UPES SCHOOL OF LAW, MOOT COURT ASSOCIATION

XVI INTERNAL MOOT

COURT COMPETITION,
2021
23rd – 31st October, 2021

MOOT PROPOSITION
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1. Democratic Republic of Sarvopari (“DRS”) is a country having the largest democracy in the world
with a population of almost 1.2 billion people having various and diversified cultures living in peace
and harmony. DRS became an independent republic free from the rule of the British in 1947. In 1946,
prior to independence, the members of the Provincial Legislative Assembly indirectly elected the
members of the Constituent Assembly to draft the Constitution of DRS. The Constitution drafted by
the Constituent Assembly was adopted on 26th November 1949 and was brought into force w.e.f.
26.01.1950. DRS is a constitutional republic having a quasi-federal structure and a union of 28 states.
DRS is a beautiful country having a peninsula on its southern side, while the northern side is covered
by mountain ranges with Hailistan and Shina as its neighbours. Shina has the largest population in the
world and is the cheapest manufacturer with major goods being manufactured there.

2. DRS is the second-largest consumer of energy globally, with an 8% energy consumption share in the
world. Since 2010 the energy consumption of DRS has doubled, projecting an energy demand growth
of 6% per annum. Nearly 304 million people are without access to electricity in DRS and about 500
million people are still dependent on solid biomass for cooking. Currently, 80 % of the energy
requirement of DRS is met through fossil fuels, primarily coal, which makes it one of the biggest
carbon emitters in the world. DRS, in order to reduce its dependence on fossil fuels and to reverse the
fast pace of climate change due to carbon emission, is focusing on non-conventional sources of energy
and the recent development of solar panels led to the implementation of major energy production
policy changes in the country in 2017.

3. Sundar Pradesh (“SP”), one of the 28 states of DRS, has the largest dependency on fossil fuels, and
the majority of the state population lives without electricity. SP, keeping in view the energy policy
changes issued by the Central Govt. of DRS and to provide the citizens of its state a better life, started
inviting tenders to install solar plants in the state. The installation of the solar plant was to be done in
a phase-wise manner and a total of 20 sites in the state were selected for the 1st phase of installation.
Many private companies with prior experience in solar panel installation applied for the tenders with
the SP state Govt. After reviewing the tenders, Kindal Energy Solutions (“KES”) was selected by the
Govt. of SP as the perfect energy partner for installing solar plants with an experience of almost 10
years in the solar energy field.

4. After negotiations with the KES, an agreement was made between the Govt. of SP and KES on
24.12.2019 for the implementation of the 1st phase of the solar plant installation. Soon after the site
inspection, purchase orders were placed by KES to Shelby Energy Ltd (“SEL”), a Shina based entity
for the delivery of solar panels as SEL was the leading manufacturer of solar panels and a separate
agreement was entered into between SEL and KES in this regard. KES had just completed the minor
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work process when, suddenly, the whole world was affected by a deadly contagious disease DEVID-
19, which forced most nations to halt their activities. All the import and export facilities between the
nations were also stopped. Copy of the agreement dated 24.12.2019 is annexed herewith as Annexure
A.

5. DRS, keeping in view the recent pandemic, also issued a nationwide lockdown on 24.03.2020, and all
the activities within the country were brought to an immediate halt. Shina was stated to be the country
where the virus was first detected by the worldwide news and it was intensely criticised by the United
Nations for keeping the whole world unaware of the disease and failing to control its fast spread. The
Govt. of DRS also issued a ban on all import and export facilities from the country of Shina until
further orders.

6. Due to great administerial decisions, DRS was able to overcome the effect of the pandemic very fast
and resumed all operations within the country from November 2020. Govt. of SP issued a notice on
11.11.2020 to KES to resume the installation process as the state had already suffered a backflow of
almost 9 months due to the DEVID-19 pandemic. The notice further contained that:

“Since all the import and export facilities are banned with the country of Shina, you are
hereby advised to look for an alternate provider for the solar panels and provide the
details of the new provider to the Govt. of SP within 90 days of the receipt of the notice,
failing which the agreement dated 24.12.2019 will stand terminated and new tenders will
be invited for installation of solar plant.”

7. After receiving the notice, KES immediately conducted an internal meeting with their head officials,
wherein it was discussed that the sudden change in the conditions would affect KES’s contract not
only with SP but with SEL as substantial orders have already been given to the SEL.

8. KES made a formal representation to the Govt. of SP describing its position with SEL. It further
requested that it has already placed orders worth INR 80 Crores and made an advance payment to SEL
to the tune of INR 50 Crore. Therefore, the change in the present contract terms would also affect
KES’s contract with SEL. However, the Govt. of SP categorically denied the request and asked KES
to look for another service provider to complete the work on time.

