DAMODARAM SANJIVAYAA NATIONAL MOOT COURT COMPTETION 2019

_____________________________________________________________________________

BEFORE THE HON’BLE SUPREME COURT OF AVALON

UNDER ARTICLE 32 OF THE CONSTITUTION OF AVALON

_____________________________________________________________________________

PIL NO. ----- of 2019

1. THE GOLLUM ENTER. ………………………….. (PETITIONER)

V.

2. THE BAN & OTHERS.………………………….. (RESPONDENT)

MEMORIAL FILED ON BEHALF OF THE RESPONDENT

COUNSELS APPEARING ON BEHALF OF THE RESPONDENT

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INDEX OF AUTHORITIES..................................................................................................[4]

STATEMENT OF JURISDICTION........................................................................................[5]

STATEMENT OF FACTS.........................................................................................................[5]

STATEMENT OF ISSUE..........................................................................................................[9]

SUMMARY OF ARGUMENTS..............................................................................................[10]

ARGUMENTS ADVANCED.................................................................................................[11]

PRAYER...............................................................................................................................[17]

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 LIST OF ABBREVIATIONS
1. AIR- All India Reporter
2. All ER- All England Reports
3. DLT- Delhi Law Times
4. HL- House of Lords
5. HP- Himachal Pradesh
6. Med LJ- Medical Law Journal
7. PC- Privy Council
8. SC- Supreme Court
9. SCC- Supreme Court Cases
10. SCC- Supreme Court Cases
11. SLT- Scots Law Times
12. UKHL- UK House of Lords
13. WLR- Wisconsin Law Review
14. WP- Writ Petition

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 INDEX OF AUTHORITIES
CASES:
1. Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd……….. ([1961]
AC 388).)
2. Banque Bruxelles Lambert v Eagle Star Insurance Co…………….. ([1996] UKHL
10 (SAAMCo ))

3. Victoria Laundry (Windsor Ltd.) v. Newman Industries Ltd…………… ( (1854) 9

Exch. 341.)
4. Jupiter Gaming Solutions Pvt. Ltd. v. Government of Goa & Ors
5. United States: Dee-K Enterprises v. Heveafil
6. United States: Empagran et al. v. F. Hoffman-LaRoche
7. ANGILA TELEVISION v REED………………………….. (1972] 1 QB 60)

8. Stedman v. Swan's Tours…………………………… ((1951) 95 SJ 727.)

9. BOLTON V MAHADEVA………………………………….. 1972] 2 All ER 1322

10. Fletcher v. Autocar and Transporters……………. ((1968) 2 QB 322 = (1968))

BOOKS:

 THE CONSTITUTION OF AVALON

 THE COMPETITION COMMISSION ACT 2002

OTHER SOURCES:
https://indiankanoo.com

https://lawn.com

https://livelaw.com

https://lawtimesjournal.in

https://unctad.org/en/Docs/c2clp38_en.pdf

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 STATEMENT OF JURISDICTION

The jurisdiction of this Hon’ble High Court has been invoked under Article 226 of the
Constitution of India by the Competition Commission challenging the jurisdiction of the
disputes of the Company’s that the given facts is that the Gollum is not acquire by the Bain and
it is not liable for dominant the power. It is humbly submitted that this Hon’ble Court has
jurisdiction over the matter.

STATEMENT OF FACTS

1. In 1991, the Government of Avalon opened up its market and in order to address any
emergent issues, Avalon enacted its competition law in 2002, the Avalon Competition Act,
2002 (hereinafter referred to as the “Competition Act”). However, due to various policy
considerations and judicial challenges, the Competition Act was brought into force in phases,
with the first tranche of substantive provisions coming into force on 20 May, 2009. The
Competition Act replaced the Avalon Monopolies and Restrictive Trade Practices Act, 1969.

2. The Competition Commission of Avalon (hereinafter referred to as “CCA”) regards the

decisions of the Competition Commission of India as well as other decisions of the Indian
Courts Ron the Indian Competition Act, 2002, as having high persuasive value. The CCA
also gives due regard to the competition regulators of the European Union and the United
States, and relies on precedents from these jurisdictions as well.

3. In the years 2014 – 2015, with the change in Government in Avalon, there was a significant
push for economic reforms. As part of a series of economic and financial reforms, the
Government of Avalon introduced the Avalon Insolvency and Bankruptcy Code (hereinafter
referred to as “AIBC”). The stated purpose of AIBC was time-bound resolution of credit
woes of financial institutions and at the same time, operationalization of the stalled assets in
the market.

