MEMORANDUM on behalf of the APPLICANT

243A

15TH NLUO INTRA UNIVERSITY MOOT COURT COMPETITION

2023

Before THE HON’BLE ARBITRAL TRIBUNAL OF LIVERPOOL

Under SECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, 1996

IN THE MATTER OF

KATHAJODI INNOVATION PVT LTD..………..…………………………….…. APPLICANT

V.

DIGIPRO MAHANADI PVT LTD........................................................................RESPONDENT

COUNSEL APPEARING ON BEHALF OF THE APPLICANTS

CIVIL SUIT NO. __________ OF 2023

MEMORANDUM ON BEHALF OF THE APPLICANTS

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TABLE OF CONTENTS

TABLE OF CONTENTS..................................................................................................................I

INDEX OF AUTHORITIES............................................................................................................III

TABLE OF ABBREVIATIONS........................................................................................................V

STATEMENT OF JURISDICTION..................................................................................................VI

STATEMENT OF FACTS............................................................................................................VII

I. BACKGROUND OF THE PARTIES................................................................................VII

II. THE CONTRACTUAL AGREEMENT BETWEEN THE PARTIES...................................VII

III. EXECUTION ISSUES.....................................................................................................VII

IV. PAYMENT DISPUTE...................................................................................................VIII

V. ARBITRAL PROCEEDINGS.........................................................................................VIII

ISSUES RAISED..........................................................................................................................IX

SUMMARY OF ARGUMENTS.......................................................................................................X

ARGUMENTS ADVANCED............................................................................................................1

I. LIST OF DATES:..............................................................................................................1

II. ISSUE 1: WHETHER THERE EXISTS A DISPUTE BETWEEN KIPL AND DIGIPRO UNDER

THE TERMS OF THE SUB-CONTRACT? IF YES, WOULD MATRIX BE A NECESSARY/PROPER

PARTY TO THE DISPUTE?.......................................................................................................2

A. THAT THERE EXISTS A DISPUTE BETWEEN KIPL AND DIGIPRO..................................2

B. THAT WHETHER MATRIX IS A NECESSARY/PROPER PARTY......................................3

III. ISSUE 2: WHETHER KIPL IS ENTITLED TO THE BALANCE PAYMENTS AND INTEREST,

AS CLAIMED UNDER THE SUB-CONTRACT?..........................................................................6

A. THAT THERE EXISTS PRIVITY OF CONTRACT BETWEEN KIPL AND DIGIPRO..............6

B. THAT KIPL IS ENTITLED TO THE BALANCE PAYMENT AND INTEREST

7

PRAYER FOR RELIEF................................................................................................................XII

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INDEX OF AUTHORITIES

CASES

Associated Cinemas of America, Inc v World Amusement Co. 201 Minn. 94 (Minn. 1937).....2
Bharathi Knitting Company vs DHL Worldwide Express Courier Division of Airfreight Ltd.
(1996) 4 SCC 704...................................................................................................................7
BIG Industrial Gas Sdn Bhd v Pan Wijaya Property Sdn Bhd and Another Appeal [2018] 3
MLJ 326.................................................................................................................................5
Energy Watchdog & Ors. v. Central Electricity Regulatory Commission & Ors. (2017) 14
SCC 80...................................................................................................................................6
Forcometal SARL vs Mediterranean Shipping Co SA [1989] AC 788......................................9
Hochester vs De La Tour (1853) 2 E&B 678............................................................................8
Islam Fatima & Ors. v Pothi Ram & Ors. (1915) ILR 37 All 212..........................................10
K. Pro Infra Works (P) Ltd v State of Manipur AIR 2015 NOC 505 (Mani)..........................10
M/s Jyoti Ltd. v. E.I.H. Limited 2009 SCC OnLine Del 754.....................................................3
M/s. Satya Narain Sharma (Huf) v M/s. Ashwani Sarees Pvt. Ltd. 2009 SCC OnLine Del 69. 4
Magenta Resources (S) Pte. Ltd. v China Resources (S) Pte. Ltd. [1996] 3 SLR 62................5
Nabha Power Ltd. (NPL) v Punjab State Power Corporation (PSPCL) & Anr. Civil Appeal
No. 179 of 2017....................................................................................................................11
Naihati Jute Mills Ltd. v Hyaliram Jaganath 1968 SCR (1) 821..............................................6
Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co 1894 AC 535.................................10
Oil & Natural Gas Corporation Ltd. vs Saw Pipes Ltd 2003 (7) AIC 147 (SC).......................8
Prathyusha Associates v Rashtriya Ispat Nigam Limited 2006 (1) ALT 69..............................4
Sitaram Bindraban vs Chiranjanlal Brijlalit AIR 1958 Bom 291.............................................7
Standard Retail Pvt. Ltd v Gs Global Corp and Ors 2020 SCC OnLine Bom 704...................5
State of Gujrat vs Dharangdhra Chemical Works Ltd 1985 (Supp) SCC 1..............................3
Zaheer Khan & Anr v Percept D’mark India Pvt. Ltd. AIR 2004 Bom 362...........................10

