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6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

PUM – 03
6th KIIT NATIONAL MOOT COURT COMPETITION, 2018

BEFORE THE HONOURABLE HIGH COURT OF MALGUDI

M/S. MERCURY PARKING INC. _____________________________________________PETITIONER

V.

THE AIRPORT AUTHORITY OF MALGUDI___________________________________ RESPONDENT

MEMORANDUM ON BEHALF OF THE APPELLANT

TABLE OF CONTENTS

i
MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

LIST OF ABBREVIATIONS .................................................................................................. iii

INDEX OF AUTHORITIES..................................................................................................... iv

STATEMENT OF JURISDICTION........................................................................................vii

STATEMENT OF FACTS ....................................................................................................... ix

STATEMENT OF ISSUES .....................................................................................................xii

SUMMARY OF ARGUMENTS .............................................................................................xii

ARGUMENTS ADVANCED ................................................................................................... 1

ISSUE 1: WHETHER THE SUPREME COURT CAN SUOMOTU UNDERTAKE AN

OVERHAUL OF THE BRCI AND CRICKET GOVERNANCE IN INDIA (REL.

WHETHER BRCI CAN BE CONSIDERED A PUBLIC BODY)?...................................... 1

ISSUE 2.WHETHER THE BRCI ABUSED ITS DOMINANT POSITION AND

ENGAGED IN ANTI-COMPETITIVE PRACTICES W.R.T. THE CTLI AND S TV. ...... 5

ISSUE 3: WHETHER THE WRIT PEITITION FILED BY MS.RANI DEVI IS

SUSTAINABLE IN THE COURT ........................................................................................ 8

ISSUE 4: WHETHER THE PREMATURE TERMINATION OF CONTRACT WITH

STATS TV IS VALID?........................................................................................................ 11

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ISSUE 5: WHETHER MANDATORY SHARING OF BROADCASTING SIGNALS

WITH DB CHANNEL FOR TRANSMISSION TO CABLE OPERATORS IS

JUSTIFIED? ......................................................................... Error! Bookmark not defined.

PRAYER .................................................................................................................................. 25

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LIST OF ABBREVIATIONS

HC High court
AIR All India Report
NHA National Highway Authority
NOC No Objection Certificate
AAI Airport Authority of India

GCC General Conditions of Contract


CVC Central Vigilance Commission
RTI Right to Information
ILR Indian Law Reporter
Ltd. Limited
Pvt. Private
SC Supreme Court
SCC Supreme Court Cases
SCR Supreme Court Report
UOI Union of India
v. Versus

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MEMORIAL ON BEHALF OF THE PETITIONER
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INDEX OF AUTHORITIES Cases

A. Ayyasamy Vs. A. Paramasivam & Ors. AIR 2016 SC 4675, .............................................................. 4


Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak ................................................................ 2
Anil Mahindra & Anr vs Surender Kumar Makkar & Anr , MANU / DE / 3652 / 2017, Rachappa
Gurudappa, Bijapur v. Gurudiddappa Narandappa & Ors., AIR 1989 SC 635 ........................... 4
Bharat Rasiklalv. Gautam Rasiklal, (2012) 2 SCC 144 .......................................................................... 3
Denel Proprietary Ltd. v. Govt. of India, Ministry of Defence, (2012) 2 SCC 759 ................................ 7
Hajra Bai v Jadavabai) AIR 1986 MP 106 .......................................................................................... 12
HD Hanumanthapa v Mohd. Sab, 2011 1 Kant LJ 49 .......................................................................... 12
Hindustan Sugar Mills v State of Rajasthan, AIR 1981SC1681 ............................................................. 8
In C.V.George and Company vs. M/s.Marshall Sons (Manufacturing) Ltd., 1983 MLJR 525 ............. 13
in Dharma Prathishthanam v. Madhok Construction P. Ltd .................................................................. 7
In Muhammad Habidullah vs. Bird and Company ............................................................................... 13
In Sterling Computers v. M & N. Publications Ltd. ,AIR 1996 SC 11 .................................................... 9
Johnson v Agnew , 1980 AC 367 .......................................................................................................... 11
Lucent Technologies Inc. v. ICICI Bank Limited & Ors, MANU/DE/2717/2009 ................................... 7
Maula Bux vs Union Of India 1970 AIR 1955, 1970 SCR (1) 928 ....................................................... 11
Moitra’s Law of Contract & Specific Relief Act; 5th ed ,page 4 ............................................................. 8
Muhammad Habidullah vs. Bird and Company.................................................................................... 13
National Seeds Corporation Ltd. v. M. Madhusudhan Reddy ................................................................ 4
Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 690 [1995 .............................. 5
Pyrites, Phosphates & Chemicals ltd. v Bihar Electricity Board , AIR1996 Pat 1................................. 9
Radhakrishnan v. Maestro Engineers, 2010 1 SCC 72........................................................................... 3
Ramesh Kumar & Anr. v. Furu Ram & Anr., (2011) 8 SCC 613 ............................................................ 2
Rosedale Developers Pvt. Ltd. v. Aghore Bhattacharya ......................................................................... 4
Shri Sachidanand Pandey v State of West Bengal, AIR1987 SC 1109 ................................................ 10
Skypak Courier Ltd. v. Tata Chemical Ltd (2016) SCC Online SC 825 ................................................ 4
State of Bihar v Karam Chand Thakur, AIR 1962 SC 110...................................................................... 9
State of Bihar v Majeed, 1954 AIR 245 .................................................................................................. 8
State of Punjab vs. K.R Erry, AIR 1967 P H 279 .................................................................................... 7
V. Punnan Thomas v. State of Kerala, 2000(1) SCR 33 ......................................................................... 9

