RAJIV GANDHI NATIONAL UNIVERSITY OF LAW, CIRRICULUM MOOT, 2019

ROLL NO- 14063

RAJIV GANDHI NATIONAL UNIVERSITY OF LAW,

CIRRICULUM MOOT, 2019
before
THE HON’BLE HIGH COURT
at
NEW DELHI

Case filed Under Section 96 of Civil Procedure Code1908.

In the matter of
Power Train, Inc……………………………………………………………………Appellant
v.

Mr. Joyce Ma…………………………………………………………………….Respondent

Most Respectfully Submitted before the Hon’ble High Court

MEMORIAL ON BEHALF OF APPELLANT

DRAWN AND FILED BY THE COUNSELS FOR THE APPELLANT

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TABLE OF CONTENTS

TABLE OF ABBREVIATION………………………..........
………………………………..3

INDEX OF AUTHORITIES.........................................................................................…......
4

STATEMENT OF JURISDICTION………………………………..................................…
6

SYNOPSIS OF FACTS………………………………………………....................................7

ISSUES RAISED……………………………………………………………………………10

SUMMARY OF ARGUMENTS……………………………………………………….......
11

ARGUMENTS ADVANCED…………………………………………………………....... 13

I. WHETHER THE PROCEEDING SHOULD BE REFERRED TO

ARBITRATION OR NOT
A. VALIDITY OF ARBITRATION CLAUSE IN THE AGREEMENTY……………
13
B. VALIDITY OF THE ARBITRATION
AGREEMENT………………………….15

II. WHETHER THE REMOVAL OF THE MANAGING DIRECTOR IS

ACCORDANCE WITH THE PROVISION OF COMPANIES ACT OR NOT.
A. ROTATIONAL RETIREMENT VALID EVEN IF AGM IS NOT
CALLED…….16
B. REMOVAL IS IN ACCORDANCE WITH PROVISION OF COMPANIES ACT,
2013…………………………………………………………………………………..17

III. WHETHER INCORPORATION OF RANNY BIOLECHNOLOGY LTD IS

VIOLATIVE OF SHAREHOLDER AGREEMENT OR NOT.
A. NON-COMPETE CLAUSE IN SHARE-HOLDER AGREEMENT……………20

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B. THAT THE SHARE-HOLDER AGREEMENT IS

ENFORCEABLE…………..22

PRAYER FOR RELIEF………………………………………………....…………………24

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INDEX OF AUTHORITIES

BOOKS REFERRED:
1. A. RAMAIYA, GUIDE TO THE COMPANIES ACT, PART III (17TH ED. 2010)
2. Dr. G.K. KAPOOR, COMPANY LAW AND PRACTICE (ed. 21st 2016)

CASES REFERRED:

1. Haji Mohd. Ishaq v. Mohd. Iqbal - (1978) 2 SCC 493

2. Maharastra Rajya Sahakari Kappos Utpadak Panan Mahasangha Ltd. V. Manga
Bhaga Choudhary. - (2009) 3Mad LJ 721.
3. Star India Private Limited vs Indus Ind Media and other - AIR 2003 AP 473.
4. M/S. Dinshaw and Dinshaw vs Indoswe Engineers Pvt. Ltd - AIR 1995 Bom 180.
5. Alka Bose vs. Parmatma Devi & Ors - [CIVIL APPEAL NO(s). 6197 OF 2000].
6. Sheela Gehlot vs. Sonu Kochar & Ors - 2006(92) DRJ 498.
7. State Bank of Saurashtra v. PNB - (2001) 5 SCC 751.
8. Blyth v. Birmingham Water Works Co. - (1856) LR 11 Exch. 781.
9. Gilford Motor Company Ltd v. Horne - 1933 (1) CH 935
10. Jones v. Lipman - 1962 (1) All. ER 442
11. Thyssen Krupp Materials Ag vs The Steel Authority of India - 2017 (3) ArbL R255
(Delhi).
12. Delhi Development Authority v. Skipper Construction - (2000) 10 SCC 130
13. DHN Food Distributors v. Tower Hamlets London Borough Council - (1976) 1 WLR
852
14. Bhatia Industries & Infrastructure Limited vs. Asian Natural Resources (India)
Limited and Ors. - [2016(6)ABR132]

DICTIONARIES:
1. BRYAN A. GARNER, BLACK’S LAW DICTIONARY (8 TH ED. 2001).
2. OXFORD ENGLISH DICTIONARY (2 ND ED. 2009).