4. The Government also laid heavy emphasis on environmental regulations and made stricter
norms for industries based on forest assets. The new Environment Policy of Avalon was
initially enacted for a period of 5 years and was to be reviewed thereafter. The Environment
Policy entailed heavier regulation of consumption of forest wealth and increased duties with
a view to divert attention to alternatives. This had a direct effect on industries dependent on

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 forest assets including paper and wooden furniture and saw a dip in their profits. Since the
enactment of the Environment Policy, Avalon has seen a steady increase in imports of paper,
which currently account for about 20 percent of the total consumption of paper in Avalon.

5. Shadowfax Industries (hereinafter referred to as “Shadowfax”) is a leading printing and

publishing house in Avalon. Shadowfax is credited with revolutionizing the printing industry
in Avalon by continuously evolving techniques that are cost efficient and innovative. In
2011, with a view to integrate its operations, Shadowfax ventured into paper manufacturing
and with the help of investments from a consortium of private equity funds, raised its
production capacity to 14,000 MTPA (metric tonnes per annum) in just two years, which was
second only to Gollum Paper Mills’ (hereinafter referred to as “Gollum”) total capacity of
24,000 MTPA. Shadowfax also started supplying paper to other printing houses and
newspaper companies. However, in 2014, the paper production unit of Shadowfax went
through an insolvency process and was acquired by Bain Industries (hereinafter referred to as
“Bain”). This acquisition proved to be a game changer for Bain, which upgraded its paper
production capacity to 18,000 MTPA as a result of the acquisition. Shadowfax attempted to
get a preferred buyer treatment in return for some investment in Bain but could not reach an
agreement.

6. Shadowfax started procuring paper for its printing business from other suppliers in the
market, including Gollum. In November 2017, Shadowfax placed an order for about 4000
MTs (metric tonnes) of a special quality glazed paper to be supplied in 4 tranches over the
course of six months. Shadowfax had won a contract for Ostrich Publications’ global
assignments.

7. Gollum supplied the first tranche of 1000 MTs of glazed paper in 15 days. Thereafter,
through its letter dated 9 December, 2017, Gollum informed Shadowfax that there has been a
breakdown in the machinery at one of their plants which could cause some delay in
subsequent supplies. However, they were willing to divert supplies from their other
production facilities to meet Shadowfax’s order, but that would entail an increased price,
amounting to 1.5 times the price originally agreed upon.

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8. Shadowfax and Gollum had a series of correspondence to negotiate the supply terms.
However, since Shadowfax couldn’t get Gollum to reduce the price, they agreed to pay the
1.5 times price for the second tranche of supply. In the meantime, Shadowfax also imported
some quantity of glazed paper from China to meet the demands of Ostrich Publications.

9. Shadowfax filed an Information before the CCA alleging abuse of dominant position by
Gollum for demanding exorbitant prices. Shadowfax further alleged that Gollum had refused
to supply paper to Shadowfax, which amounted to a violation of Section 3 of the Competition
Act. Shadowfax, by way of a Supplementary Information, submitted to the CCA that Ostrich
Publications had terminated its contract with Shadowfax on account of delayed supplies and
sub-standard quality. Ostrich also invoked the arbitration proceedings against Shadowfax for
violation of contractual terms and instituted claims for damages. The CCA found that there
was a prima facie case of contravention of the Competition Act, and directed the Director
General (hereinafter referred to as “DG”) to investigate the matter.

10. The DG in its investigation, found that there was a long breakdown in one of the units of
Gollum that resulted in huge losses to it. In its response to the DG, Gollum submitted that
continued breakdown of machinery in one of its major production facility and inability to pay
its creditors resulted in Gollum being listed as a defaulter. Gollum also provided freight
charges between its production units and the printing sites of Shadowfax. The DG’s
investigation revealed that the price variation was not significant on account of freight
charges. Further, the DG found that while the unit of Gollum that had broken down was the
only one with the capacity to produce the special quality of glazed paper required by
Shadowfax, Gollum could have easily started production of this special quality glazed paper
at any of its other units at a minimal additional cost.