STATUTES

2.1,ICC MEMBERSHIP CRITERIA: APPLICATION PROCESS, RE-CLASSIFICATION


AND RETENTION OF MEMBERSHIP ............................................................................... 7
S. 115 (1), Broadcasting Services Act, 1992, No. 103, Acts of Australian Parliament, 1992
(Australia)............................................................................................................................. 24
S. 2(h), Competition Act, 2002, Act No:12 of 2003, Acts of Parliament (2003). ..................... 5

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S. 2(u), Competition Act, 2002, Act No:12 of 2003, Acts of Parliament (2003). ..................... 5
S. 4(1), Competition Act, 2002, Act No:12 of 2003, Acts of Parliament (2003). ..................... 8
S.4(2), Competition Act, 2002, Act No:12 of 2003, Acts of Parliament (2003). ...................... 8
Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, No. 11,
Acts of Parliament,2007 (India). .................................................................................... 16, 18

INTERNATIONAL AUTHORITIES

Evans v. Newton US 296 15 L.Ed.-2ND 373, Ch 614=1963 1 All.E.R.590 ............................. 15


Fédération internationale de football association v European Commission, Kingdom of
Belgium, Federal Republic of Germany, United Kingdom of Great Britain and Northern
Ireland., Case C-204/11 P .................................................................................................... 23
New York v United States,US 572 .......................................................................................... 15
Rex v. Parke ,[1903] 2 K.B. 432 ................................................................................................ 1
Turner Broadcasting System, Inc. et al. v. Federal Communications et al, 512 U.S. 622
(1994). .................................................................................................................................. 24
Union of European Football Associations (UEFA), Fédération Internationale de Football
Association (FIFA) v. European Commission, (Case C-204/11 P) in the CJEU,
http://fra.europa.eu/en/caselaw-reference/cjeu-joined-cases-c-20111-p-c-20411-p-and-c-
20511-p-opinion. .................................................................................................................. 23
Whittaker, J McDonnell, Pans Singh,T,’United we stand: collective media rights sales under
challenge in England’(2003) (3) ISLJ 11 ............................................................................. 16

RESEARCH PAPERS

European Council’s Directive relating to ‘the pursuit of television broadcasting activities’,


Official Journal of the European Union ( Apr. 4, 2003), ..................................................... 23
Roshan Gopalakrishna and Vidya Narayanaswamy, M an dat or y sh ari n g, N ew s Acces s
a n d F ai r Us e St a n dar d , T h e Sp ort s L aw & P ol i c y C e nt e r, B eng al uru ,
In di a (M a r. 15, 2 0 11 ), ht t p :/ / sp ort sl a w .i n/ ho m e/ 2 01 1/ 0 3/ 15/ ma nda t or y -
s ha r i n g - n ew s -a c c es s -a nd -f ai r -u se - st a n dar ds / . .................................................. 22
Vidushpat Singhania, Sports Broadcasting Rights in India, The International Sports Law
Journal (Apr. 3, 2007), http://www.asser.nl/media/2052/cms_sports_id121_1_islj-2007_3-
4.pdf...................................................................................................................................... 22

CONSTITUTIONAL PROVISIONS

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INDIAN CONSTI .art 266 ......................................................................................................... 2

INTERNET

http://www.business-standard.com/article/companies/zee-bcci-argue-case-in-supreme-court-
104092901065_1.html Zee, BCCI argue in Supreme Court by Law correspondent Delhi,
6:33pm.................................................................................................................................... 2

PARLIAMENTARY DEBATES

LOK SABHA DEBATES, Sports Broadcasting Signals (Mandatory Sharing with Prasar
Bharati) Bill,2007164.100.47.194/loksabha/debates/debatesadvsearch14.aspx.,................ 20

STATEMENT OF JURSIDICTION

The Petitioner, M/s. Mercury Parking Inc. has approached the Hon’ble High Court of
Malgudi under Article 225 of the Constitution of India, 1949.

225. Jurisdiction of existing High Courts

Subject to the provisions of this Constitution and to the provisions of any law of the
appropriate Legislature made by virtue of powers conferred on that Legislature by this
Constitution, the jurisdiction of, and the law administered in, any existing High Court, and
the respective powers of the Judges thereof in relation to the administration of justice in the
Court, including any power to make rules of Court and to regulate the sittings of the Court
and of members thereof sitting alone or in Division Courts, shall be the same as immediately
before the commencement of this Constitution: Provided that any restriction to which the
exercise of original jurisdiction by any of the High Courts with respect to any matter
concerning the revenue or concerning any act ordered or done in the collection thereof was
subject immediately before the commencement of this Constitution shall no longer apply to
the exercise of such jurisdiction.

