MARWADI UNIVERSITY

1st VIRTUAL NATIONAL MOOT COURT COMPETITION

BEFORE

THE HON’BLE CIVIL COURT OF MUMBAI

DISPUTE RELATED TO

CONTRACT

CIVIL CASE NO. _________/2020

under section 9 of Code of Civil Procedure ,1908

IN THE MATTER OF

DEF HOSPITALITY…………………………………….PETITIONER

ABC TEXTILES PRIVATE LIMITED………….…………………………………RESPONDENT

MEMORIAL FOR RESPONDENT

ABC TEXTILES PRIVATE LIMITED
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TABLE OF CONTENTS

LIST OF ABBREVIATIONS ........................................................................................................ 2

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

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

STATEMENT OF FACTS ..............................................................................................................7

ISSUES RAISED .............................................................................................................................10

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

BODY OF ARGUMENTS ..................................................................................................... ........12

1. WHETHER THE RS. 25 LAKHS CLAIMED AS DAMAGES ON ACCOUNT OF NON-

DELIVERY OF THE SECOND LOT IS MAINTAINABLE.

2. WHETHER THE RS. 16 LACS CLAIMED ON ACCOUNT OF POOR QUALITY OF THE

FIRST CONSIGNMENT LOT IS MAINTAINABLE.

PRAYER …………………………………………………………………………………………..18

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LIST OF ABBREVIATIONS

Serial Abbreviations Expansion

Number

1. ICA The Indian Contract Act, 1872

2. Sec Section

3. AIR All India Reporter

4. J. Justice

5. EC English Cases

6. Ed. Edition

7. UOI Union Of India

8. Hon’ble Honourable

9. SC Supreme Court

10. Co. Company

11. SCC Supreme Court Cases

12. Ltd. Limited

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13. Pvt. Private

15. SCC Supreme Court Cases

18. & And

21. v. Versus

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INDEX OF AUTHORITIES

CASE LAWS:

1. Commr. of Customs (Preventive) Vs. Aafloat Textiles (I) Pvt. Ltd. and Ors., (2009) 11 SCC
18

2. Wallis v. Russell [1902] 2 I.R. 585

3. Phulchand Ram Marwari and Anr .v.Naurangi Lal Marwari ,172 Ind Cas 225

4. Dhanrajamal Gobindram v. Shamji Kalidas & Co AIR 1961 SC 1285

5. The Board Of Trustees For The Port vs Swadesh Kumar Khatua & Ors. 2012 SCC CAL 9431.

6. Esmail Allarakhia vs Dattatraya Ramchandra Gandhi AIR 1916 BOM 209

7. Alka Yadav vs State Of U.P. And 2 Others

8. KJS Ahluwalia and Ors. vs. State of Odisha and Ors.

9. Polytech Trade Foundation vs. Union of India and Ors. (22.05.2020 - DELHC)

10. The Supreme Court in Commnr. Of Customs(Preventive) vs M/S. Aafloat Textiles (2009)

11. Halliburton off shore services V. Vedanta limited, O.M.P. (I) (COMM) & I.A. 3697/2020

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LEGISLATIONS:

1. THE INDIAN CONTRACT ACT, 1872.

2. CIVIL PROCEDURAL CODE, 1908.

4. SALE OF GOODS ACT, 1930.

LAW DICTIONARIES:

Black’s law dictionary, Tenth Edition, Bryan A. Garner (editor).

BOOKS:

1. Avtar Singh, Contract & Specific Relief, Twelfth Edition.

2. Pollock & Mulla, The Indian Contract Act, 1872, 14th Edition, 2012.

3. Beatson & A. Burrow, Anson’s law of contract, 30 th Edition, 2016.

4. Hugh Beale, Chitty on contract, 32nd Edition, 2019.

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STATEMENT OF JURISDICTION

The Respondent humbly submits that this memorandum is in furtherance of the suit filed by the
petitioner before the Hon’ble City Civil Court of Mumbai under Sec 9 of Code of Civil Procedure,
1908.

Section 9 of the Code of Civil Procedure, 1908 read as follows:

“The Courts shall (subject to the provisions herein contained) have jurisdiction to try all Suits of a
civil nature exempting suits of which their cognizance is either expressly or impliedly barred.

[Explanation 1].—A suit in which the right to property or to an office is contested is a suit of a civil
nature, notwithstanding that such right may depend entirely on the decision of questions as to
religious rites or ceremonies.

