Respondent Memorial T-29

TEAM CODE - T29
DECCAN EDUCATION SOCIETY’S

SHRI NAVALMAL FIRODIA LAW COLLEGE, PUNE
LOKMANYA TILAK NATIONAL APPELLATE
MOOT COURT COMPETITION, 2023
BEFORE
THE HON’BLE HIGH COURT OF BOMBAY
Civil Appeal No. _______/2023
Mr. Chaudhari
Age – 43 Years,
Residing at Cosmos Regency, Flat Number 08,
Baner 411045, Pune Maharashtra………………………………………...….…. APPELLANT
v.
PHOENIX HOSPITALITIES
A registered partnership firm,
Under the Partnership Act, 1932
Through its partners,
Mr. Anand,
Age- 45 years
Residing at- Kumar Clove,
Flat 111 Near Goodwill society, Aundh - 411007,
Pune, Maharashtra.
Mr. Bhagat,
Residing at- Sindh Society, House Number 09,
Aundh - 411007, Pune, Maharashtra…………………………...………....…RESPONDENT 1
PHOENIX SUPER SPECIALITY HOSPITAL
A registered company,
Under the Companies Act, 2013
Through its director
Dr. Sharma,
Age- 52 years,
Residing at- Ajmera Aria, Flat Number 06,
Koregaon Park - 411001, Maharashtra……………………………...…...…. RESPONDENT 2
MEMORIAL ON BEHALF OF RESPONDENTS

DES’s SHRI NAVALMAL FIRODIA LAW COLLEGE
TH
15 LOKMANYA TILAK NATIONAL APPELLATE MOOT COURT, 2023
TABLE OF CONTENTS
TABLE OF CONTENTS………………………………………………………………….…2
TABLE OF ABBREVIATIONS…………………………………………………………….3
INDEX OF AUTHORITIES………………………………………………………………...4
STATEMENT OF JURISDICTION……………………………………………………….5
STATEMENT OF FACTS………………………………………………………………….6
STATEMENT OF ISSUES…………………………………………………………………8
SUMMARY OF ARGUMENTS……………………………………………………………9
ARGUMENTS ADVANCED………………………………………………………………10
1. WHETHER MR. CHAUDHARI IS LIABLE TO PAY RS. 3,00,00,000/- (RUPEES

THREE CRORE ONLY) TO PHOENIX HOSPITALITIES?....................................10
FIVE CRORE ONLY) TO PHOENIX SUPER SPECIALITY HOSPITAL?...........12
3. WHETHER OWNING TO THE ENACTMENT OF INSOLVENCY AND
BANKRUPTCY CODE, 2016, DOES THE ARBITRAL TRIBUNAL HAVE
JURISDICTION OVER THE CURRENT CASE?......................................................13
PRAYER………………………………………………………………………………….…15
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TABLE OF ABBREVIATIONS
ABBREVATION FULL FORM
Mr. Mister
Dr. Doctor
Rs. Rupees
Pvt. Ltd. Private Limited
No. Number
Hon’ble Honourable
v. Versus
NCLT National Company Law Tribunal
PSSH Phoenix Super Speciality Hospital
CFO Chief Financial Officer
PWC Price Waterhouse Coopers
IBC Insolvency and Bankruptcy Code
Ors. Others
SBI State Bank of India
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INDEX OF AUTHORITIES
Cases -
Emaar Mgf Land Limited v. Aftab Singh - (2018) 6 ArbiLR 313
Parmod Yadav & Anr. Vs. Divine Infracon Pvt. Ltd Company Appeal (AT) (Insolvency) No.
251 of 2017
M/s. Ksheerabad Constructions Pvt. Ltd. (“KCPL”) vs M/s Vijay Nirman Company Pvt. Ltd
Company Appeal (AT) (Insolvency) No.167 of 2017
Mobilox Innovations Private Limited v. Kirusa Software Private Limited AIR 2017 SC 4532
Acts and Statutes include –
Arbitration and Conciliation Act, 1996,
The Code of Civil Procedure, 1908,
The Indian Partnership Act, 1932
Books referred are -
1) Arbitration and Conciliation - A commentary by Saurabh Bindal and RV Prabhat, 1st

