 Lakh to be given before the initiation of the construction.

[3] Place of Business

The agreement, place of construction, the residence, cause of action as well as matter in Issue
arise at Bhubaneswar, Orrissa. The construction was about to start on 20 January of 2019 and
was to be completed by 19the January of 2020.

[4] Monetary Transaction

An advance of Rs. 30 Lakh was given by the claimant to the respondent and agreed to pay the
rest amount i.e. 20 Lakh after the completion of the work on 19 January of 2020.

[5] Pandemic

A global pandemic outbreak spreading throughout the nation, brought into restriction of
commutation in the place of business of the parties between 1st January, 2019 and 7th of
January, 2019.

[6] Arbitration

On 7th January of 2019, the parties decided to insert an arbitration clause in the construction
agreement, contemplating the pandemic issues.

[7] The invocation of arbitration

5
The parties invoked clause (13) of the Construction Agreement and further proceeded u/s. 7
of the Arbitration and conciliation Act.

ISSUES RAISED

1. WHETHER ALL OR CERTAIN DISPUTES WHICH HAVE ARISEN BETWEEN

THE PARTIES ARE IN RESPECT OF A DEFINED LEGAL RELATIONSHIP?
2. WHETHER NON-COMPLETION OF WORK IN STIPULATED TIME HAS
CAUSED GRAVE DAMAGE TO THE CLAIMANT?
3. WHETHER THE PERFORMANCE OF THE CONTRACT HAS DIRECT
RELATION WITH PANDEMIC ISSUES?
4. WHETHER THE CLAIMANT IS FACING SEVERE FINANCIAL CONSTRAINTS
DUE TO LOAN TAKEN FOR THE CONSTRUCTION OF THE BUILDING?
5. WHETHER THERE IS DIRECT RELATION BETWEEN ENVIRONMENT
REALTED ISSUES AND NON-PERFORMANCE OF THE CONTRACT?

SUMMARY OF ARGUMENTS

[1] THAT THE CLAIMANT HAS A DEFINED LEGAL RELATIONSHIP W.R.T TO

THE DISPUTE AND HAS LOCUS STANDI IN OTHER STATUTORY RIGHTS

The claimant has a right which has the backing of substantive, as well as procedural law, though
the arbitrator is not bound by such right, it is an important factor for compensating the aggrieved
claimant. For any arbitral proceeding two important requirements must be fulfilled i.e. defined
legal relationship (contractual or not) and subject of reference. Apart from damages under
various sections of Indian Contract Act, the claimant has remedies under Specific Relief Act.
In ascertaining damages, the rights and obligations of the party would obviously be governed
by provisions of the Contract Act, including those which relate to right of compensation in case
of breach of contract, as has been provided in Sections 73, 74 & 75 of the Contract Act.

[2] THAT THE NON-COMPLETION OF WORK IN STIPULATED TIME HAS

CAUSED GRAVE DAMAGE TO THE CLAIMANT.

The non-performance of the contract, has caused the claimant an irrevocable damage w.r.t.
monetary, residential, mental distress and a burden to her resources. Where the contract was
for providing relief and comfort, has resulted in providing distress to the claimant. 1

[3] THAT THE PERFORMANCE OF THE CONTRACT HAS NO DIRECT

RELATION WITH PANDEMIC ISSUES.

In the facts of the case, the parties knew that, there was a pandemic outbreak in other parts of
the country and was of a continuing nature. Sec. 56 (1) provides for contracts to become

1
In Hayes v. Dodd, it was observed that where the contract which has been broken was itself a contract to provide
peace of mind (comfort or pleasure) or freedom from distress, the mental pain and suffering to be taken into
account.
6
impossible, when after the contract has been made, by reason of some event which the promisor
could not prevent, unlawful, becomes void. But, Sec. 56(2) 2 provides for compensation, if the
act is known to the parties, that such impossibility would frustrate the contract. The non-
performance of the contract, in the facts of the case, is an intervention of a temporary nature,
which does not uproot the foundation of the contract, and will not have the dissolving effect.
Further, the doctrine of frustration does not apply where there is merely a ‘likely delay’
(Government restrictions to commute) in the performance of the contract. 3

[4] THAT THE CLAIMANT IS FACING SEVERE FINANCIAL CONSTRAINTS

DUE TO LOAN TAKEN FOR THE CONSTRUCTION OF THE BUILDING.