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STATEMENT OF FACTS

1. The Airport Authority of Malgudi (Airport Authority) issued a tender for a contract of

managing public parking space. In the tender documents, the size of the portion of

land to be allotted to the bidder was 5000sq. meters. The terms of the tender stated

that the successful bidder would derive revenue by collecting parking charges at the

land allotted and would pay a monthly license fee to the Airport Authority.

2. M/s. Mercury Parking Inc. (Mercury) is a company registered under Companies Act,

1956 and is engaged in the business of operating parking lots for various airports

across the country. The tender was awarded to Mercury and a license agreement for a

period of 3years was entered into between the parties in May 2017.

3. Mercury came to know that some construction work had started by the NHA on the

land allotted to it. Mercury filed an RTI query, in pursuant to which Mercury receives

a response that 2000sq meters out of a total 5000sq. meter allotted to the Mercury was

being acquired by the NHA and an “NOC” had been granted by the Airport Authority

to NHA in 2016 for the said acquisition.

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4. Consequently, Mercury wrote a letter to the Airport Authority asking for a

proportionate reduction in the license fee since the area of land allotted to it had been

reduced substantially.

5. Mercury had stopped making payments towards the license fee when no reply was

received from the Airport Authority. The Authority issued letters to Mercury,

demanding payment due. The License Agreement contained an arbitration clause

which states that “In case of any dispute between the parties, the dispute will be

referred to an arbitrator to be solely appointed by the Airport Authority. As a

condition precedent to the appointment of an arbitrator, the licensee will deposit any

amount due to the licensor under the license agreement”.

6. When Mercury invoked the arbitration agreement. The Airport Authority replied that

all dues had to be deposited as a condition precedent to the appointment of arbitrator.

7. Mercury issued a letter to the Airport Authority stating that there was a material

misrepresentation in the tender documents as the fact that 2000sq meters of the said

were to be acquired by NHA was suppressed. Mercury also stated about its demand

for revising the license fee payable proportionately.

8. Meanwhile, Mercury was disqualified in another tender issued by the Airport

Authority in the state of Arkham, due to the pending dues of Mercury with the Airport

Authority of Malgudi , as one of the conditions of disqualification.

9. Mercury filed a civil suit before the High Court of Malgudi, on the basis that the

entire suit was vitiated by fraud. Therefore, Mercury was entitled to damages.

10. The Airport Authority stated that matter should be referred to arbitration complying

with the condition precedent. Additionally, any reduction in the license fee could take

place by way of a public tender and the Authority would have to invite a fresh tender.

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11. Mercury contended that the clause violates the basic principles of arbitration and is

contrary to the spirit of arbitration as an ADR mechanism itself is framed in such a

manner so as to deter any party to initiate arbitration. Mercury also claimed damages

for the loss of opportunity in tender issued in the state of Arkham. It was finally

argued that the entire matter was vitiated by fraud and should be decided by the Civil

Court itself.

STATEMENT OF ISSUES

ISSUE I.

Whether the present dispute is arbitrable or it should be tried by the Civil Court in a
Civil Suit?

ISSUE II.

Whether the arbitration clause is onerous , and the condition precedent amounted to an
unfair and unreasonable condition for initiating arbitration?

ISSUE III.

Whether Mercury is entitled to damages for loss of opportunity in the second project as
a result of the purported dues?

ISSUE IV.
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Whether any proportionate reduction in the license fee could take place only by the way
of rebid or the Authority could itself suo-moto grant the revision in rates of the tender?

SUMMARY OF ARGUMENTS

ISSUE 1: WHETHER THE PRESENT DISPUTE IS ARBITRABLE OR IT SHOULD

BE TRIED BY CIVIL COURT IN CIVIL SUIT?

It is humbly submitted before the Hon’ble High Court that the present suit is competent
enough to be tried by civil court in civil suit. As the matter involves serious allegations of
fraud against the respondent and such allegations of fraud are so complicated that it becomes
absolutely essential to be decided by the civil court. Arbitrator cannot take care of such a
complex case.

ISSUE 2. WHETHER THE ARBITRATION CLAUSE IS ONEROUS , AND THE


CONDITION PRECEDENT AMOUNTED TO AN UNFAIR AND UNREASONABLE
CONDITION FOR INITIATING ARBITRATION?

It is contended that the arbitration clause is onerous as well as the condition precedent to
trigger the arbitration is absolutely unfair and unreasonable. It was the Airport Authority,
who breaches the contract; further such condition which clearly favours the respondent has
been included. Petitioner on the other hand, given no choice about the type of dispute
settlement it would choose and in order to get the deal, have to sign that form of contract.
Moreover, there is a suspicion of bias, which has been variously described as apparent or
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unconscious or imputed bias, as it is arbitration tribunal of Airport Authority which would


decide the dispute. it is utter violation of principle of natural justice.