[Explanation II]—For the purposes of this section, it is immaterial whether or not any fees are
attached to the office referred to in Explanation I or whether or not such office is attached to a
particular place.

(2) Notwithstanding anything contained in Sub-section (1), at the hearing of any such application,
the Court may grant such interim relief as it may consider necessary, pending determination by it of
the preliminary issue as to jurisdiction.” - Maharashtra Act (65 of 1977) (wet. 19-12-1977).”

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STATEMENT OF FACTS

The material facts arise out of the plaint filed by the DEF HOSPITALITY as against ABC TEXTILES
PRIVATE LIMITED for non-performance of his part of the contract.

BACKGROUND

1. ABC Textiles Private Limited is a major manufacturer of bedsheets, hand towels and bath towels
with its registered oce in Mumbai. It boasts some of India's top hotels and resorts as its esteemed
clients that purchase the same via yearly bulk orders. s. In January 2020, DEF Hospitality, one
of the largest chains of hotels in the country, placed a yearly bulk order of bed sheets, hand towels
and bath towels totalling INR 1 Crore. DEF shared its standard procurement contract with ABC
Textiles and it signed the same. The contract did not have an aggregate liability cap. It also did
not have a clause disclaiming liability of either party for indirect or consequential losses or
damages, loss of profits, loss of reputation and loss of business.

2. The order was required to be delivered in two lots – (i) first lot comprising 80% of the order value
that was needed to be delivered in February 2020; and (ii) the second lot comprising the
remaining 20% of the consignment value that was required to be delivered in June 2020. The
contract had a penalty of 20% of the relevant consignment lot value if the quality was substandard
and did not meet the specific quality requirements mentioned in the contract. The contract also
had a penalty of INR 10,000/- for every week of delay in consignment delivery. The contract
also had a force majeure clause i.e. neither party was liable for factors beyond its reasonable
control like act of good, flood, earthquake etc. However ‘pandemic’ was not expressly mentioned
in the force majeure clause. The contract had a termination clause that stated that a party may
terminate the contract for cause if the other party commits a material breach of its obligations.
The contract also mentioned that timely delivery of the consignment lots was the essence of the
contract.

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3.TIMELINE OF EVENTS

January , 2020 : DEF Hospitality, placed a yearly bulk order of bed sheets, hand towels and
bath towels totalling INR 1 Crore.

February , 2020 : As per the terms of the contract, DEF paid for the first lot in full within fifteen
(15) days of receipt of the delivery.

Mid - February, 2020 : Some of the local news media and local newspapers in Mumbai reported
that guests in DEF’s flagship hotel in Mumbai had reported about the poor quality of the hand
towels and bath towels. Some of the customers had also uploaded pics and videos on social media
platforms highlighting the poor quality of the hand towels and bath towels.

Last week of March 2020 : Lockdown was imposed in India to contain the spread of COVID-
19

From the last week of March 2020 to June 2020 : ABC Textiles wrote a letter and multiple
emails to DEF requesting an extension of time during the lockdown period to meet the delivery
commitment for the second consignment. In the letter and multiple emails, ABC Textiles had
mentioned it could not import cotton fabric of the requisite quality to meet the quality
requirements under the contract and also started facing labor availability constraints as a result
of the lockdown. DEF did not reply to the letter or emails of ABC Textiles.

June 2020 : DEF sent a letter to ABC Textiles stating the delay in delivering the second lot and
highlighted the poor quality of the first consignment and canceled the contract with immediate
effect. DEF also filed a suit against ABC Textiles regarding the same.

DISPUTE

4. In the suit filed by DEF against ABC Textiles :

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1) DEF claimed Rs. 16 lacs towards 20% penalty on account of poor quality of the first
consignment lot and Rs.10 lacs as damages for loss of business, loss of revenue and loss of
goodwill due to the circulation of videos and posts of poor towel quality in the news and social
media. ABC challenged this claim stating it was not bound to pay either the 20% penalty or
the claim of Rs.10 lacs as the first consignment was of good quality and had been accepted by
DEF on delivery. ABC further challenged these claims by stating that the procurement price
of cotton towels had fallen by at least 20% due to the severe economic impact of COVID-19
pandemic and hence DEF had not suffered any loss due to its inability to deliver the second
consignment.

