Moot Court Memorial File

4TH KIIT NATIONAL MOOT COURT COMPETITION
TEAM CODE:
Symbiosis Law School, Pune – National ADR

Tournament, 2017
IN THE MATTER OF:
DIGNOSOFT SOLUTIONS LTD
(Claimant)
V.
NAVRATNA CORPORATION LIMITED
(Respondent)
MEMORANDUM ON BEHALF OF THE CLAIMANT
FILED BY: AGAINST:
DIGNOSOFT SOLUTIONS LTD NAVRATNA CORPORATION LIMITED
(CLAIMANT) (RESPONDENT)
MEMORANDUM ON BEHALF OF THE PETITIONER

I
SYMBIOSIS LAW SCHOOL, PUNE – NATIONAL ADR TOURNAMENT, 2017
TABLE OF CONTENTS
TABLE OF ABBREVIATIONS iii

INDEX OF AUTHORITIES iv
STATEMENT OF JURISDICTION viii
STATEMENT OF FACTS ix
STATEMENT OF ISSUES xi
SUMMARY OF ARGUMENTS xii
ARGUMENTS ADVANCED 1
[I] THE CONTRACT BETWEEN NCL AND DSL IS COMPLETELY VALID AND 1
SHOULD BE RESTORED.
[I.A] The contract between NCL and DSL is constitutionally valid and 1
is not hit by the provisions of Section 23 Of The Indian Contract
Act
[A.1] The Right to Privacy is qualified by certain reasonable 2
restrictions to exercise of the same
[A.2] The contract is legal due to the operation of the doctrine of 3
prospective overrurling
[A.3] The contract cannot be invalidated dur to the operation of Salus 4
Populi Est Suprema Lex
[A.4] The contract is not hit by the provisions of Section 23 of the 5
Indian Contract Act
[I.B] The contract between NCL and DSL is liable to be restored 6
[II] MR. VERGHESE CANNOT BE APPOINTED AS AN ARBITRATOR 7
[II.A] The appointment of Mr. Verghese is invalid since the operation 8

of the amendment Act
[II.B] The 2015 Amendment is retrospective in nature 10
[Arguendo] The Appointment Of Mr. Verghese Is Not A Viable Option 12
Even If The Amendment Is Not Deemed To Be

i
Retrospective.
[III] NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAYING IN 13
IMPLEMENTATION OF THE SOFTWARE APPLICATION AND NCL IS ALSO
LIABLE TO PAY COMPENSATION FOR THE DEVELOPMENT OF VIRUS
LEADING TO THE FALL IN THE PRICES OF THE SHARES OF DSL.
13
[III.A] The NCL Is Liable To Pay Compensation To The DSL For
Delaying In Implementation Of The Software Application.
14
[A.1] The parties intended to extend the timeline and specified the
time for the performance of contract to August 1, 2015.
15
[A.2] The time period should be complied by the NCL as the
contract was a commercial contract
[III.B] NCL Is Liable To Pay Compensation To DSL For Causing 17
Damage To Reputation And Goodwill Of DSL
PRAYER 19

ii
TABLE OF ABBREVIATIONS
v. Versus
Ltd. Limited
Ed. Edition
Vol. Volume
M.P. Madhya Pradesh
AIR All India Reporter
SC Supreme Court
U.P. Uttar Pradesh
SCC Supreme Court Cases
¶ Paragraph
US United States of America
Ker Kerala
FB Full Bench
Bom Bombay
ICR Industrial Cases Reports
BomCR Bombay Cases Reporter
ILR Indian Law Reports
Cal Calcutta
Pvt. Private
HP Himachal Pradesh
PC Privy Council
Del Delhi
Pat Patna
DLT Delhi Law Times
Mys. Mysore
American LR American Law Reporter
INDEX OF AUTHORITIES
iii
CONSTITUTION
 Constitution of India.
STATUTES REFERRED
 The Indian Contract Act, 1872.

 The Arbitration and Conciliation Act, 1996.
 The Arbitration and Conciliation (Amendment) Act, 2015.
PRECEDENTS
S.No. Case Name Citation Page No.(s)

1 ADM Jabalpur v. Shivkant Shukla (1976) 2 SCC 521 17
2 Anandram Mangturam v. Bholaram AIR 1946 Bom 1 14
Tanumal
3 Andard Mount (London) Ltd. v Curewel AIR 1985 Del 45 14
(India) Ltd.
4 Assignia-Vil JV v. Rail Vikas Nigam Ltd Arbitration Petition No. 8
677 of 2015
5 Avishek Goenka v. Union of India (2012) 5 SCC 321 2,5
6 Bansi Dhar v. Ajudhia Prasad AIR 1925 Oudh 120 5
7 Bharat Seva Sansthan v. Uttar Pradesh AIR 2007 SC 2961 12
Electronics Corporation Limited
8 Bhudar Chandra Goswami v. CRS Betts AIR 1916 Cal. 901 15
9 Binoy Viswam v. Union of India (2017) 7 SCC 59 5
10 Board of Control for Cricket in India v. Arbitration Petition 6
KPH Dream Cricket Pvt. Ltd. (Lodg.) No. 1303 of
2010, Bombay High
Court
11 Board of Trustees of the Port of Bombay (1983) 1 SCC 124 17
v. Dilip Kumar Raghavendranath

iv
Nadkrani
12 British Paints (India) Ltd. v. Union of AIR 1971 Cal 393 14,15
India
13 Chicot County Draniage District v. Baxter (1940) 308 US 371 3
State Bank
14 Coral Leisure Group Limited v. Burnett [1981] ICR 503 6
15 D.F. Marion v. Minnie Davis 1955 Amercian LR 171 17
16 Delhi Cloth Mills Co. Ltd. v. Kanhia (1913) Punj Rec No. 80 16
285
17 Divine Retreat Centre v. State of Kerala (2008) 3 SCC 542 18
18 Friends Colony Development Committee 2 (2004) 8 SCC 733 5
v. State of Orissa
19 Govind v State of Madhya Pradesh AIR 1973 SC 1378 2
20 Hira Tikkoo v. Union Territory of (2004) 6 SCC 765 5
Chandigarh
21 I.C. Golaknath v. State of Punjab AIR 1967 SC 1643 4
22 Kailash Nath Associates v DDA (2015) 4 SCC 136 14
23 Kharak Singh v. State of U.P. AIR 1963 SC 1295 2
24 Lucknow Automobiles v Replacement AIR 1940 Oudh 443 15
Parts Co.
25 Madina Rice Mills v Sampangirmiah AIR 1953 Mys. 66 15
26 Mahabir Prasad Rungta v. Durga Dutta AIR 1961 SC 990 15
27 Maneka Gandhi v. Union of India (1978) 1 SCC 248 16