edition, 2021
2) Law of Arbitration and Conciliation and Alternative Dispute Resolution Systems by Avtar
Singh, 12th edition 2022
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STATEMENT OF JURISDICTION
The Appellant has invoked the jurisdiction of the Honourable High Court by the virtue of
Section 37 of The Arbitration and Conciliation Act, 1996.
S. 37. Appealable orders. —
1) Notwithstanding anything contained in any other law for the time being in force, an
appeal shall lie from the following orders (and from no others) to the Court authorised by
law to hear appeals from original decrees of the Court passing the order, namely: —
a. refusing to refer the parties to arbitration under section 8;
b. granting or refusing to grant any measure under section 9;
c. setting aside or refusing to set aside an arbitral award under section 34.
2) Appeal shall also lie to a court from an order of the arbitral tribunal—
a. accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
b. granting or refusing to grant an interim measure under section 17.
3) No second appeal shall lie from an order passed in appeal under this section, but nothing
in this section shall affect or takeaway any right to appeal to the Supreme Court.
However, the counsel for respondents seeks to reason that there has already been one appeal
before and the appeal present before the Hon’ble Court is a second appeal. Unless there is a
substantive question of law to be answered, the counsel of appellants cannot seek a second
appeal.
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STATEMENT OF FACTS
1. Phoenix Hospitalities is a partnership firm comprising of three partners namely Mr.