The advance transferred to the respondent was paid, by taking a loan at 12% interest, which the
claimant is paying to the lender on instalment basis from 1st January of 2019. Due to the
pandemic issues, there has been a considerable shortage of labour force in the state 4. The
current construction rate has increased. In the case of M/S Univabs Sleepers Pvt. Ltd vs Union
Of India 5 , it was held that, in an arbitration proceedings, the determination of damages has to
be done according to the provisions u/s. 73, 74, 75 of the Indian Contract Act. As per clause
(1) and the relevant law applicable to ascertaining damages, the claimant claims damages of
Rs. 45,64,000 only.

[5] THAT THERE IS DIRECT RELATION BETWEEN ENVIRONMENT REALTED

ISSUES AND NON-PERFORMANCE OF THE CONTRACT.

That the non-performance of contract by the independent contractor, has no direct bearing to
the environment issues, The relief is given by the court on the ground of subsequent
impossibility when it finds that whole purpose or basis of contract was frustrated by the
intrusion or occurrence of an unexpected event 6 or change of circumstances which was beyond
what was contemplated 7 by the parties at the time when they entered into the agreement.

2
Compensation for loss through non-performance of act known to be impossible or unlawful
3
Satyabrata Ghose V Mugneeram Bangur AND CO. (AIR 1954 SC 44)
4
Due to pandemic, a large labour force has migrated to different states, thereby by shortage of labour force and
increase in the demand of labourers in the state. Thereby inflating the labour cost.
5
ARBA No. 43 of 2017

6
Including Environment issues
7
In this particular case, the pandemic was global and had an element of continuity, thus the parties could have
reasonable diligence would have contemplated the restrictions.
7
 ARGUMENTS ADVANCED

[1] THAT THE CLAIMANT HAS A DEFINED LEGAL RELATIONSHIP W.R.T TO

THE DISPUTE AND HAS LOCUS STANDI IN OTHER STATUTORY RIGHTS

¶ 1. The right under civil action gets ousted when an application is made under
section 8 8 of the Arbitration and conciliation act, when there is a valid arbitration
agreement. The judicial authority, before which an action is brought in a matter which
is the subject matter of an arbitration agreement, is bound by the act 9 to refer the
parties to the arbitration.
¶ 2. But, it is pertinent to note, that, section 7 requires the arbitration agreement of the
dispute in question, shall be in respect of a “defined legal relationship”10. Defined Legal
relationship requires that, the disputes and claim shall be backed by the force of law.
¶ 3. All matters of a civil nature, whether they relate to present or future disputes may
form the subject of reference 11, if the agreement relates to a present dispute it will generally
amount to a reference.
¶ 4.Section 9 12, Civil Procedure Code provides for the initiation of civil suit, by providing
that all matters of “civil nature” 13 can be dealt under the code 14. Civil nature includes
Contractual obligations. The claimant has a cause of action, as she has a right and there is a
violation of such right u/s. 74 and Sec. 37 of the Indian Contract Act.