28 Mohammad Wahiduddin v. Hakiman ILR (1902) 29 Cal 278 10
29 Muhammad Habidullah v Bird & Co AIR 1922 PC 178 14
30 Newland v. Simons and Willer Ltd. [1981] ICR 521 6
31 Orissa Textiles Mills Ltd. v. Ganesh Das AIR 1961 Pat 107 15
Ramkishun
32 Paper Sales Ltd. v. Chokhani Bros AIR 1946 Bom 429 14

v
33 Patnaik D. Bhuvan Mohan v. State of AIR 1974 SC 2092 2

Andhra Pradesh
34 Raffles Design International India Pvt. O.M.P. (I) (COMM.) 12
Ltd. v. Educomp Professional Education 23/2015 & CCP (O)
Ltd 59/2016, IA Nos.
25949/2015 &
2179/2016
35 Rani Constructions Pvt Ltd. v. H.P.SEB C.A. No. 61 of 1999, 11
Himachal Pradesh High
Court
36 Ratna Infrastructure Projects Pvt. Ltd. v. Arbitration Proceeding 11
Meja Urja Nigam Private Limited 537/2016
37 Re: KL Gauba AIR 1954 Bom 478 5
38 Sayyed Ratanbhai Sayeed and Ors. v. AIR 2016 SC 1042 4
Shirdi Nagar Panchayat and Ors.
39 Shriram Pistons & Rings Ltd. v Buckeye 136 (2007) DLT 254 15
Machines (P) Ltd.
40 State of Bihar v. Lal Krishna Advani (2003) 8 SCC 361 17
41 State of Maharashtra v. Madhukar AIR 1991 SC 207 2
Narayan Mardikar
42 State of Maharashtra v. Public Concern (2007) 3 SCC 587 17
for Governance Trust
43 Thyssen Stahlunion GmbH v. SAIL (1999) 9 SCC 334 10
44 TRF Ltd. V. Energo Engineering Project 2017 (8) SCC 377 9
45 V N Narayanan Nair v. State of Kerala AIR 1971 Ker. 98 (FB) 4
46 World Sport Group India Pvt. Ltd. v. The (2011) 4 BomCR 797 7
Board of Control for Cricket in India
47 X v. Hospital Z (1998) 8 SCC 296 2
BOOKS REFERRED

vi
 ANSON, LAW OF CONTRACT (29TH ED.) 2010.

 ARVIND P DATAR, COMMENTARY ON THE CONSTITUTION OF INDIA (2 ND ED, VOL. 1)
2010
 CHESHIRE, FIFOOT AND FURMSTON, LAW OF CONTRACT (15TH ED.) 2007.
 DURGA DAS BASU, COMMENTARY ON THE CONSTITUTION OF INDIA (8TH ED, VOL.S 1, 2
AND 3) 2007.
 DURGA DAS BASU, SHORTER CONSTITUTION OF INDIA (14TH ED, VOL 1) 2015.
 GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION (2ND ED., VOL.S I, II & III)
2014.
 H.M. SEERVAI, CONSTITUTIONAL LAW OF INDIA (4TH ED, VOL. 2) 2011.
 JAGDISH SWARUP, CONSTITUTION OF INDIA (3RD ED, VOL. 1) 2013.
 JOHN CARTWRIGHT, FORMATION AND VARIATION OF CONTRACTS (1ST ED.) 2014.
 M.P. JAIN, INDIAN CONSTITUTIONAL LAW (6TH ED, VOL.S 1 AND 2) 2013.
 P.C. MARKANDA, LAW RELATING TO ARBITRATION AND CONCILIATION (9TH ED) 2016.
 P.C. MARKANDA, THE LAW OF CONTRACT (3RD ED. VOL. 1) 2013.
 POLLOCK & MULLA, THE INDIAN CONTRACT AND SPECIFIC RELIEF ACTS (14 TH ED.)
2016.
 REDFERN AND HUNTER, INTERNATIONAL ARBITRATION (6TH ED.) 2015.
 T.K. TOPE, CONSTITUTIONAL LAW OF INDIA (3RD ED) 2010.
DICTIONARIES
 BRYAN AND GARNER, BLACK'S LAW DICTIONARY, (7th Ed. Sweet & Maxwell 2008)
 P. RAMANATHA AIYAR, ADVANCED LAW LEXICON (2nd Ed.) 1997.
 K. J. AIYAR, JUDICIAL DICTIONARY (13thed.).
STATEMENT OF JURISDICTION

vii
The Claimant approaches this Hon’ble Arbitral Tribunal pursuant to the arbitration agreement
entered into between the parties and also under the provisions of Section 16 of the Indian
Arbitration and Conciliation Act, 1996.
STATEMENT OF FACTS

viii
The government of Nabhivarsha introduced the scheme of allotment Identification Number in the
year 2012. Under this scheme government was to provide for Citizen Identity Number (CIN) to
all citizens and Entity Identity Number (EIN) to all legal entities. The Government decided that
the process of issuance and maintenance of CIN and EIN services would be outsourced to a
Private Company and invited bids for the same, the project was finally awarded to Corps Lab
Ltd. (CLL) on 10th January, 2013.
CLL was to collaborate with the Ministry of Information Technology and Human Resource
Development to undertake the process of issuing CIN/EIIN. The process included collecting of
several personal details, within a period of 2 years from the date of contract. Sharma Committee
was setup for suggesting reforms in tax regime and according to the report of that committee it
was suggested that the IT department be restructured and the filing of tax returns be digitized;
also it was suggested to link the PAN with CIN/EIN.
As per the reports given by the committee further amendments in the contract with CLL were
made, whereby CLL was required to link the CIN and PIN with PAN. CLL was further required
to ensure that by 1st June 2015 no citizen or legal entities could file their Income Tax Returns
unless they had linked their CIN/EIN with PAN.
CLL needed to outsource some of their obligation and they therefore entered into a contract with
Dignosoft Solutions Ltd. (DSL). CLL and DSL entered into contract on 20 th August 2013. DSL
under the contract was to digitalize the Income Tax Records in collaboration with IT Department
and also the filing of IT returns and it was envisaged to be completed by 20 th January, 2015. DSL
was also asked to develop a software application whereby the IT filing webpage and the IT