Anand, Mr. Bhagat, and Mr. Chaudhari, and registered in Pune in accordance with the
Indian Partnership Act of 1932. The partnership firm entered into a 'Deed of Partnership'
on the 10th of January 2012, which was duly executed by all the partners and
subsequently registered in compliance with the relevant legal provisions.
2. In the year 2015, the defendant, Mr. Chaudhari, presented a proposal to establish a
hospital equipped with extensive and specialized medical facilities under the direction of
Dr. Sharma. Pursuant to this proposal, Mr. Chaudhari arranged a meeting on the 21st of
October 2015, which was attended by all relevant partners and Dr. Sharma. Subsequently,
on the 15th of February 2016, a 'Hospital Institution, Operation, and Management
Agreement' was executed and registered on the same day.
3. The construction of the hospital was completed on December 25, 2018, and registered as
"Phoenix Super Speciality Hospital" in compliance with the provisions of the Companies
Act, 2013. Pursuant to the meeting held on February 15, 2016, the board of directors was
constituted with Dr. Sharma, Mr. Chaudhari as the Chief Administrative Officer, the
Chief Marketing Officer and the Chief Finance Officer, and Mr. Anand and Mr. Bhagat
as additional directors.
4. On the month of January 2022, Mr Anand discovered significant irregularities and errors
in the books of accounts of the partnership firm, which amounted to approximately Rs.
3,00,00,000/-(rupees 3 crore only). Mr Bhagat subsequently verified the entries and
confirmed the same to Mr Anand. Following this discovery, Mr Anand and Mr Bhagat
attempted to question Mr Chaudhari regarding the erroneous entries in the books of
accounts of the partnership firm. Mr Chaudhari initially provided evasive answers and
ignored their inquiries from time to time. However, Mr Chaudhari eventually attempted to
avoid further confrontation with both parties by stating that he was unable to provide
proper financial reports due to his heavy workload and occupation with the work of the
super speciality hospital.
5. In light of the aforementioned statement made by Mr. Chaudhari regarding his busy
schedule, Mr. Anand and Mr. Bhagat expressed their concerns to Dr. Sharma and
requested that he conduct an audit of the hospital's book of accounts. Upon auditing, Dr.
Sharma discovered certain errors in the book, amounting to approximately Rs.
5,00,00,000/- (rupees 5 crore only). Collectively, Mr. Anand, Mr. Bhagat, and Dr. Sharma
confronted Mr. Choudhari. Despite receiving multiple phone calls and meeting invitations
sent via WhatsApp (as documented in Annexure 3.1), Mr. Choudhari avoided all
communication. On 02/02/2022, Mr. Anand, Mr. Bhagat, and Dr. Sharma wrote an email
to Mr. Chaudhari expressing their concerns (as documented in Annexure 3.2). However,
Mr. Chaudhari failed to reply to the email within the prescribed time. Therefore, Mr.
Anand, Mr. Bhagat, and Dr. Sharma are compelled to initiate legal action against Mr.
Chaudhari.
6. Upon conducting an audit of the books of accounts of the partnership firm and hospital, it
was determined that errors occurred between April 2020 and November 2020, inclusive
of March 2020 and November 2020. Upon review, it was discovered that in December
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2020, Mr. Chaudhari invested funds from the accounts of the partnership firm and the
hospital, as well as personally invested Rs.2,00,00,000/- (rupees two crore only), in a
pharmaceutical company by the name of "Sigma Pvt. Ltd.", for the purpose of
manufacturing vaccines. However, in July 2021, the pharmaceutical company lost its
license and Mr. Chaudhari's investment was lost. Despite this incident being widely
publicized during that period, the partners were not aware of Mr. Chaudhari's investment
activities.
7. By virtue of the aforementioned dispute, Mr. Anand, Mr. Bhagat, and Dr. Sharma have
issued a legal notice to Mr. Chaudhari on the 15th of February, 2022, as documented in
Annexure 4. The Notice Senders have requested that the Recipient effect a settlement of
the dispute within a period of 15 days from the date of the notice, failing which the Notice
Senders shall be compelled to commence arbitral proceedings in accordance with clause
no. 29 of the Deed of Partnership and Clause no. 12 of the Hospital Agreement.
8. Upon receipt of the aforesaid legal notice on February 17, 2022, Mr. Chaudhari
responded to said notice on February 19, 2022 (refer Annexure 5), declaring the legality
and validity of the transactions and expressing acceptance to commence arbitration
proceedings.
9. Pursuant to the Notice and Notice in Reply, the Arbitral Proceedings commenced on the
25th of February, 2022, in accordance with the provisions of the Dispute Resolution
clauses contained in the Deed of Partnership and Hospital Agreement. The opposing
parties submitted their respective Statement of Claim and Defence (Annexure 6 and
Annexure 7, respectively) before the sole arbitrator. During the course of the Arbitral
Proceedings, upon submission of evidence and witnesses, it came to light that Mr.
Chaudhari had become insolvent in October 2021, subsequent to incurring losses in his
investments in Sigma Pvt. Ltd. The Arbitral Proceedings continued for a period of 9
months, culminating in the issuance of an Arbitral Award (Annexure 8) in favour of Mr.
Anand, Mr. Bhagat, and Dr. Sharma on the 31st of November, 2022. The said Arbitral
Award directed Mr. Chaudhari to repay the total disputed amount of INR 8,00,00,000
(Rupees Eight Crores Only) to each of the claimants along with 12% interest per annum,
within a period of 12 months. Additionally, the Arbitral Award also directed Mr.
Chaudhari to step down from his position as the Chief Finance Officer in the Partnership
Firm, as well as from his directorial position in the Super Specialty Hospital.
10. On the 1st day of December, 2022, Mr. Chaudhari filed an application (Annexure 9)
before the Hon’ble District Court of Pune seeking to have the arbitral award set aside on
the basis of both oral and written statements (Annexure 10). Subsequently, on the 1st day
of January, 2023, the Hon’ble Court of Pune issued an order (Annexure 11) against Mr.
Chaudhari. Displeased by the aforementioned order, Mr. Chaudhari has chosen to appeal
before the Hon’ble High Court of Bombay.
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STATEMENT OF ISSUES

THREE CRORE ONLY) TO PHOENIX HOSPITALITIES?
FIVE CRORE ONLY) TO PHOENIX SUPER SPECIALITY HOSPITAL?
JURISDICTION OVER THE CURRENT CASE?
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SUMMARY OF ARGUMENTS

