Team Code: A46

UNIVERSITY INSTITUTE OF LEGAL STUDIES

INTRA DEPARTMENT MOOT COURT COMPETITION 2016

BEFORE THE

HONBLE DELHI COMMERCIAL COURT, TIS HAZARI

AT

NEW DELHI

IN THE MATTER OF:

SWARN KUMAR

.. PETITIONER

V.

AKHIL SINGHAL

.. RESPONDENT

Petition under Section 20 of the Code of Civil Procedure, 1908

MEMORANDUM FOR THE RESPONDENT

MOST RESPECTFULLY
SUBMITTED

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 COUNSELS APPEARING ON BEHALF OF
RESPONDENT

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ..3

INDEX OF AUTHORITIES 4

STATEMENT OF FACTS6

STATEMENT OF JURISDICTION7

ISSUES....8

SUMMARY OF ARGUMENTS..9

ARGUMENTS ADVANCED..11

I. THE DELHI COMMERCIAL COURT DOESNT HAVE JURISDICTION TO

ENTERTAIN THE MATTER ..11
II. ALL THE ESSENTIALS OF VALID CONTRACT ARE FULFILLED.13
1 There should be an agreement between two parties13
2 The parties to the agreement should be competent to contract14
3 There should be lawful consideration and lawful object in respect of the agreement.15
4 There should be free consent of the parties, when they enter into the agreement...19
5 The agreement must not be one, which has been declared to be void.21
III. THE CONTRACT ENTERED BETWEEN THE PARTIES IS NOT A WAGERING
CONTRACT BUT A CONTINGENT CONTRACT AND HENCE ENFORCABLE.21
IV. THE INJUNCTION SHOULD NOT BE GRANTED AGAINST MR. SINGHAL FROM
SELLING MAJORITY OF THE SHARES OF THE COMPANY..24

PRAYER..25

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 LIST OF ABBREVIATIONS

Acc. According

Approx. Approximately

CPC The Code of Civil Procedure

Co. Company

Govt. - Government

Ltd. Limited

Pvt. Private

Sec. - Section

& - And

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 INDEX OF AUTHORITIES

STATUTORY COMPILATIONS

1. The Indian Contract Act, 1872.

2. The Code of Civil Procedure, 1908.

3. The Companies Act, 2013.

4. The Sale of Goods Act, 1930.

5. The Specific Relief Act, 1963.

DICTIONARIES

1. Oxford English Dictionary (2nd ed. 2009).

2. Whartons Pocket Law Dictionary (15th Ed., Universal Law Publishing Co. 2010).

WEBSITES

1. www.manupatra.com

2. www.judis.nic.in

3. www.supremecourtcaselaw.com

4. www.indiankanoon.org

5. www.jstor.org

6. www.legalcrystal.com

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BOOKS

1. R.K. BANGIA, INDIAN CONTRACT ACT (18th ed. Allahabad Law Agency 2015).

2. P.N KUMAR, INDIAN CONTRACT ACT, 1872 AND TENDERS (11th ed. Delhi Law House 2009).

3. UMESH CHADARA, 1 THE CODE OF CIVIL PROCEDURE, 1908 (ACT 5 OF 1908) (2008 ed. Delhi Law House
2008).

4. R.K. BANGIA, SALES OF GOODS ACT, 1930 (10th ed. Allahabad Law Agency 2014).

5. R.K. BANGIA, SPECIFIC RELIEF ACT, 1963 (9th ed. Allahabad Law Agency 2015).

6. LAURENCE KOFFMAN, THE LAW OF CONTRACT (6th ed. Oxford Univ. Press 2007).

7. S.C. MITRA, LAW OF CONTRACTS (1st ed. Orient Publ'g 2005).

8. MULLA'S, 1 CODE OF CIVIL PROCEDURE (2nd ed. Ashoka law house 2011).

TABLE OF CASES

Abdul Jabbar v. Abdul Muthaliff A.I.R 1982 Mad. 12................................................................17

Babasaheb v. Rajaram AIR 1931 Bom. 264................................................................................22
Brown Jenkinson v. Co. Ltd. v. Percy Dalton (London) Ltd. (1957) 2 Q.B. 621.............18
Chapelton v. Barry Urban District Council (1940) 1 K.B. 532.................................................14
Clay v. Yates (1856) 1 H & N. 73...........................................................................................18
Holman v. Johnson, (1775) 1 Cowp..........................................................................................17
Jyotichandra Bhattacharjee v. Mrs. Sona Balon Bora A.I.R. 2005 Gau. 12..............................16
Ram Sarup v. Bansi Mandar (1915) 42 Cal. 742...................................................................18
Shrimati v. Sudhakar R. Bhatkar A.I.R. 1988 Bom. 122.........................................................20
Smt. Shrisht Dhawan v. M/s. Shaw brothers A.I.R. 1992 S.C. 1555.....................................20