ix
accounts (PAN) of the citizens and other legal entities would be locked unless they link their
CIN/EIN with their PAN.
Later, Navratna Corporation Limited (NCL) acquired CLL. DSL had no problems with CLL
being acquired by NCL and therefore the contract was amended on 11 th October, 2014 to the
extent of incorporating in place of CLL. In December it was realized that they won’t be able to
complete their obligations on the stipulated time and therefore extended the time by 3 months.
DSL was unhappy that the software application was not made operational on time and they
therefore demanded 10 million dollars towards delay caused by NCL. DSL invoked the
arbitration clause on 1st September 2015 for claiming of damages for delay in implementation of
the software application. DSL appointed Mr. Robert Mathew, a solicitor based out of UK as an
arbitrator and NCL appointed Mr. Verghese, the legal advisor of NCL as an arbitrator and they
both in turn appointed a third arbitrator.
In May, 2017, Nabhivarsha was heavily affected by a computer virus named Wannawail, it
disrupted the computer and freezed the screen. Mr. Sudeep a former employee of NCL was
responsible for the same. He made the said ransomware on the basis of the software application
made by DSL given to NCL for testing. During the same time, the Apex Court of Nabhivarsha
declared Right to Privacy as a fundamental right.
The government of Nabhivarsha and directors of NCL decided to end the contract on 20 th
August, 2013 and said the contract was void already as because it was in violation to Right to
Policy. DSL submitted application for restoration of contract and demanded damages for failure
of NCL to protect the data of DSL. They also asked for removal for Mr. Verghese as the
arbitrator as because his appointed was in contravention to the 2015 amendment act.

x
STATEMENT OF ISSUES
I. WHETHER THE CONTRACT BETWEEN NCL AND DSL IS VALID AND WHETHER IT CAN BE
RESTORED?
II. WHETHER MR. VERGHESE CAN BE APPOINTED AS AN ARBITRATOR?
III. WHETHER NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAY IN

IMPLEMENTATION OF THE SOFTWARE AS WELL AS FOR HARMING DSL’S REPUTATION?

xi
SUMMARY OF ARGUMENTS
[I] THE CONTRACT BETWEEN NCL AND DSL IS COMPLETELY VALID AND
MUST BE RESTORED.
The contract between NCL and DSL is not hit by constitutional invalidity. As it seeks to enforce
a reasonable classification under Article 14 of the Constitution of India and neither is hit by the
provisions of Section 23 of the Indian Contract Act. The claimant seeks to assert this statement
by proving before this Hon’ble Tribunal, that the operation of the contract, if at all it affects the
right to privacy, would only be a reasonable restriction to its exercise. Further, the right to
privacy is a subsequent development and it cannot operate retrospectively. Also, the maxim
Salus Populi Est Suprema Lex gives force to the contract. The claimant further seeks to prove
that the contract in question is not hit by the operation of Section 23 as well. It is in light of these
submissions that the claimant would like to bring this tribunal to the conclusion that the contract
is completely valid and must be restored.
[II] MR. VERGHESE CANNOT BE APPOINTED AS AN ARBITRATOR
Section 12 of the The Arbitration and Conciliation Act, talks about the various grounds that are
available for challenging the appointment of an arbitrator in an arbitral proceeding. In the present
case, the appointment of Mr. Verghese is invalid since the operation of The Amendment Act and
it is sought to be concluded by proving that the amendment of the act is retrospective in nature.
Further, even if the retroactivity of the amendment is not acceptable, the claimant argues that it is
seemingly unfair and under all probability biased that Mr. Verghese be appointed on the tribunal.

xii
[III] NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAYING IN

IMPLEMENTATION OF THE SOFTWARE APPLICATION AND NCL IS
ALSO LIABLE TO PAY COMPENSATION FOR THE DEVELOPMENT OF
VIRUS LEADING TO THE FALL IN THE PRICES OF THE SHARES OF DSL
Section 55 of the Indian Contract Act 1872 provides a rule in regard to the performance of the
promise to do a certain thing at or before a specified time. Contracts, for the performance of
which definite time is fixed, must be completed within the time limit. Delay in such performance
shall make defaulter liable to pay compensation. The NCL under this section is liable to pay
compensation to the DSL for delaying in implementation of the software application. The NCL
is also liable to pay compensation to DSL for causing damage to reputation and goodwill of
DSL.