THREE CRORE ONLY) TO PHOENIX HOSPITALITIES?
Mr. Chaudhari is liable to pay the above-mentioned amount since he willingly
participated in the arbitration proceedings and is to follow the commands of the award.
Such an award was even validated hy the Hon’ble District Court. The arbitration
proceedings were carried in due course of law as per the Arbitration and Conciliation Act
of 1998.
FIVE CRORE ONLY) TO PHOENIX SUPER SPECIALITY HOSPITAL?
Mr. Chaudhari is liable to even pay the amount mentioned above since both the amounts
are a part of the same award. The award has been valid since he was declared insolvent
after the beginning of the proceedings and not before it. The present appeal is a second
appeal and hence not maintainable.
JURISDICTION OVER THE CURRENT CASE?
It is to be noted that the claim that the arbitration has jurisdiction over this case is not
maintainable. Section 8 maintains that the judicial authority can refer a particular dispute
of any kind to the arbitration tribunal if the subject matter falls within the scope of
Arbitration agreement.
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ARGUMENTS ADVANCED
ISSUE 1 – Whether Mr. Chaudhari is liable to pay Rs. 3,00,00,000/-

(Rupees Three Crore Only) to Phoenix Hospitalities?
1. The counsel for respondents respectfully submits that Mr. Chaudhari bears a
clear liability to pay the aforementioned amount, as he has withdrawn funds
from the firm without providing a justifiable explanation. Mr. Chaudhari’s
failure to respond to messages and emails and to inform the other partners
has resulted in doubts arising as to his actions, leading to the invocation of
the arbitration clauses within both the Partnership Deed and the Hospital
Institution, Operation, and Management Agreement.
2. The undersigned hereby submits this formal document to the court to assert
the validity of the arbitral award in question. The party in question willingly
entered into the agreement that established the arbitration process as the
means of resolving disputes, and therefore, the validity of the arbitral award
is well-founded. This fact was duly recognized by the District Court, as
evidenced in its order. It has been claimed that the tribunal had no
jurisdiction over the dispute, which was the sole ground for filing an appeal
against the award. However, despite the successful appeal, the party is now
seeking the same request before the Honorable High Court. It is therefore
respectfully submitted that the arbitral award is legally binding and should
be upheld by this court.
3. The arbitration proceedings were executed in accordance with the due
procedure prescribed under The Arbitration and Conciliation Act, 1996. The
partnership agreement executed by the parties contained a specific provision,
clause 17, which mandated all parties to act with honesty and fidelity
towards each other. Mr. Chaudhari’s failure to provide a satisfactory
explanation for his actions has rendered him fully liable to repay the sum of
money owed, even in simple terms understandable to a layperson.
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4. The Honorable District Court made an observation regarding the non-

compliance with the procedure stated under Section 34(5) of the Act while
filing an appeal. Nevertheless, the Honorable Court deemed it necessary to
test the validity of the award and ultimately upheld its validity.
5. It is advised that Mr. Chaudhari engage in consultation with each partner of
the firm and hospital prior to making any investment decisions. As the chief
finance officer of both entities, Mr. Chaudhari’s position does not grant him
the unilateral right or authority to invest funds at his discretion. Therefore, it
is imperative that Mr. Chaudhari seeks consensus and approval from all
relevant parties before engaging in any investment activity.
6. Pursuant to Section 41 of the relevant legislation, it is incumbent upon the
receiver, and not the insolvent individual, to make a determination regarding
the jurisdiction of the arbitration proceedings. Thus, the decision as to the
venue in which the proceedings should be conducted rests solely with the
receiver.
7. Your Honor, I respectfully submit that the case of Emaar MGF Land Limited
v. Aftab Singh1, which was decided by the Supreme Court of India on 4
September 2020, is relevant to the present matter. The case involved an
arbitration proceeding between Emaar MGF Land Limited and Aftab Singh.
During the course of the arbitration, Singh was declared insolvent and an
interim resolution professional was appointed to manage his affairs. Despite
Singh’s insolvency, the arbitration proceeded and resulted in an award in
favor of Emaar MGF. Singh challenged the award on the grounds that the
arbitration should have been stayed once he was declared insolvent.
However, the Supreme Court held that Singh’s insolvency did not
automatically stay the arbitration. The Court explained that the insolvency
1
Emaar Mgf Land Limited v. Aftab Singh - (2018) 6 ArbiLR 313
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court may have the power to stay the arbitration, but it was not required to do
so in every case. Rather, the court must consider the specific facts and
circumstances of each case to determine whether staying the arbitration is
necessary. In this case, the Court found that the insolvency court did not stay
the arbitration, and Singh did not request a stay. Therefore, the Court held
that the arbitration was valid and the award was enforceable.
ISSUE – 2 Whether Mr. Chaudhari is liable to pay Rs. 5,00,00,000/-

(Rupees Five Crore Only) to Phoenix Super Speciality Hospital?
1. The undersigned counsel for respondents respectfully submits that Mr.