ISSUE 3: WHETHER MERCURY IS ENTITLED TO DAMAGES FOR LOSS OF


OPPORTUNITY IN THE SECOND PROJECT AS A RESULT OF THE
PURPORTED DUES?

It is humbly pleaaded that Mercury is entitled to damages for loss of opportunity in the
second project as a result of the purported dues. In the present case State being party to the
contract makes the contract entirely different from the contract between private individuals.
Contract between Govt. imposes a liability upon it to act in reasonable and fair manner, as it
includes the public interest. Unlike the said principles, nothing has been followed by the
Respondents.

ISSUE 4: WHETHER ANY PROPORTIONATE REDUCTION IN THE LICENSE


FEE COULD TAKE PLACE ONLY BY THE WAY OF REBID OR THE
AUTHORITY COULD ITSELF SUO-MOTO GRANT THE REVISION IN RATES
OF THE TENDER?

It is humbly contended that the Airport Authority could itself suo-moto grant the revision in

rates of the tender and rebid for reduction in license is possible. Firstly, the contract in the

present dispute is voidable at the option of one party i.e. Mercury, which cleared it intention

of subsisting the contract with revised license fee as the area allotted has been reduced.

Secondly, the Airport Authority being single body to govern all the airports across the

country is empowered to modify the contract at the Airport Authority of Malgudi also.

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ARGUMENTS ADVANCED

ISSUE 1: WHETHER THE PRESENT DISPUTE IS ARBITRABLE OR IT SHOULD


BE TRIED BY CIVIL COURT IN CIVIL SUIT?

It is humbly submitted before the Hon’ble Court that the present dispute is not arbitrable and

it should be tried by civil court in civil suit because of the following reasons:

[1.1]. THE MATTER INVOLVES SERIOUS ALLEGATIONS OF FRAUD, THEREFORE


IT IS INARBITRABLE.

The matter before the court is not capable of being decided by an arbitrator as the Courts
have held in a number of cases that certain kinds of disputes may not be capable of
adjudication through the means of arbitration. The Courts have held that certain disputes like
criminal offences of a public nature, disputes arising out of illegal agreements and disputes
relating to status, such as divorce, cannot be referred to arbitration. Following categories of
disputes are generally treated as non-arbitrable:1

(i) patent, trademarks and copyright;

(ii) antitrust /competition laws

(iii) insolvency/winding up;

(iv) bribery /corruption;

(v) fraud ;

(vi) criminal matters.

'Fraud' is a knowing misrepresentation of the truth or concealment of a material fact to induce


another to act to his detriment. Fraud can be of different forms and hues. Its ingredients are
an intention to deceive, use of unfair means, deliberate concealment of material facts, or

1
Indu Malhotra & O.P. Malhotra, The Law & Practice of Arbitration and Conciliation' ( 3rd ed. 2006).
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abuse of position of confidence. The Black's Law Dictionary defines 'fraud' as a concealment
or false representation through a statement or conduct that injures another who relies on it.2

The manner in which the agreement in dispute was entered with deliberate non-disclosure of
the material information pertaining to the area of land allotted and disproportionate license
fee, clearly disclose a case of fraud. It is difficult to define it with precision, as the shape of
each fraud depends upon the fertile imagination and cleverness of the person who conceives
of and perpetrates the fraud. Its ingredients are an intention to deceive, use of unfair means,
deliberate concealment of material facts, or abuse of position of confidence.

Section 17 of the Indian Contract Act, 1872 defines `fraud' as :

"17. `Fraud' defined.-`Fraud' means and includes any of the following acts committed by a
party to a contract, or with his connivance, or by his agent, with intent to deceive another
party thereto or his agent, or to induce him to enter into the contract :

(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be
true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent.

Explanation.- Mere silence as to facts likely to affect the willingness of a person to enter into
a contract is not fraud, unless the circumstances of the case are such that, regard being had to
them, it is the duty of the person keeping silence to speak, or unless his silence, is in itself,
equivalent to speech."

In Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak3, serious allegations of fraud
were held by the Court to be a sufficient ground for not making a reference to arbitration.

2
Ramesh Kumar & Anr. v. Furu Ram & Anr., (2011) 8 SCC 613
3
AIR 1962 SC 406
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Reliance in that regard was placed by the Court on a decision of the Chancery Division in
Russell v. Russell.4

When fraud is of such a nature that it vitiates the arbitration agreement, it is for the Court to
decide on the validity of the arbitration agreement by determining the issue of fraud.5

Where allegations of fraud are so complicated that it permeates the entire contract, including
the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of
the contract itself of the entire contract which contains the arbitration clause or the validity of
the arbitration clause itself it is for the Court to decide on the validity of the arbitration
agreement.6

The applicant made serious allegations against the respondents of having committed
malpractices in the account books, and manipulation of the finances of the partnership firm.
The Court held that such a case cannot be properly dealt with by the arbitrator, and ought to
be settled by the Court, through detailed evidence led by both parties. 7 It is respectfully
submitted before the Court that when we apply the aforesaid principles in the present case, it
is clear that only a civil court is competent enough to try the suit involving fraud in order to
render justice to petitioner, the Airport Authority knowingly concealed the fact of giving no
objection certificate to NHA prior to invitation of tender for the same area of land. Mercury,
the petitioner in good faith and with no knowledge of prior NOC agreed to come into contract
with respondent.

