641R

FALL INDUCTIONS 2023, OP JINDAL GLOBAL UNIVERSITY

BEFORE THE HON’BLE SUPREME COURT OF MONROVIA

MESSRS. SUNSHINE CATERERS

(PETITIONERS)

Versus

STATE OF MONROVIA

(RESPONDENTS)

MEMORIAL for RESPONDENTS

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 TABLE OF CONTENTS

STATEMENT OF RELEVANT FACTS……………………………………………………...3.

STATEMENT OF JURISDICTION…………………………………………………………..5.

QUESTIONS PRESENTED………………………………………………………………….6.

SUMMARY OF ARGUMENTS……………………………………………………………...7.

ARGUMENTS ADVANCED……………………………………………………………….. 9.

1. THERE WAS NO VALID CONTRACT BETWEEN MESSRS SUNSHINE

CATERERS AND MINISTRY OF EXTERNAL AFFAIRS …………………………9.

a. There Has to Be Consensus Ad Idem Between the Two Parties for It to Be a Valid

Contract …………………………………………………………………………..9.

b. The Submission of a Counter-Offer by One Party to Another Does Not Lead to

The Acceptance and Ultimate Conclusion of a Contract ………………………10.

c. There Were Material and Substantial Alterations Made by Sunshine Caterers to

Which Ministry of External Affairs Had Not Consented ……………………….11.

d. There Has to be Absolute Clarity Between the Two Parties on Contractual

Details……………………………………………………………………………11.

e. The Contract Contravenes an Article of the Indian Constitution ……………….12.

2. THE MINISTRY OF EXTERNAL IS NOT LIABLE TO PERFORM ANY

OBLIGATIONS TO MESSRS SUNSHINE CATERERS

……………………………………………………………………………………….13.

1
 a. An Agreement to Enter into Contract Does Not Give Rise to Contractual

Obligations ……………………………………………………………………...13.

b. There Has to Be a Contract for Legal Obligations for Arise ……………………14.

c. The Ministry of External Affairs Reserves the Right to Cancel Any Bid……….14.

d. The Ministry of External Affairs Has to Make Its Decisions in Public Interest...15.

3. SUNSHINE CATERERS ARE NOT ENTITLED TO ANY LIQUIDATED

DAMAGES………………………………………………………………………….16.

a. There Has to Be a Concluded Contract for The Party to Claim Damages......16.

b. The Clause Stipulating Liquidated Damages by Sunshine Caterers Cannot Be

Held Valid…………………………………………………………………...17.

c. The Doctrine of Promissory Estoppel Cannot Be Invoked by Sunshine

Caterers ……………………………………………………………………...18.

PRAYER …………………………………………………………………………………20.

2
 STATEMENT OF RELEVANT FACTS

The Ministry of External Affairs (MEA) of the State of Monrovia planned to hold a SAARC

summit from 23rd -25th September 2023. The MEA required a caterer for Food and

Beverages and thus issued a tender inviting proposals for the aforementioned services. The

Tender document clearly stipulates that the bid price(s) which are the lowest and reasonable

will be chosen and awarded the contract. Messrs. Sunshine Caterers had provided the

ministry with the lowest bid and hence it was decided to enter into an agreement with them to

supply food and beverages to all our attendees.

On the 24th of July, the MEA sent a letter to Sunshine Caterers congratulating them and

offering them the contract for the event pursuant to them depositing Rs. 10,00,000 via a

demand draft and their acceptance along with a duly filled Form III via registered post by

August 2nd, 2023. The Form III would serve as the final terms of both the parties’ contractual

engagement and shall also count as a formal written agreement between the parties.

This letter reached Sunshine Caterers on July 27th, 2023, and they posted their letter of

acceptance, along with a signed Form III and a demand draft for Rs 10,00,000. They also

provided the Ministry with their proposed menu options and their standard terms and clauses.

This letter consisting of all the relevant and required documents along with their proposed

terms and clauses reached the offices of Ministry of External Affairs by post on 31st July

2023. This letter remained unopened by the Additional Director of the MEA until the 23rd of

August. Between this time, there was a phone call on the 20th of August between Sunshine

and the MEA, in which Sunshine was informed that the MEA would like walnut tart as an

option for the SAARC summit on 23 -25th September.