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STATUTES

Arbitration and Conciliation Act 1996,s11.............................................................................VII

Indian Contract Act 1872, s 27................................................................................................10
Indian Contracts Act 1872, s 56.................................................................................................5
Indian Contracts Act 1872, ss 73, 74 & 75................................................................................7
Section 6 of the Commercial Courts Act, 2015.......................................................................VI
The Companies Act 2013.......................................................................................................VII
The Disaster Management Act 2005.....................................................................................VIII
The Epidemic Diseases Act 1897..........................................................................................VIII

OTHER AUTHORITIES

‘A suggested revision of the contract doctrine of anticipatory repudiation’ (1954) 64 Yale L.J.
85............................................................................................................................................2
‘Covid impact: Home delivery of food turns new bread and butter for top hotels’ The Hindu
Business Line (8 Nov 2020)...................................................................................................7

ORDERS AND REGULATIONS

Ministry of Home Affairs [2020] Order number 40-3/2020-DM-I (A).....................................7

BOOKS

Bryan A Garner (ed), Black’s Law Dictionary (11th edn, Thomson Reuters West 2019)........10
G.H. Treitel, Frustration and Force Majeure (3rd edn, Sweet & Maxwell 1994).....................5
Pollock & Mulla, The Indian Contract Act, 1872 (14th edn, LexisNexis 2014)........................6

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TABLE OF ABBREVIATIONS

S. Section

¶ Paragraph

P Page

% Percentage

INR Indian Rupee

i.e. That is

Pvt. Private

Ltd. Limited

Hon’ble Honourable

Vs Verses

Matrix Matrix Badambadi Private Limited

DigiPro DigiPro Mahanadi Private Limited

KIPL Kathajodi Innovation Private Limited

IFOC Internet Fibre Optic Cable

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STATEMENT OF JURISDICTION

The Applicants have approached the Hon’ble Arbitral Tribunal of Liverpool under Section 11
of the Arbitration and Conciliation Act, 1996 1. The Applicants, humbly submits to the
jurisdiction of the Hon’ble High Court of Liverpool.

The present memorial puts forth the facts, contentions and arguments in the present case.

1
Arbitration and Conciliation Act 1996, s 11.

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STATEMENT OF FACTS

I. BACKGROUND OF THE PARTIES

A. Matrix Badambadi Private Limited (“Matrix”) is a company incorporated under the
Companies Act 2013 of India, having it’s registered office and primary place of
business in the state of Manchester, proposed to develop an IT Park in Manchester,
B. Matrix in turn contracted out Digipro Mahanadi Private Limited (“Digipro”), The
Respondant, to establish and install Internet Fiber optic Cable (“IFOC”) throughout
the IT Park for high-speed internet connectivity,
C. Digipro in turn entered into a contract with Kathajodi Innovation Private Limited
(“KIPL”), the Applicant, sub-contracting a part of the mandate received from Matrix
for supply of electrical equipment, installation, acceptance and verification testing and
commissioning of servers for facilitating IFOC in the IT Park.