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Aspective Vanijya Pvt. Ltd. v. Industrial Financial Corporation of India.24

State Bank of Bikaner v. Ballabh Das & Sons A.I.R. 1984 Raj. 10724

STATEMENT OF FACTS

Mr. Swarn Kumar is a businessman from Delhi. He enjoys gambling, socializing, and is
notorious for womanizing. He went to Goa on a trip with his friends including Mr. Aditya
Sahni a lawyer from Delhi.
While playing poker at Casino Royale, he lost approx. Rs. 3 crores. He was desperate for
more money and borrowed Rs. 5 crores to play further from Mr. Akhil Singhal (money
lender of Casino) signing a pre written form of agreement that he would pay double the
loan amount at the table keeping majority shares of his company as security.
He lost the game and was unable to return the agreed amount. As a consequence he lost
majority shares of his company. He then called Mr. Aditya, who contacted Mr. Singhal
not to take the shares of the company but he refused the offer.
Immediately Mr. Singhal signed a contract with Delhi based Co. named A & M Pvt. Ltd.
for selling majority shares of the Co.
The video from the Casino shows that Mr. Kumar had consumed eight alcoholic drinks
(8*30 ml) prior to signing the contract.
Mr. Sahni had filed a civil suit on behalf of Mr. Kumar before Delhi Commercial Court at
Tis Hazari to prevent Mr. Singhal from taking over the company.

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 STATEMENT OF JURISDICTION

The present civil dispute has been brought by the Petitioner before the Delhi Commercial Court,
Tis Hazari. But the said court doesnt have necessary jurisdiction to deal with this case as acc. to
Sec. 20 of CPC, 1908 the suit is to be instituted where defendants resides or cause of action
arises. In this case cause of action arose in Goa so accordingly Goa Commercial Court under
Sec. 20 of CPC, 1908 has the jurisdiction to hear the matter.

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 ISSUES

1. Whether the Delhi Commercial Court has jurisdiction to entertain the mater or not?
That the present petition has not been rightly filed in Delhi Commercial Court Tis Hazari.
2. Whether the essentials of a valid contract are fulfilled or not?
That all the essentials of a valid contract are fulfilled and hence the contract is valid.
3. Whether the wagering contract entered between the parties are enforceable or not?
That it is not a wagering agreement and hence enforceable.
4. Whether the injunction should be granted against Mr. Singhal from selling majority of the
shares of the company in the present case or not?
That the injunction should be refused and not be granted against Mr. Singhal from selling
majority shares.

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 SUMMARY OF ARGUMENTS

I. THE DELHI COMMERCIAL COURT DOESNT HAVE JURISDICTION TO

ENTERTAIN THE MATTER.

According to Sec. 20 of CPC, the jurisdiction arises where the matter actually arises or where the
defendant works for gain. Here the issue arose in Goa and moreover the defendant carries
business in Goa. Moreover, the value of shares is more than 1 crores, which satisfies the
condition for bringing suit in the Commercial Court. So, no other court than Goa Commercial
court has territorial and pecuniary jurisdiction to entertain the mater.

II. ALL THE ESSENTIALS OF VALID CONTRACT ARE FULFILLED.

There was a written agreement between Mr. Singhal and Mr. Kumar. Both the parties were
competent to contract. Although Mr. Kumar had consumed alcoholic beverages voluntarily but
he being habitual of it (as he enjoys socializing) doesnt affect his mental capacity as it was not
for the first time he had drink. So, it doesnt affect his soundness. Moreover he plays poker,
which is a skill game after being drunk proves his soundness because not everyone can play it.
The consideration or object of the Contract was also lawful as it doesnt defeats any of the
provisions of Section 23 of Indian Contract Act. Mr. Kumar voluntarily signed the contract.
There was no coercion, undue influence, fraud, misrepresentation and mistake to the facts of the
agreement between the parties. In addition to it, the agreement was not the one which has been
declared to be void. So the Contract is valid one and hence enforceable between the parties.

