LL.

B, V Term, Faculty of Law, University of Delhi

LB - 501: Moot Court, Mock Trial and Internship

MOCK TRIAL: PROBLEM No. 4

Singer Consultant Pvt. Ltd.

v.
WinSoft Telecommunications Pvt. Ltd

SUBMITTED BY COUNSEL FOR PLAINTIFF

Name of the Centre: LAW CENTER - 1

Term: 5th
Section: F
Student’s Name: ROBERT LAISHRAM
Exam Roll No: 21310806378
Class Roll No: 236700
FACTS –

Singer Consultants Pvt. Ltd., having registered office at 34 New Complex, Delhi,
was approached by Miss Neena Elizabeth, Managing Director of WinSoft
Telecommunications Pvt. Ltd, in June Yr-4. Ms. Elizabeth was interested in
leasing the company’s most expensive and exquisitely designed properties, Jubilee
Plaza at 14 Old Road, Delhi In July Yr-4, Miss Elizabeth, accompanied by her
manager Mr. Sooraj Krishan, visited the property and found it suitable for their
purposes. After few rounds of negotiations, the property was leased out to WinSoft
on 12th September, Yr-4. The lease deed contained all standard clauses pertaining
to lease of a property – the rent was fixed at INR 2L/pm, to be paid in advance by
the 7th of every month, alongside rent of parking space of two cars, which was
fixed at INR 8000/-. A security deposit equivalent to three months of rent
was paid, which was liable to be forfeited in case of breach of contract, and a lock -
in period of three years was fixed – during which WinSoft could not terminate the
lease. In return, WinSoft was assured that the property would be maintained by
Singer Consultants.

Then, in March Yr-2, out of the blue, WinSoft sent a three-month notice,
terminating the lease June 30, Yr-2. It was quite a shocking blow for Singer
Consultants, which left them in a tumultuous situation. The reason cited for this
unfair step was limitation of space for current and future requirements;
furthermore, it was contended that the rent for the months of April to June
Yr-2 be adjusted against the three months security amount deposited with Singer
Consultants.

WinSoft Telecommunications left the property on March 30, Yr -2. A joint

inspection in September Yr-2 showed that the premises were in absolutely good
condition. The building remained unutilized and unproductive of rent right up to
February 1, Yr-1 On April 26, Yr-2, WinSoft sent a legal notice, raising grievances
regarding maintenance of the property and alleging breach of contract by Singer
Consultants – however, this was the very first time that such issues were being
raised.
OPENING STATEMENT FOR THE PLAINTIFF

Council seeks the permission to address the bench as Lordship.

My Lordship, my name is ROBERT LAISHRAM representing the plaintiff in this

case, Singer Consultants Pvt Ltd.
The plaintiff asks that the defendant, WinSoft Telecommunication Pvt Ltd., be
held liable for breach of contract. The facts of the case clearly show that the
contract was terminated 18 months prior to completion of locking in period.

The Defendant Company Signed the lease agreement for the property Jubilee Plaza
owned by the Plaintiff Company. The property was one of the Plaintiff Company’s
high-end properties and its rent was Rs. 2,00,000 per month. The lease agreement
was signed after several rounds of negotiations and had the standard terms and
conditions, involving what is commonly known as 'Lock-in-Period', which is a
contractually agreed minimum tenure as well as a three-month security deposit
which would be forfeited in case of a breach of contract.

The Defendant Company vacated the premises before the end of the Lock -in
Period which constitutes a Breach of Contract u/s 73 of the Indian Contract Act
1872. The grounds given for the breach by the Defendant Company cannot hold as
they wanted more space to expand their business and shifted elsewhere
immediately in 5 days. This is supported by the judgment K Narayana Kurupu
Sankaranarayanan (AIR 2000 KER 296) where it was held that ‘when a contract is
broken, the party who suffers by such breach is entitled to receive compensation
for any loss or damage caused to him by the party who has breached the contract.
The Defendant-Company’s inability to honor the terms of the agreement also
violate Section 37 of the Indian Contract Act of 1872. The spirit of Section 37 also
stems from the legal maxim ‘pacta sunt servanda’, which translates to ‘agreements
must be kept’.
The Plaintiff company is entitled to claim the lease fee or rent for the remainder of
that Lock-in Term, which is 18 months rent, with 18% additional interest on the
same. Also, the Plaintiff is fully entitled to forfeit the 3 months security deposit as
they committed a breach of contract first.