II. THE CONTRACTUAL AGREEMENT BETWEEN THE PARTIES

D. Matrix and Digipro entered into a contract dated 21 st of February, 2020 with a total
value of INR 30,00,00,000. The payment for the same was contingent on the
successful completion of working within 2 years from entering into contract and with
adherence to minimum quality standards.
E. Digipro in turn entered into a sub-contract with KIPL dated 14 th of June, 2020, with a
total contract value of INR 8,00,00,000. This sub-contract was to be completed within
15 months from the date of commencement which was 16 th of August, 2020. The
following relevant clauses were a part:
1. Clause 4 stated that KIPL can invoice Digipro for the agreed price upon
completing the sub-contract work. Digipro must pay KIPL for the undisputed
invoices within 30 days of receiving the corresponding amount from Matrix,
as per the back-to-back terms of the project.
2. Clause 12.1 stated that all disputes, differences and questions that arise and are
unresolved through the executive management escalation, will be settled
through arbitration in India, involving three arbitrators chosen as per the
Arbitration and Conciliation act, 1996.

III. EXECUTION ISSUES

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F. KIPL started work on the commencement date as per the sub-contract and did not face
any supply chain issue, until the installation process, during which KIPL faced a
shortage of skilled labour, causing a delay of 1 month. As soon as the installation was
complete, KIPL approached Digipro to start with the acceptance and verification
testing, but Digipro informed KIPL that due to the 1 month delay, all engineers are
occupied on other projects and shall be available only after a delay of another month.
G. KIPL handed over the sub-contract to Digipro with an overall delay of 3 months,
while Digipro handed over the entire mandate to Matrix with an overall delay of over
4 months.
IV. PAYMENT DISPUTE
H. Due to the delayed handover of the work, matrix withheld INR 5,00,00,000 of the
entire consideration amount of the contract. As a result of such withholding, Digipro
withheld an amount of INR 1,33,36,000 out of the entire consideration amount of the
sub-contract.
V. ARBITRAL PROCEEDINGS
I. KIPL requested for a meeting with Digipro, to resolve the issues. However, despite
repeated reminders Digipro refused to enter into any negotiation. KIPL then sent a
demand notice cum notice involving arbitration under the sub-contract for release of
the unpaid consideration along with an interest rate of 25% per annum.

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ISSUES RAISED

ISSUE I.

WHETHER THERE EXISTS A ‘DISPUTE’ BETWEEN KIPL AND DIGIPRO UNDER THE TERMS OF THE
SUB-CONTRACT? IF YES, WOULD MATRIX BE A NECESSARY/PROPER PARTY TO THE DISPUTE?

ISSUE II.

WHETHER KIPL IS ENTITLED TO THE BALANCE PAYMENTS AND INTERESTS, AS CLAIMED

UNDER THE SUB-CONTRACT?

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SUMMARY OF ARGUMENTS

ISSUE 1:
I. The Appellant claims that DigiPro’s decision to withhold a part of KIPL’s payment was
wrongful, thereby leading to a dispute. Legal precedent, such as the case of Indian Oil
Corporation Ltd. vs. M/s Tatpar Petroleum Centre, outlines that a dispute arises when
one party asserts a claim and the opposing party refutes it. In the current context, KIPL
expressed concerns over withheld payments. In response, DigiPro neither confirmed nor
denied the claim, choosing not to engage in negotiations and emphasizing that they met
all their contractual obligations. Such a stance, by definition, underscores the existence of
a dispute between the two parties.
II. The next contention concerns whether Matrix should be included as a necessary or proper
party in the ongoing dispute. Legal provisions from the Code of Civil Procedure give
courts discretion to include or exclude parties as deemed fit. The provided facts highlight
that matrix had an influential role in the sequence of events leading to the dispute. After
experiencing delay in KIPL’s delivery, Matrix chose to withhold a significant portion of
the contract’s consideration amount. Following this, DigiPro adjusted their payment to
KIPL proportionally. Given Matrix’s direct impact on the financial decision causing the
dispute, the counsel argues that Matrix is a proper party and should be included in the
legal proceedings.