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Sunshine Caterers then found out that the price of walnut tart had gone up by almost five

times which made it difficult for Sunshine Caterers to deliver meals at the agreed contract

price. They had a call with the Additional Director in which they informed that they would

require an additional sum of Rs 10,00,000 to supply walnut tarts as specified in the menu,

which the Additional Director agreed to inform the Chief Secretary about.

Thereafter, on 23rd August, the Chief Secretary of the MEA wrote to Sunshine Caterers

apologizing for withdrawing the bid from them due to a lower offer by Messrs. Blu-Ray

which had been overlooked due to a technical error in the bidding portal. They were also

informed that their demand for an additional Rs 10,00,000 was not acceptable to the MEA.

Sunshine Caterers on receiving this letter immediately wrote back to the MEA saying there

was a “formal agreement between the parties was now in existence which prevents the MEA

from going back on its word.” They also insisted that the MEA “make good on its

representation or assume liability for the losses incurred by us.” This letter was hand

delivered to the Chief Secretary by an employee of Sunshine Caterers, who was informed by

him that all contracts require the explicit approval of the Chief Secretary and since the

Additional Director did not inform him about this there was no agreement in the first place.

The Chief Secretary said, “There is no liability here, we will not pay.”

4
 STATEMENT OF JURISDICTION

The counsel for the Respondent hereby submits before the Honourable Supreme Court of

Monrovia, the memorial for the Respondent in the suit filed by the Petitioners. The

respondent shall be bound by any determination of this Court.

IN THE SUPREME COURT OF MONROVIA

THE RESPONDENTS HUMBLY AND RESPECTFULLY SUBMIT TO THE JURISDICTION OF

THE HONOURABLE COURT

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 QUESTIONS PRESENTED

1. WHETHER A VALID CONTRACT EXISTED BETWEEN MESSRS. SUNSHINE

CATERERS AND STATE OF MONROVIA?

2. WHETHER THE STATE IS LIABLE TO PERFORM ITS OBLIGATIONS UNDER THE

SAID AGREEMENT?

3. WHETHER SUNSHINE CATERERS IS ENTITLED TO CLAIM LIQUIDATED

DAMAGES FROM THE STATE OF MONROVIA?

6
 SUMMARY OF ARGUMENTS

1. THERE EXISTED NO VALID CONTRACT BETWEEN MESSRS. SUNSHINE

CATERERS AND STATE OF MONROVIA

For an existence of a legally binding contract, there has to be consensus ad idem

between the two parties intending to enter into contractual obligations. Sunshine

Caterers inclusion of its own terms and clauses is a material and substantial alteration

of contractual details, which constitutes a counter-offer rather than acceptance of the

MEA’s offer. Without mutual agreement on all essential terms and conditions,

consensus ad idem cannot be achieved, and hence there was no formal concluded

contract between Messrs. Sunshine Caterers and State of Monrovia. Furthermore,

under the provision of the Indian Constitution, the government cannot be bound to a

contract if the acceptance is not provided by the duly authorized individual.

2. THE MINISTRY OF EXTERNAL AFFAIRS IS NOT LIABLE TO PERFORM

ANY OBLIGATIONS TOWARDS SUNSHINE CATERERS

An agreement between two parties to enter a contract does not result in the formation

of a concluded contract and nor does not impose any kind of contractual obligations

on either of the parties. There has to be a binding contract between the two parties for

any legal obligations to arise. Sunshine was treated equally and fairly as all other

bidders in the process, and according to the terms of the tender, the MEA had the right

to terminate any bid they like without having to provide a justification. As a public

7
entity, the MEA has a duty to make the most efficient and prudent use of public

finances and keep in mind, the larger ‘public interest’. Hence, they decided that since

Messrs. Blu – Ray provided the lowest offer out of all, bound by the guidelines and

other regulations, they had cancelled Sunshine Caterer’s bid and gave it to Blu-Ray.