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STATUTES:

1. THE COMPANIES ACT, 2013.

2. INDIAN CONTRACT ACT, 1872.
3. THE SALES OF GOODS ACT, 1930
4. LAW OF TORTS.

WEBSITES:

1. MANUPATRA ONLINE RESOURCES, HTTP://WWW.MANUPATRA.COM .

2. LEXIS NEXIS LEGAL, HTTP://WWW.LEXISNEXIS.COM/IN/LEGAL .
3. SCC ONLINE, HTTP://WWW.SCCONLINE.CO.IN .
4. OXFORD DICTIONARY, HTTP://WWW.OXFORDDICTIONARIES.COM.

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STATEMENT OF JURISDICTION

The Appellant, humbly submits this Memorandum for the appellant filed before the Hon’ble
high court wherein the appellant invokes the jurisdiction under section 96 of Civil Procedure
Code, 1908. It sets forth the facts and the laws on which the claims are based.

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SYNOPSIS OF FACTS

~ BRIEF FACTS ~

1. In 2001, Joyce Ma (“Ma”), the president 0f Best Machinery & Electrical, Inc. (“368$
Machinery”) and Oneal Wood, the president Of Power train, Inc. (“Power train”), met at a
trade show in Pragati Maidan, Delhi. Subsequently Power train placed orders for Chinese
engines through Best Machinery. Best Machinery then ordered the engines from Chinese
manufacturers and had them shipped to India. After the imported engines arrived in India,
Power train sold or distributed the engines. All subject engines were manufactured in China,
were imported for resale in India by Power train, and were subject to Environmental
Protection standards. Ma helped the Chinese manufacturers who could supply the products
Power train wanted.

~ BUSINESS ACTIVITY ~

2. Between sometime in 2002 and early 2003, Best Machinery assisted Power train in Power
train's purchase of a handful of engines, as well as related equipment, manufactured in
China by EVERFINE Corporation (“Everfine”). As a part of the process of purchasing
engines manufactured by Everfine, Power train applied for and eventually obtained a
Clearance Certificate from environment authorities on June 4, 2002, for a 4 hp/163 cc
Everfine engine designated as engine family for model year 2002. In early 2003, Best
Machinery ceased its relationship with Everfine and began to arrange for Power train to
purchase engines and related equipment manufactured by Tong Yong, another Chinese
manufacturer.

3. From 2003 to 2006. Power train renewed its Certificate of Conformity for the Everfine 4 hp/
163 cc engine under the carry-over provisions. Between 2002 and 2006, Power train
purchased 78,284 small engines and non-road equipment containing such engines from
China through Best Machinery for resale in India. Between early 2003 and approximately
November of 2006, the engines and related equipment purchased by Power train through
Best Machinery were manufactured by Tong Yong.

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~ FACTS LEADING TO THE DISPUTE ~

4. On May 28, 2009, the Environment authorities in India initiated an action against Power
train and its sister companies, Wood Sales, Inc. (“Wood Sales”) and Tool Mart, Inc.
(“Tool Mart”, related to the purchase and importation of the subject engines into India. In
May of 2011, India and Power train, Wood Sales, and Tool Mart entered into a Consent
Decree requiring Power train, Wood Sales, and Tool Mart to pay civil penalties to the
amount of ₹20, 00,000 plus interest; to implement an emission reduction program; and to
destroy or export any remaining subject engines in their inventory.

~DISPUTE~
5. Power train subsequently initiated this suit claiming that Best Machinery and Ma that
they should be held responsible for the damages Power train incurred in the proceedings
by the India against Power train. Power train alleged that Ma, both individually and as
the alter ego of Best Machinery, imported to the India from China small engines that
violated the Environment emission and labeling standards and were not covered by
clearance certificates. Power train asserted cause of action for negligence, breach of
contract, breach of warranty and piercing the corporate veil for Ma’s involvement
through Best Machinery.