2) DEF claimed Rs. 25 lacs as damages on account of non-delivery of the second lot. ABC
challenged this claim by stating that the delay in delivery of the second consignment was due
to COVID-19 and resultant lockdown by the Central Government and hence the same was a
Force Majeure event.

The present memo is in response to this petition.

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ISSUES RAISED

ISSUE: 1

WHETHER THE RS. 25 LAKHS CLAIMED AS DAMAGES ON ACCOUNT OF NON-

DELIVERY OF THE SECOND LOT IS MAINTAINABLE.

ISSUE: 2

WHETHER THE RS. 16 LACS CLAIMED ON ACCOUNT OF POOR QUALITY OF THE

FIRST CONSIGNMENT LOT IS MAINTAINABLE.

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SUMMARY OF ARGUMENT

ISSUE: 1

WHETHER THE RS.25 LAKHS CLAIMED AS DAMAGES ON ACCOUNT OF NON-

DELIVERY OF THE SECOND LOT IS MAINTAINABLE.

The Counsel humbly submits that the contract entered into by the parties was duly performed as per
section 50 of The Indian Contract Act,1872 and hence discharged. Since the contract was discharged
there stands no breach of such contract.

The Counsel humbly submits that the respondent is not liable for the Rs.25 lakhs claimed as damages
on account of non-delivery of the second lot as it was unable to do so as a result of the lockdown and
the concept of force majeure will be applied in the case.

ISSUE: 2

WHETHER THE RS. 16 LACS CLAIMED ON ACCOUNT OF POOR QUALITY OF THE

FIRST CONSIGNMENT LOT IS MAINTAINABLE.

The Counsel humbly submits that respondent is not liable for the Rs. 16 lacs claimed on the first
consignment as the consignment supplied were of good quality.

The Counsel humbly submits that it is the buyers responsibility to be cautious i.e., the doctrine of
caveat emptor.

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BODY OF ARGUMENTS

ISSUE 1. WHETHER THE RS.25 LAKHS CLAIMED AS DAMAGES ON ACCOUNT OF

NON-DELIVERY OF THE SECOND LOT IS MAINTAINABLE.

1.1 It is humbly submitted that the respondent is not liable for the 25 lakhs claimed on account
of non delivery of the second lot as it was because of the pandemic which was a force majeure
event

1. After the timely delivery of the first lot in February, the respondent had taken adequate
measures for the timely delivery of the second lot in June 2020. With the onset of COVID- 19
and the resultant lockdown imposed in India around the last week of March 2020, ABC
Textiles could not import cotton fabric of the requisite quality to meet the quality requirements
under the contract and also started facing labor availability constraints1. It is humbly submitted
that the respondent made multiple attempts to contact the petitioner to inform them of the
current situation. The petitioner did not respond to any of the mails that the respondent had
sent their way. The silence in fact is implied acceptance .The suit filed in June claiming 25
lakhs on account of the non delivery of the second lot is not maintainable as the lockdown
imposed by the government which resulted in ABC textiles not being able to import the cotton
fabric of the requisite quality to meet the quality requirements under the contract rendered the
delivery of the second lot in June impossible. Since this act was rendered impossible, the
concept of force majeure can be applied in this case.

1 Fact sheet para 6

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2.The term "force majeure" has been defined in Black's Law Dictionary as 'an event or effect
that can be neither anticipated nor controlled'. The term includes both acts of nature (e.g. floods
and hurricanes) and acts of people (e.g. riots, strikes and wars). Black's Law Dictionary defines
force-majeure clause as 'A contractual provision allocating the risk if performance becomes
impossible or impracticable, esp. as a result of an event or effect that the parties could not have
anticipated or controlled.2

3.The concept of force majeure has neither been defined or specifically dealt with under the
Indian statutes. However, the legislators have to some extent dealt with this concept as is clear
from Section 32 of the ICA, 1872 dealing with contingent contracts.

Section 32 of the ICA, 1872 reads as follows:

"32. Enforcement of contracts contingent on an event happening –Contingent contracts to do

or not to do anything if an uncertain future event happens, cannot be enforced by law unless
and until that event has happened. If the event becomes impossible, such contracts become
void."