The legality, validity, and enforceability of a lock in period clause was ascertained
in a Single Judge Bench of the Delhi High Court in Satya Narain Sharma (HUF)
vs Ashwani Sarees Private (2009 ILR 4 Delhi 601). Specifically, the judgment
speaks of parties coming to an agreement with ‘eyes wide open’ and consciously
choosing to include and agree to a lock-in period, and there is no reason as to why
they should not be held to the terms of their agreement. The text also significantly
notes the lock-in period is a dual protection for both the lessee and lessor, as the
lessee gets protection from eviction for the extent of the lock -in period, and the
lessor gets a guaranteed minimum income.

The counsel for the plaintiff also avers that the unpaid rent constitutes a ‘debt’ with
in meaning of Sections 433 and 434 of the Companies Act of 1956.
EXAMINATION IN CHIEF OF VARUN SINGER

1. State your name and occupation for the record of the Honorable Court.
Ans- I am Varun Singer, Managing Director of Singer Consultants Pvt Ltd.
2. Are you the proprietor of Jubilee Plaza?
Ans- Indeed, I am.
3. How did you meet Miss Neena Elizabeth?
Ans- I received a call from her asking to rent Jubilee Plaza for her office.
4. What was Miss Elizabeth’s reaction when she visited the property?
Ans. She found the property suitable for her purposes.
5. Did you reach an agreement after she inspected the property?
Ans- We agreed and signed a lease deed on 12 Sept 2014.
6. Elaborate to The Court, the contents of the lease deed.
Ans- Lease was given at monthly rental of 2 lakhs for the property and 8 thousand
for parking spaces, it contains the standard clauses of payment of security deposit
equivalent to 3 months and a lock in period of 3 years during which they could not
terminate lease deed.
7. Were there any clauses regarding default by either party in the Lease
Deed?
Ans- There was nothing specific per se but the lock in period was the backbone of
the deed.
8. How was the defendant reacting upon shifting to the property?
Ans- They were quite satisfied upon shifting and we never had any complaints.
9. When did you become aware about termination of lease deed?
Ans- It was on 25 March 2016 that we received a legal notice on their behalf.
10. Where there any explanation for the termination?
Ans- They said the space was limited and couldn’t expand as they expected.
11. What were the contents of the second notice that you received?
Ans- We got a follow-up notice on 26 Th April 2016, where they raised grievances
relating to maintenance of property and alleged breach of contract by us.
12. Were there any formal complaints regarding anything prior to the legal
notice?
Ans- I am not aware of any complaints before the notice.
CROSS EXAMINATION OF NEENA ELIZABETH

1. You were looking for a Spacious property and Jubilee Plaza happens to be
just the one you had in mind
Ans- Yes.
2. So it's quite clear of the fact that you just rented the property without much
of a thought and expansion plan in mind?
Ans. Yes.
3. Would it not be unfair if Singer Consultants were made to pay for your
haste and erroneous decision?
Ans. This is not the case, it is the Singer Consultants who have breached the
contract by not maintaining the property.
4. There is a mention of ‘lock-in’ period clause in your agreement with Singer
Consultants?
Ans. Yes
5. Was the “Lock In’ clause mutually agreed upon?
Ans. Yes
6. So do you have a full understanding of a lock-in period and its
consequences if violated?
Ans. Yes
7. Even then you terminated the lease before the expiration of the ‘Lock-In’
Period
Ans. Yes, I did, and I have already stated the reason for doing so.
8. So you single-handedly terminated the contract due to maintenance issues
in the building?
Ans. Yes

9. The situation was getting out of hand, so you had to fit the AC by incurring
your own expenses?
Ans. Yes
10. There were severe maintenance issues in the said premise, and you even
fixed by spending your own, yet you continue paying the maintenance
charges?
Ans. Yes
11. Are you aware of other tenants facing the same issue and raised a
complaint about it?
Ans. Not that I am aware of
12. Was there any joint inspection by both the companies around September
and the property being returned “in the same condition in which you got it”?
Ans. Yes. But all the maintenance works were incurred by us while they did
nothing even after collection maintenance charges without fail.
CLOSING STATEMENT BY PLAINTIFF’s LAWYER