III.THE CONTRACT ENTERED BETWEEN THE PARTIES IS NOT A WAGERING

CONTRACT BUT A CONTINGENT CONTRACT AND HENCE ENFORCABLE.

Essentials of a wagering contract were not fulfilled as there were not chances of equal gain or
loss to the parties. In this case Mr. Singhal would not lose anything whether Mr. Kumar wins or

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lose the game. Mr. Kumar has to give money to Mr. Singhal irrespective of the fact whether he
win or lose the game. Here the contract entered into by the parties was contingent according to
Sec. 31 of Indian Contract Act and hence enforceable. So, Mr. Singhal had full right to take the
majority shares of company on inability of Mr. Kumar to return the amount of loan. Hence it is
not a wagering agreement and enforceable between the parties.

IV. THE INJUNCTION SHOULD NOT BE GRANTED AGAINST MR. SINGHAL FROM
SELLING MAJORITY OF THE SHARES OF THE COMPANY.

As a valid contract was concluded between the parties, the shares which were pledged by Mr.
Kumar automatically got transferred to Mr. Singhal on his inability to return the said amount at
stipulated time. Moreover the Pawnee has the Right to Sale the pledged goods (shares here) in
default of the pawnor to fulfil the contract. So, no ground for injunction can be sought by
petitioner to prevent Mr. Singhal from selling majority of shares to another Co. Mr. Singhal had a
right to dispose of the share in the way he likes.

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 ARGUMENTS ADVANCED

Respectfully showeth:

I. DELHI COMMERCIAL COURT DOES NOT HAVE THE JURISDICTION TO

THE MATTER.
1.1 Provisions in support of the argument

1) Sec. 6 of the Commercial Court Act regarding jurisdiction of Commercial court

The Commercial Court shall have jurisdiction to try all suits and applications relating to a
commercial dispute of a Specified Value arising out of the entire territory of the State over which
it has been vested territorial jurisdiction.

Explanation.For the purposes of this section, a commercial dispute shall be considered to arise
out of the entire territory of the State over which a Commercial Court has been vested
jurisdiction, if the suit or application relating to such commercial dispute has been instituted as
per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908

2) Sec 20 of CPC, 1908 relates to jurisdiction where course of action arises

20..Other suits to be instituted where defendants reside or cause of action arises.-Subject to the
limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose
jurisdiction

(a) the defendant, or each of the defendants where there are more than one, at the time of the
commencement of the suit, actually and voluntarily resides, or carries on business, or personally
works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of
the suit, actually and voluntarily resides, or carries on business, or personally works for gain,
provided that in such case either the leave of the Court is given, or the defendants who do not

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reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such
institution; or the cause of action, wholly or in part, arises.

Explanation I.where a person has a permanent dwelling at one place and also a temporary
residence at another place, he shall be deemed to reside at both places in respect of any cause of
action arising at the place where he has such temporary residence.

Explanation II. A corporation shall be deemed to carry on business at its sole or principal
office in or, in respect of any cause of action arising at any place where it has also a subordinate
office, at such place1.

In this context the defendant resides in Goa and carries out business in Goa therefore the
jurisdiction of the above mentioned case lies with Goa commercial court to hear this case.

1 Subs. by Act 2 of 1951, s.3, for "the States".}

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II. ESSENTIALS OF A VALID CONTRACT ARE FULFILLED.

A. Meaning of Contract

An agreement enforceable by law is a contract2.

B. Essentials of a valid contract

Sec. 10 of the Indian Contract Act states that, All agreements are contracts if they are made by
the free consent of parties competent to contract, for a lawful consideration and with a lawful
object, and are not hereby expressly declared to be void.

Nothing herein contained shall affect any law in force in India, and not hereby expressly
repealed, by which any contract is required to be made in writing or in the presence of witnesses,
or any law relating to the registration of documents.

For the validity of a contract, Sec. 10 requires the following essentials to be satisfied requires the
following essential to be satisfied.

1) There should be an agreement between two parties. An agreement arises when one
party makes a proposal or offer and the other party accepts the offer.
2) The parties to the agreement should be competent to contract.
3) There should be lawful consideration and lawful object in respect of the agreement.
4) There should be free consent of the parties, when they enter into the agreement.
5) The agreement must not be one, which has been declared to be void.

1) There should be an agreement between two parties.

Acc. to Sec. 2 (e)3 : Every promise and every set of promises forming the consideration for each
other is an agreement.