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ISSUES RAISED

ISSUE 1

WHETHER THERE IS ANY BREACH OF CONTRACT OR NOT. WHETHER THE

CONTRACT IS VALID AND IS THEIR ANY BREACH OF CONTRACT

ISSUE 2

WHETHER THERE WAS NEGLIGENCE AND BREACH OF WARRANTY BY BEST

MACHINERY OR NOT.

ISSUE 3

WHETHER THERE SHOULD BE LIFTING OF CORPORATE VEIL OR NOT.

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SUMMARY OF ARGUMENTS

I. WHETHER THE CONTRACT IS VALID AND IS THEIR ANY BREACH OF

CONTRACT.

It is humbly submitted before the Hon’ble High Court that in the instant case it can be
observed that in the contract between Best Machinery & Electrical, Inc. and Power Train, Inc.
is valid and binding and there is a breach of contract by the Best Machinery & Electrical Inc.
because firstly, there is an implied contract between the parties [A], secondly, validity of the
oral contract [B], thirdly, there is a breach of contract.

II. WHETHER THERE WAS NEGLIGENCE AND BREACH OF WARRANTY BY

BEST MACHINERY OR NOT.

It is humbly submitted to the Hon’ble High Court that there was a negligence from the side of
Best Machinery and they are also liable for breach of warranty as the Best Machinery even
being aware of the fact that the goods are not meeting the environmental standards were
supplied to the Power train, India and hence the Best Machinery is liable because firstly, there
is negligence on part of Best Machinery [A], secondly, there has been breach of warranty on
part of Best Machinery [B].

III. WHETHER THERE SHOULD BE LIFTING OF CORPORATE VEIL OR NOT.

It is humbly submitted to the Hon’ble High Court that whether there should be lifting of
corporate veil or not as per the facts given in the moot problem it is clear that the act done by
Best machinery was fraudulent or improper conduct and in this situation Joyce Ma will be
personally liable for his act through Best Machinery and there should be lifting of corporate
veil because firstly, there has been improper conduct by Best Machinery and Joyce Ma
personally [A]

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ARGUMENTS ADVANCED

I. WHETHER THE CONTRACT IS VALID AND IS THEIR ANY BREACH OF

CONTRACT.

1. It is humbly submitted before the Hon’ble High Court that in the instant case it can be
observed that the contract between Best Machinery & Electrical, Inc. and Power
Train, Inc. is valid and binding and there is a breach of contract by the Best
Machinery & Electrical Inc.
A. THERE IS AN IMPLIED CONTRACT BETWEEN THE PARTIES

2. As per the facts given in the case

“In 2001, Joyce Ma (“Ma”), the president 0f Best Machinery & Electrical, Inc. (“Best
Machinery”) and Oneal Wood, the president of Power train, Inc. (“Power train”), met
at a trade show in Pragati Maidan, Delhi. Subsequently Power train placed orders for
Chinese engines through Best Machinery. Best Machinery then ordered the engines
from Chinese manufacturers and had them shipped to India. After the imported
engines arrived in India, Power train sold or distributed the engines.”1
It is cleared from the facts that there was an implied contract between the parties and
section 9 of Indian Contract Act reads as follows:

“Section 9-Promises, express and implied.2—in so far as the

proposal or acceptance of any promise is made in words, the
promise is said to be express. In so far as such proposal or
acceptance is made otherwise than in words, the promise is said to
be implied. —In so far as the proposal or acceptance of any
promise is made in words, the promise is said to be express. In so
far as such proposal or acceptance is made otherwise than in
words, the promise is said to be implied."

1
Para 1 of Moot Problem.
2
Section 9 of Indian Contract Act ,1872, No. 9 of 1872, Acts of Parliament.

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3. From the clear reading of the facts and the above section there has been a valid and
enforceable contract between the parties and which has been reiterated in various case
laws.