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ISSUE 2:

I. The crux of Issue 2 surrounds KIPL’s entitlement to the outstanding payments and
subsequent interest as delineated in the sub-contract with digipro. First and foremost, the
Appellant emphasizes the undeniable privity of contract between KIPL and Digipro.
Drawing on the ruling from cases like Zonal General Manager, Ircon International Ltd.
vs. Vinay Heavy Equipments, the Appellant underscores the distinct contractual
obligations between principal contractors and their sub-contractors. These cases establish
that any disagreements or delays at the level of Matrix and Digipro and KIPL should not
infringe upon Digipro’s commitment to KIPL. The fact that Digipro and KIPL have a
direct contractual relationship underscores Digipro’s duty to KIPL, particularly
concerning payments.
II. Furthermore, the Appellant argues fervently for KIPL’s rightful claim to the balance
payments, accentuating it with an 18% interest rate. Citing the precedent set by the M/s
Larsen Air Conditioning and Refrigeration Company vs. Union of India & Ors. case, the
counsel showcases that the 18% interest rate demand is neither arbitrary nor exorbitant. In
fact, it’s harmonized with statutory provisions under section 31(7)(b) of the 1996 Act.
This provision posits that in the absence of an arbitrator’s specified rate, the interest on
the awarded amount should be 18% per annum. The interest acts as compensation for the
delay, accounting for the fiscal ramification and loss experienced by KIPL due to
postponed payments.

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ARGUMENTS ADVANCED
I. LIST OF DATES:
Date
Before 21 February, 2020
21st of February, 2020
14th of June, 2020
16th August, 2020
1st July,2022
10th July, 2022
18th July, 2022
20th July, 2022
25th August, 2022
13TH NLUO INTRA UNIVERSITY MOOT COURT COMPETITION (PHASE I) 2021
Event
Government of Manchester introduced a new
policy to encourage and incentivize IT
infrastructure. Matrix proposed to develop an IT
park and Government agreed, owing to the
experience of Matrix in developing IT parks.
Matrix entered into a contract with Digipro, with
total value of INR 30,00,00,000, to be
completed within 2 years from commencement
date
Digipro enters into sub-contract with KIPL with
a total value of INR 8,00,00,000, to be
completed within 15 months from
commencement date.
KIPL commenced work as stipulated in the sub-
contract.
Digipro hands over the completed contract to
Matrix.
Matrix communicates to Digipro via an email
communication about delay of over 4 months
and withholds INR 5,00,00,000 crores from the
total payment to Digipro.
Digipro withholds INR 133,36,000 towards
KIPL
KIPL contests the reduced payment and seeks
negotiation with Digipro.
KIPL invokes arbitration against Digipro and
nominates Retd. Justice Christiano Dhoni as one
of the arbitrators.
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 MEMORANDUM on behalf of the APPLICANT

September, 2022 KIPL approaches high court of Liverpool.

II. ISSUE 1: WHETHER THERE EXISTS A DISPUTE BETWEEN KIPL AND DIGIPRO UNDER

THE TERMS OF THE SUB-CONTRACT? IF YES, WOULD MATRIX BE A

NECESSARY/PROPER PARTY TO THE DISPUTE?