8
8. Power to refer parties to arbitration where there is an arbitration agreement. —
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration
agreement shall, if a party so applies not later than when submitting his first statement on the substance of the
dispute, refer the parties to arbitration.
9
Arbitration and Conciliation Act, 1996
10
The word “defined” would signify the known categories of legal relationships and also the upcoming categories.
If the matter or transaction is outside the known categories of relations under which legal rights or liabilities are
likely to be created, it would not be an arbitrable matter u/s. 7(1).
11
Carus-Wilson and Greene, Re (1886) 18 QBD 7CA
12
The Courts shall (subject to the provisions) have jurisdiction to try all suits of a civil nature excepting suits of
which their cognizance is either expressly or impliedly barred.
13
All matters of Civil nature with a few exceptions, whether they relate to present or future disputes may form the
subject matter of reference but not a dispute arising from and founded on an illegal transaction.
14
Civil Procedure Code, 1908
8
 ¶ 5. Further, the claimant can also file a suit for specific performance u/s. 10 15 and can
also claim compensation w.r.t. to non-performance of contract u/s. 21 of Specific Relief Act,
1963.
¶ 6.It is pertinent to note, that, u/s. 34 (2)(iv) of the 1996 act, the arbitrator should conform
to the terms of the agreement under which he is appointed and is supposed to function. He
has no authority to arbitrate that which is not submitted to him. But, the award u/s. 35 must
be in accordance with the principles of the relevant law, otherwise it will be illegal, being
against the law. That is, the arbitration proceedings, must conform to the principles of law.
¶ 7.In the present case, the subject of reference is, the dispute arising out of the non-
completion of construction by Mr. Gautam, within the stipulated time. Therefore, the laws
regarding the breach of contract and other relief shall be applied in awarding the damages.
¶ 8. In M/S Univabs Sleepers Pvt. Ltd vs Union Of India 16, it was held that the rights and
obligations of the party would obviously be governed by provisions of the Contract Act,
including those which relate to right of compensation in case of breach of contract, as has
been provided in Sections 73, 74 & 75 of the Contract Act. The aforesaid provisions have to
be read into the agreement between the parties.

[A] THE CLAIMANT IS BOUND TO RECEIVE DAMAGES UNDER SEC. 74 OF

THE INDIAN CONTRACT ACT.

¶ 9. It is to be noted, that the arbitration proceedings are not bound by S.74 of the Indian
Contract, as that would amount to parallel proceedings, but, the arbitration shall be
proceeded as per the legal principles in awarding compensation, which is enshrined u/s.
73,74 of the Indian Contract Act, 1872.
¶ 10.In Arbitration matters, the principle of law, has to be taken due consideration, though
not with strict scrutiny. In matters relating to the breach of contract, S. 73,74,75 should
govern with the quantum of damages to be awarded.

15
Cases in which specific performance of contract enforceable. —Except as otherwise provided in this Chapter,
the specific performance of any contract may, in the discretion of the court, be enforced—(a) when there exists no
standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or(b) when
the act agreed to be done is such that compensation in money for its non-performance would not afford adequate
relief
In this particular case, Khyati, with the intention to construct her house, made a contract. The monetary
remuneration through damages may or may not be sufficient. S. 10 can claim for specific performance.
16
ARBA No. 43 of 2017
9
 ¶ 11. It was held in an arbitration case 17, the Courts 18 have to adopt a pragmatic approach
and not a pedantic or technical approach while interpreting or construing an arbitration
agreement or arbitration clause. It would be the duty of the Court to make the same workable
within the permissible limits of the law, without stretching it beyond the boundaries of
recognition. In other words, a common sense approach has to be adopted to give effect to
the intention of the parties to arbitrate.

[B] THE RESPONDENT HAS OBLIGATION TOWARDS THE CLAIMANT UNDER

S. 37 OF THE INDIAN CONTRACTS ACT.

¶ 12.Subsequent to the construction agreement and advance of 30,00,000 given by the

claimant, a duty was cast upon the parties through the application of Sec. 37 19 of the act 20.
¶ 13.This aforesaid section creates a statutory right, in respect of either of parties for the
performance of a legal contract, enforceable by law. All the necessary conditions and the
validity has complied with, in the construction agreement and the claimant has alternate
remedy available to her.

