MOOT PROPOSITION

Facts:

1. The Republic of Dakshin Pradesh is a country in South Asia. In terms of land mass, it
is the world’s fifth-largest country. However, it is the second most populous country
with more than 60% of its population working in the agriculture sector with reliance on
traditional methods of agriculture. Bound by sea on three sides i.e. east, west, south,
and the highest mountain range on its north, the country enjoys unique geographical
and ecological benefits.

2. Dakshin Pradesh gained independence from Maritania around 70 years back. The
Constitution of Dakshin Pradesh (“Constitution”) declares Dakshin Pradesh to be a
sovereign, socialist, secular, democratic republic, assuring its citizens of justice,
equality, and liberty. Dakshin Pradesh takes great pride in the Constitution which draws
inspiration from various countries and some international conventions.

3. The policy of Liberalisation, Privatisation and Globalisation (“LPG”) adopted by the

government of Dakshin Pradesh in early 1970s further quickened the development
pace, in the city of, Shreshth Pradesh. It is noteworthy that post-LPG era saw several
multinational companies (“MNCs”), small/ large scale industries and manufacturing
units mushrooming in and around the city of Shreshth Pradesh.

4. Armani Group is an indigenous multinational conglomerate, headquartered in Shreshth

Pradesh, capital of Dakshin Pradesh. It was founded by Raman Armani in 1980 as a
commodity trading business, with the flagship company Armani Enterprises. The
Group's diverse businesses include port management, electric power generation and
transmission, renewable energy, mining, airport operations, natural gas, food
processing and infrastructure.

5. In 2020, Armani Group crossed US$100 billion in market capitalization, and in 2022 it
crossed the $200 billion mark, in both cases becoming the third Dakshin Pradesh
conglomerate to do so, after Mandora Group and Trilient Industries. In December 2022,
it reached $280 billion (INR 24 trillion) surpassing Mandora Group. More than 60
 percent of the Armani Group's revenue is derived from coal-related businesses. The
company's corporate debt totaled $30 billion in 2022.

6. In the first few weeks of 2023 there was a steep decline in the share price of the Armani
Group of companies. The decline in the share price was precipitated by a report
published by Turquoise Research on 1st January 2023.

7. This report inter alia alleges that the Armani Group of companies has manipulated its
share prices; failed to disclose transactions with related parties and other relevant
information concerning related parties in contravention of the regulations framed by
FEBDP (Financial Exchange Board of Dakshin Pradesh); and violated other provisions
of securities laws. The report also states that Turquoise Research has taken a short
position in the Armani Group companies through foreign traded bonds and non-
Dakshin Pradesh traded derivative instruments.

8. Armani subsequently lost more than $100 billion of market capitalization after alleged
fraud and market manipulation allegations by short-seller firm Turquoise Research. The
Armani Group has also attracted other controversies due to various reports of irregular
practices.

9. It was alleged in the Turquoise Research report that public money amounting to
thousands of crores is at risk because public institutions like the Federal Bank of
Dakshin Pradesh and the Jeevan Insurance Corporation of Dakshin Pradesh are exposed
to the Armani Group.

10. The Turquoise report also alleges that “the Armani Group has been in flagrant violation
of ... Rule 19A of the Securities (Regulation) Rules by surreptitiously controlling more
than 75% of the shares of public listed Armani group companies, thereby manipulating
the price of its shares in the market.” It inter alia seeks a court-monitored investigation
by a Special Investigation Team or by the Federal Bureau of Investigation into the
allegations of fraud and the role played by top officials of leading public sector banks
and other lender institutions.
 11. On the basis of the allegations in Turquoise research report, several investor groups
filed petitions inter alia seeking the issuance of directions to the Union of Dakshin
Pradesh and the Union Ministry of Home Affairs to constitute a committee headed by
a retired judge of the Federal Court to investigate the allegations.

12. Another group of investors in a separate petition, have asked for the issuance of
directions to the Union Ministry of Home Affairs of Dakshin Pradesh to register an FIR
against Mr. Clive Loyd (the European founder of Turquoise Research) and his
associates for short selling, and for directions to recover the profits yielded by the short
selling to compensate investors.

13. FEBDP (Financial Exchange Board of Dakshin Pradesh) has placed on record a brief
note on the factual and legal aspects describing the existing statutory regime, regulatory
mechanisms and frameworks in place for the protection of investors. It has also laid out
the regulatory framework governing short selling and stated that:
a. It has adopted a disclosure based regulatory regime for both issuance of and trading
in securities. This is in line with the discontinuation of pricing control for capital issues
in favour of the principle of free discovery by the markets based on demand and supply
from informed investors; and
b. It is “strongly and adequately empowered to put in place regulatory frameworks for
effecting stable operations and development of the securities markets including
protection of investors.”

Issues:

After getting satisfied on the maintainability of the PIL, the Hon’ble Federal Court has issued
the notice to the parties and has fixed the matter for hearing on the following issues:

a. Whether the Turquoise Research Report amounts to a violation of the fundamental right of
freedom to carry on business, trade or profession of the Armani Group?

b. Whether the Turquoise Research Report amounts to a violation of the national interests of
the country of Dakshin Pradesh?

c. Whether the State of Dakshin Pradesh has failed in its duty and obligation to protect and
safeguard the interests of investors of Dakshin Pradesh?
Notes:

A. The parties are allowed to raise and plead the additional issues incidental to the facts of the
moot proposition.

B. The Petitioner shall present arguments on behalf of investors and the Respondent shall
present arguments on behalf of the Union of Dakshin Pradesh.

C. The national and international laws, policies, obligations/ commitments (inter alia relating
to Constitution, Securities Laws, Banking Laws of Dakshin Pradesh are pari materia to that of
Republic of India. Parties are independent to cite case laws from Indian Courts as persuasive
precedent.

Disclaimer: This case is purely fictional. Any resemblance to names, properties and
associations is purely coincidental.