xiii
ARGUMENTS ADVANCED
[I] THE CONTRACT BETWEEN NCL AND DSL IS COMPLETELY VALID AND
SHOULD BE RESTORED.
The contract between NCL and DSL is not hit by constitutional invalidity. As it seeks to enforce
a reasonable classification under Article 14 of the Constitution of India and neither is hit by the
provisions of Section 231 of the Indian Contract Act. 2[A] It is in light of these submissions that
the claimant would like to bring this tribunal to the conclusion that the contract is completely
valid and must be restored.[B]
[I.A] THE CONTRACT BETWEEN NCL AND DSL IS CONSTITUTIONALLY VALID AND IS
NOT HIT BY THE PROVISIONS OF SECTION 23 OF THE INDIAN CONTRACT ACT
The claim of NCL that the contract is constitutionally invalid as it is in direct contravention of
the Right to Privacy is unsustainable in light of the jurisprudence which imposes reasonable
restrictions on the exercise of any fundamental right.[1] It is to be further noted that the doctrine
of prospective overruling embalms within its meaning the spirit that no judgment shall be
applicable retrospectively. By virtue of this doctrine, the vires of the contract between NCL and
DSL, which, though claimed to be in abrogation of the Right to Privacy, are kept within their
constitutional limits.[2]
Also, it is pertinent to note that the maxim “Salus Populi Est Suprema Lex” provides a self-
contained scheme with a definite object. The scheme embodied under the maxim says that regard
1
Section 23 of the Indian Contract Act, 1872.
2
The Indian Contract Act, 1872.
1
for public welfare is the highest law and nothing shall override that, thereby protecting the
constitutionality of the contract between NCL and DSL.[3] It must also be kept in mind that the
contract is not hit by the provisions of Section 23 of the Indian Contract Act.[4]
[A.1]The Right to Privacy is qualified by certain reasonable restrictions to exercise of
the same
It is a settled proposition of law that the right to privacy is not an absolute right but is subject to
certain reasonable restrictions.3 Further the judiciary has time to time held that the right to
privacy is an essential component of the right to life but is not absolute and may be restricted for
crime,4 disorder or protection of health and morals or protection of rights and welfare of the
others.5 In this regard, it is pertinent to note the judgment of the Hon’ble Supreme Court in
Avishek Goenka v. Union of India,6 wherein it was held that, “Even if some individual interests
are likely to suffer, such individual or private interests must be given in to the larger public
interest”.
In the matter before this tribunal, it is an accepted fact that the Republic of Nabhivarsha is one of
the most corrupt nations and one with the most tax evaders. 7 The contract between NCL and
DSL was entered into with the sole objective of linking the PAN Number with the CIN/ EIN to
ensure that the legitimate amount of taxes are collected and the constitutional goals of achieving
social and economic equality are furthered. This was also done with a view to fulfil the
constitutional goals of ensuring a social order for the promotion of the welfare of the people 8 and
3
Govind v. State of M.P., AIR 1973 SC 1378; State of Maharashtra v. Madhukar Narayan Mardikar, AIR 1991 SC
207; Patnaik D. Bhuvan Mohan v. State of Andhra Pradesh, AIR 1974 SC 2092.
4
Kharak Singh v. State of U.P., AIR 1963 SC 1295.
5
X v. Hospital Z, (1998) 8 SCC 296.
6
(2012) 5 SCC 321.
7
¶ 2 of the Moot Proposition.
8
Article 38 of the Constitution of India.
2
to ensure that the operation of the economic system does not result in the concentration of wealth
and means of production to common detriment.9
Thus, in the instant matter, the private interest of privileged privacy lies on the one hand and the
greater public interest of social welfare and greatest good of the greatest number lie on the other
and it is only in accordance with the spirit of the Constitution to not hold the contract in violation
of the right to privacy, but only as a reasonable restriction to it. Thereby, holding the contract to
be constitutionally valid.
[A.2]The contract is legal due to the operation of the doctrine of prospective
overrurling
Ordinarily the judicial pronouncements have a retrospective effect. However, constitutional
pronouncements an exception is made to recognize the judiciary’s duty to announce new and
better rules than the ones already in place for future transactions. The whole purpose is to avoid
reopening of settled issues and also prevent multiplicity of proceedings; in effect, this means that
all actions prior to the declaration do not stand invalidated.
The original justification for employing this doctrine has been given in Chicot County Draniage
District v. Baxter State Bank10 wherein it was held that the actual existence of the law prior to the
declaration of its unconstitutionality is an operative fact and may have consequences which
cannot justly be ignored, that the past cannot always be erased by a new judicial declaration…
and it is also likely that retrospective operation of a decision will substantially burden the
9
Article 39 C of the Constitution of India.
10
(1940) 308 US 371.
3
administration of justice. This view was subsequently adopted by the Hon’ble Supreme Court in
the case of I.C. Golaknath v. State of Punjab11 and a catena of other judicial pronouncements.12
In the matter at hand as well, it is pleaded that the non-existence of right to privacy as a
fundamental right is an operative fact that gave force to the contract between NCL and DSL and
declaring it unconstitutional would have consequences which cannot be ignored in a just and fair
manner. Thus, by virtue of the operation of this doctrine, the judgment of the Apex Court of the
Republic of Nabhivarsha declaring the right to privacy as a fundamental right cannot be given a
retrospective or retroactive effect and therefore the validity of the contract is protected.
[A.3] The contract cannot be invalidated dur to the operation of Salus Populi Est
Suprema Lex
The latim maxim “Salus Populi Est Suprema Lex” connotes that health, safety and welfare of the
public is the supreme in law. Herbert Broom, in his celebrated publication, "A Selection of Legal
Maxims" has elaborated the essence thereof as hereunder:
“This phrase is based on the implied agreement of every member of the society that
his own individual welfare shall, in cases of necessity, yield to that of the
community; and that his property, liberty and life shall, under certain
circumstances, be placed in jeopardy or even sacrificed for the public good.”13
11
AIR 1967 SC 1643.
12
V N Narayanan Nair v. State of Kerala, AIR 1971 Ker. 98 (FB).
13
Sayyed Ratanbhai Sayeed and Ors. v. Shirdi Nagar Panchayat and Ors., AIR 2016 SC 1042.
4
The same view has been taken by the judiciary in a catena of judgments, 14 a case in point being,
Friends Colony Development Committee v. State of Orissa 15 and it was held that private interest
stands subordinated to public good. In the matter before this Hon’ble Tribunal as well the most
contentious question in deciding the validity of the contract also is the balance between the
private interests and public welfare. Thus, it is humbly pleaded that the balance be decided in
favor of the greater good of the public thereby giving validity to the contract.
[A.4] The contract is not hit by the provisions of Section 23 of the Indian Contract Act
The scheme envisaged and contained under the provision of Section 23 of the Indian Contract
Act, covers the legality of both the object of the contract and the consideration for it. It is
contended by the respondent herein that the contract between NCL and DSL as it is hit by the
provisions of Section 23. It is pertinent to note that the said section covers only four
circumstances and any agreement falling squarely within the ambit of any of these conditions
shall be deemed to be void.
These conditions are that the contract is either forbidden by law, would defeat the provisions of