Your Honour, kindly allow me to make a few brief and distinct submissions as part
of my closing statement

Firstly, Miss Neena has just admitted that there was a ‘lock-in’ period clause in the
lease agreement. In Indiabulls Properties vs Treasure World Developers (2014),
the Bombay HC has said that a contractual provision in a leave and license
agreement for a lock-in period is not per se illegal, unlawful, void or even
voidable. All commercial and residential rental properties have a lock-in period. It
is mutually understood to mean that both the lessee and the owner cannot terminate
the lease unilaterally before the time period expires. Section 42 of the Specific
Relief
Act, gives the Court power to compel specific performance of the negative part of
an agreement, in this case, it being the responsibility to not terminate the lease
before the lock-in period. Furthermore, Section 30 of the same Act says that Court
may require parties rescinding to do equity i.e. On adjudging the rescission of a
contract, the court may require the party to whom such relief is granted to restore,
so far as may be, any benefit which he may have received from the other party and
to make any compensation to him which justice may require.

Secondly, the Court is requested to acknowledge the lack of corroboration from

other occupants of Jubilee Plaza about ill maintenance of the building as well as
absence of any such previous complaints from any other occupants. Jubilee Plaza
was the most exquisitely designed properties and a joint inspection in September
Yr-2 proved the good conditions it was kept in.

Thirdly, on the one hand, WinSoft claims that the building had maintenance issues,
and furthermore, they had to invest money in the repair of the air conditioning; on
the other hand, they have submitted evidence of having paid all maintenance bills
to Singer Telecommunications? Why would they continue to do that? This is a
clear loophole in the fictitious story presented by the respondents.

Fourthly, I would like to assure the Court that 26th April, Yr-2 is the first time ever
that these maintenance issues were raised. The respondents have failed to provide
any evidence to the contrary. In such case, it is not hard to logically conclude that
this was done later on to evade heir legal obligation.
Now, about the security deposit, this is also one of the issues in conflict. A security
deposit is any money a landlord takes from a tenant other than the advance
payment of rent. The security deposit serves to protect the landlord if the tenant
breaks or violates the terms of the lease or rental agreement. It is returned only
after successful completion of the time period agreed upon in the agreement. By
illegally and unilaterally terminating the lease before it’s expiry, WinSoft
has lost any claims over it and the same has been justifiably forfeited by my
clients.

Miss Neena’s attorney intends to bring to the notice of the Court that Singer
Telecommunications wishes to extort money from WinSoft and has not submitted
any evidence to show that they have tried to mitigate their loss by bringing in a
new tenant. In defense against this, I would like to bring to light the judgment of
Bombay HC in Corporate Management Council vs Crawford Bayley & Co., where
the Court has declared the following: Agreements of leave and license cannot be
equated with agreements for the sale of goods or properties. It is thus not always
possible or easy to assess the loss in the case of a breach of a leave and license
agreement by the licensee. Indeed, for these reasons, it is not always necessary for
a licensor to mitigate loss in the case of a breach of a leave and licence agreement
by the licensee. Unlike in the case of a sale it would not always be permissible to
compel a licensor to let the premises to another with a view to mitigating the loss.

Mr. Krishan, manager to Miss Elizabeth, has admitted in his statements that that at
the very beginning, it was very clear that the building would be too small for their
purposes. However, she paid no heed to him words and signed the lease deed.
Upon realizing that the building would indeed not suffice to fit in the new staff, she
terminated the lease agreement in violation of the Indian Contract Act. To escape
the consequences, WinSoft Pvt. Ltd. fabricated false claims against my client,
which has consequently hurt the goodwill of the company.
PRAYER

My clients plead Your Lordship to bring justice to them, and in conformity with
the laws and legal precedents of India and Indian Courts, allow Singer Consultants
Pvt. Ltd.’s claim for rent from April Yr-2 onwards for the unexpired lock-in
period, along with interest @ 18% p.a. till
date of payment.