11. The DG also found that the agreement between Shadowfax and Gollum contained a price
variation clause and one of the conditions of price variation was ‘unforeseen circumstances’
(defined in the contract as ‘circumstances which either party could not prevent with all
reasonable care and diligence’). Shadowfax submitted to the DG that they had agreed to the
terms of the agreement as they were in dire need of glazed paper which could have only been
supplied by Gollum. The DG had also reached out to various third parties for responses and

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 found that Shadowfax had reached out for price quotations to at least three other small paper
mills. Frodo Paper Mills, in their price quotation, had assured that they will be able to
develop the capacity to meet Shadowfax’s requirement and would meet the demand through
imports, if required.

12. The DG in its report, held Gollum to be dominant in the market for glazed paper in Avalon,
and found them to be liable for charging exorbitant prices. The CCA sent the final report of
the DG to all the parties and invited them for an oral hearing. The CCA, after hearing the
parties, agreed with the DG and found that Gollum had abused its dominant position by
charging exorbitant prices. The CCA rejected Gollum’s contention that during the relevant
period, it had to lose out on several orders and was facing action in damages suits in various
Courts in Avalon. The CCA held Gollum to be in contravention of Section 3 and 4 of the
Competition Act and also imposed a penalty amounting to 6 percent of Gollum’s average
turnover for the preceding three years.

13. Eventually, insolvency process had to commence for Gollum, and Bain got interested in
acquiring the assets owned by Gollum. Bain presented its resolution plan for acquisition of
the assets of Gollum before the Committee of Creditors (hereinafter referred to as “COC”)
of Gollum, constituted as per the AIBC. As part of the insolvency process, a third party study
commissioned by the Resolution Professional of Gollum found that Gollum would have to
closeits operations and exit the market in the next four to five years if its current loans and
liabilities were not resolved or restructured. Since the resolution plan contemplated
acquisition of assets constituting a combination under the Competition Act, the COC directed
that as per AIBC, Bain had to obtain approval of the CCA prior to approval by the COC and
therefore, deferred the approval of the resolution plan till Bain had obtained CCA’s approval.
Bain filed a notice under Section 6 of the Competition Act before the CCA for seeking
approval of their proposed acquisition of Gollum. Shadowfax made submissions to the CCA
during the pendency of the merger review process, opposing the proposed acquisition and
submitted that if allowed, the combined entity of Bain and Gollum would become super
dominant in the market. However, the CCA proceeded to approve the combination
unconditionally.

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14. Gollum filed an appeal before the Appellate Tribunal (hereinafter referred to as “ACLAT”)
against the order of the CCA penalizing it for abuse of dominance. Shadowfax filed an
appeal before the ACLAT against the CCA’s order approving the acquisition of Gollum by
Bain, stating it to be anti-competitive. Since there was substantial overlap between the two
appeals and keeping in mind the commonality of the parties, the ACLAT decided to club the
two appeals and has listed both for final hearing on maintainability as well as merits.

STATEMENT OF ISSUE

1. Weather the defaulting party can be held liable for the indirect damages.
2. Weather the alleged charges on Gollum that violation of s. 3 & 4 of CA is sustainable
in the eyes of law.
3. Weather the Shadowfox is liable for violation of Contractual terms to Ostrich.
4. Weather the CCA order approving the acquisition of Gollum by Bain is anti-
competitive or not.

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 SUMMARY OF ARGUMENTS

1. Weather the defaulting party can be held liable for the indirect damages.

Yes, the defaulting party or the Gollum party held be liable for the indirect damages. Because the
Gollum had a lot of time to make his contract or full fill the demand of the shadowfox.

But the Gollum that has happened has been direct and knew very well that if I do not mind the
demand of Shadowfox, then millions of money will be damaged but still he lied and he had a
machine once which can fulfill its demand.

2. Weather the alleged charges on Gollum that violation of s. 3 & 4 of CA is

sustainable in the eyes of law.

Yes the alleged charges on Gollum that violation of section 3 and 4 is sustainable in the eyes of
law and the Gollum is abuse his dominant position. Yes, the alleged charges is sustainable in the
eyes of law because the Gollum had was violation ofthe section 3 and 4 of the Competition
Commission Act, and violation of his dominant position.

Gollum had a lot of ways to full fill the demand of the Shadowfox and after the investigation is
found that there was another machine which was make same glazed paper which demand of
SHadowfox.

3. Weather the CCA order approving the acquisition of Gollum and

shadowfox by Bain is anti-competitive or not.

Yes, it is anti- competition because the companies which had a competition between them had
been acquired by the Ban, so now what will the competition this is an anti-competition.

Competition was happening between two companies, but before that Ban had once done a
company. After that, Ban have now acquire Gollum, so for the competition two companies

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mutually compulsive. The company alone can not do it itself, then now it is only anti-
competition.