A contract implied in fact requires meeting of minds. 3 Haji Mohd. Ishaq v. Mo.
Iqbal4, in support of his contention that since the appellant is accepting the monthly
subscription from the respondent even after the expiry of the agreement, it amounts
that there is an implied contract between them and the same cannot be terminated
without any reason. In the above case, the Supreme Court has held as follows-

"The appellants by their conduct of accepting the goods and never

repudiating the numerous letters and telegrams of the respondent
demanding the money from them on the assertion that the goods
were dispatched by the respondent and that the appellants should
pay the money, clearly showed that a direct contract, which was an
implied contract by conduct, was brought about between them.
Whatever might have been the jural relationship between the
respondent and the appellants' witness and between that witness and
the appellants and in whatever manner he acted as a go-between
man between the parties what is clear is that eventually and finally
the supply of the goods by the respondent was to the appellants on
its own account and not on account of that witness. The appellants
clearly and unerringly accepted the goods as such and hence
became liable to pay the whole of the price directly to the
respondent."

4. The same was upheld in Star India Private Limited vs Indus Ind Media and other.5
The court spelt out an implied contract by conduct of the parties. That means there
was supply of goods by the Plaintiff and its acceptance by the Defendants. Even in the
present case, the Plaintiff has done some additional work and the Defendant has
accepted and enjoyed the benefits of the same.6

3
Maharastra Rajya Sahakari Kappos Utpadak Panan Mahasangha Ltd. V. Manga Bhaga Choudhary. (2009)
3Mad LJ 721.
4
(1978) 2 SCC 493
5
AIR 2003 AP 473
6
M/S. Dinshaw And Dinshaw vs Indoswe Engineers Pvt. Ltd AIR 1995 Bom 180.

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B. VALIDITY OF THE ORAL CONTRACT

5. As per the facts given in the case-
“In 2001, Joyce Ma (“Ma”), the president 0f Best Machinery & Electrical, Inc. (“Best
Machinery”) and Oneal Wood, the president Of Power train, Inc. (“Power train”), met
at a trade show in Pragati Maidan, Delhi. Subsequently Power train placed orders for
Chinese engines through Best Machinery. Best Machinery then ordered the engines
from Chinese manufacturers and had them shipped to India. After the imported
engines arrived in India, Power train sold or distributed the engines.”7
6. The process of making a valid agreement starts from statutory provisions given in
Indian Contract Act.
Under Section 10 of the Act8, it is stated that
“All agreements are contracts if they are made by the free consent
of parties competent to contract, for a lawful consideration and
with a lawful object, and are not hereby expressly declared to be
void”.
So from this section, we can conclude the following necessary things for making an
Agreement a valid contract-
a. Competent parties
b. Free consent
c. Lawful consideration
d. Lawful object

7. By fulfilling these 4 necessary requirements, an agreement becomes a contract under

Section 10 of the Act. Hence it can be understood that an agreement plus the
essentials tabled in Section 10 will deem the contract valid. Section 2(e) of the Act
says that an Agreement is defined as “every promise and every set of promises
forming the consideration for each other”. When a person makes an offer to another
and that offer is accepted by the other person that offer becomes a promise and we
have already discussed the definition of an agreement above.
8. So as per the fact given and section 10 of the said act we can say that there was surely
a valid contract between the parties as one party ordered machinery and another party

7
Para 1 of Moot Problem.
8
Section 10 of Indian Contract Act, 1872, No. 9 of 1872, Acts of Parliament.

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delivered the product without any question and dispute regarding that so it clearly
implies that there was a meeting of mind from both the parties.
9. On the validity of oral agreements while dealing with several cases the courts
recognised the acceptability of oral agreements once they were found to be fulfilling
the essentials provided in section 10. As we see in the case of Alka Bose vs.
Parmatma Devi & Ors9 the Supreme Court by coming to the conclusion of the case
observed that how oral agreements are valid. A sale agreement can be oral also and
valid. It is not necessary that agreement should be written, what is more important is
that it should be within the ambit of Section 10 of the Indian Contract Act. All oral
and written agreements will be valid if they fulfil the conditions specified in Section
10.
10. Then in the case of Sheela Gehlot vs. Sonu Kochar & Ors10 Delhi High Court
observed that oral agreements are valid and enforceable and there could be no dispute
about it. Until there is anything which needed to be written, an oral agreement will
enforce. Further for a contract, there has to be some proposal and acceptance. And for
the oral agreement, there should be some circumstances surrounding the alleged oral
agreement. No one can question the oral agreement as invalid.