9. KES informed the Govt. of SP that ordering supplies from an alternate provider would increase the
project’s cost 5 times the current estimate and KES would incur a substantial loss. Since it did not want
to lose such a high-value project, KES sent a proposal to the Govt. of SP to revise the value of the
present project so that the losses of KES could be minimised.
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10. Govt. of SP explicitly rejected the request and informed KES that it has to work on the same price or
else the project will be shortly closed, and Govt. of SP will reinvite the bid. To that effect, senior
officials of KES and Govt. of SP had various meetings. However, all the efforts were futile.

11. Finding no other alternative, a notice of arbitration dated 17.02.2021 was sent by KES to Govt. of SP
invoking arbitration as per clause 11 of the agreement dated 24.12.2019, which read as under:

Clause 9: “All disputes, differences and/or claim or questions arising out of this
agreement in any way touching or consigning the same or as to constructions, meaning
or effect thereof or as to the right, obligations, and liabilities of the parties hereunder
shall be referred to and settled by arbitration, to be held in accordance with the provisions
of the Arbitration & Conciliation Act, 1996 or any statutory amendments thereof, before
a sole Arbitrator to be nominated by the mutual consent of both the parties, and in the
event of death, unwillingness, refusal, neglect, inability or incapability of a person so
appointed to act as an Arbitrator, the parties may appoint a new Arbitrator to be sole
Arbitrator. The Arbitrator shall not be required to give any reason for the award and the
award of the Arbitrator shall be final and binding on all parties concerned. The
Arbitration proceedings shall be held in Atistha (Capital of Sundar Pradesh). The
language of arbitration proceedings shall be English.”

12. KES in the said notice suggested the name of Ms. N. R. Menon, Former Chief Justice, SP High Court
as the sole arbitrator for the arbitration proceedings to be conducted between KES and Govt. of SP.

13. Despite being in receipt of the arbitration notice, on 19.02.2021, the Govt. of SP proceeded with the
termination of the agreement dated 24.12.2019 and invited new tenders in order to not delay the solar
project further keeping in view the best interest of its citizens. KES proceeded with the appointment
of Ms. N. R. Menon, Former Chief Justice, SP High Court as an arbitrator for the arbitration
proceedings. KES then preferred an application under Section 17 of the Arbitration and Conciliation
Act, 1996 for a stay on the arbitrary termination of agreement dated 24.12.2019.

14. Subsequently, KES informed SEL to cancel their order as the Govt. of SP has terminated its contract.
Further, KES also offered SEL to forfeit INR 10 Crores in lieu of the already manufactured
material/goods.

15. SEL informed KES that it has already completed the production of goods worth 40 Crores and since
all the goods are customised as per the demand of KES the same cannot be used in any other project.
Therefore, either KES should take the delivery as per the contract or pay the entire price of the
manufactured product with additional damages and cost of loss of profits to the tune of INR 10 Crores.
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16. SEL, for recovering its dues from KES sent a notice invoking arbitration to the KES and sought two
alternative claims i.e., specific performance of the contract or, in the alternative, the cost of
manufactured goods and damages. In reply to the arbitration notice KES apprised SEL that KES has
already initiated arbitration against Govt. of SP. Since the cause of action is the same, SEL should
participate in the same arbitration proceeding rather than forming another tribunal. SEL accepted the
same proposal and, for effectuating the same KES applied to the Tribunal to join SEL as a party to the
arbitration proceeding.

17. The Govt. of SP opposed the application for joining SEL in the ongoing arbitration proceeding by
stating that it violates the parties’ ‘party autonomy’ and fair and equitable treatment.

18. For resolving the said controversy, the Learned Sole Arbitrator has scheduled a hearing on 24th
October, 2021 for determining the following issues: -

a. Whether the tribunal can stay the termination of the contract by the Govt. of SP in favour
of KES?

b. Whether SEL can be made a party to the present arbitration proceedings?

Note:

I. Parties have not raised any objection wrt the constitution/selection/appointment of the arbitral
tribunal/sole arbitrator.
II. Arbitration and Conciliation Act, 1996 is the law governing the arbitration proceedings.
III. Indian laws will act as a substantive law/law governing the merits.
IV. Dispute Resolution Clause and Governing Law Clause in the agreement between KES and SEL are
identical/same as the agreement dated 24.12.2019.
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ANNEXURE A
WORK AGREEMENT

This WORK Agreement (hereinafter referred to as “the Agreement”) is made and entered into at Atistha on
this 24th day of December 2019.

BETWEEN

Govt. of Sundar Pradesh (hereinafter called the "FIRST PARTY") which expression unless repugnant to
the context and/ or meaning thereof includes its successor-in-interest and permitted assigns) of the First Part;
AND
Kindal Energy Solutions having office at 5/15, LGF, Sarvapriya Vihar, Sundar Pradesh, DRS (hereinafter
called the "SECOND PARTY") which expression unless repugnant to the context and/ or meaning thereof
includes its successor-in-interest and permitted assigns) of the Second Part;

Whereas both are collectively referred to as the “Parties”;

WHEREAS the First Party in lieu of the policy parameters issued by the Govt. of DRS has been looking for
energy partners for installation of solar panels across the state and has notified the same vide the tender no. T-
074/SPSPI/ Solar Plant Installation/WC/2019 dated 23/05/2019 (hereinafter referred to as the “Tender”).