any law, is fraudulent or involves or implies injury to the person or property of another; or the
Court regards it as immoral or opposed to public policy. 16The matter at hand as evident does not
fall in the ambit of any of the conditions mentioned under the said section and is thus not hit by
illegality.
Further, any unlawful or immoral act committed by a party in the performance of a contract does
not of itself the party from further enforcing the contract, unless the contract itself was formed
14
Avishek Goenka v. Union of India, (2012) 5 SCC 321; Hira Tikkoo v. Union Territory of Chandigarh, 1 (2004) 6
SCC 765; Binoy Viswam v. Union of India, (2017) 7 SCC 59.
15
2 (2004) 8 SCC 733.
16
Bansi Dhar v. Ajudhia Prasad, AIR 1925 Oudh 120; Re: KL Gauba, AIR 1954 Bom 478.
5
with the intention or purpose of doing that immoral or unlawful act. 17 Therefore, even if some
illegality might be committed in course of the completion of the contract, it’s enforcement
cannot be estopped because the original purpose of the formation of the contract was not
unlawful or immoral and the little effect that it has on the right to privacy is also a subsequent
development.
[I.B] THE CONTRACT BETWEEN NCL AND DSL IS LIABLE TO BE RESTORED
It is humbly submitted before this Hon’ble Tribunal that in view of the arguments stated
hereinbefore, it can be conclusively stated that the contract between NCL and DSL is valid.
However, due to the rescission of the contract by NCL, it is of prime importance to DSL as well
as in tune with the ends of justice that the contract between the two parties be restored.
The judgment in the case of Board of Control for Cricket in India v. KPH Dream Cricket Pvt.
Ltd.,18 it was held that:
“Damages would not provide an adequate remedy and that an interim order staying the
termination was warranted… The Arbitrator has power to grant specific
performance… particularly when the action of an abrupt termination of
the contract which had a life… is unjust, unfair and illegal. Damages will hence not
provide adequate or sufficient recompense.”
The same view has been upheld by the courts in World Sport Group India Pvt. Ltd. v. The
Board of Control for Cricket in India.19 In light of the precedent laid down by the judiciary in
17
Coral Leisure Group Limited v. Burnett, [1981] ICR 503; Newland v. Simons and Willer Ltd., [1981] ICR 521.
18
Arbitration Petition (Lodg.) No. 1303 of 2010, Bombay High Court.
19
(2011) 4 BomCR 797.
6
the above-mentioned judgments, it is only fair to DSL and in the interests of justice that this
Hon’ble tribunal restores the contract or grants a specific performance of the same.
II. MR. VERGHESE CANNOT BE APPOINTED AS AN ARBITRATOR
Section 12 of the The Arbitration and Conciliation Act 20, talks about the various grounds that are
available for challenging the appointment of an arbitrator in an arbitral proceeding. It provides
various reasons as to why an appointment of an arbitrator can be challenged and thereby the
arbitrator can be removed from the arbitral tribunal. One such ground has been provided under
sub-section 5 of Section 1221, it ensures the neutrality of arbitrators, and says that if a person is
approached to be an arbitrator in a certain case he should first disclose all the information to
prove his neutrality, it further says that if the person approached is found of having any kind of
relationship as mentioned in the Seventh Schedule 22 of the act, then he won’t be eligible to be
appointed as an arbitrator for the proceeding. In the present case Dignosft Solutions Ltd. (DSL),
submitted an application for the denial of Mr. Verghese as an arbitrator and submitted two
reasons for the same. The appointment of Mr. Verghese is invalid since the operation of The
Amendment Act and [A] The amendment of the act is retrospective in nature. [B] Further, even
if the retrospective nature of the act is not accepted, the appointment of Mr. Verghese is still not
a viable option. [Arguendo].
20
The Arbitration and Conciliation Act, 1996.
21
Section 12(5) of The Arbitration and Conciliation Act, 1996.
22
Seventh Schedule of The Arbitration and Conciliation Act, 1996.
7
[II.A] THE APPOINTMENT OF MR. VERGHESE IS INVALID SINCE THE OPERATION OF
THE AMENDMENT ACT
Section 12(5)23, of the act has been added by the 2015 Amendment, and it’s a new edition to the
grounds for challenges against the appointment of an arbitrator, according to this section if the
arbitrator and the party enjoy any kind of relationship mentioned under the Seventh Schedule of
the Act, they cannot be appointed as an arbitrator. 24 In the present case DSL and NCL were in a
contract to make the software application operational on the agreed date, upon failure of which
DSL was unhappy and made a representation in writing to Mr. Raghunandan of NCL asking him
to enhance the speed of issuance of CIN/EIN and also demanded 10 million dollars towards
delay caused by NCL in making the software application operational. NCL and DSL had several
meetings to resolve the issue between the two but it never worked out and thereby, DSL invoked
the arbitration clause. DSL nominated Mr. Robert Mathew, a solicitor based out of UK as an
arbitrator and NCL appointed Mr. Verghese, the legal advisor of NCL as an arbitrator and the
two in turn appointed the third arbitrator. Later the 2015 amendment came. DSL submitted an
amendment application to the arbitral tribunal seeking for the modification of prayer, along with
that DSL also submitted an application stating that according to amended arbitration act, Mr.
Verghese could not be appointed as an arbitrator.
In the case of Asssignia-Vil JV v. Rail Vikas Nigam Ltd. 25, the Hon’ble Delhi High Court says
that, Section 12(5),26 mandates that if the arbitrator and the party enjoys any of the relationship
mentioned under Schedule Seven of the Act, they cannot be appointed as an arbitrator. In this
case the court took cognizance of the Amendment to section 12(5), of the act and held that under
23
24
Assignia-Vil JV v. Rail Vikas Nigam Ltd. Arbitration Petition No. 677 of 2015.
25
Arbitration Petition No. 677 of 2015.
26
8
the amendment act the court is duty bound to secure appointment of an independent and
impartial Arbitral Tribunal.
It is most humbly submitted before the Hon’ble Tribunal that in the present case Mr. Verghese
who was the legal advisor in NCL was appointed as an arbitrator by NCL, and DSL agreed to it,
but after the amendment made in the 2015, subsection 5 was inserted in section 12 of the Act. 27 It
said that if the arbitrator appointed enjoys any kind of relationship given in Schedule Seven with
the party he won’t be appointed as an arbitrator, in the present case Mr. Verghese was the legal
advisor in NCL which makes him fall under the relationship categories given under Schedule
Seven and thereby makes him ineligible to be appointed as an arbitrator.
In the case of TRF Ltd. V. Energo Engineering Project,28 the relevant arbitration clause contained
in the contract between the parties provided: “Unless otherwise provided, any dispute or
difference between the parties in connection with this agreement shall be referred to sole
arbitration of the Managing Director of Buyer or his nominee…”. The question which arose
before the Hon’ble Supreme Court was whether this clause was valid in view of section 12(5) 29
as amended in 2015; the appellant argued that the new provisions meant that the Managing
Director could not be appointed as an arbitrator. It was held by the Court that because of the new
provision inserted in the act by the 2015 amendment, the respondent cannot appoint the
Managing Director as the arbitrator in the proceeding because the decision given by him can be
biased and the subsection 5 of section 12 itself makes it clear.
27
The Arbitration and Conciliation Act, 1996.
28
2017 (8) SCC 377.
29
9
It is humbly submitted to the tribunal that similar circumstances occurred in the case of