Chaudhari bears liability to remit the stated sum to the Hospital, based on a
careful examination of the relevant facts and legal precedents. The award in
favor of respondents expressly resolves this matter in Point Number 3,
thereby establishing the respondent’s right to recovery.
2. The decree pertaining to the award in question was upheld by the District
Court in its order. In light of this, the present appeal cannot be maintained as
it constitutes a second appeal and there exists no subsequent legal question
that requires resolution.
3. The action of transferring funds to his personal account and subsequently
investing in another company without disclosing this to the respondents is an
act contrary to the best interests of the firm or hospital. Mr. Chaudhari is
solely responsible for the resulting losses and is obligated to reimburse his
creditors. By failing to adhere to the fundamental principles of financial
lending, the parties initiated the arbitration clause, and the decision was duly
rendered in our favor.
4. The above-mentioned case of Emaar MGF Limited v. Aftab Singh is
applicable for the same issue since bthe awards disputed in issue 1 and 2 are
the points of the same decree passed the Hon’ble Arbitrator.
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ISSUE 3 – Whether owning to the enactment of Insolvency and

Bankruptcy Code, 2016, does the Arbitral Tribunal have jurisdiction over
the current case?
1. May it please the Honorable Court, it is submitted that Section 8 of the

Arbitration and Conciliation Act, 1996, mandates the judicial authority to
refer parties to arbitration if the matter brought before it is the subject of an
arbitration agreement, unless it finds that prima facie no valid arbitration
agreement exists. It is pertinent to note that the term “judicial authority”
includes Tribunals as defined in the Act. This obligation of the judicial
authority is irrespective of any judgment, decree, or order of the Supreme
Court or any court. It has been held that the language employed in Section 8
of the Act, 1996, is preemptory in nature. Therefore, it is incumbent upon the
court to refer the parties to arbitration in accordance with the terms of the
arbitration agreement in cases where a valid arbitration clause exists in the
agreement.
2. The preamble of the Arbitration reads that Arbitration is a right in personam
and binds two parties agreeing to opt for such mechanisms to resolve their
dispute. Hence, while deciding applications under Section 11, any Judge
who finds that there was an arbitration agreement between or amongst the
parties, should refer the matter for the decision of the Arbitral Tribunal.
3. The NCLAT in the case of Parmod Yadav & Anr. Vs. Divine Infracon Pvt.
Ltd2 held that upon the commencement of arbitral proceedings under section
21 of the Arbitration and Conciliation Act, 1996, it is presumed that there is
an existence of a dispute and therefore, the petition under Section 9 of the
Insolvency and Bankruptcy Code, 2016 was not maintainable.
2
Parmod Yadav & Anr. Vs. Divine Infracon Pvt. Ltd Company Appeal (AT) (Insolvency) No. 251 of 2017
13 | P a g e
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4. On the other hand the Supreme Court in M/s. Ksheerabad Constructions Pvt.
Ltd. (“KCPL”) vs M/s Vijay Nirman Company Pvt. Ltd 3 held that the
pendency of a petition under Section 34 of the Arbitration Act, constituted a
pre-existing dispute under the IBC. Hence, from a clear reading of the above
judgments it can be said that, the IBC cannot be invoked to initiate the
corporate insolvency resolution process (CIRP) in respect of an operational
debt where an Arbitral Award has been passed against the operational
debtor, even though the same has not yet been finally adjudicated upon due
to a challenge under Section 34 of the Arbitration Act.
5. In a landmark judgment of Mobilox Innovations Private Limited v. Kirusa
Software Private Limited [(2018) 1 SCC 353] 4 the Supreme Court held that
the insolvency process for operational creditors, cannot be used to bypass the
adjudicatory and enforcement process of a debt contained in other statutes
and defined in the Agreement. Therefore, using the IBC as a substitute for
debt enforcement, the procedure had been rejected.
6. Hence, as per the ratio held in this judgment if an Agreement has a pre-
existing Arbitration clause we cannot approach the NCLT for adjudication.
On the contrary once the moratorium period under IBC starts it precludes the
filing of any legal action including initiation of Arbitration. Consequently, it
can be said that unless a Notice under section 21 of the Arbitration Act has
been given, there is no bar on approaching the NCLT even if there an
Arbitration clause within the Agreement.
3
M/s. Ksheerabad Constructions Pvt. Ltd. (“KCPL”) vs M/s Vijay Nirman Company Pvt. Ltd Company Appeal
(AT) (Insolvency) No.167 of 2017
4
Mobilox Innovations Private Limited v. Kirusa Software Private Limited AIR 2017 SC 4532
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PRAYER
WHEREFORE IN THE LIGHT OF THE ISSUES RAISED, ARGUMENTS ADVANCED