A. THAT THERE EXISTS A DISPUTE BETWEEN KIPL AND DIGIPRO

[[¶1.]] The Appellant submits to the hon’ble bench that the The counsel humbly submits that
the withholding of a part of the payment by DIGIPRO towards KIPL was unlawfulwrong
and should not have been done. This act of Digipro led to the rise of a dispute between
KIPL and Digipro. The counsel hereby submits that firstly, there is a dispute between
KIPL and Digipro [A] and lastly, Matrix is a proper party [B]This shall be shown by the
counsel in the following arguments.
[[¶2.]] DISPUTE DEFINED
1.
[[¶3.]] It is humbly submitted before the court that there is a dispute between KIPL and
Digipro. The term 'Dispute' was defined clarified in the case of Indian Oil Corporation
Ltd. vs. M/s Tatpar Petroleum Centre2. The hon’ble court in this case held that The
ruling explained that a dispute arises when one party makes a claim and the other refutes
it. A dispute doesn't occur if one side claims something and the other side doesn't
respond. It's not necessary for an action or order to result from this disagreement. The
mere claim by one party and its denial by the other is sufficient to establish a dispute.
[[¶4.]] The hon’ble reiterated same Similarly, in the case of Pearl Hosiery Mills, Ludhiana
vs Union of India3, the court held that a dispute or difference requires for there to be a
statement of proposition and a denial thereof by the other side. Furthermore, according to
Avtar Singh, the word dispute means the matter in dispute and not the contention or
disputation over it. The dispute may relate to an act of commission or omission, for
example, withholding a certificate to which a person is entitled or refusal to register a
transfer of shares.4
[[¶5.]] Likewise In the present case, in the case of KIPL, when a part of the payment was
withheld by Digipro claiming compensation for the loss occurred due to delay in

2
Indian Oil Corporation Ltd. vs. M/s Tatpar Petroleum Centre [2022] A.A. No. 80/2021
3
Pearl Hosiery Mills, Ludhiana vs Union Of India And Anr [1978], AIR 1979 Delhi 64
4
Avtar Singh, Law of Contract & Specific Relief (first published 2004, EBC 1980)

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submission of contract work, Digipro denied any liability whatsoever owing to the
payment of the withheld amount, and instead claimed that it had fulfilled all obligations
under the terms of the sub-contract thereof. In this caseHere, KIPL clearly made a claim
demanding the payment withheld which was denied by Digipro. Thus, causing for a
dispute to rise between KIPL and Digipro. Moreover, Digipro committed an act of
omission by withholding a part of the payment as consideration amount of the sub-
contract towards KIPL as opined by Avtar Singh.
As defined in the book, Arbitration and Conciliation Act and Alternative Dispute Resolution
by Avtar Singh, the word dispute means the matter in dispute and not the contention or
disputation over it. The dispute may relate to an act of commission or omission, for example,
withholding a certificate to which a person is entitled or refusal to register a transfer of
shares.
Likewise, in this Digipro committed an act of omission by withholding a part of the payment
as consideration amount of the sub-contract towards KIP
[2.] CONCLUSION
[[¶6.]] Keeping all the above arguments in Therefore, the counsel concludes that there exists
a dispute between KIPL and Digipro.

B. THAT WHETHER MATRIX IS A NECESSARY/PROPER PARTY

[[¶7.]] The Counsel humbly submits that, in the given scenario, Matrix stands to be a Proper
Party. This shall be shown by the counsel in the following arguments.
[[¶8.]]
[[¶9.]] PROPER PARTY DEFINED
[1.] As in the provisions of Order 1 Rule 10(2) of Code of Civil Procedure ("CPC”) (‘,
“Court may strike out or add parties. The court may at any stage of the proceedings,
either upon or without the application of either party, and on such terms as may
appear to the court to be just, order that the name of any party improperly joined,
whether as plaintiff or defendant, be struck out, and that the name of any person who
ought to have been joined, whether as plaintiff or defendant, or whose presence before
the court may be necessary in order to enable the court effectually and completely to
adjudicate upon and settle all the questions involved in the suit, be added.” 5
[¶1.] Hence, tThe said provision makes it clear that a court may, at any stage of the
proceedings (including suits for specific performance), either upon or even without any
5
Code of Civil Procedure 1908, order 1 rule 10(2)