Mohammad Wahiduddin v. Hakiman,30 where the mukhtiar was acting as the arbitrator of one of
the parties without remuneration, the court in this case held that because he was his mukhtiar he
can be biased and rejected his appointment as a arbitrator in the proceeding.
The objective behind this amendment was twofold:
 To make arbitration more investor friendly, cost effective and suitable for expeditious
disposal of cases.
 To facilitate in making India a major centre for International Commercial Arbitration.
[II.B] THE 2015 AMENDMENT IS RETROSPECTIVE IN NATURE
The Arbitration and Conciliation Act, 1996 was amended in 2015, as because there were certain
points which the Arbitration and Conciliation Act, 1996 wasn’t able to cover moreover there
were certain provisions which required modifications as because they were misplayed and were
used in certain wrong ways that would affect an individual. Section 85(2)(a), 31 says that the
provisions of the amended act in relation to arbitral proceedings which commenced before the
amendment unless otherwise agreed by the parties.
In Thyssen Stahlunion GmbH v. SAIL32it was held that when the arbitral proceedings commenced
before the Arbitration and Conciliation Act, 1996 came into force on 25-1-1996, the award given
on 24-9-1997 would be enforceable under the provisions of the Arbitration Act, 1940.
The provisions of the old Arbitration Act, 1996 would apply in relation to arbitral proceedings
which commenced before the coming into force of the new Arbitration and Conciliation Act,
30
ILR (1902) 29 Cal 278.
31
32
(1999) 9 SCC 334.
10
2015. So the enforcement of the award had to be examined on the touchstone of the proceedings
held under the old Act.33
The 2015 amendment is retrospective in nature, the Hon’ble Delhi High Court in Ratna
Infrastructure Projects Pvt. Ltd. v. Meja Urja Nigam Private Limited, 34 made observations on the
applicability of the 2015 amendments over the arbitral proceedings commenced under the
Arbitration and Conciliation Act, 1996 i.e. before 23 rd October 2015. The Court interpreted the
words “unless the parties otherwise agree” as used in Section 26 of the Amendment Act in light
of the standard agreement terms and held that the amendment act shall be applicable to the
arbitral proceedings initiated before 23 October 2015, since the parties had agreed to statutory
modification in their agreement and hence the 2015 amendments shall come within the ambit of
the clause. Court held that it is not necessary for the parties to expressly enter into a separate
agreement to make the 2015 amendments applicable to the arbitration proceedings.
It is humbly submitted before the tribunal that in the present case there was a contract between
CLL and DSL which came into force on 20th August 2013, with the NCL acquiring CLL the
contract was amended on 11th October 2014 to the extent of incorporating NCL in place of CLL.
The relevant clause of the contract was also amended. According to the principal terms and
conditions of the contract between NCL and DSL after amendment “The arbitration
proceedings shall be governed by the Arbitration and Conciliation Act, 1996 or any statutory
modification or re-enactment thereof and the rules made there under for the time being in
force.35” It proves that the parties at the time of amendment of the contract specifically
33
Rani Constructions Pvt Ltd. v. H.P.SEB, C.A. No. 61 of 1999, Himachal Pradesh High Court.
34
Arbitration Proceeding 537/2016.
35
¶ F, Annexure 1, Page No. 12 of Moot Proposition.
11
mentioned that they will be governed by the 1996 act and if any modifications made to that then
according to that amendment.
The Hon’ble Delhi High Court in Raffles Design International India Pvt. Ltd. v. Educomp
Professional Education Ltd.36 allowed a petition seeking interim relief under Section 9 of the Act
in a Singapore seated arbitration, and held that the provisions of the Amendment Act would
apply to all court proceedings in relation to arbitral proceedings instituted after the Amendment
Act came into force, even if the arbitration commenced prior to the Amendment Act.
[Arguendo] THE APPOINTMENT OF MR. VERGHESE IS NOT A VIABLE OPTION EVEN
IF THE AMENDMENT IS NOT DEEMED TO BE RETROSPECTIVE.
It is humbly submitted before this hon’ble tribunal that even if the retrospective effect of the
amendment is not accepted as an argument, concrete enough for this tribunal to rule against the
appointment of Mr. Verghese as an arbitrator, his appointment is not really a viable option to
adjudge the dispute at hand.
In order to come to this conclusion, it is necessary to look into the object of Arbitration and
Conciliation Act, 1996. The Act has, as one of its objects, to provide for an arbitral procedure
which is fair, efficient and capable of meeting the needs of the specific arbitration. 37 In order to
fulfill this object, it is necessary that the arbitrators constituting the tribunal must be fair,
unbiased and efficient. However, the relationship of Mr. Verghese with NCL raises serious
doubts as to his neutrality and the claimant has a reasonable doubt as to whether the decision of
the tribunal would be fair and unbiased. Therefore, his appointment on the tribunal is not a viable
option.
36
O.M.P. (I) (COMM.) 23/2015 & CCP (O) 59/2016, IA Nos. 25949/2015 & 2179/2016.
37
Bharat Seva Sansthan v. Uttar Pradesh Electronics Corporation Limited, AIR 2007 SC 2961.
12
[III] NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAYING IN
IMPLEMENTATION OF THE SOFTWARE APPLICATION AND NCL IS ALSO
LIABLE TO PAY COMPENSATION FOR THE DEVELOPMENT OF VIRUS
LEADING TO THE FALL IN THE PRICES OF THE SHARES OF DSL.
Section 55 of the Indian Contract Act 187238 provides a rule in regard to the performance of
the promise to do a certain thing at or before a specified time. Contracts, for the performance
of which definite time is fixed, must be completed within the time limit. Delay in such
performance shall make defaulter liable to pay compensation. The NCL under this section is
liable to pay compensation to the DSL for delaying in implementation of the software
application [A]. The NCL is also liable to pay compensation to DSL for causing damage to
reputation and goodwill of DSL [B].
[III.A] The NCL Is Liable To Pay Compensation To The DSL For Delaying In
Implementation Of The Software Application.
The provisions of Section 55 of the Indian Contract Act39 apply when the parties have
specified the time for the performance of any obligation under the contract. The Contract
between DSL and NSL was for the purpose of operation of software application whereby the
IT filing webpage and the IT Account (PAN) of the citizens and other legal entities would be
locked unless they had linked their CIN/EIN with their PAN from May 1, 2015 which was
extended for a period of 3 months to August 1, 2015 40. Both the parties have specified the time
for the performance of contract which clearly established the intention of parties to extend the
time.[1] The time period should be complied by the NCL as the contract is the commercial
38
Section 55 of Indian Contract Act, 1872
39
Ibid.
40
¶ 13 of the Moot Proposition
13
contract.[2] NCL failure to make software application operational on or before August, 1 will
amount to delay in execution of the contract.[3]
[A.1] The parties intended to extend the timeline and specified the time for the
performance of contract to August 1, 2015.
Section 55 puts an agreement after the original date on the same footing as an agreement just
before the original date. Mere forbearance from suing or giving a formal notice is not enough.
Time for performance can be extended only by an agreement arrived at between the parties 41.
The above principle has been laid down by the Hon’ble Bombay High Court in the case of
Anandram Mangturam v.Bholaram Tanumal42. The Hon’ble Supreme Court has upheld the
same principle in the case of Kailash Nath Associates v DDA43.
It is submitted before this Hon’ble Tribunal that in the case of Muhammad Habidullah v Bird