[1.2] SECTION 8 OF ARBITRATION AND CONCILIATION ACT,1996, IS NOT A


MANDATORY PROVISION:

It is respectfully submitted before the court that the power of court to refer parties to
arbitration where there is an arbitration agreement, is not a mandatory provision. For the
furtherance of justice , the existence of an arbitration clause will not be a bar to the
entertainment of a complaint by any other forum , since the remedy provided under the law is

4
(1880) 14 Ch D 471
5
Paragraph 50, Law Commission Report
6
Bharat Rasiklalv. Gautam Rasiklal, (2012) 2 SCC 144
7
Radhakrishnan v. Maestro Engineers, 2010 1 SCC 72
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in addition to the provisions of any other law for the time being in force8. This was reiterated
in National Seeds Corporation Ltd. v. M. Madhusudhan Reddy9, and Rosedale Developers
Pvt. Ltd. v. Aghore Bhattacharya10. It was observed that the remedy is merely optional and is
in addition to and not in derogation of the provisions of any other law for the time being in
force.

As well as the disputes where the subject matter falls exclusively within the domain of public
fora, viz. the Courts, such disputes would be non-arbitrable and cannot be decided by the
Arbitral Tribunal but by the Courts alone,11 which makes application under Sec. 8 of the
ACA non enforceable.

Where the issue of "arbitrability" arises in the context of an application under Section 8 of the
Act in a pending suit, all aspects of arbitrability will have to be decided by the court seized of
the suit, and cannot be left to the decision of the arbitrator. Even if there is an arbitration
agreement between the parties, and even if the dispute is covered by the arbitration
agreement, the court where the civil suit is pending, will refuse an application under Section
8 of the Act, to refer the parties to arbitration.12

With the above principles, the counsel on behalf of petitioner humbly submits that the civil
suit is completely maintainable.

8
Skypak Courier Ltd. v. Tata Chemical Ltd (2016) SCC Online SC 825
9
(2012) 2 SCC 506
10
(1981) 2 SCR 466
11
A. Ayyasamy Vs. A. Paramasivam & Ors. AIR 2016 SC 4675,
12
Anil Mahindra & Anr vs Surender Kumar Makkar & Anr , MANU / DE / 3652 / 2017, Rachappa Gurudappa,
Bijapur v. Gurudiddappa Narandappa & Ors., AIR 1989 SC 635.
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ISSUE 2: WHETHER THE ARBITRATION CLAUSE IS ONEROUS, AND THE


CONDITION PRECEDENT AMOUNTED TO AN UNFAIR AND UNREASONABLE
CONDITION FOR INITIATING ARBITRATION?

Through the submissions tendered therein, it will be established that the arbitration clause is

onerous and the condition precedent amounted to an unfair and unreasonable condition for

initiating arbitration as:

[2.1]ARBITRATION CLAUSE FALLS WITHIN THE AMBIT OF UNCONSCIONABLE

CONTRACT.

A condition precedent is “an act or event, other than a lapse of time, which, unless the

condition is excused, must occur before a duty to perform a promise in the agreement

arises”.13 The arbitration clause with condition precedent to initiate the arbitration in the

present dispute falls within the ambit of "Unconscionable" contract. It refers to the inequality

of bargaining power between the parties and of unfair advantage of one party over the other.14

Section 16 of ICA has three sub-section which are re-produced as under:

(1) A contract is said to be induced by "undue influence" where the relations subsisting

between the parties are such that one of the parties is in a position to dominate the will of the

other and uses that position to obtain an unfair advantage over the other.

(2) in particular and without prejudice to the generality of the foregoing principle, a person is

deemed to be in a position to dominate the will of another: (a) Where he holds a 'real or

apparent authority over the other, or where he stands in a fiduciary relation to the other; or

(b) Where the makes a contract with a person whose mental capacity is temporarily or

permanently affected by reason of age, illness, or mental or bodily distress.

13
Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 690 [1995]
14
Section 16, Indian Contract Act, 1872
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(3) where a person who is in position to dominate the will of another, enters into a contract

with him, and the transaction appears, on the face of it or on the evidence adduced, to be

unconscionable, the burden of proving that such contract was not induced by undue influence

shall be upon the person in a position to dominate the will of the other.

The counsel contends here that the Airport Authority, in the present case has itself drafted the
arbitration agreement including the onerous condition precedent to appoint an arbitrator.
Mercury being in a weaker position, had left with no choice but to sign the agreement. The
contract is looked upon as take it or leave it contracts with no room for negotiation.15 The
Airport Authority abused its position of dominance and tried to gain disproportionately.
Mercury with a view to get the tender for allocating parking space at airport, accepted the
harsh and unfair terms imposed by the Respondents.