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application, and on such terms as may appear to it to be just, direct that any of the
following persons may be added as a party: a) any person who ought to have been joined
as a plaintiff or defendant, but not added: or b) any person whose presence before the
court may be necessary in order to enable the court to effectively and completely
adjudicate upon and settle the questions involved in the suit. ThusIn short, the court is
given discretion to add as a party, any person who is found to be a necessary or proper
party.
[¶2.][[¶10.]] A "necessary party" is a person or entity who ought to have been joined as a
party and in whose absence no effective decree could be passed at all by the court. If a
"necessary party" is not impleaded, the suit itself is liable to be dismissed. A "proper
party" is a person or entity who, though not a necessary party, is a person whose presence
would enable the court to completely, effectively and adequately adjudicate upon all
matters in dispute in the suit, though he need not be a person in favour of or against
whom the decree is to be made. If a person is not found to be a proper or necessary party,
the court has no jurisdiction to implead him, against the wishes of the Plaintiff. The fact
that a person is likely to secure aright/interest in a suit property, after the suit is decided
against the Plaintiff, will not make such person a necessary party or a proper party to the
suit for specific performance.
[¶3.][[¶11.]] In the case of Krishan Kumar Shyam Lal Bansal v Union of India and Ors.,
the hon’ble court held that, “Under Order I, Rule 10(2) CPC, the Court has the power to
add a party to a suit in two situations, namely, when a party ought to have been joined
when the suit was originally instituted and was not so joined, or secondly, the presence of
the person sought to be added is necessary to effectively and completely adjudicate upon
and settle all points involved in the suit. As per settled law the discretion by the Court is
to be exercised sparingly and in exceptional cases because plaintiff is the 'Dominus Litis'
and in the normal course one cannot be impleaded as additional party if a plaintiff does
not want. In a case where the Court directs addition of a party against the Will of the
plaintiff who is to control the litigation, the Court must be satisfied that there is anything
in the suit which cannot be determined on account of absence of party in the party array
or whether any prejudice would be caused by that party not being added. To put it
differently, where a person is neither necessary nor proper party the Court has no
jurisdiction to add him as a party and the question of necessary party is to be determined
with reference to the averments in the plaint.”6
6
Krishan Kumar Shyam Lal Bansal v Union of India and Ors [1993]

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[¶4.][[¶12.]] In the present case, to determine whether Matrix is a necessary/proper party, we

rely on the above-mentioned provisions. It states that the plaintiff is the “Dominus Litis”,
meaning that if the plaintiff desires, an additional party can be impleaded into the suit, but
if not, the hon’ble court must be satisfied that there exist certain aspects within the facts
of the case which cannot be determined in the absence of the said party.
[¶5.][[¶13.]] Noting the facts of the case, the first delay occurred, during the installation
process, when KIPL faced shortage of skilled labour in Manchester, causing a delay in the
completion timelines. This delay in the sub-contract work was duly communicated to
Digipro, with a proposed progress recovery plan, who in turn, informed Matrix of the
delays. Matrix, noting the delays, instructed Digipro to ensure that no further delays were
caused and that the sub-contract work is completed within the stipulated timeline.
[¶6.][[¶14.]] Upon the handover of the entire mandate to Matrix, Matrix wrote an email to
Digipro, dated 10th of July 2022, communicating that due to the delays occurred primarily
in the IFOC server works, Matrix received the mandate with a delay of over 4 months.
The email also stated that the delay was not attributable to Matrix on any account, and
substantial losses were incurred by matrix due to the delayed handover of the IFOC server
works. As a result of which, the competent authority of Matrix withheld an amount of
INR 5,00,00,000 of the entire consideration amount of the contract.
[¶7.][[¶15.]] On 18th of July 2022, Digipro wrote an email to KIPL communicating that as a
result of the substantial delays in the handing over of the entire contract, Matrix has
withheld a certain amount of consideration of the contract. As a result of such
withholding, Digipro withheld an amount of INR 1,33,36,000 out of the entire
consideration of the sub-contract, and that a reduced amount was released on a
proportionate pro rata manner based on the proportionate amount withheld by Matrix.
[¶8.][[¶16.]] KIPL replied to Digipro’s email registering protest against receiving a lower
amount than what was agreed in the sub-contract and requested for a meeting to discuss
and resolve the issues at the earliest. However, Digipro refused to enter into any kind of
negotiation on the grounds that it has successfully completed it’s contractual obligations
under the terms of the sub-contract. Digipro further suggested that KIPL should further
consult with Matrix regarding their grievance on balance of payment.
[¶9.][[¶17.]] Taking into consideration the facts of the case, and the provisions mentioned
above, the Counsel submits that even though the dispute exists between KIPL and
Digipro, the presence of Matrix would be necessary to pass a judgement. Moreover, it
fulfills all the required pre-requisites to be termed as a proper party. In order to prove the

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Appellant’s plea, the Counsel pleads for the impleadment of Matrix as a proper party to
the suit .
1.[2.] CONCLUSION
Therefore the counsel concludes that Matrix be impleaded as a proper party to the suit.