& Co.44 it was held that the parties can elect to extend the time for performance, even after the
time stipulated has expired and if the goods are not delivered, the buyer can claim damages as
on the extended date. Various organs of the judicial system have taken the same view. 45 In
view of the ratio established under this precedent, the Claimant derives a right to claim
compensation on August 2, 2015.
It is also submitted before the Hon’ble Tribunal that the decisive date for fixing damages is the
last date to which the contract was extended. This was established in the case of Orissa
41
Pollock & Mulla, The Indian Contract and Specific Relief Acts, Vol I, 14th Edition, Lexis Nexis, p. 858
42
AIR 1946 Bom 1
43
(2015) 4 SCC 136
44
AIR 1922 PC 178
45
Andard Mount (London) Ltd. v Curewel (India) Ltd., AIR 1985 Del 45; British Paints (India) Ltd. v. Union of
India, AIR 1971 Cal 393; The Paper Sales Ltd. v. Chokhani Bros. , AIR 1946 Bom 429
14
Textiles Mills Ltd. v. Ganesh Das Ramkishun.46 This view has been taken by Delhi 47 and
Calcutta High Court48.
It has been established from the provision of Section 55 of the Indian Contract Act, 1872 and
the above cases that there should be intention of the parties to extend the time of performance
of contract to a fixed date and both the parties in this case were intended to extend the time of
performance of contract to August 1, 2015.
[A.2] The time period should be complied by the NCL as the contract was a
commercial contract
In Commercial or Mercantile Contracts, the need of certainty is of great importance 49. The
Commercial contract includes both purchase of goods by one party from the other and
outsourcing of any service by one party from the other.
There is no scope of presumption in commercial contract that time is not the essence of the
contract.50 The Hon’ble Supreme Court in the case of Mahabir Prasad Rungta v. Durga
Dutta51 has held that stipulation as to time is ordinarily of the essence of the contract in
mercantile contracts.
It is submitted before the Hon’ble Tribunal that in the case of Bhudar Chandra Goswami v.
CRS Betts52, the defendant subsequently obtained the extension of time period for 5 days for
46
AIR 1961 Pat 107.
47
Shriram Pistons & Rings Ltd. v Buckeye Machines (P) Ltd., 136 (2007) DLT 254,
48
British Paints (India) Ltd. v. Union of India, AIR 1971 Cal 393
49
Pollock & Mulla, The Indian Contract and Specific Relief Acts, Vol I, 14th Edition, Lexis Nexis, p 863
50
Lucknow Automobiles v Replacement Parts Co., AIR 1940 Oudh 443; Madina Rice Mills v Sampangirmiah AIR
1953 Mys. 66
51
AIR 1961 SC 990.
52
AIR 1916 Cal. 901
15
the purpose of delivery of Elephant and he failed to deliver within the stipulated time, it was
held that the very circumstances that the defendant asked for the extension of the time, showed
that time was intended to be essence of the contract, and the plaintiff was therefore justified in
refusing to accept the Elephant and was entitled to damage.
It is also submitted before the Hon’ble Tribunal in the case of Delhi Cloth Mills Co. Ltd. v.
Kanhia53, where a contract for the sale of goods provided for delivery to be taken by the buyer
within a specified period, and reserved liberty to the seller, if delivery was not taken within the
fixed period, to sell the goods on the buyer’s account and at his risk, the mere fact that the
contract contained a clause that after the expiry of that period, the goods shall remain at the
buyer’s risk, would not take the case out of the general rule that in mercantile contracts, time is
of the essence of the contract.
It is well established from the above cases that the performance of contract should be made
within the time period as provided by the agreement provided such agreement is a commercial
agreement. In view of the rule laid down by the above cases, the NCL is bound to operate the
software application within the specified time.
[III.B] NCL Is Liable To Pay Compensation To DSL For Causing Damage To
Reputation And Goodwill Of DSL
Article 21 of the Constitution confers on every person the fundamental right to life and
personal liberty which has become an inexhaustible source of many other rights. 54 The
Judiciary has time and again read into the mandate of Article 21, 55 of the Constitution various
53
(1913) Punj Rec No. 80 285
54
Maneka Gandhi v. Union of India, (1978) 1 SCC 248.
55
Article 21 of The Constitution of India, 1950.
16
facets of the right to life and personal liberty, one of such facets which has been recognized by
Hon’ble Supreme Court is the right to reputation.
H.R.Khanna J. in his dissenting opinion in ADM Jabalpur v. Shivkant Shukla,56 said that
Article 21 cannot be considered as the sole repository of the right to life and personal liberty.
Sanctity of life of liberty was not something new when the constitution was drafted; the
principal that no one should be deprived of his life and liberty without the authority of law was
not the gift of the constitution. This dissenting opinion is the bedrock on which the apex court
reads into Article 2157 the various facets of the right to life and personal liberty.
Right to Reputation is another face of right to life of a citizen under Article 21. 58 If an authority
or any person in the discharge of their duties or in completion of work harms or adversely
affects the reputation or character of any person, it must provide a chance to him to have his
say in the matter. In such circumstances right of an individual to have a safeguard of the
principles of natural justice before being adversely commented upon by a commission of
enquiry, is statutorily recognized and violation of the same will have to bear the scrutiny of
judicial review.59 No judicial order can ever be passed by any court without providing a
reasonable opportunity of being heard to the person likely to be affected by such order and
particularly when such order results in drastic consequences of affecting one’s own reputation.
In the instant case the High Court had erred in directing enquiry and investigation against an
institution without impleading the same.60
56
(1976) 2 SCC 521.
57
58
59
State of Bihar v. Lal Krishna Advani, (2003) 8 SCC 361; Board of Trustees of the Port of Bombay v. Dilip
Kumar Raghavendranath Nadkrani (1983) 1 SCC 124; State of Maharashtra v. Public Concern for Governance
Trust, (2007) 3 SCC 587; D.F. Marion v. Minnie Davis, 1955 Amercian LR 171.
60
Divine Retreat Centra v. State of Kerala, (2008) 3 SCC 542.
17
It is most humbly submitted to the Hon’ble tribunal that in the present case DSL according to
the contract with NCL developed the software application whereby the IT filing webpage and
the IT accounts (PAN) of the citizens and other legal entities would be locked unless they link
their CIN/EIN with their PAN, DSL developed the software application and gave it to NCL for
testing on 1st August 2015. Mr. Sudeep a former employee of NCL, developed a
Virus/Ransomware (Wannawail) on the basis of the software application developed by DSL,
this virus was a menace which would disrupt the system and freeze the screen of the computer
unless certain ransom was paid by the user.
The report of Mr. Sudeep being the person causing such menace was leaked into public
domain through social media, DSL was criticized for making such a software application. DSL
had a very good reputation before the happening of this event but because of a former
employee of NCL all the reputation of DSL were drastically going down, moreover the shares
of DSL fell drastically due this report and media speculations.
PRAYER
For the reasons stated and argued before this Hon’ble Tribunal, the Counsels on behalf of the
Claimant humbly requests this Tribunal to:
Adjudge and, Declare that:
1. The impugned contract is neither unconstitutional nor is it hit by the provisions of Section
23 of the Indian Contract Act, 1872.
2. Mr. Verghese is not eligible to be appointed as an arbitrator.