Section 56 of the Indian Contract Act, 1872 reads as follows:

56. Agreement to do impossible act. Contract to do an act afterwards becoming impossible or

unlawful.—A contract to do an act which, after the contract is made, becomes impossible, or,
by reason of some event which the promisor could not prevent, unlawful, becomes void when
the act becomes impossible or unlawful. Compensation for loss through non-performance of
act known to be impossible or unlawful.—Where one person has promised to do something
which he knew, or, with reasonable diligence, might have known, and which the promisee did
not know, to be impossible or unlawful, such promisor must make compensation to such
promisee for any loss which such promisee sustains through the non performance of the
promise. 3

4.The Delhi High court in Halliburton Offshore Services Inc. vs Vedanta Limited & Anr.
[O.M.P (I) (COMM.) No. 88/2020 & I.As. 3696-3697/2020] laid down the following factors
for assessing whether a party is genuinely prevented or able to justify its non-performance due

2 ACT OF GOD, Black’s Law Dictionary (11th ed. 2019)

3 The Indian Contract Act, 1872, No. 19, Acts of the Imperial Legislative Council, 1872

(India).

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to the pandemic: 1) conduct of the parties prior to the outbreak 2) deadlines imposed under
the contract 3) steps that were to be taken 4) compliances that were required to be made. The
respondent’s conduct before the outbreak was in line with the terms of the contract as can be
seen in the case of timely delivery of the first consignment. The deadline that was set for the
delivery under that contract was June 2020 and ABC textiles was not able to deliver it solely
because of the pandemic. ABC textiles had taken neccesary steps for the procurement of cotton
for the delivery of the second consignment, which were interrupted solely by the imposition
of the lockdown4. Assessing the factors laid down by the Delhi High Court in this case, the
respondent is able to justify the non performance due to the pandemic.

5.It is humbly submitted that in the Govt. of India vide its Memo No. F. 18/4/2020 PPD dated
19-02-202011 issued by the Deputy Secretary of Govt. of India, Ministry of Finance states as
follows: "A doubt has arisen if the disruption of the supply chains due to spread of coronavirus
in China or any other country will be covered in force majeure clause. In this regard it is
clarified that it should be considered as a case of natural calamity and force majeure clause
may be invoked whenever considered appropriate, following due procedure." The Ministry of
New & Renewable Energy vide Office Memorandum bearing no. 283/18/2020-GRID SOLAR
dated March 20, 2020 has also termed the occurrence of Covid-19 as a Force Majeure Event.5

6. In Dhanrajamal Gobindram v. Shamji Kalidas & Co, The Supreme Court of India said that
when force majeure is included in a contract , the intention of the parties is to save the
performing party from the consequences of anything over which it has no control. If this is the
underlying meaning that comes out from the specified contractual provision, that condition
about force majeure cannot be considered vague. Even if there lies some vagueness in such a
clause, it is capable of being made certain and definite based on the dealings of the parties in
the ordinary course of business and other related proofs. Hence, despite ‘pandemic’ not being
expressly mentioned in the force majeure clause, force majeure can be invoked in this case. 6
Additionally, the Hon'ble High Court of Delhi in M/s Halliburton Offshore Services Inc. v.
Vedanta Limited its interim Order dated observed that the lock down done by the Government

4 Halliburton off shore services V. Vedanta limited, O.M.P. (I) (COMM) & I.A. 3697/2020
5 https://mnre.gov.in/public-information/current-notice
6 Dhanrajamal Gobindram v. Shamji Kalidas & Co AIR 1961 SC 1285

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in view of the outbreak of coronavirus was prima facie in the nature of a force majeure.

7.The Orissa court in M/S. Kjs Ahluwalia vs State Of Odisha & Others, 7stated COVID 19
pandemic was a valid ground for invoking the force majeure clause. Further, the Delhi High
Court in M/S Polytech Trade Foundation vs Union Of India & Ors 8 stated that due to the
COVID 19 pandemic and the resultant lockdown measures in several countries, the logistic
chain all across the world has been severely disrupted and associated production &
consumption centres have been affected. It also mentioned that some relief measures should
be taken to support and rebuild the logistic chain, the imposition of force majeure in
appropriate cases being one of them.

8.The pandemic was an event that was not under the control of the respondent and therefore
the counsel humbly requests the honourable court to recognise the same

1.2 Amount claimed by Petitioner is unreasonable

It is humbly submitted that the contract had a penalty of Rs. 10,000/- for every week of delay in
consignment delivery. 9 Assuming that a delay of 4 weeks happened and the consignment was
delivered in the last week of June or in July, the penalty ABC textiles would have to pay is Rs. 40,000.
But the amount claimed by DEF for non delivery of the second consignment in the suit that it filed in
June is 25 lakhs. This goes to show the unreasonability of the amount claimed by DEF.