AND AUTHORITIES CITED, IT IS HUMBLY PRAYED
1. To Declare the Arbitral Award as not contrary to the process of law.

2. To Hold Mr. Chaudhari liable to pay Rs. 3,00,00,000/- (Rupees Three Crores Only) to
Phoenix Hospitalities
3. To Hold Mr. Chaudhari liable to pay Rs. 5,00,00,000/- (Rupees Five Crores Only) to
Phoenix Super Speciality Hospital
4. To Declare, that the Arbitral Tribunal has no effect whatsoever on the jurisdiction in
the current case as a consequence of Mr. Chaudhari’s Insolvency.
AND PASS ANY OTHER ORDER, DIRECTION, OR RELIEF THAT THIS HON‟BLE
COURT MAY DEEM FIT IN THE INTERESTS OF JUSTICE, EQUITY AND GOOD
CONSCIENCE.
All of which is humbly prayed,
Counsel for Respondent
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TEAM CODE - T29

DECCAN EDUCATION SOCIETY’S

MEMORIAL ON BEHALF OF RESPONDENTS

1. WHETHER MR. CHAUDHARI IS LIABLE TO PAY RS. 3,00,00,000/- (RUPEES

ABBREVATION FULL FORM

Pvt. Ltd. Private Limited

NCLT National Company Law Tribunal

PSSH Phoenix Super Speciality Hospital

CFO Chief Financial Officer

PWC Price Waterhouse Coopers

IBC Insolvency and Bankruptcy Code

SBI State Bank of India

Emaar Mgf Land Limited v. Aftab Singh - (2018) 6 ArbiLR 313

Acts and Statutes include –

Arbitration and Conciliation Act, 1996,

The Code of Civil Procedure, 1908,

The Indian Partnership Act, 1932

Books referred are -

1) Arbitration and Conciliation - A commentary by Saurabh Bindal and RV Prabhat, 1st

S. 37. Appealable orders. —

1. Phoenix Hospitalities is a partnership firm comprising of three partners namely Mr.

1. WHETHER MR. CHAUDHARI IS LIABLE TO PAY RS. 3,00,00,000/- (RUPEES

1. WHETHER MR. CHAUDHARI IS LIABLE TO PAY RS. 3,00,00,000/- (RUPEES

ISSUE 1 – Whether Mr. Chaudhari is liable to pay Rs. 3,00,00,000/-

4. The Honorable District Court made an observation regarding the non-

ISSUE – 2 Whether Mr. Chaudhari is liable to pay Rs. 5,00,00,000/-

1. The undersigned counsel for respondents respectfully submits that Mr.

ISSUE 3 – Whether owning to the enactment of Insolvency and

1. May it please the Honorable Court, it is submitted that Section 8 of the

WHEREFORE IN THE LIGHT OF THE ISSUES RAISED, ARGUMENTS ADVANCED

1. To Declare the Arbitral Award as not contrary to the process of law.

All of which is humbly prayed,

Counsel for Respondent

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