2 Sec 2 (h) of the Indian Contract Act.

3 Indian Contract Act, 1872.

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 There was an offer from Mr. Kumar resulting into acceptance by Mr. Singhal. So there was an
agreement between the parties.

The term proposal or offer4 has been defined in the Section 2 (a) of Indian Contract Act,
1872 as follows

When one person signifies to another his willingness to do or to abstain from doing anything,
with a view to obtaining the assent of that other to such act or abstinence, he is said to make a
proposal.

Whereas According to Sec. 2 (b)5 of Indian Contract Act, acceptance means when the person to
whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A
proposal, when accepted, becomes a promise.

There was an offer from Mr. Kumar resulting into acceptance by Mr. Singhal. So there was
an agreement between the parties.

Further we can see Rule to Standard Form of Contract whose conditions are also fulfilled.

A There should be a contractual document.

The parties are bound if the terms are contained in a contractual document.

In Chapelton v. Barry Urban District Council,6 it has been held that if the document is mere
receipt and does not create a contract, the terms contained in such a document are not binding.

B There should be no misrepresentation.

4 Under English Law of Contract, the term offer is used, whereas in the Indian Contract Act,
1872, the term proposal is used.

5 Section 2(b), the Indian Contract Act, 1872.

6 (1940) 1 K.B. 532.

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 Even if a person signs a document containing terms but there is found to be a different oral
misrepresentation about the contents of the document, the document would not be a binding one.
There was no as such misrepresentation.

C There should be reasonable notice of the contractual document.

In order that the terms of a contract become binding, all that is necessary to draw the attention of
the other party to those terms should be done by the party who has pre-drafted the terms of the
contract. If the attention of a party to a contract has been drawn to the terms of the contract by
sufficient notice, for example, by printing on a ticket, For the terms see back, or obtaining his
signatures on the document, there arise a binding contract as regards such terms. If, on other
hand, reasonable sufficient notice has not been given, there is no binding contract as regards such
terms.

In Parker South Eastern Railway Co.7, it was held by the Court that when the defendant had
made every possible effort to draw the attention of plaintiff to the terms of contract and then also
plaintiff had ignored to read it, then the terms of the contract will be binding on the parties.

2) The parties to the agreement must be competent to contract.

According to Sec. 11,8 every person is competent to contract:

(i) Who is the age of majority, and

(ii) Who is of sound mind and
(iii) Who is not disqualified from contracting by any law to which he is subject.

Sec. 12 of Indian Contract Act states that A person is said to be of sound mind for the purpose
of making a contract, if at the time when he makes it, he is capable of understanding it and of
forming a rational judgment as to its effect upon his interest.

7 (1877) 2 C.P.D. 416; L Estarange v. F. Graucab Ltd. (1934) 2 K.B. 394.

8 Every person is competent to contract who is of the age of majority according to the law to
which is subject and, is of sound mind and, is not disqualified from contracting by any law to
which he is subject.

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 Mr. Kumar was competent to contract as he had attained the age of majority and when we
talk about soundness of mind of Mr. Kumar it can be inferred from the following facts:

Poker is a skilled game. Everyone cant play it. It requires a lot of mind to play it. This
proves that he was of sound mind at the time of taking loan.
As Mr. Kumar enjoys gambling, socializing and was notorious for womanizing. It can
be inferred from circumstances that as a business man he has to deal with many people
and this was not the first time that he had drunk and then signed the contract.

Onus to Prove Unsoundness

It is well settled that onus of proving unsoundness of mind of a person always rest upon him who
alleges such state of mind of person.

Holding that the onus to prove the fact of unsoundness of mind was always on the person
who alleges such states of mind, the Gauhati High Court in Jyotichandra Bhattacharjee v.
Mrs. Sona Balon Bora9, said that the respondents could not establish that late Bora was not a
normal person. Merely because late Bora instituted a case against his wife and children, picked
up quarrels with the members of the family, remained away from the house from a long period
and transferred the entire property by way of sale rendering the members of the family homeless,
the Court ruled, could not indicate that the late Bora was not a normal person. Also, there was
nothing on record to prove that the late Bora was ever medically examined to support the
contention of the respondents that he was of unsound mind.