3. MESSRS. SUNSHINE CATERERS IS NOT ENTITLED FOR ANY

LIQUIDATE DAMAGES

The presence of a concluded contract is sine qua non for damages arising under the

Indian Contract Act, 1872 for breach of contract. As argued in the previous

statements, the lack of legally enforceable contracts impedes Sunshine from claiming

damages under the provisions of Indian Contract Act. The clause inserted by Sunshine

Caterers for liquidated damages is in essence construed as a penalty and therefore

according to the provisions of the Indian Contract Act cannot be invoked by them.

Furthermore, Sunshine Caterers also cannot claim promissory estoppel on the MEA

due to supervening public interest at stake.

8
 ARGUMENTS ADVANCED

THE RESPONDENTS MOST HUMBLY AND RESPECTFULLY SUBMIT:

1. THERE WAS NO VALID CONTRACT BETWEEN MESSRS

SUNSHINE CATERERS AND STATE OF MONROVIA

In a contract, it is imperative for both the parties to have consensus ad idem regarding

important and crucial details of the contract. [A] In its response to the offer put forth by

Ministry of External Affairs, Sunshine Caterers in addition to its acceptance offered their own

terms and conditions which constituted a counter-offer and not absolute acceptance of the

offer. [B] There were substantial changes demanded by Sunshine Caterers in their offer [C]

which required the explicit approval of the MEA. [D] However, since such acceptance was

never effectively communicated, it follows that consensus ad idem was not attained between

the parties, resulting in the absence of a concluded contract. Furthermore, under the

provisions of the Indian Constitution, a contract involving government has to be executed by

the authorized person in-charge. [E]

A. THERE HAS TO BE CONSENSUS AD IDEM BETWEEN THE TWO PARTIES

FOR IT TO BE A VALID CONTRACT

For the contract to be valid, there has to be a ‘meeting of minds’ or consensus ad idem

between the parties upon the same thing and in the same sense1 and meet the statutory

requirements and provisions of the rules governed under.2 Section 13 of the Indian Contract

Act3 which defines consent, specifically deals with this issue, in that both the parties to the

contract should “agree upon the same thing in the same sense”. This section derives

1
John Tinson & Co. (P) Ltd. v. Surjeet Malhan, (1997) 9 SCC 651.
2
BSNL v. BPL Mobile Cellular Ltd, (2008) 13 SCC 597.
3
The Indian Contract Act, 1872.

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inspiration from the precedent set forth in Smith v Hughes,4 in which Lord Hannen said,

“essential to the creation of a contract is that both parties should agree to the same thing in

the same sense.” Therefore, there should be an offer from one party, either implied or explicit

and the acceptance should be in the same sense in which it was made by the other. 5 This

agreement in the same sense is true consent or consensus ad idem and is at the root of every

contract.6

B. THE SUBMISSION OF A COUNTER-OFFER BY ONE PARTY TO ANOTHER

DOES NOT LEAD TO THE ACCEPTANCE AND ULTIMATE CONCLUSION

OF A CONTRACT

In the event that a party, in response to an offer, presents its own set of terms and conditions,

it gives rise to a counter-offer, thereby precluding the acceptance of a contract. 7.There must

be unequivocal and definitive acceptance given by the offeree to the offer put forth, for the

contract to be concluded and binding. 8 Sunshine Caterers in their letter in response to the

offer by Ministry of External Affairs (MEA) replied with their own terms and clauses in

addition to Form III and other required documents.9 An acceptance with variation is not an

absolute acceptance, but rather a counter–proposal which must be accepted by the other party

for the contract to be concluded.10 Thus, Sunshine’s letter containing its own terms was clear

indication that it was not an absolute and unqualified acceptance of the MEA’s offer. When

the acceptor puts in a new condition while accepting the contract, as already agreed by the

proposer, it does not lead to a concluded contract until the other party also agrees to the

4
Smith v Hughes (1871) LR6 QB597 (DC).
5
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas & Co., (1966) 1 SCR 656.
6
Avtar Singh, Law of Contract and Specific Relief (12th edn, Eastern Book Company 2020).
7
Vedanta Ltd. v. Emirates Trading Agency LLC, (2017) 13 SCC 243.
8
Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751.
9
Moot Proposition [3].
10
Padia Timber Co. (P) Ltd. v. Visakhapatnam Port Trust, (2021) 3 SCC 24.