Whereas the Second Party has read the Tender and has confirmed that they have the requisite capacities to
manufacture or source the products as per the Tender and they confirm that they shall fulfil the terms and
conditions as stipulated in the Tender documents.

Whereas The Second Party has further entered into a separate contract with the country of Shina for importing
Solar panels to be installed in the state of Sundar Pradesh.

NOW, THEREFORE, it is mutually agreed as follows:

1. First party has been appointed as the first point of contact for installing and maintaining the solar plant
to be installed within the state of Sundar Pradesh.

2. Payment Terms
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The work contract has been sanctioned to the Second Party by the First Party for a sum of Rs. 120
Crores and the same shall be payable to the Second Party in a phase-wise manner and the final payment
shall be made at the complete installation.

1st phase Rupees 30 Crores

2nd phase Rupees 30 Crores

3rd phase Rupees 30 Crores

4th phase Rupees 30 Crores

3. Maintenance Policy
3.1 After the installation of the solar panels, the Second party shall be liable for the maintenance of the
same for the next two years from the date of final installation after which the same will be handed over
to the First Party.
3.2 In case the Solar Panels are found to be defective or damaged within the two year period, the
liability for the same will be on the Second Party.

4. Special condition
No material shall be supplied without specific engraved embossment “SP”.

5. Area of Operation
5.1 Second Party shall only operate in the Area / Region defined or allotted by the First Party.
5.2 The Second Party has identified the worksites allocated by the First Party and done a maintenance
check on the sites allocated.

6. Termination of Agreement
6.1 The term of this Agreement shall be for a period of two years commencing on 24.12.2019, and
terminating on 24.12.2021, and shall thereafter continue in effect unless either party shall notify the
other party of its intention to terminate the Agreement by giving at least 120 days written notice prior
to any specific termination date.

6.2 However, in the event of a breach of any of the terms and provisions of this Agreement, either
party may terminate this Agreement by giving the other party 90 days written notice provided said
notice shall set forth the breach being claimed as the basis for termination.
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7. Condition for Default Payments

All the payments shall be made by the First Party within 45 Days of raising of the invoices by the
Second Party after getting the same verified from the Govt. Engineer. \

8. Non-satisfaction Clause
8.1 First party shall have the right to terminate this Agreement upon 45 days written notice in the event
that Second Party:

8.1 (a) is found operating beyond the area/region defined by the First Party;

8.1 (b) fail to meet the targets mutually agreed upon between the First Party and the Second Party;

8.1 (c) fail to procure and install the solar panels in prescribed time;

9. FORCE MAJEURE
Neither of the parties will be in breach of this Contract to the extent that such party is unable to perform
due to any event of “force majeure”, including, without limitation, fire, explosion, earthquake,
epidemic, war, strike, riot, civil disobedience, Act of God or any governmental law, decree or
ordinance, and neither party shall be liable to the other for any of its obligations hereunder during the
period that such “force majeure” event remains in effect provided the Party claiming non-performance
due to an event of “Force Majeure” has served a notice on the other Party of such “Force Majeure”
event. It is clarified that in case the Force Majeure event occurs due to negligence of “Second Party”,
the provisions of this clause shall not apply to “Second Party”.

10. Governing Law

(a) Arbitration and Conciliation Act, 1996 shall be the law governing the arbitration proceedings, if
any.
(b) Indian laws shall govern the substantive/merit portion of the dispute, if any.

11. Arbitration Clause

All disputes, differences and/or claim or questions arising out of this agreement in any way touching
or consigning the same or as to constructions, meaning or effect thereof or as to the right, obligations,
and liabilities of the parties hereunder shall be referred to and settled by arbitration, to be held in
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accordance with the provisions of the Arbitration & Conciliation Act, 1996 or any statutory
amendments thereof, before a sole Arbitrator to be nominated by the mutual consent of both the parties,
and in the event of death, unwillingness, refusal, neglect, inability or incapability of a person so
appointed to act as an Arbitrator, the parties may appoint a new Arbitrator to be sole Arbitrator. The
Arbitrator shall not be required to give any reason for the award and the award of the Arbitrator shall
be final and binding on all parties concerned. The Arbitration proceedings shall be held in Atistha
(Capital of Sundar Pradesh). The language of arbitration proceedings shall be English.

12. SEVERABILITY
In the event that any provisions contained in this agreement shall, for any reason held to be invalid,
illegal, or unenforceable in any respect, such illegality or unenforceability shall not affect the other
provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provisions were contained therein.

IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be duly executed as of the
Effective Date.

By: First Party By: Second Party