7 "MANU/OR/0304/2020

KJS Ahluwalia and Ors. vs. State of Odisha and Ors. (22.12.2020 - ORIHC) : MANU/OR/0304/2020

8 "MANU/DE/1636/2020

Polytech Trade Foundation vs. Union of India and Ors. (22.05.2020 - DELHC) : MANU/DE/1636/2020

9 Factsheet Para 3

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ISSUE 2: WHETHER THE RS. 16 LACS CLAIMED ON ACCOUNT OF POOR QUALITY

OF THE FIRST CONSIGNMENT LOT IS MAINTAINABLE.

It is humbly submitted that the respondent is not liable for any damage caused to the petitioner . In
fact, the respondent’s company has duly performed the contract. The Rs. 16 lacs claimed on account
of poor quality of the first consignment holds no stead. It is in fact the buyer's responsibility to be
cautious i.e the doctrine of caveat emptor.

2.1 It is humbly submitted that the clothes supplied were of good quality. Since the company
ABC textiles Pvt. Ltd was a large manufacturer of Bedsheets,hand towels and bath towels ,
they would not specifically change their quality standards for production of certain garments
only because they are meant to be supplied to the petitioner ’s company. They are also the
suppliers of the very same to India’s top hotels and resorts and a company like this would not
ever want to tarnish its own reputation and goodwill.It is also Important to note how They
have bothered to complain only after a gap of four months and Initially had appreciated ABC
for their timely delivery.

2.2 It is humbly submitted that it is the buyer's responsibility to be cautious i.e., the doctrine
of caveat emptor. The legal maxim Caveat Emptor or “let the buyer beware” means that the
buyer relies on his skill and judgment when he purchases. In Wallis v. Russel, (1902) 21 R
585, The Court of Appeal explained the scope of caveat emptor and laid down that the rule of
Caveat emptor implies that “the buyer must take care”. It applies to the purchase of those things
upon which buyer can exercise his own skill and judgment, e.g. a picture, book, etc (also known
as specific goods); it also applies in the cases where by usage or by a term of contract it is
implied that the buyer shall not rely on the skill and judgment of the seller 10. Similarly, in
Phulchand Ram Marwari and Anr. v. Naurangi Lal Marwari, 172 Ind Cas 225, the Patna High
Court held that If a person purchases a property under circumstances in which the principle of
caveat emptor applies, he does so at his own risk, and if he suffers loss, he has himself alone
to blame11. The Supreme Court in Commnr. Of Customs(Preventive) vs M/S. Aafloat Textiles

10 Wallis v. Russel, (1902) 21 R 585

11 hulchand Ram Marwari and Anr. v. Naurangi Lal Marwari, 172 Ind Cas 225
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(2009)12 held that caveat emptor one of the settled maxims, applying to a purchaser who is
bound by both actual and constructive knowledge of any defect in the thing purchased, which
is obvious, or which might have been known by proper diligence. Additionally, in Alka Yadav
vs State Of U.P. And 2 Others13, the Allahabad High Court held that it was the bounden duty
of the petitioner before purchase to make reasonable inquiries and ascertain the quality of the
products. Similar judgements have been given by the Bombay High Court in Esmail Allarakhia
vs Dattatraya Ramchandra Gandhi AIR 1916 BOM 209 and the Kolkata High Court in The
Board Of Trustees For The Port vs Swadesh Kumar Khatua & Ors. 2012 SCC CAL 9431.

12 Commnr. Of Customs(Preventive) vs M/S. Aafloat Textiles (2009)

13 MANU/UP/0819/2006

Alka vs. State of U.P. and Ors. (23.05.2006 - ALLHC) : MANU/UP/0819/2006

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PRAYER FOR RELIEF

therefore, in light of the issues raised, arguments advanced, and authorities cited, it is most

humbly and respectfully prayed that this Hon'ble Court may be pleased to declare that:

● There has been no breach of contract.

● The respondent is not liable to pay any claim.

AND/OR

PASS ANY OTHER ORDER, DIRECTION OR RELIEF THAT HIS HON’BLE MAY DEEM FIT IN THE INTEREST OF
JUSTICE, EQUALITY AND GOOD CONSCIENCE.

ALL OF WHICH IS HUMBLY PRAYED

COUNSEL FOR RESPONDENT

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