10
condition.11 As a result, the absence of consensus ad idem between the parties becomes

evident, leading to the conclusion that no contractual agreement was reached. 12

C. THERE WERE MATERIAL AND SUBSTANTIAL ALTERATIONS MADE BY

SUNSHINE CATERERS TO WHICH MINISTRY OF EXTERNAL AFFAIRS

HAD NOT CONSENTED

The terms and conditions of Messrs. Sunshine Caterers introduced significant changes and

modifications to the initial contract offered by the Ministry of External Affairs (MEA). 13Such

as the clause of variable pricing which can only be allowed if the tender document permits,

similarly, installing penalty clauses on the MEA for non-performance clearly warrant the

approval of the Chief Secretary of the MEA.14 These substantial changes necessitate careful

consideration and deliberation among the involved officials, and it cannot be assumed with

certainty that they would unquestionably accept such changes. It has been held by the High

Court of Bombay, that assumption of acceptance can be warranted in trivial matters, however

in such material and significant matters such as these clauses, there has to be an explicit

acceptance by the other party. 15 Hence, acceptance by the MEA of the subsequent terms and

clauses introduced by Sunshine is necessary for the contract to be formed. 16

D. THERE HAS TO BE ABSOLUTE CLARITY BETWEEN THE TWO PARTIES

ON CONTRACTUAL DETAILS

Under Section 7(1) of the Indian Contract Act, 17a proposal can be converted into a

binding contract only when acceptance is “absolute and unconditional.” An

acceptance which is qualified by various conditions and terms does not result in a

11
Haridwar Singh v. Bagun Sumbrui, (1973) 3 SCC 889.
12
U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., (1996) 2 SCC 667.
13
Moot Proposition [3].
14
Moot Proposition [7].
15
Abhay Construction v. State of Maharashtra, (2014) SCC Bom 2865.
16
U.P. Rajkiya Nirman Nigam Ltd. (n 12).
17
The Indian Contract Act, 1872.

11
 concluded contract.18 In Padia Timber v. Visakhapatnam Port Trust,19 the Supreme

Court emphasized the necessity for acceptance to be absolute and leave no room for

doubt. They further underscored that acceptance must be based on certainty,

communication and commitment. Consequently, the acceptance provided by Sunshine

Caterers wherein they introduced their own clauses was not in absolute accordance

with the terms and conditions put forth by Ministry of External Affairs and thus there

was no formal acceptance of the offer, and no final contract was reached between

them.

E. THE CONTRACT CONTRAVENES AN ARTICLE OF THE INDIAN

CONSTITUTION

Article 299(1) of the Indian Constitution states “All contracts made in the exercise of the

executive power of the Union or of a State… expressed to be made by the President…. by

such persons and in such manner as he may direct or authorise.’’ The Chief Secretary of the

Ministry of External Affairs is the only authorized official in the Ministry who has the

authority to sign off contracts and any agreement is contingent on his formal acceptance

being received.20 The provisions of Article 299 have been enacted to safeguard the

government from unauthorized contracts and ensure there is a definite procedure according to

which agents of the government bind the contract, so as to prevent depletion of public funds

by unauthorized contracts.21 These provisions are mandatory in nature and any contravention

of these article nullifies a contract.22 Since, there was no explicit acceptance given by the

authorized individual, i.e., the Chief Secretary, no formal contract is concluded.

18
Himachal Pradesh State Electricity Board v. Sumer Chand, (2000) SCC Del 186.
19
Padia Timber Co. (P) Ltd. (n 10).
20
Moot Proposition [7].
21
Glock Asia-Pacific Ltd. v. Union of India, (2023) SCC SC 664.
22
Mulamchand v. State of M.P., (1968) 3 SCR 214.