C. THERE IS A BREACH OF CONTRACT

11. As per the facts- “Between sometime in 2002 and early 2003, Best Machinery assisted
Power train in Power train's purchase of a handful of engines, as well as related
equipment, manufactured in China by EVERFINE Corporation (“Everfine”). As a
part of the process of purchasing engines manufactured by Everfine, Power train
applied for and eventually obtained a Clearance Certificate from environment
authorities on June 4, 2002. In early 2003, Best Machinery ceased its relationship with
Everfine and began to arrange for Power train to purchase engines and related
equipment manufactured by Tong Yong, another Chinese manufacturer. From 2003 to
2006. Power train renewed its Certificate of Conformity for the Everfine engine under
the carry-over provisions.”11
12. The above mentioned facts are covered under Section 37 of the Indian Contract
Act,1872 provides that the parties to the contract are under obligation to perform or

9
[CIVIL APPEAL NO(s). 6197 OF 2000],
10
2006(92) DRJ 498
11
Para 2 of the Moot Problem.

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offer to perform, their respective promises under the contract, unless such
performance is dispensed with or excused under the provisions of the Indian Contract
Act or of any other law.
13. According to Section 39, where the party has refused to perform or disabled himself
from performing, his promise in its entirely, the other party may put an end to the
contract, unless that other party has expressly or impliedly signified its consent for the
continuance of contract. If the other party chooses to put an end to the contract, the
contract is said to be broken and amounts to breach of contract by the party not
performing or refusing to perform its promise under the contract. This is
called repudiation. Thus repudiation can occur when either party refuses to perform
his part or makes it impossible for him to perform his part of contract in each of the
cases in such a manner as to show an intention not to fulfil his part of the contract.
14. After reading the facts and the contents of section 37 and 39 of the act 12 it can be seen
that there is a clear case of breach of contract by Best machinery as there was an
agreement to purchase the parts from Everfine but without informing and the consent
of Power Engines the purchaser was changed to Tong Yong.13
15. Consequences of breach of contract- section 73-
“Compensation for loss or damage caused by breach of
contract14.—When a contract has been broken, the party who
suffers by such breach is entitled to receive, from the party who
has broken the contract, compensation for any loss or damage
caused to him thereby, which naturally arose in the usual course
of things from such breach, or which the parties knew, when they
made the contract, to be likely to result from the breach of it. —
When a contract has been broken, the party who suffers by such
breach is entitled to receive, from the party who has broken the
contract, compensation for any loss or damage caused to him
thereby, which naturally arose in the usual course of things from
such breach, or which the parties knew, when they made the
contract, to be likely to result from the breach of it." Such

12
Indian Contract Act, 1872, No. 9 of 1872, Acts of Parliament.
13
Given in para 2 of moot problem.
14
ibid

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compensation is not to be given for any remote and indirect loss

or damage sustained by reason of the breach.”
16. The party who is injured by the breach of a contract may bring an action for
damages15. So as per the decided case the Best machinery co is liable to pay damages
of the appellant which is ₹20,00,000 plus interest and cost of exporting or
permanently destroying the subject engines.

II. WHETHER THERE WAS NEGLIGENCE AND BREACH OF WARRANTY BY

BEST MACHINERY OR NOT.

17. It is humbly submitted to the Hon’ble High Court that there was a negligence from the
side of Best Machinery and they are also liable for breach of warranty as the Best
Machinery even being aware of the fact that the goods are not meeting the
environmental standards were supplied to the Power train, India and hence the Best
Machinery is liable because firstly, there is negligence on part of Best Machinery [A],
secondly, there has been breach of warranty on part of Best Machinery [B].