As well as by applying sec. 67 A of Indian Contract Act, 1872,it can be stated that the

arbitration clause as well as the condition precedent is highly arbitrary and hence excusable

as the company is a well-established company in the business of operating parking lots for

various airports across the country. In the era of globalization, every company urges and

desires to enhance the business and getting government tenders like these surely boosts up the

desires of the companies. Therefore, the terms was accepted under the influence of getting the

tender deed.

[2.2] AGAINST THE PRINCIPLE OF NATURAL JUSTICE

It is a fundamental requirement of justice in deciding a dispute between 2 or more parties.

Firstly, that the arbitrator or the tribunal must be and must be seen to be disinterested and

unbiased. Secondly that every party must be given a fair opportunity to present his case and

answer the case of his opponent.

15
Russell B. Korobkin, 'Bounded Rationality, Standard Form Contracts And Unconscionability' [2003] SSRN
Electronic Journal.
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In the words of Supreme Court of India 16, where a body or authority is characteristically

administrative, the principles of Natural Justice are also liable to be invoked. Any decision

which infringes upon the principles may be set aside by the superior judicial authorities.

An agreement which is unilateral and lacks mutuality is not enforceable and would also be

void under Section 28 of the Indian Contract Act, 187217. In addition, the counsel referred to

the decision of the Supreme Court in Dharma Prathishthanam v. Madhok Construction P.

Ltd 18 on the strength of the said decision contended that one party cannot usurp the

jurisdiction and proceed to act unilaterally; therefore, a unilateral appointment and reference

would be illegal.

The right to appoint the arbitrator is solely kept by the Airport Authority which makes the

agreement fundamentally flawed and indicates that the clause only refers to the right of the

Airport Authority to refer the disputes to a Sole Arbitrator to be appointed by the Authority.

Moreover, Airport Authority being state under Article 12 of the Constitution of India, is a

government body and appointment of the Government nominated arbitrator leads to

apprehension of bias that is not indicative of an impartial approach19.

16
State of Punjab vs. K.R Erry, AIR 1967 P H 279
17
Lucent Technologies Inc. v. ICICI Bank Limited & Ors, MANU/DE/2717/2009
18
(2005) 9 SCC 686
19
Denel Proprietary Ltd. v. Govt. of India, Ministry of Defence, (2012) 2 SCC 759

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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

ISSUE 3: WHETHER MERCURY IS ENTITLED TO DAMAGES FOR LOSS OF


OPPORTUNITY IN THE SECOND PROJECT AS A RESULT OF THE
PURPORTED DUES?

It is humbly contended before the Hon’ble court that Mercury is entitled to damages for the

loss of opportunity. In a democratic society governed by the rule of law, it is the duty of the

State to do what is fair and just to the citizen and the State should not seek to defeat the

legitimate claim of the citizen by adopting a legalistic attitude but should do what fairness

and justice demand20.

[3.1] GOVERNMENT CONTRACTS ARE DIFFERENT FROM PRIVATE CONTRACTS

The Indian Contract Act, 1872 does not prescribe any form for entering into contracts. A

contract may be oral or in writing. It may be expressed or be implied from the circumstances

of the case and the conduct of the parties 21 .But the position is different in respect of

Government Contracts. A contract entered into by or with the Central or State Government

has to fulfill certain formalities as prescribed by Article 299 of the Indian Constitution22.

A contract is an agreement enforceable by law which offers personal rights, and imposes

personal obligations, which the law protects and enforces against the parties to the agreement.

The general law of contract is based on the conception, which the parties have, by an

agreement, created legal rights and obligations, which are purely personal in their nature and

are only enforceable by action against the party in default23.

20
Hindustan Sugar Mills v State of Rajasthan, AIR 1981SC1681
21
M.P Jain; Indian Constitutional Law; 5thed; page 1353
22
State of Bihar v Majeed, 1954 AIR 245
23
Moitra’s Law of Contract & Specific Relief Act; 5th ed ,page 4
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

Some special privileges are accorded to the Government in the shape of special treatment

under statutes of limitation24.As well as it is not and should not be as free as an individual in

selecting the recipients for its largess. A democratic Government cannot lay down arbitrary

and capricious standards for the choice of persons with whom alone it will deal25.

3.2 PRINCIPLES UNDERLYING GOVERNMENT CONTRACTS

[3.2.1] REASONABLENESS, FAIRNESS

The principle of reasonableness and rationality which is legally as well as philosophically an

essential element of equality or non-arbitrariness is projected by Article 14 and it must

characterize every State Action, whether it be under the authority of law or in exercise of

executive power without making of law.. The action of the Executive Government should be

informed with reason and should be free from arbitrariness26.

[3.2.2] ACTIONS OF THE STATE AND ITS INSTRUMENTALITY ARE BOUND TO BE

FAIR AND REASONABLE.

The principle of fairness and reasonableness would be applicable even in the matter of

exercise of executive power without making law. It is settled principle of law that the court

would strike down an administrative action which violates any foregoing conditions27.