[C] THE CLAIMANT HAS A RIGHT TO SPECIFIC RELIEF UNDER SEC. 10 & S.
21 OF THE SPECIFIC RELIEF ACT, 1963

¶ 14.Where compensation is not adequate in cases of breach of contract, the claimant can
file u/s. 10 of the specific relief act for specific performance. The claimant in the facts of
the case has the available remedy to file the suit under the aforesaid section, and claim the
performance of the contract apart from availing herself with other remedies.
¶ 15.Power to award compensation w.r.t to breach of contract, can also be claimed under
Section 21 (1) of the act in addition to specific performance of the contract. The principles

17
Enercon ( India ) Ltd . and Ors . vs . Enercon GMBH and Ors . ( 14 . 02 . 2014 - SC ) Civil Appeal No. 2086 of
2014 (Arising out of SLP (C) No. 10924 of 2013)
18
“courts” here includes arbitration proceedings
19
Obligation of parties to contract. —The parties to a contract must either perform, or offer to perform, their
respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of
any other law. —The parties to a contract must either perform, or offer to perform, their respective promises,
unless such performance is dispensed with or excused under the provisions of this Act, or of any other law."
Promises bind the representatives of the promisors in case of the death of such promisors before performance,
unless a contrary intention appears from the contract.
20
Indian Contract Act,1872
10
 u/s. 21 (4) of Specific Relief Act, in awarding such compensation shall be governed by the
provisions u/s. 73 of the Indian Contract Act.
¶ 16.In Bhanumati Jaisukhbhai Bhuta Vs. Ivory Properties & Hotels Private Limited and
Ors 21, it was held that, the arbitrator may allow an award of specific performance, if
there are merits in the case.

[2] THAT THE NON-COMPLETION OF WORK IN STIPULATED TIME HAS

CAUSED GRAVE DAMAGE TO THE CLAIMANT.

¶ 17.That the claimant, had borrowed a substantial amount, for the construction of the
building, to provide her with the peace and comfort. With such non-performance and due to
financial constraints, the claimant is suffering mentally and physically.
¶ 18.In Hayes v. Dodd 22, it was observed that where the contract which has been broken
was itself a contract to provide peace of mind (comfort or pleasure) or freedom from distress,
the mental pain and suffering to be taken into account.
¶ 19.That, the complainant due to hefty amount of loan, unable to pay with the interest is
facing mental agony and dismay. As the amount of 30 Lakhs (Loan Amount) is with the
independent contractor, she is unable to afford her daily expenses.

[3] THAT THE PERFORMANCE OF THE CONTRACT HAS NO DIRECT

RELATION WITH PANDEMIC ISSUES.

¶ 20.In an arbitration, if a question arises whether an act amounts to “force majeure”,

prima facie the arbitrator shall decide on the issue considering all the facts referred in the
dispute 23.
¶ 21.Act of god covered under the force majeure clause in a contract forms part of a
defence under Doctrine of Frustration, envisaged u/s. 56 of The Indian Contract Act. Section
56 provides for an agreement to do an act impossible in itself is void, but, it also provides
for compensation for loss through non-performance of act known to be impossible or
unlawful.

21
Bhanumati Jaisukhbhai Bhuta and Ors. vs. Ivory Properties and Hotels Private Limited and Ors. (28.01.2020 -
BOMHC): Commercial Arbitration Petition Nos. 350 of 2017 and 812 of 2019
22
(1978) 10 Build LR 19
23
The Southern Gas Ltd. vs. Visveswaraya Iron & Steel Ltd. (24.10.1997 - SC): SLP(C) No. 10490 of 1997
11
 ¶ 22.In the facts of the case, the parties knew that, there was a pandemic outbreak in other
parts of the country and was of a continuing nature. Sec. 56 (1) provides for contracts to
become impossible, when after the contract has been made, by reason of some event which
the promisor could not prevent, unlawful, becomes void. But, Sec. 56(2) 24 provides for
compensation, if the act is known to the parties, that such impossibility would frustrate the
contract.
¶ 23.The parties with due diligence could have foreseen that, such a pandemic would
have a considerable impact on the performance of the contract.
¶ 24.In a Challenge on ground that damage occurred to construction on account of flood
due to unprecedented rain and appellant not liable in view of agreement was held Untenable
because appellant did not lead any evidence before arbitrator that rain was unprecedented,
direct and in fact was act of God in terms of the said clause. 25
¶ 25.The non-performance of the contract by the respondent is not in consequence of the
pandemic, but, the restrictions imposed by the Government. In order to claim protection,
there shall be a direct relation between the non-performance and acts amounting to “force
majeure”.
¶ 26.In Paradine v Jane 26 it was pointed out that subsequent happening should not affect
a contract already made. It was held that “ when the party by his own contract creates a
duty, he is bound to make it good, if he may, notwithstanding any accident by inevitable
necessity, because he might have provided against it by his contract.” 27
¶ 27.In the facts of the case, the parties knew through contemplation, that the performance
of the contract will have a direct impact by the pandemic. In a case 28, where the parties had
full knowledge of the difficult conditions of performance or where the possibility of
alteration of circumstances was within the contemplation of the parties at the time of the
contract, they can hardly complain of any such alteration. The doctrine of frustration will
not apply to such cases. 29