18
3. NCL is liable to compensate DSL for not implementing the software application on time
as well as for damaging the reputation of DSL.
Dated this 8th Day of October, 2017.

- Counsels on behalf of the Claimant.

19

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4TH KIIT NATIONAL MOOT COURT COMPETITION

Symbiosis Law School, Pune – National ADR

IN THE MATTER OF:

DIGNOSOFT SOLUTIONS LTD

NAVRATNA CORPORATION LIMITED

MEMORANDUM ON BEHALF OF THE CLAIMANT

FILED BY: AGAINST:

DIGNOSOFT SOLUTIONS LTD NAVRATNA CORPORATION LIMITED

MEMORANDUM ON BEHALF OF THE PETITIONER

TABLE OF ABBREVIATIONS iii

[II.A] The appointment of Mr. Verghese is invalid since the operation 8

MEMORANDUM ON BEHALF OF THE CLAIMANT

MEMORANDUM ON BEHALF OF THE CLAIMANT

 The Indian Contract Act, 1872.

S.No. Case Name Citation Page No.(s)

MEMORANDUM ON BEHALF OF THE CLAIMANT

27 Maneka Gandhi v. Union of India (1978) 1 SCC 248 16

MEMORANDUM ON BEHALF OF THE CLAIMANT

33 Patnaik D. Bhuvan Mohan v. State of AIR 1974 SC 2092 2

MEMORANDUM ON BEHALF OF THE CLAIMANT

 ANSON, LAW OF CONTRACT (29TH ED.) 2010.

MEMORANDUM ON BEHALF OF THE CLAIMANT

Arbitration and Conciliation Act, 1996.

MEMORANDUM ON BEHALF OF THE CLAIMANT

Ltd. (CLL) on 10th January, 2013.

also it was suggested to link the PAN with CIN/EIN.

unless they had linked their CIN/EIN with PAN.

MEMORANDUM ON BEHALF OF THE CLAIMANT

CIN/EIN with their PAN.

both in turn appointed a third arbitrator.

declared Right to Privacy as a fundamental right.

MEMORANDUM ON BEHALF OF THE CLAIMANT

II. WHETHER MR. VERGHESE CAN BE APPOINTED AS AN ARBITRATOR?

III. WHETHER NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAY IN

MEMORANDUM ON BEHALF OF THE CLAIMANT

is completely valid and must be restored.

[II] MR. VERGHESE CANNOT BE APPOINTED AS AN ARBITRATOR

MEMORANDUM ON BEHALF OF THE CLAIMANT

[III] NCL IS LIABLE TO PAY COMPENSATION TO DSL FOR DELAYING IN

MEMORANDUM ON BEHALF OF THE CLAIMANT

valid and must be restored.[B]

NOT HIT BY THE PROVISIONS OF SECTION 23 OF THE INDIAN CONTRACT ACT

[A.1]The Right to Privacy is qualified by certain reasonable restrictions to exercise of

and means of production to common detriment.9

[A.2]The contract is legal due to the operation of the doctrine of prospective

Ordinarily the judicial pronouncements have a retrospective effect. However, constitutional

all actions prior to the declaration do not stand invalidated.

Maxims" has elaborated the essence thereof as hereunder:

circumstances, be placed in jeopardy or even sacrificed for the public good.”13

shall be deemed to be void.

[I.B] THE CONTRACT BETWEEN NCL AND DSL IS LIABLE TO BE RESTORED

Ltd.,18 it was held that:

termination was warranted… The Arbitrator has power to grant specific

performance… particularly when the action of an abrupt termination of

provide adequate or sufficient recompense.”

II. MR. VERGHESE CANNOT BE APPOINTED AS AN ARBITRATOR

available for challenging the appointment of an arbitrator in an arbitral proceeding. It provides

a viable option. [Arguendo].