Team code: D-3

DR. RAM MANOHAR LOHIA NATIONAL LAW UNIVERSITY, LUCKNOW

Before,

THE CIVIL COURT OF NOIDA

Civil Suit No. ___/2018

UNDER SECTION

Green Tea Building Energy (P) Ltd.…………………………………………………Plaintiff

V.

Softech Solutions ………………………...……….………………………………...Defendant

WRITTEN ON BEHALF OF THE DEFENDANT-

Softech Solutions

MEMORANDUM ON BEHALF OF DEFENDANTS Page 1

Table of Contents
INDEX OF AUTHORITIES...................................................................................................... 3

LIST OF ABBREVIATION ...................................................................................................... 4

STATEMENT OF FACTS ........................................................................................................ 5

ISSUES RAISED ....................................................................................................................... 7

SUMMARY OF ARGUMENTS ............................................................................................... 8

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

PRAYER……………………………………………………………………………………..13

MEMORANDUM ON BEHALF OF DEFENDANTS Page 2

 INDEX OF AUTHORITIES

Cases

Hindustan Petroleum Corp. Ltd. v. Kamal Kant Automobiles And Others………………9,10

SBP & Co. v. Patel Engineering Ltd., AIR 2017 (NOC 79) 37…………………………9.
Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967………9
Paradine v Jane [1647] 4 (KB)……………………………………………………………….11
Dhruv Dev Chand v Harmohinder Singh (AIR 1968 SC 1024)……………………………..12
Indian Rare Earth Ltd. v Southern Electric Supply Co. of Orissa (AIR 2010 Ori 115)……..12
Parmeshwari Das Mehra v Ram Chan Om Prakash (AIR 1952 Punj 34,38)………………...12
Joseph Coastline Steamship Line Ltd. v Imperial Smelting Corp Ltd. (1942 AC 154 (HL)...13

Other Authorities

AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF (12th Edition 2017)………….12,13

MEMORANDUM ON BEHALF OF DEFENDANTS Page 3

 LIST OF ABBREVIATION
1. AIR- All India Reporter
2. ALL ER - All England Reporter
3. CaPC- Clandestinesia
4. CJI- Chief Justice of India
5. Co.- Company
6. Corp- Corporation
7. Cri LJ- Criminal Law Journal
8. Del- Delhi
9. Dr.- Doctor
10. Edn- Edition
11. Hon’ble- Honorable
12. HL- House Of Lords
13. i.e- That is
14. Inc- Incorporated
15. In re- In matter of
16. IT- Information Technology
17. Jr.- Juniors
18. Ltd- Limited
19. NA- Narration Agreement
20. NGO- Non Government Organization
21. Ors.- Others
22. QB- Queen’s Bench
23. r/w- Read with
24. SLP- Special Leave Petition
25. SHA- Shareholder’s Agreement
26. SC- Supreme Court
27. SCC- Supreme Court Cases
28. SCR- Supreme Court Report
29. UP- Uttar Pradesh
30. V- Versus
31. WB- West Bengal
32. ¶- Paragraph
33. &- And
MEMORANDUM ON BEHALF OF DEFENDANTS Page 4
 STATEMENT OF FACTS

1. Raj Verma is CEO of Green Tree Building Energy (P) Ltd (GTBE). The Company
deals in management of energy efficient building. This sector is a sunrise sector of
India as energy is a big issue of climate change mitigation in India.

2. He hires Viram as Strategic Director for the company. Viram in a scan of working of
enterprise finds that GTBE still is working on manual operation and all charting and
data analysis is being done manually with outdated computer and networks which are
highly insecure and susceptible to hacking. Raj holds a top level executive meeting to
discuss for modernizing the company and in the meeting, it is decided that company
needs to be updated with state of the art computer with highly secured networking.

3. Viram invites tender for purchase of 100 Laptops with all new specifications, 200
desktops with latest specifications, 100 notebooks of Apple company. 5 tenders are
deposited out of which tender of Softech solutions which was based in Kanpur was
accepted though e-tendering process. GTBE was having its headquarter in NOIDA.
There was an arbitration clause in the agreement and deadline for supply was fixed
15th December 2017. Time was essence of contract.