24
Compensation for loss through non-performance of act known to be impossible or unlawful
25
State of U.P. vs. Allied Constructions (31.07.2003 - SC): Civil Appeal No. 14152 of 1996
26
Paradine v Jane [KB (1674) Aleyn 26]
27
Paradine v Jane [KB (1674) Aleyn 26]
28
Steamline Ltd. v Imperial Smelting corp. (1941) 2 All ER 165]
29
(1941) 2 All ER 165]
12
 ¶ 28.That the cases where, there is a continuous and an ongoing uncertainty 30, the
parties cannot claim doctrine of frustration, Disappointed expectations do not lead to
frustrated contracts. “He that agrees to do an act must do it or pay damages for not doing
it” is the general rule of the law of contract.
¶ 29.The non-performance of the contract, in the facts of the case, is an intervention of a
temporary nature, which does not uproot the foundation of the contract, and will not have
the dissolving effect. Further, the doctrine of frustration does not apply where there is merely
a ‘likely delay’ (Government restrictions to commute) in the performance of the contract. 31
¶ 30.Further in cases, of force majeure, the legal doctrine of restitution, which prohibits
unjust enrichment at the expense of another, shall apply to the present facts of the case. It
can be inferred, that Mr. Gautam (independent contractor) has been unjustly enriched, to the
tune of Rs. 30 Lakh on the expense of Ms. Khyati.

[4] THAT THE CLAIMANT IS FACING SEVERE FINANCIAL CONSTRAINTS

DUE TO LOAN TAKEN FOR THE CONSTRUCTION OF THE BUILDING.

¶ 31.In clause (2) of the construction agreement, the total cost of constructing the
building, as per rate applicable of Rs. 229.56 per sq/ft was agreed upon. The total
admeasuring area of construction was ½ Acre (21780 sq/ft). The total cost of building was
Rs. 50,00,000. An advance amounting to 30,00,000 was paid by the claimant to the
respondent.
¶ 32.The advance transferred to the respondent was paid, by taking a loan at 12% interest,
which the claimant is paying to the lender on instalment basis from 1st January of 2019. Due

30
Sachindra Nath v Gopal Chandra (AIR 1949 cal 240) : The plaintiff let certain premises to the defendant for a
restaurant at somewhat higher rent. The defendant agreed to pay high rent because the British troops were
stationed in the town and a clause in the agreement specifically provided that “this agreement will remain in force
so long as British troops will remain in this town”. After some months, the locality was declared out of bounds to
the British troops. Held that though it was possible that the defendant would not have paid such a high rent apart
from the expectation of deriving high profits from the British troops, that was not sufficient to make out a case of
frustration.
31
Satyabrata Ghose V Mugneeram Bangur AND CO. (AIR 1954 SC 44)