12
 2. THE MINISTRY OF EXTERNAL IS NOT LIABLE TO PEFORM

ANY OBLIGATIONS TO MESSRS SUNSHINE CATERERS

An agreement to enter into contractual relations does not give rise to any kind of obligations

or liabilities. [A] There has to be a contract, which is legally binding and mutually agreed

upon by all parties for the enforcement of legal obligations. [B] Furthermore, the Tender

Document permits the MEA, the right to reject any bid without having to specify their reason

or rationale. [C] Additionally, the MEA is obligated to exercise fiduciary responsibility over

its finances and prioritize “public interest” over everything else. [D]

A. AN AGREEMENT TO ENTER INTO CONTRACT DOES NOT GIVE RISE

TO CONTRACTUAL OBLIGATIONS

There was an agreement between Ministry of External Affairs and Messrs. Sunshine Caterers

with an intention to form a concluded contract in future.23 However, this does not give rise to

any kind of binding relationship between the two parties at this stage. 24 It was clearly

stipulated that certain specific conditions have to be met before a formal contract can come

into existence. 25 It is a well settled legal position that this agreement to enter into a contract is

not enforceable and does not confer any rights upon the parties. 26 Thus, just because there

was an agreement between MEA and Sunshine Caterers to eventually enter into a contract,

that agreement in itself does not give rise to any obligations for either party to perform.

Therefore, the Ministry of External Affairs is not bound to perform any legal obligations

under the said agreement.

23
Moot Proposition [1].
24
Dresser Rand S.A. (n 8).
25
Moot Proposition [2].
26
Speech and Software Technologies (India) (P) Ltd. v. Neos Interactive Ltd., (2009) 1 SCC 475.

13
 B. THERE HAS TO BE A BINDING CONTRACT FOR LEGAL OBLIGATIONS
FOR ARISE

Legal obligations and responsibilities only arise between two parties pursuant to their

mutual agreement and execution of a contract.27 As expounded upon in our initial

argument, Sunshine Caterers response constituted a counter-offer rather than a definitive

formal acceptance of the Ministry’s offer. Only upon furnishing an unequivocal

acceptance, does a contract attain legal validity and its subsequent legal obligations and

general conditions of the contract arise.28 Therefore, since there was no formal binding

contract established between the two parties due to an absence of such acceptance,

Ministry of External Affairs owe no obligations to Sunshine Caterers.

C. THE MINISTRY OF EXTERNAL AFFAIRS RESERVES THE RIGHT TO

REJECT ANY BID

In the Notice Inviting tender, it has been clearly stated that The Ministry of External

Affairs “reserves the right without assigning any reason to reject any or all of the

Bids...” It has been held by this court that since tenders come under the realm of

contract law, they are not open to judicial scrutiny. 29 The authority responsible for

issuing the tender has the power to define and set forth the terms and conditions of the

tender and it falls beyond the purview of the Court to decide upon the comparative

merit of these provisions. 30 Only when there are accusations of arbitrariness,

discrimination, mala fide or biasness in issuance of a contract to a party, the Courts

may investigate that. Judicial review is applicable solely to the process and manner

undertaken in making decisions, rather than the substance of the decision itself.31

However, the Government has been given a free hand in setting forth the terms of

27
BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213.
28
PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525.
29
Bee Jay Contractors v. Hindustan Petroleum Corpn. Ltd., (2010) SCC Bom 556.
30
Directorate of Education v. Educomp Datamatics Ltd., (2004) 4 SCC 19.
31
Tata Cellular v. Union of India, (1994) 6 SCC 651.

14
 tender as it an administration function which comes under their realm. 32 A bidder

participating in the tender process has no right except the right to equality and fair

treatment in matter of evaluation of bids. 33Sunshine Caterers were treated fairly and

equally as everyone else participating in the tender process. The decision to award

Messrs Blu-Ray was based on them providing the MEA with a lower bid and was

devoid of any favouritism or prejudice. 34

D. THE MINISTRY OF EXTERNAL AFFAIRS (MEA) HAS TO MAKE ITS

DECISIONS IN PUBLIC INTEREST

In accordance with the most recent procurement guidelines issued by the Government

of India, it is a general principle to prioritize the lowest bidder when evaluating

procurement decisions.35 Since the project for which this tender has been issued will

be borne by taxpayer funds, it is important to ensure that ‘public interest’ is kept in

mind. 36The government is the guardian of finances of the State and is always

expected to prioritize the fiscal interests of the State.37 This is why contracts are

mostly awarded to the lowest bidders as it helps in eliminating favouritism and

discrimination while also serving as the best medium to serve public interests. 38This

has even been even stated in the Instruction to Bidders/Form III under Section 3.2.1

that “The Procuring Entity shall award the contract to the Bidder(s) whose bid(s) is