[3.2.3] PUBLIC INTEREST

The consideration to weigh in allotting a public contract are and have to be different than in

case of a private contract as it involves expenditure from the public exchequer. And

whenever the authority departs from such standard or norms, the Courts intervene to uphold

and safeguard the equality clause as enshrined in Article 14 of the Constitution and strike

24
In Sterling Computers v. M & N. Publications Ltd. ,AIR 1996 SC 11
25
V. Punnan Thomas v. State of Kerala, 2000(1) SCR 33
26
State of Bihar v Karam Chand Thakur, AIR 1962 SC 110
27
Pyrites, Phosphates & Chemicals ltd. v Bihar Electricity Board , AIR1996 Pat 1
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

down actions which are found arbitrary, unreasonable and unfair and prone to cause a loss to

the public exchequer and injury to public interest. Therefore, even when an award of contract

may not be causing any loss to the public exchequer manifestly, it may still be liable to

quashment for being unfair, unreasonable, discriminatory and violative of the guarantee

contained in Article 1428.

3.3 BREACH OF CONTRACT UNDER INDIAN CONTRACT ACT, 1872.

Compensation for failure to discharge obligation resembling those created by

contract.—When an obligation resembling those created by contract has been incurred and

has not been discharged, any person injured by the failure to discharge it is entitled to receive

the same compensation from the party in default, as if such person had contracted to

discharge it and had broken his contract.

Explanation.—In estimating the loss or damage arising from a breach of contract, the means

which existed of remedying the inconvenience caused by the non-performance of the contract

must be taken into account.

The counsel by contending the above two issue presents that Airport Authority of India

falling under the purview of article 12 of the Constitution, has violated the basic principles of

government contracts and thus fails to comply with the fundamental rights provided in the

Constitution of India.

The expression "whether or not actual damage or loss is proved to have been caused thereby"

is intended to cover different classes of contracts which come before the Courts. Where the

Court is unable to assess the compensation, the sum named by the parties if it be regarded as

a genuine pre- estimate may be taken into consideration as the measure of reasonable

compensation, but not if the sum named is in the nature of a penalty. Where loss in terms of

28
Shri Sachidanand Pandey v State of West Bengal, AIR1987 SC 1109
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

money can be determined, the party claiming compensation must prove the loss suffered by

him29. In Doyle v Olby (Ironmongers) Ltd30where there has been a tortious wrong consisting

of a fraudulent inducement, the proper starting point for any court called on to consider what

damages are recoverable by the defrauded person is to compare his position before the

representation was made to him with his position after it, brought about by that

representation, always bearing in mind that no element in that consequential position can be

regarded as attributable loss and damage if it be too remote a consequence.

“The general principle for the assessment of damages is compensatory, i.e., that the innocent

party is to be placed, so far as money can do so, in the same position as if the contract had

been performed31.

ISSUE 4: WHETHER ANY PROPORTIONATE REDUCTION IN THE LICENSE


FEE COULD TAKE PLACE ONLY BY THE WAY OF REBID OR THE
AUTHORITY COULD ITSELF SUO-MOTO GRANT THE REVISION IN RATES
OF THE TENDER?

29
Maula Bux vs Union Of India 1970 AIR 1955, 1970 SCR (1) 928
30
1969 2 QB 158
31
Johnson v Agnew , 1980 AC 367
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

It is humbly submitted before the Hon’ble Court that the:

[4.1] ALTERATION IN CASE OF VOIDABLE CONTRACTS

A contract the consent to which is caused by coercion, undue influence, fraud or

misrepresentation, is voidable at the option of the party whose consent was so caused 32. A

party to a contract, whose consent was so caused by fraud or misrepresentation, may, if he

thinks fit, insist that the contract shall be performed, and that he shall be put in position in

which he would have been if the misrepresentation made had been true33. The party affected

by the factors that make the contract voidable, has to avoid it otherwise it remains valid. It is

not like that of a void agreement that does not require to be avoided34. He has the option

either to avoid the contract.

The contract is void at the behest of the parties. In the present case Mercury is already facing

the situation of fraud and terminating the contract will render more difficulty to its fame and

market. In this era of rapid growing market structure, and this field being a field of

monopolistic market, where there is only one seller i.e. Government and large number of

buyers the government clearly is at a very dominating stage.

The seller (Government) is at a very dominating stage can easily regulate the terms and

conditions accordingly, the only condition being fair and non-arbitrary. The government can

easily and efficiently alter the terms of the contract and enter into a new contract with the

same party. The government although being at a fraudulent stage can adjust the terms and

conditions, not hampering the rights of the company.

[4.2] INTENTION OF THE PARTY TO ENTER INTO A NEW CONTRACT

32
Section 19, Indian Contract Act, 1872.
33
Hajra Bai v Jadavabai) AIR 1986 MP 106
34
HD Hanumanthapa v Mohd. Sab, 2011 1 Kant LJ 49
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

Immediately after receiving the response of RTI Query, Mercury wrote a letter to the Airport

Authority expressing its intention of entering into a new contract. Mercury asked for a

proportionate reduction in the license fee of 25lakhs/month since the area of land allotted to it

has been substantially reduced. The license fee was quoted on the basis of the representations

made by the Airport Authority in tender document and on the assumption that the revenue

flow would be out of the parking charges collected out of the use of the entire 5000 sq.

meters land.