13
 to the pandemic issues, there has been a considerable shortage of labour force in the
state 32. The current construction rate has increased up to Rs 300 per sq/ft.
¶ 33.With such non-performance of the contract, the claimant apart from facing financial
constraints w.r.t. to loan, is also facing difficulties in finding the contractors for the
construction.
¶ 34.In the case of M/S Univabs Sleepers Pvt. Ltd vs Union Of India 33 , it was held that,
in an arbitration proceedings, the determination of damages has to be done according to the
provisions u/s. 73, 74, 75 of the Indian Contract Act.
¶ 35.Section 73 provides for compensation for loss or damage caused by breach of
contract. It lays down 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. 34
¶ 36.Section 74 provides for breach of contract where penalty is stipulated for or a sum
is named and lays down that when a contract has been broken, whether or not actual damage
or loss is proved to have been caused thereby, to receive from the party who has broken the
contract reasonable compensation. There is nothing in s. 73 or s. 74 of the contract Act,
which makes the award of such liquidated damages illegal. Assuming that the case is
covered by s. 74, it is provided therein that reasonable compensation may be awarded for
breach of contract, as per Sections 73 and 74 of the Contract Act.

32
Due to pandemic, a large labour force has migrated to different states, thereby by shortage of labour force and
increase in the demand of labourers in the state. Thereby inflating the labour cost.
33
ARBA No. 43 of 2017
34
Shiva Jute Baling Limited vs. Hindley and Company Limited (21.08.1959 - SC):1959 AIR 1357: 1960 SCR (1)
569

14
The claimant is entitled to damages of:

I. ADVANCE + INTEREST:

An amount of 30 Lakh and interest payable at 12% annually = Rs. 3,60,000 Only

Monthly Interest = Rs. 30,000 Only

Total = 30,00,000 + Rs 30,000

Rs. 30,30,000 Only

II. DIFFERENCE BETWEEN CONTRACT PRICE & MARKET PRICE

Contract price: 21780 X 229.56= Rs. 50,00,000 (Rupees fifty Lakhs only).

Market Price: 21780 X 300 =Rs. 65,34,000 (Rupees Sixty-Five Lakh Only)

Difference: 65,34,000 - 50,00,000= Rs. 15,34,000 (Rupees fifteen Lakhs Thirty-Four

Only)

III. TOTAL COMPENSATION

The claimant seeks through this arbitration, a total sum amounting to Rs 45,64,000 only (Rs.
30,30,000+15,34,000).

[5] THAT THERE IS NO DIRECT RELATION BETWEEN ENVIRONMENT

REALTED ISSUES AND NON-PERFORMANCE OF THE CONTRACT.

¶ 37.That the non-performance of contract by the independent contractor, has no direct

bearing to the environment issues, The relief is given by the court on the ground of subsequent
impossibility when it finds that whole purpose or basis of contract was frustrated by the
intrusion or occurrence of an unexpected event 35 or change of circumstances which was

35
Including Environment issues
15
 beyond what was contemplated 36 by the parties at the time when they entered into the
agreement.
¶ 38.The environment issues, created by such a pandemic has the effect of delaying the
completion of construction and do not make the whole contract impossible. The respondent
has mala-fide intentions to evade the liability and make the claimant suffer, due to such
irrevocable damage. 37

36
In this particular case, the pandemic was global and had an element of continuity, thus the parties could have
reasonable diligence would have contemplated the restrictions.
37
In Twentsche overseas trading co. Ltd v Uganda sugar factory Ltd. (AIR 1954 PC 144), it was held that if there
are more than one ways of performing a contract and the war cuts off only one of them, the party is still bound to
perform by the other way, however inconvenient or expensive.

16
 PRAYER

In light of the above submissions, the Claimant request the Arbitrator to declare:

(1) That the counter-claim is not maintainable

(2) That “force majeure” does not frustrate the contract in the present case.
(3) That environmental issues have no direct bearing on the performance of the contract.
(4) That the claimant is entitled to damages, due to increase in labour cost per sq./ft due to
non-performance of contract.
(5) That the Claimant shall be paid subsequent damages due to loan advance amount of
30Lakhs.

And, therefore, the following reliefs are prayed for:

(1) That the claimant should be awarded damages of Rs. 45,64,000 only.
(2) Further or other reliefs. AWARD interest in favour of the claimant.

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