Techno- commercially suitable and whose bid price(s) is lowest and reasonable”. In

case of a tender, there is no obligation on the part of the entity issuing the bid to

accept any of the bids. 39The government has the discretion to adopt any public policy
32
ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board, (2019) 4 SCC 401.
33
Meerut Development Authority v. Assn. of Management Studies, (2009) 6 SCC 171.
34
Moot Proposition [6].
35
Department of Expenditure, ‘Manual for Procurement of Goods’ (June 2022)
<https://doe.gov.in/sites/default/files/Manual%20for%20Procurement%20of%20Goods_1.pdf> accessed on 10
July 2023.
36
Tirupati LPG Industries Ltd. v. Bharat Petroleum Corpn. Ltd., (2001) SCC Del 687.
37
Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138.
38
W.B. SEB v. Patel Engg. Co. Ltd., (2001) 2 SCC 451.
39
State of Jharkhand v. CWE-SOMA Consortium, (2016) 14 SCC 172.

15
 and alter it and change it as long as serves public policy more effectively. 40 Hence, in

accordance with these stipulations and prescribed conditions, the MEA decided to

select Messrs. Blu-Ray as their caterer for the event.41

3. SUNSHINE CATERERS ARE NOT ENTITLED TO ANY

LIQUIDATED DAMAGES

Messrs Sunshine Caterers do not qualify for any liquidated damages from the

Ministry of External Affairs since there was no concluded contract between them. [A]

The provision incorporated within Sunshine's proposed clauses is in essence punitive

in nature, rather than constituting a clause for liquidated damages and therefore also

cannot be invoked by them. [B] There also cannot be a claim against the Ministry

under the doctrine of promissory estoppel since the decision made by them was

keeping in mind public interest and the broader public concern at large. [C]

A. THERE HAS TO BE A CONCLUDED CONTRACT FOR THE PARTY TO

CLAIM DAMAGES

As it was argued in the previous statements, there was no formal concluded

contract between Ministry of External Affairs and Messrs. Sunshine Caterers,

which means that their claim for liquidated damages lack the requisite legal

validity.42 In cases involving breach of contract and claims for damages, the

existence of a valid and concluded contract is sine qua non. 43 It was similarly held

by this court, “If instead of acceptance of a proposal, a counter-proposal is made,

40
Shimnit Utsch India (P) Ltd. v. W.B. Transport Infrastructure Development Corpn. Ltd., (2010) 6 SCC 303.
41
Moot Proposition [6].
42
Vedanta Ltd. (n 7).
43
Vedanta Ltd. (n 7).

16
 no concluded contract comes into existence.” 44 There was lack of clarity between

the parties on the details of contract, and an agreement could only be set to be

concluded when the Chief Secretary of the MEA gave his approval. 45

Consequently, in the absence of a duly concluded contract, there is no basis for

asserting a breach of contract or demanding damages.46 To assert a claim for

damages, there has to be a full agreement approved and signed by both the parties

and a mere acceptance of the tender would not suffice to form a concluded contract

from which damages could be claimed.47 Hence, there was no acceptance of the

proposal by Ministry of External Affairs and consequently there was no breach of

contract by them.48

B. THE CLAUSE STIPULATING LIQUIDATED DAMAGES BY

SUNSHINE CATERERS CANNOT BE HELD VALID

Section 73 and Section 74 of the Indian Contract Act49 deal with provisions

relating to breach of contract and compensation for breach when penalty is

stipulated for. The difference between penalty and liquidated damages was

elucidated in Subir Ghosh,50 where it was held that “penalty is a payment of

money as stipulated in terrorem”, i.e., significantly more than the actual

damage suffered whereas liquidated damages are “genuine covenanted pre -

estimate of the damages” sustained in case of breach of contract. When the

terms stipulating liquidated damages for breach of contract are a genuine pre

estimate of the damages agreed upon by both the parties, only then can they be

44
Vedanta Ltd. (n 7).
45
Moot Proposition [7].
46
Union of India v. Bhim Sen Walaiti Ram, (1969) 3 SCC 146.
47
K.N. Keerthi Rao v. General Manager, Southern Railways, (1999) SCC Mad 61.
48
Maharashtra Rajya Sahakari Kappos Utpadak Panan Mahasangha Ltd. v. Manga Bhaga Choudhary, (2009)
SCC Bom 44.
49
The Indian Contract Act, 1872.
50
Subir Ghosh v. Iron and Steel Co. Ltd., (1977) CHN 1.