The essential requirement of section 55 of the Contract Act is, if the appellant wants to claim

compensation for any loss occasioned by the non-performance of the contract within the

stipulated time and if the appellant accepts performance of the contract, he must issue notice

to the respondent of his intention to claim damages35. In Muhammad Habidullah vs. Bird and

Company36, it has been held that the effect of Section 55 of the Act is, where the party having

the option elects not to avoid, to put the agreement after the original date on the same footing

as an agreement just before the original date.

Mercury had clearly indicated the intention of entering into a new contract. When no reply

was received to Mercury, then only Mercury stopped making payments towards the license

fee. Prior to this Mercury had no intention of stopping the payments or going to the Court.

"We think that a distinction can be made between cases where a document is wholly or

partially invalid so that it can be disregarded by any court or authority and one where it has to

be actually set aside before it can cease to have legal effect. In Ningawwa v. Byrappa37 &

Ors. Court referred to the well-established principle that a contract or other transaction

35
In C.V.George and Company vs. M/s.Marshall Sons (Manufacturing) Ltd., 1983 MLJR 525

36
AIR 1922 PC 178
37
1968 AIR 956
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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

induced or tendered by fraud is not void, but only voidable at the option of the party

defrauded. The transaction remains valid until it was avoided.

[4.3] THE AUTHORITY CAN ITSELF SUO-MOTO GRANT THE REVISION IN RATES

OF TENDER

It is most humbly submitted that the Authority can itself suo-moto grant the revision in rates

of tender. The authority need not take any further step to enter into a new contract and itself

revise the rates and continue with the same party.

It is submitted that two similar tenders of Airport Authority (enclosed herewith) possess

clauses which empower them of taking suo moto action in case of any reduction in the area of

land or license fee.

1. In the notice on inviting tender of car parking at Aurangabad Airport clause 2 sub clause c

clearly mentions that-

c) The tentative area of the car park is indicated in the NIT (as per Location map attached).

During the course of the contract due to any administrative reasons (like construction activity

or security etc.) the area of car park is reduced more than 10% of the area allotted at the time

of commencement then the rebate will be worked out on proportionate basis.

2. In the Special Conditions of The License of car parking tender at Calicut International

Airport clause 25 and 26 clearly mention that-

25. Rebate: - During the course of the contract due to any administrative reasons (like

construction activity or security etc) the area of car park is reduced more than 10% of the area

allotted at the time of commencement then the rebate will be worked out as below: - (i)

Actual measurement shall be conducted jointly by AAI and the contractor whenever the

14
MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

change is taking place after the commencement of the contract. (ii) The modified contract

value shall be approved by the Airport Director and communicated to the contractor duly

acknowledged. (iii) The reduction will be applicable from the first of the following month

only. (iv) The contract period will not be changed under any condition. (v) The applicable

rates for parking for different vehicles mentioned will be strictly adhered to.

26. In case of reduction in area as above, AAI reserves the right to compensate for the same

in the low level car park area. The licensee is entitled for rebate as above only if the

reduction in area is more than 10% even after alternate area is provided.

Thus, the counsel humbly submits that the governing authority of all these Airport

Authorities is the same. They all get covered under the same Authority and are directed by

the same Authority. The counsel contends here that when all of them are governed and

controlled by the same Authority and having the same clause as of rebate and reduction of

land then the Airport Authority of Malgudi can also take suo moto action and reduces the

license fee.

Adopting this procedure will surely help in saving a huge amount of money which will be

wasted in the long procedure of re-bid and starting the contract again. A fresh bid will cost a

huge amount of money which money saved can be used by the Authorities in other purposes.

A fresh bid will also help in saving a lot of time of the Authorities which will be wasted

during the procedure and tests adopted for a fresh bid.

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MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

PRAYER

In the light of the issues raised, arguments advanced and authorities cited, may this Hon’ble

Court be pleased:

TO DECLARE that the present dispute should be tried by the Civil Court in a Civil Suit.

16
MEMORIAL ON BEHALF OF THE PETITIONER
6th KIIT NATIONAL MOOT COURT COMPETITION - [P-634]

TO UPHOLDThat the BRCI has abused its dominant position and engaged in anti-
competitive practices with respect to the CTLI and S TV and levy fine keeping facts,
circumstances and revenues of the BRCI.

TO UPHOLD and set aside the termination of contract with Stats TV and to declare that it is
a breach.

TO DECLAREThat the award of Broadcasting Rights of ILC to Wickets TV was not valid
and the E-auction as requested by Rani Dev to be deemed justifiable.

TO DECLAREThe mandatory sharing of broadcasting signals with DB Channel is justified.

AND/OR

Pass any other order that it deems fit in the interest of Justice, Equity and Good Conscience.

All of which is respectfully submitted.

And for this, the Appellants as in duty bound, shall humbly pray.

Sd/-
COUNSEL FOR THE APPELLANTS

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MEMORIAL ON BEHALF OF THE PETITIONER