III. ISSUE 2: WHETHER KIPL IS ENTITLED TO THE BALANCE PAYMENTS AND INTEREST, AS
CLAIMED UNDER THE SUB-CONTRACT?

[¶10.][[¶18.]] The Appellant humbly submits to the hon’ble bench that the withholding of a
part of payment towards KIPL is unlawful. Digipro should be liable to pay the withheld
amount. The counsel hereby submits that firstly, Time is not of the essence of the
contract, secondly, the Unilateral withholding of payment is not permissible thirdly, there
exists Privity of Contract between Digipro and KIPL and lastly, the Digipro is liable to
pay an interest amount of 18%.

A. THAT THERE EXISTS PRIVITY OF CONTRACT BETWEEN KIPL AND DIGIPRO

[¶11.][[¶19.]] The Counsel humbly submits that there exists Privity of Contract between
KIPL and Digipro.

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[¶12.][[¶20.]] In the case Zonal General Manager, Ircon International Ltd. vs. Vinay
Heavy Equipments7, the distinct and sole liability of the middle-contractor is presumed
and that the rules in relation to privity of contract will mean that the jural relationship
between the employer and the main contractor on one hand and between the sub-
contractor and the main contractor on the other hand will be quite distinct and separate.
[¶13.][[¶21.]] Likewise, in the case of Shri. Dinesh Bhardwaj and another vs. Shri
Janardhan singh and others8, the hon’ble court held that there is no privity of contract
between the employer and the sub-contract, since there was no written agreement
between the two and had no direct contractual relationship.
[¶14.][[¶22.]] In the present case, applying the above-mentioned provision, the counsel
humbly submits that the jural relationship between Matrix (the employer) and Digipro(the
main contractor) and that between KIPL(the sub-contractor) and Digipro(the main
contractor), are quite distinct and separate. This means that the obligations of Digipro to
KIPL are distinct and shouldn’t be directly affected by any dispute or delay between
Matrix and Digipro.
[¶15.][[¶23.]] The case mentioned above underlines the presumption of the distinct and sole
liability of the middle-contractor, which is Digipro in this instance. This suggests that
even if there are disputes, between matrix and Digipro, Digipro is solely liable to KIPL
for payments based on their subcontract agreement. The delays or payment issues at the
Matrix-Digipro level should not invalidate or affect the commitment Digipro has made to
KIPL.
[¶16.][[¶24.]] According to the principle of privity of contract, only the parties to a contract
have rights or obligations under that contract. KIPL and Digipro have a direcvt
contractual relationship, Digipro owes duties, including payment to KIPL. Any agreement
or lack thereof between Matrix and Digipro owes duties, including payment to KIPL.Any
agreement or lack thereof between Matrix and Digipro doesn’t alter the obligations that
Digipro owes to KIPL.
[¶17.][[¶25.]] Referring to the payment clause provided KIPL’s right to invoice Digipro is
based upon “the achievement of the sub-contract work”. While there’s a back-to-back
payment, it doesn’t state that any withholding by Matrix due to delays absolves Digipro
of it’s responsibility to pay KIPL. Given, the separate nature of the contracts, Digipro
can’t avoid it’s payment obligations to KIPL, especially when the delay wasn’t entirely

7
Zonal General Manager, M/S IRCON International Ltd. Vs. Vinay Heavy Equipments [2015] 2 MLJ 344
8
Shri. Dinesh Bhardwaj and another vs. Shri Janardhan singh and others [2016] SCC DEL 4740

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 MEMORANDUM on behalf of the APPLICANT

caused by KIPL.
[¶18.][[¶26.]] Thus, the counsel humbly submits before the hon’ble bench that there exists
privity of contract between KIPL and Digipro and due to the existence of the same, KIPL
is entitled to the balance payments.