A. NEGLIGENCE

18. It is humbly submitted to the Hon’ble High Court that Power train placed orders for
Chinese engines through Best Machinery. Best Machinery then ordered the engines
from Chinese manufacturers and had them shipped to India. After the imported
engines arrived in India, Power train sold or distributed the engines. All subject
engines were manufactured in China, were imported for resale in India by Power
train, and were subject to Environmental Protection standards.16 Best Machinery
assisted Power train in Power train's purchase of a handful of engines, as well as
related equipment, manufactured in China by EVERFINE Corporation (“Everfine”).
But in early 2003, Best Machinery ceased its relationship with Everfine and began to
arrange for Power train to purchase engines and related equipment manufactured by
Tong Yong, another Chinese manufacturer.17
19. After looking the above mentioned fact we can clearly see that it was in the
knowledge of the best machinery that all the purchases were the subject to the

15
State Bank of Saurashtra v. PNB (2001) 5 SCC 751.
16
Para 1 of moot problem.
17
Para 2 of the moot problem.

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environmental standards., even then the best machinery supplied goods to power
trains without checking the environmental standards of the goods which was
purchased from Tong Yong. From 2003 to 2006. On good faith Power train renewed
its Certificate of Conformity for the Everfine engine under the carry-over provisions.18
20. On May 28, 2009, the Environment authorities in India initiated an action against
Power train and its sister companies, Wood Sales, Inc. (“Wood Sales”) and Tool
Mart, Inc. (“Tool Mart”) , related to the purchase and importation of the subject
engines into India. In May of 2011, India and Power train, Wood Sales, and Tool
Mart entered into a Consent Decree requiring Power train, Wood Sales, and Tool
Mart to pay civil penalties to the amount of ₹20, 00,000 plus interest; to implement an
emission reduction program; and to destroy or export any remaining subject engines
in their inventory.
21. It is therefore from the above facts that best machinery being aware of the fact that all
the purchases was the subject to the environmental standards., even then the best
machinery supplied goods to power trains without checking the environmental
standards of the goods which in result proves negligence on the part of Best
Machinery.
22. Negligence meaning- In everyday usage, the word ‘negligence’ denotes mere
carelessness. In legal sense it signifies failure to exercise standard of care which the
doer as a reasonable man should have exercised in the circumstances. In general, there
is a legal duty to take care when it was reasonably foreseeable that failure to do so
was likely to cause injury. Negligence is a mode in which many kinds of harms may
be caused by not taking such adequate precautions.19

B. BREACH OF WARRANTY

23. It is humbly submitted before the Hon’ble High Court that there has been the breach
of warranty is committed from the part of best machinery. Which has been discussed
under section 59 of sales of goods act, 1930.
Section 59 Remedy for breach of warranty.20—

18
ibid
19
Blyth v. Birmingham Water Works Co. (1856) LR 11 Exch. 781.
20
Sales of Good Act, 1930

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(1)Where there is a breach of warranty by the seller, or where the buyer elects or is
compelled to treat any breach of a condition on the part of the seller as a breach of
warranty, the buyer is not by reason only of such breach of warranty entitled to reject
the goods; but he may—
(a) Set up against the seller the breach of warranty in diminution or extinction
of the price; or
(b) Sue the seller for damages for breach of warranty.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of
the price does not prevent him from suing for the same breach of warranty if he has
suffered further damage.
24. Definition of warranty is given under Section 12 of the said act which is
Section 12-Condition and warranty:21
(1) A stipulation in a contract of sale with reference to goods which are the subject
thereof may be a condition or a warranty.
(2) A condition is a stipulation essential to the main purpose of the contract, the
breach of which gives rise to a right to treat the contract as repudiated.
(3) A warranty is a stipulation collateral to the main purpose of the contract, the
breach of which gives rise to a claim for damages but not to a right to reject the goods
and treat the contract as repudiated.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in
each case on the construction of the contract. A stipulation may be a condition, though
called a warranty in the contract.
25. It was held in the case Thyssen Krupp Materials Ag vs The Steel Authority Of
India22 Once it is established that the goods in question were defective, Section 59 of
the Sale of Goods Act, 1930 would apply where the buyer elects to or is compelled to
treat the breach of condition by the seller as a breach of warranty, and the buyer in
such a case would be entitled to set up against the seller the breach of warranty in
diminution or extinction of the price or sue the seller for damages for breach of
warranty. The question that would then arise would be in relation to the computation
of damages. In this regard, the damages that would be due to the buyer from the seller
would be governed by Section 73 of the Indian Contract Act, 1872.