17
 awarded. 51However, when the amount stipulated is unreasonable or is by way

of penalty it cannot be awarded.52 , The court also reserves the authority to

award an amount that is less than the stipulated amount, if it is proved to more

reasonable considering all circumstances. 53 The clauses proposed by Sunshine

Caterers included a provision requiring the Ministry of External Affairs (MEA)

to pay twice the amount stated in the contract if the contract was rescinded.
54
This was clearly not a genuine or reasonable pre estimate of damages and was

in form of a penalty to compel the MEA to adhere to the contract, rather than a

fair assessment of the damages suffered by them. Hence, even in the case a

concluded contract exists, this clause cannot be invoked by Sunshine to force

the MEA to pay damages.

C. THE DOCTRINE OF PROMISSORY ESTOPPEL CANNOT BE

INVOKED BY SUNSHINE CATERERS

The principal of promissory estoppel is a well-established doctrine in

administrative law of this country. This doctrine represents a principle evolved by

equity to avoid injustice. 55 Courts in this country have also held that this doctrine

is applicable against government where it is necessary to prevent fraud or manifest

injustice. 56 However, this is not a hard and fast rule but a flexible one, whose

objective is to do justice between the parties and extend an equitable treatment to

them. 57 Therefore, if the government can show that based on the facts transpired,

there is a supervening public interest in play and it would be inequitable in light of

public good to enforce the promise against the government,58 the Court will not
51
Maula Bux v. Union of India (1969) 2 SCC 554.
52
ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.
53
Alfa Bhoj (P) Ltd. v. New Delhi Municipal Council, (2012) SCC Del 3522.
54
Moot Proposition [3].
55
Kasinka Trading v. Union of India, (1995) 1 SCC 274.
56
Union of India v. Unicorn Industries, (2019) 10 SCC 575.
57
Shree Sidhbali Steels Ltd. v. State of U.P., (2011) 3 SCC 193.
58
M.P. Mathur v. DTC, (2006) 13 SCC 706.

18
 raise an equity in favour of the promisee and not compel the government to

perform its promise59 The reason the contract was rescinded from Sunshine

Caterers and given to Blu-Ray was because Blu-Ray had provided the MEA with a

lower offer.60 The decision was thus made in accordance with the guidelines issued

by the MEA and justified by the principle of "public interest”. Similarly, it has

been held Courts very rarely interfere with fiscal decisions of the Government

where they act in accordance with the principle of “public interest” and where

neither fraud nor lack of bona fides is established by the other party.61

PRAYER

WHEREFORE IN CONSIDERATION OF THE QUESTIONS PRESENTED,

ARGUMENTS ADVANCED AND THE AUTHORITIES CITED, THE COUNSEL FOR

THE RESPONDENT MOST HUMBLY AND RESPECTFULLY PRAYS THAT THE

HON’BLE COURT BE PLEASED TO ADJUDGE AND DECLARE THAT:

59
Union of India v. VVF Ltd., (2020) 20 SCC 57.
60
Moot Proposition [6].
61
Union of India (n 59).

19
1. THERE WAS NO FORMAL BINDING CONTRACT BETWEEN MESSRS.

SUNSHINE CATERERS AND THE STATE OF MONROVIA

2. THE STATE OF MONROVIA DOES NOT HAVE TO PERFORM ANY

CONTRACTUAL OR LEGAL OBLIGATIONS UNDER THE AGREEMENT

BETWEEN THE PARTIES

3. SUNSHINE CATERERS IS NOT ENTITLED TO ANY LIQUIDATED DAMAGES

FROM THE STATE OF MONROVIA

AND DECLARE ANY OTHER RELIEF THAT THIS HON’BLE COURT MAY

BE PLEASED TO GRANT IN THE INTEREST OF JUSTICE, EQUITY AND

GOOD CONSCIENCE

COUNSEL FOR THE RESPONDENTS

ON BEHALF OF STATE OF MONROVIA

20