4. The networking of company was to be processed by TCS for a tender of 200 crores
was accepted by TCS New Delhi. The networking was to be completed by 15th
December 2017. Time was essence of contract.

5. The master agreement maintained that in case of disputes all matters shall be settled
amicably by the arbitration. The seat of arbitration shall be in NOIDA and arbitration
shall be run in English language only.

6. Softech Solutions started supplying the computers to GTBE. It supplied 100 laptops
to it as per order on 9th December.

7. On 6th December in Maulviganj area Muslims are observing the Black Day
commemorating the demolition of Babri Masjid. On the same day Hindu Extremist
outfits are observing as ‘Shurya Divas’. On this day a boy Ramswaroop leads a
congregation in the Maulviganj area shouting anti-muslim slogan. Soon the mob turns

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 violent and they start firing with illegal arms upon each other. Ramswaroop is killed
in such firing.

8. Killing of Ramswaroop triggers violence in Kanpur. In Maulviganj area Softech

Solutions has the biggest warehouse which is torched by the unruly mob and in fire
the whole warehouse is destroyed which casuse a damage of 500 crores to Softech.

9. Softech is having equally big warehouses in other part of country but this damage
breaks the spinal chord of the company. Softech writes a letter on 11th December,
2017 to GTBE about inability to perform the contract on account of ‘Force Majeure’.
GTBE being annoyed with the letter writes a letter of enforcement of contract as per
placed order.

10. Softech Solutions wanted the revision of original contract pleading ‘impossibility on
account of riot’ to perform the contract. They demanded 3 months time to complete
the contract.

11. TCS is about to complete the work but in order to encrypt the whole network and
protect the systems of enterprise and maintain the firewall demands all computer of
the enterprise to be installed for final completion of work. In case GTBE is unable to
give all the computers by 13th December the completion of networking is not possible
by TCS.

12. In wake of such situations GTBE is unbale to revise the contract of Softech and wants
to treat is as a breach of contract. A case is filed for breach of contract in NOIDA
Civil Court

13. This is being objected by Defendants on the plea that it has no jurisdiction. They also
plead ‘frustration’ and riot as a reason of non-performance of the contract.

MEMORANDUM ON BEHALF OF DEFENDANTS Page 6

 ISSUES RAISED

ISSUE 1-

ISSUE 2- THAT THE CONTRACT WAS IMPOSSIBLE TO PERFORM BECAUSE

OF ‘FRUSTRATION’.

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 SUMMARY OF ARGUMENTS

ISSUE 1-THAT THE KANPUR CIVIL COURT DOES NOT HAVE JURISDICTION
OVER C2O COMPANY
It is very humbly submitted before this Hon’ble Court that the Kanpur Civil Court does not
have jurisdiction over the Click to Own (C2O) Company because with reference to Section
20 of the Code of Civil Procedure the suit can only be instituted in the court in the
jurisdiction of which the defendant actually or voluntarily resides, or carries on business, or
personally works for gain or where the cause of action, wholly or in part, arises.

ISSUE 2- THAT THE CONTRACT WAS IMPOSSIBLE TO PERFORM BEACAUSE

OF FRUSTRATION.

It is very humbly submitted before this Hon’ble Court that the defendant is not liable to pay
for any kind of compensation caused by breach of contract as the breach was caused by the
impossibility of performance of contract (frustration). Defendant is also not liable for any
breach of contract caused by impossibility of performance of contract due to unforeseen
events.

The same has been stated in The Indian Contract Act, 1872 that “a contract to do an act
which, after the contract is made becomes impossible, or by reason of some event which the
promisor could not prevent, unlawful, becomes void when the act becomes impossible or
unlawful”1 It is clearly stated that a contract to do any act which is made impossible by some
reason which the promisor could not prevent becomes void. In this case, the defendant could
not have been able to prevent such a situation which made the performance of contract
impossible. This being the case the defendant is thus not liable to pay compensation for any
damages caused by breach of contract.