4. Weather the Shadowfox is liable for violation of Contractual terms to

Ostrich.

No, the Shadowfox here is not liable to Ostrich enterprise because some uncertain events arises.
Shadowfox had completed his contract absolutely but due to some natural changes or uncertain
events and due to the damages in machinery. He had make to some changes in a new contract,
due to which the problem is come on face the Contract.

ARGUMENTS ADVANCED

1. Weather the defaulting party can be held liable for the indirect
damages.
In relation to some types of torts (in particular negligence and nuisance) the test for remoteness
of damage is whether the kind of damage suffered was reasonably foreseeable by the defendant
at the time of the breach of duty

Kourfos v. C. Czarnikow Ltd.1

In case of breach of contract, the aggrieved party is only entitled to recover such part of the loss
actually resulting as was at the time of the contract reasonably foreseeable as liable to result from
the breach.... (3) What was at that time reasonably so foreseeable depends on the knowledge then
possessed by the parties or at all events, by the party who later commits the breach.... (4) For this
purpose, knowledge ‘possessed’ is of two kinds: one imputed, the other actual. Everyone, as a
reasonable person, is taken to know the ‘ordinary course of things and consequently what loss is

1
(1969) 1 A.C. 350

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liable to result from a breach of contract in that ordinary course.’ But to this knowledge which a
contract breaker is assumed to possess whether he actually possesses it or not, there may have to
be added in a particular case -knowledge which he actually possesses, of special circumstances
outside the ‘ordinary course of things’ of such a kind that a breach in those special circumstances
would be liable to cause more loss.” In claims of damages for breach of contract, damages may
be measured by the profits which the plaintiff would have made in the ordinary course if the
contract had been implemented. However, in 5 | P a g e insurance, it depends upon the types of
insurance which provides cover against loss of trade and profits resulting from some disaster
such as ‘fire’. In the later case the policy would typically pay a business the equivalent of the
expected net profits lost while repair work and restocking were carried out, plus salaries, rates
and rent due in that period. Fire damage itself will probably be covered by separate fire
insurance. A loss of profits policy is sometimes also called as a business interruption policy.

2. Weather the alleged charges on Gollum that violation of s. 3 & 4 of CA is

sustainable in the eyes of law.

ABUSE OF DOMINANT POSITION (under Section 4 Competition Act, 2002)

An enterprise in dominant position performs any of the following acts:

1. directly or indirectly, imposes unfair or discriminatory practices

2. limits or restricts production of goods or provision of any services in any form

3. indulges in practice or practices resulting in denial of market access

4. makes conclusion of contracts subject to acceptance by other parties of supplementary

obligations which have no connection with the subject of such contracts; or

5. Uses its dominant position in one relevant market to enter into, or protect, other relevant
market.

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Jupiter Gaming Solutions Pvt. Ltd. v. Government of Goa & Ors

The CCI while determining alleged abuse of dominance by Government of Goa stated that
dominance per se is not bad, but its abuse is bad in Competition Law in India. CCI further
opined that abuse is said to occur when an enterprise uses its dominant position in the relevant
market in an exclusionary or /and an exploitative manner. In the case the Government’s tender
bid of lottery contained certain conditions which apparently restricted the size of bidders such as,
minimum gross turnover of the participating entity, participating entity should have experience
of at least three years. The CCI held that the Government of Goa by imposing such conditions
abused its dominant position denial/restriction of market access to the other parties in the
relevant market.

3. Weather the CCA order approving the acquisition of Gollum

by Bain is anti-competitive or not.
The FTC takes action to stop and prevent unfair business practices that are likely to reduce
competition and lead to higher prices, reduced quality or levels of service, or less innovation.
Anticompetitive practices include activities like price fixing, group boycotts, and exclusionary
exclusive dealing contracts or trade association rules, and are generally grouped into two types:

1. agreements between competitors, also referred to as horizontal conduct

2. monopolization, also referred to as single firm conduct

The FTC generally pursues anticompetitive conduct as violations of Section 5 of the Federal
Trade Commission Act, which bans “unfair methods of competition” and “unfair or deceptive
acts or practices.”