3)There should be lawful consideration and lawful object in respect of the agreement

For the validity of contract, it is also essential that the consideration and object should be lawful.
According to Sec. 23, the considerations or object of an agreement should is lawful unless:-

i It is forbidden by law, or
ii Is of such a nature that it would defeat the provision of law or
iii It is fraudulent, or
iv It involves or implies injury to the person or property of another, or
v The Court regards it as immoral or opposed to the public policy.

9 A.I.R. 2005 Gau. 12.

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 In each of the cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.

In this case consideration or object is lawful because it does not defeat any of the following
provisions of Sec. 23 of Indian Contract Act:

i Forbidden by law.

When something is forbidden by law, an agreement to do that is unlawful. An agreement to do

what has been prohibited by the Indian Penal Code or by some other law cannot be enforced. An
agreement offending a statute or public policy is void from the beginning and the same cannot be
come valid even if the parties agree to the effect.

Only 3 states allow casinos i.e., Goa, Daman & Diu and Sikkim. According to the Goa,
Daman & Diu Public Gambling Act, 1967 Casinos can be set up only at 5 star hotel or
offshore vessels with the prior permission of the Government. Casinos in Goa contribute
Rs. 135 crores to the State Revenue in 2013. In addition to it Government of Goa had issued
guidelines named Casino Guidelines none of which are violated.

If the contract is signed by keeping in mind the provisions of the law, then afterwards injunction
against that cannot be filed10.

It may further noted that that the defendants sought to invoke the maxim in pari delicto potior
est condition possidentis11the position of the party in possession (or defending) is the better
one, and contended, that the plaintiff could not sue for declaration or possession, because no
court will lend its aid to a man who found his cause of action upon an immoral or illegal act.12
There was held to be nothing illegal or anything opposed to the public policy in the suit filed by

10 Abdul Jabbar v. Abdul Muthaliff, A.I.R 1982 Mad. 12.

11 in case of equal or mutual fault between two parties

12 Holman v. Johnson, (1775) 1 Cowp.

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 the plaintiff in the recovery of his own property. The plaintiff was, therefore, successful in his
action.

ii Defeats the provision of any law.

If the object or consideration of an agreement is such of a nature that, if it is permitted, it would

defeat the provisions of any law, such an agreement is void. Certain acts may not be expressly
forbidden by law, but if they result in circumventing any law, they cannot be encouraged.

Here, the contract did not defeat the provision of any law, as gambling was legal in Casino
Royale of Goa.

iii Fraudulent Purpose.

If the consideration or object of an agreement is to commit fraud, the agreement is void.

Mr. Singhal had no intention to commit fraud or anything else. He did not manipulate the
contract; there was a prewritten form of agreement.

iv Agreement injurious to the person or property of another.

If the consideration or object of an agreement is to cause an injury to the person or property of

another, the agreement is unlawful and therefore void. Injury here means harm which is
unlawful, for example, an agreement to commit fraud, 13 or a tort.14 If the borrower of money is
made to execute a bond requiring him to do manual labour until repayment, and imposes a heavy
penalty on default in the form of an exorbitant rate of interest, agreement contained in bond
virtually amounts to slavery, and therefore such an agreement is opposed to public policy and
hence void.15

13 Brown Jenkinson v. Co. Ltd. v. Percy Dalton (London) Ltd., (1957) 2 Q.B. 621.

14 Clay v. Yates, (1856) 1 H & N. 73.

15 Ram Sarup v. Bansi Mandar, I.L.R., (1915) 42 Cal. 742.

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 Here Mr. Singhal has not done any act which was injurious to Mr. Kumar or his property.

v Immoral or opposed to public policy.

If the consideration or object of an agreement is regarded by the Court to be immoral or opposed

to public policy, the agreement is unlawful and the same has also been declared void by Sec. 23

Nothing in this case was immoral or opposed to public policy. Government permits Casinos in
State of Goa16. Casino Royale was an offshore casino, which was working with the
permission of the govt. So it does not affect the society or the object was not economically
against the public interest. Here public policy means the policy of the law at a stated time. An act
which is not injurious to the society is eventually not against public policy.

(4) There should be free consent of the parties when they enter into contract .

One of the essentials of valid contract mentioned in Sec. 10 is that the party should enter into the
contract with their free consent. Acc. to Sec. 14 consent is said to be free when it is not caused
by-

a. Coercion, as defined in Sec. 15, or

b. Undue influence, as defined in Sec.16, or
c. Fraud, as defined in Sec. 17, or
d. Misrepresentation, as defined in Sec. 18
e. Mistake, subject to the provisions of Sec. 20, 21 and 22.