1
Section 56 para 2 ICA

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 ARGUMENTS ADVANCED

ISSUE 1-THAT THE KANPUR CIVIL COURT DOES NOT HAVE JURISDICTION
OVER C2O COMPANY.

It is humbly submitted that in the present case the petitioner and respondent had entered into
an agreement according to which in case of disputes all matters were to be settled amicably
by arbitration.2 This agreement falls within the ambit of Section 7(1) of the Act which states
that “arbitration agreement” means an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in a contract or in the

form of a separate agreement.3 It is a very common modality to include arbitration clause in a
detailed contract, in India and the world over. In case of any dispute, the arbitrator appointed
as per the arbitration clause, has the competence4 to separate the arbitration clause from the
underlying contract, and decide the issue.

The Indian Arbitration and Conciliation Act, 1996, also recognizes the same principle and
provides that the Arbitral Tribunal may rule on its own jurisdiction, including ruling on any
objections with respect to the existence or validity of the arbitration agreement, and for that
purpose, an arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract; and a decision by the Arbitral Tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.5 This
is widely recognized as the doctrine of separability in the international commercial arbitration
legal regime. It necessarily entails that the arbitration clause contained in a contract remains
valid, even if the contract becomes null and void.

The Supreme Court in the judgment of Hindustan Petroleum Corporation6 held that the
jurisdiction of the civil court is barred after an application under section 8 of the Act is made
for arbitration. The court further stated that if there is a clause for arbitration in an agreement
between the parties then it is mandatory for the civil court to refer the dispute to an

2
Para 7, Moot Proposition.
3
Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967).
4
SBP & Co. v. Patel Engineering Ltd., AIR 2017 (NOC 79) 37.
5
Hindustan Petroleum Corp. Ltd. v. Kamal Kant Automobiles And Others
6
Ibid.

MEMORANDUM ON BEHALF OF DEFENDANTS Page 9

arbitrator.7 Section 16 of the Arbitration and Conciliation Act states that the arbitral tribunal
has the power to rule on its own jurisdiction including rule on any objection with respect to
the existence or validity of the arbitration agreement.

ISSUE 2- THAT CONTRACT WAS IMPOSSIBLE TO PERFORM BECAUSE OF

‘FRUSTRATION’.

It is very humbly submitted before this Hon’ble Court that the defendant is not liable to pay
for any kind of compensation caused by breach of contract as the breach was caused by the
impossibility of performance of contract (frustration). Defendant is also not liable for any
breach of contract caused by impossibility of performance of contract due to unforeseen
events.

The same has been stated in The Indian Contract Act, 1872 that “a contract to do an act
which, after the contract is made becomes impossible, or by reason of some event which the
promisor could not prevent, unlawful, becomes void when the act becomes impossible or
unlawful”8 It is clearly stated that a contract to do any act which is made impossible by some
reason which the promisor could not prevent becomes void. In this case, the defendant could
not have been able to prevent such a situation which made the performance of contract
impossible. This being the case the defendant is thus not liable to pay compensation for any
damages caused by breach of contract.

Essentials of Frustration of contract are defined in the case of Paradine v Jane9:

1. That the untoward/ supervening event occurred after the formation of the contract;

2. That the performance of the contract has become impossible/ unlawful owing to the said
untoward/ supervening event;

3. That the impossibility/ unlawfulness is not on account of any event which the promisor
could not prevent or anticipate;

7
Ibid.
8
Section 56 para 2 of ICA
9
Jane (King’s Bench (1647) Aleyn 26) ; ER 897 (Laid down the doctrine of frustration)

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4. That the impossibility/ unlawfulness is not self-induced by the promisor or due to his
negligence, i.e. the event is due to no fault of either party.