United States: Dee-K Enterprises v. Heveafil2

2
https://unctad.org/en/Docs/c2clp38_en.pdf

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Dee-K Enterprise filed a complaint in the United States alleging that it paid artificially high and
non-competitive prices for rubber thread, as a result of a price-fixing arrangement between
several Asian rubber producers, thus depriving Dee-K Enterprises to reap the benefits of free and
open competition in the market. Dee-K Enterprises purchases rubber thread (also called extruded
rubber thread) to manufacture elastic fabric, bungee cords, toys and other products in Southeast
Asia. The initial ruling of a federal district court in March 2001 denied the existence of a
"substantial effect" on the US rubber-threat market. The US Court of Appeals, 4th circuit, has
further rejected allegations that a conspiracy to fix prices worldwide by three large Malaysian
producers of rubber thread (Heveafil, Filamax and Latex) had a substantial effect on the US
market. The jury found that there had been a price-fixing agreement reached in meetings in Asia
(Malaysia and Indonesia), but did not find a ‘substantial effect’ in the United States.
Commentary The case turns on a ‘cutting-edge’ question about the reach of the US’s antitrust
laws, in particular the further clarifications brought to the extraterritorial application of the
'substantial effect' doctrine in US antitrust law. A ‘substantial effect’ test has been required since
the Hartford Fire case, which decided that plaintiffs must show that the alleged conspiracy
resulted in purchasers in the US paying higher prices. The case is also of particular interest for it
shows that cases having an extra-territorial dimension could presumably act as a signalling
device for competition authorities from other countries in initiating investigations on the impact
of the price-fixing cartels in their domestic jurisdictions.

4. Weather the Shadowfox is liable for violation of Contractual

terms to Ostrich.
No, the Shadowfox here is not liable to Ostrich enterprise because some uncertain events arises.
Shadowfox had completed his contract absolutely but due to some natural changes or uncertain
events and due to the damages in machinery. He had make to some changes in a new contract,
due to which the problem is come on face the Contract.

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Hadley v. Baxendale 3

In the said case, the plaintiff, were millers and used to run the City Steam-Mills in Gloucester. A
crankshaft of a steam engine at the mill had broken and the plaintiff arranged to have a new one
made by W. Joyce & Co. in Greenwich, and for the said purpose W. Joyce & Co. required that
the broken crankshaft be sent to them in order to ensure that the new crankshaft would fit
together properly with the other parts of the steam engine. The plaintiffs contracted with the
defendants, who were common carriers, to deliver the crankshaft to engineers for repair by a
certain date at a cost of £2 sterling and 4 shillings. The defendants failed to deliver on the date in
question, causing the plaintiff to lose business. The plaintiff sued for the profits lost due to the
defendant's late delivery, and the jury awarded the plaintiff damages of £25. The defendants
appealed, contending that they did not know that the plaintiff would suffer any particular damage
by reason of the late delivery. The issue raised by the defendants in the appeal was whether the
defendant in breach of contract could also be held liable for the damages that the defendant was
not aware and which were suffered by the plaintiff from a breach of the contract.

Where it has been observed that the Court will take into account only such loss as may be fairly,
as reasonably be considered either arising naturally, i.e. according to the usual of things, from
breach of contract itself, or such as may reasonable supposed to have been in the contemplation
of both the parties at the time they made the contract as the probable result of the breach of it.
Remoteness of damages for remote consequences is usually not allowed. The loss from the
breach must naturally arise in the usual course of things or it must be such as the parties knew
when they made the contract to be likely to result from the breach of it. In other words, damages
would be considered as too remote if they are not the direct consequence of the breach or they
are not in the contemplation of the parties when the contract was made. However, if the special
circumstances were common to both parties, damages would be then amount of injury which
would follow from such special circumstance.

3
(1854 – 9 Ex. 341
https://indiankanoo.com
https://lawtimesjournal.in
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Therefore, applying the aforesaid rule and considering the fact that the special circumstance was
not communicated by the plaintiff to the defendants, it was held that the plaintiffs could not
recover the loss of profits from the defendants.

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 PRAYER

Wherefore, in the light of arguments advanced, authorities cited and facts stated the Respondent
humbly prays that:

 This Hon”ble Court may be pleased to dismiss the present this appeal.

 This Hon”ble Court may be pleased to declare that the Gollum enterprise is should be
liable.
 This Hon”ble Court may be declare that the alleged charges are true and Gollum had
violation the section 3 and 4 of the CCA.

Or, Pass any order as it deems fit in the interest of equity, justice and good.

Place…………………….

Date: 11/05/2019

Counsel for Respondent

Mohd Tarik Ashraf Ansari

Reg.no: GU17R0226

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