B. THAT KIPL IS ENTITLED TO THE BALANCE PAYMENT AND INTEREST

[¶19.][[¶27.]] The counsel humbly submits before the hon’ble bench that KIPL is entitled to
the balance payments and interest.
[¶20.][[¶28.]] In the case, M/s Larsen Air Conditioning and Refrigeration Company vs.
Union of India & Ors., “The Counsel appearing on behalf of the appellant, submitted
that their claim was in fact for 24% pendente lite interest, and the arbitrator had already
reduced it to the 18% granted. Pointing to pre-amended Section 31(7)(b) of the 1996
Act9, it was contended that the High court had erred in reducing the ‘statuatory interest
rate’; this provision prescribed that in the event the arbitrator did not give any specific
directions as regards rate of interest on amount awarded, such amount ‘shall’ carry
interest of 18% per annum.”
[¶21.][[¶29.]] Similar to the appellant in the M/s Larsen case, KIPL's demand for 18%
interest is not exorbitant or arbitrary. In the M/s Larsen case, the initial claim was for a
24% pendente lite interest, which the arbitrator reasonably reduced to 18%. KIPL's
demand aligns with this benchmark, suggesting that an 18% interest rate is within a
justified range given the context of arbitration claims.
[¶22.][[¶30.]] As pointed out in the case above, the pre-amended Section 31(7)(b) of the
1996 Act prescribes that if the arbitrator does not specify the rate of interest, the awarded
amount "shall" carry an interest of 18% per annum. Thus, KIPL's demand is not just a
random figure; it is in consonance with the statutory provisions. Even if the arbitrator in
the present case does not give specific directions regarding the interest rate, KIPL's
demand of 18% is legally justified by this section.
[¶23.][[¶31.]] The interest is meant to compensate the party for the time value of the money
it has been deprived of. Given the delay in payment and the financial implications it has
on KIPL's business operations, an 18% interest rate seems like an appropriate measure to
recompense for the loss suffered due to the delay in the receipt of dues.

9
M/s Larsen Air Conditioning and Refrigeration Company vs. Union of India & Ors [2023] INSC 708

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 MEMORANDUM on behalf of the APPLICANT

[¶24.][[¶32.]] In the above-mentioned case, the contention was that the High Court erred in
reducing the 'statutory interest rate'. Drawing from this, if in the present case any attempt
is made to reduce the 18% interest demanded by KIPL, the aforementioned case can be
cited as a precedent to argue that such a reduction would be against the spirit and intent of
the statutory provision.
[¶25.][[¶33.]] The above-mentioned case exemplifies a recognized and accepted practice in
the arbitration landscape. By adhering to the 18% interest rate as laid out in the pre-
amended Section 31(7)(b) of the 1996 Act, the arbitral tribunal would be acting in line
with established jurisprudence, ensuring consistency and predictability in arbitral
decisions.
[¶26.][[¶34.]] Thus, the counsel humbly submits to the hon’ble bench that KIPL is entitled to
the balance payment and interest under the terms of the sub-contract.

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 MEMORANDUM on behalf of the APPLICANT

PRAYER FOR RELIEF

In light of facts presented, questions raised, arguments advanced and authorities cited,
Counsel for the Applicants most humbly prays before this Hon’ble Arbitral Tribunal of
Liverpool, to adjudge and pass:

1. That Digipro should release the balance payment of INR 1,33,36,000 as consideration
under the sub-contract.
2. That Digipro should pay interest at the rate of 18% per annum from the handover
date, on such balance amount claimed at (1); and
3. That the Arbitral Tribunal may pass any order it may deem fit and proper.

The Hon’ble Court being satisfied may also make any such order as it may deem fit in the
light of Justice, Equity and Good conscience.

PLACE: LIVERPOOL
Respectfully
submitted,
Sd/-
(Counsel Appearing for Applicants)

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