21
ibid
22
2017 (3) ArbL R255 (Delhi).

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26. In the present case the defect in the good was that it did not meet the environmental
standards and hence best machinery is liable for breach of warranty and also liable to
pay damages for the breach of warranty.

III. WHETHER THERE SHOULD BE LIFTING OF CORPORATE VEIL OR NOT.

27. It is humbly submitted to the Hon’ble High Court that whether there should be lifting
of corporate veil or not as per the facts given in the moot problem it is clear that the
act done by Best machinery was fraudulent or improper conduct and in this situation
Joyce Ma will be personally liable for his act through Best Machinery.
28. The Courts have been more than arranged to pierce the corporate veil when it feels
that fraud is or could be executed behind the veil. The Courts won’t enable the
Salomon standard to be utilized as an engine of fraud. The two great instances of the
fraud exception are Gilford Motor Company Ltd v. Horne 23 and Jones v. Lipman24.
In the main case, Mr. Horne was an ex-worker of The Gilford engine organization and
his business contract gave that he couldn’t solicit the clients of the organization. With
a specific end goal to crush this, he incorporated a limited organization in his better
half’s name and solicited the clients of the organization. The organization brought an
action against him. The Court of appeal was of the view that “the organization was
shaped as a gadget, a stratagem, keeping in mind the end goal to veil the viable
carrying on of the business of Mr. Horne” for this situation obviously the primary
reason for incorporating the new organization was to execute fraud. Along these lines,
the Court of appeal viewed it as a negligible sham to shroud his wrongdoings.
29. In the second instance of Jones v. Lipman25, a man contracted to offer his territory
and after that point altered his opinion with a specific end goal to keep away from an
order of specific performance, he transferred his property to an organization. The
court, in this case, held that the organization here was “a veil which (Mr. Lipman)
holds before his face trying to maintain a strategic distance from acknowledgment by
the eye of equity” Therefore the court ordered for specific performance both against
Mr.Lipman and the organization.

23
1933 (1) CH 935
24
1962 (1) All. ER 442
25
1962 (1) All. ER 442

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30. This doctrine was primarily applied in cases of tax evasion and non-compliance of the
provisions of the Companies Act, however, the Courts have broadened the concept
and applied the same in – inter alia – the following scenarios26:
a. Where group companies/companies have been used to perpetuate a fraud or
illegality, as in Delhi Development Authority v. Skipper Construction27.
b. Where business realities of the situation require the veil to be pierced, as in
DHN Food Distributors v. Tower Hamlets London Borough Council.28.
31. In this instance Joyce Ma involved in the improper conduct of activity through Best
Machinery, so it should be held that he will be personally liable for all the act done by
the company and liable to pay damages to Power Train.

26
Bhatia Industries & Infrastructure Limited vs. Asian Natural Resources (India) Limited and Ors.
[2016(6)ABR132]
27
(2000) 10 SCC 130
28
(1976) 1 WLR 852

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PRAYER FOR RELIEF

WHEREFORE IN THE LIGHT OF THE ISSUES RAISED, ARGUMENT ADVANCED, REASONS

GIVEN AND AUTHORITIES CITED, THIS HON’BLE HIGH COURT MAY BE GRACIOUSLY
PLEASED TO:

1. To Hold, that there is a breach of contract.

2. To Hold, that there is negligence and breach of warranty by Best Machinery
3. To Hold, that there should be lifting of corporate veil and Mr. Joyce Ma should be
personally liable for his act.
4. To Direct, the Best Machinery to pay civil penalties amounting ₹20,00,000 plus
interest, the cost of exporting or permanently destroying the subject engines and the
cost of implementing an emission off-set project.

AND PASS ANY OTHER ORDER, DIRECTION, OR RELIEF THAT THIS HON’BLE TRIBUNAL MAY

DEEM FIT IN THE INTERESTS OF justice, equity and good conscience.

All of which is Humbly Prayed,

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Sd/-

………………………………

Counsels for the Appellant

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