The King’s Bench laid down the following essentials for frustration of contract. Applying this
case set of circumstances the defendant is not liable to pay compensation as the supervening
event occurred after the formation of contract and the defendants could not have possibly
think of any such circumstances having in the near future. Moreover, the performance of
contract has become impossible owing to the said event as the warehouse of the defendant
had been torched by the mob and was not of any use and because of which they suffered huge
loss. Although the defendants had other warehouses but because of the loss of 500 crores
broke the spinal cord of the company which made the performance of the contract
impossible. The third essential also proves that there was no breach of contract as the
defendant could not have foreseen such situation and could neither do anything to prevent
such a situation, there was nothing on his part he could do. And neither was there any
negligence on the part of defendant or any fault on the part of defendant which made the
performance of such event impossible. There being no mistake on the part of the defendant
therefore he is not liable to pay compensation for the breach of contract.

Further it has been said by the Supreme Court in the case of Dhruv Dev Chand v
Harmohinder Singh10 that the performance of an act may not be literally impossible but it
may be impractical and useless from the point of view of the object and purpose which the
parties had in view of the object and purpose which the parties had in view; if an untoward
event or change of circumstances totally upsets the very foundation upon which the parties
rested their bargain, it can very well be said that the promisor finds it impossible to do the act
which he promised to do.11 In this case the promisor found it impossible to do the act
promised after a loss of 500 crore which broke the spinal cord of the company12. In spite of
having two other warehouses the defendant could not possibly perform the act because of
huge damage caused to the company.

It was held in Indian Rare Earth Ltd v Southern Electric Supply Co of Orissa13 that since
there was no supply to factory because of uprooting of towers by super cyclone, no liability
incurred on the defendant because it was caused by natural event which the defendants had

10
AIR 1968 SC 1024
11
AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF (12th Edition 2017 page 393)
12
Part 11 of the Moot Proposition
13
AIR 2010 Ori 115

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no control of. Similar is the situation in this case the warehouse was burned down to ashes in
the communal riots by the mob which the defendant had no control of. Since the defendant
had no control on the event and because of this event only the act was converted into an
impossible one and making the contract void. Thus, there is no liability on the part of the
defendant to pay any damages to the plaintiff.

In Parmeshwari Das Mehra v Ram Chan Om Prakash14 explained the principle “it is clear
that if there is entirely unanticipated change of circumstances the question will have to be
considered whether this change of circumstances has affected the performance of contract to
such an extent as to make it virtually impossible or even extremely difficult or hazardous. If
that be the case, the change of circumstances not having been brought about by the fault of
either party, the courts will not enforce the contract.” In this case the court emphasised on
‘entirely unanticipated change of circumstances’ to such an extent which makes the
performance virtually impossible. Here also because of the burning of the warehouse and
damage caused to the company it became virtually impossible for the defendants to carry on
the performance of the act.

It was held in the case of Joseph Coastline Steamship Line Ltd v Imperial Smelting Corp
Ltd15where a ship was chartered to load a cargo but on the day before she could have
proceeded to her berth, an explosion occurred in the auxiliary boiler, which made it
impossible for her to undertake the voyage at the scheduled time, the House of Lords held
that frustration had, in fact, occurred in the circumstances. 16 The same happened in this case
since the warehouse was torched and no work could be carried on further therefore,
impossibility of performance. The burning of the warehouse made it impossible to carry on
the work which led to frustration of contract.

14
AIR 1952 Punj 34,38
15
1942 AC 154 (HL)
16
AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF (12th Edition 2017 page 399)

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 PRAYER
Wherefore in the light of the issues raised, arguments advanced and authorities cited, this
Hon’ble Supreme Court may be pleased to adjudge and declare:

1. That the Hon’ble Court should dismiss the matter because the Hon’ble court has no
jurisdiction over the matter.
2. That the Hon’ble Court should declare that contract is impossible to perform because
of ‘Frustration’.

AND/OR
Pass any other order that this Hon’ble Court may deem fit in the interests of justice, equity
and good conscience.
And for this the Respondent, as is duty bound shall forever humbly pray.

Sd/-

(Counsel on behalf of the Defendants)

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