Consent is said to be so caused when it would not have been given but for the existence of such
coercion, undue influence, fraud, misrepresentation, and mistake.

If the consent of one of the parties is not free consent, i.e., it has been caused by one or the other
of the above stated factor, the contract is not valid one. When consent to an agreement is caused
by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable at

16 Goa, Daman & Diu Public Gambling Act, 1976.

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the option of the party whose consent was so caused.17 If, however, the consent is caused by
mistake, the agreement is void.18

In this Case there was free consent of the parties as the consent was not obtained by any of
the following means:

a. Coercion
There was no coercion as it does not forbid any act of Indian Penal Code. Mr. Kumar has come
own its own (voluntarily) to him, so there was free consent. In addition to this there was no
unlawful detention of property.

b. Undue Influence
There was no undue influence as there was no domination of will. Every transaction where the
terms are to the disadvantage to one of the parties need not necessarily be considered to
unconscionable. If the contract is to the advantage of one of the parties but the same has been
made in the ordinary course of business, the presumption of undue influence would not be
raised.19 For example, A applies to a banker for a loan at a time when there is stringency in the
money market. The banker declines to make the loan except at an unusually high rate of interest.
A accepts the loan on these terms. There is a transaction in the ordinary course of business, and
the contract is not induced by undue influence.

Urgent need of money no Distress- exception to undue influence.20

c. Fraud

17 Sec. 19 and 19-A.

18 Sec. 20.

19 Shrimati v. Sudhakar R. Bhatkar A.I.R. 1988 Bom. 122.

20 Ragunath Prasad Sahni v. Saroj 1929.

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There was no fraud by Mr. Singhal which is shown by following as Mr. Kumar mind was not
influenced by any false statement when they enter into contract, so there was no fraud on part of
Mr. Singhal.

Proof of fraud lies on petitioner or who challenges or asserts that he has been victim of
fraud.21

Merely making a mention of fraud or misrepresentation in the pleadings is not enough.

d. Misrepresentation

There was no Misrepresentation of any fact by Mr. Singhal which led Mr. Kumar to enter into
contract.

e. Mistake

There was consensus ad idem.22 There was no confusion regarding the facts of the agreement.
Everything was clear and hence the contract cannot be declared void on the ground of mistake.

(5) The agreement must not be one, which has been declared to be void.

There are some agreements which have been specifically declared as void by the Indian Contract
Act. Even if such agreements satisfy the conditions of a valid contract, they are not enforceable.
The agreements which have been declared void by the act are as follows:

a Agreement of which the consideration or the object is not lawful. (Section 23 and
24)
b Agreement without consideration. (Section 25)
c Agreement in restraint of marriage. (Section 26)
d Agreement in restraint of trade. (Section 27)
e Agreement in restraint of legal proceedings. (Section 28)
f Agreement which is ambiguous and uncertain.(Section 29)
g Agreement by way of wager. (Section 30)
h Agreement to do an impossible act. (Section 56)
21 Smt. Shrisht Dhawan v. M/s. Shaw brothers, A.I.R. 1992 S.C. 1555.

22 . the meeting of two minds.

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There was none of the above agreements between the parties. So the contract will be enforceable
and hence valid.23

III. THE CONTRACT ENTERED BETWEEN THE PARTIES IS NOT A WAGERING

CONTRACT BUT A CONTINGENT CONTRACT AND HENCE ENFORCEABLE:

Agreements by way of wager24 are void.

Essentials of wagering contract are:

(1) The parties have opposite views regarding an uncertain event.

(2) There are chances of gain or loss to the parties on the determination of the event one way or
the other.
(3) The parties have no other interest except winning or losing of bet.

(1) The parties have opposite views regarding an uncertain event.

In this case the parties did not have opposite view regarding whether Mr. Kumar would win the
game or not.

(2) Chances of gain or loss to the parties.

There should be a chance of any one party winning and the other loosing on the determination of
the event. For example: If A agrees to pay B Rs. 100 if it doesnt rain on 1 January and B agrees
to pay A Rs. 100 if it rains on that day each party has an equal chance to win or lose, depending
upon the event. But if one party has a chance to win but cannot lose anything, it is not a wagering
contract.25

23 Section 10 of Indian contract Act, 1872.

24 According to Sec. 30 of Indian Contract Act Agreements by way of wager are void; and no suit shall be brought
for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game
or other uncertain event on which may wager is made.

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In this case Mr. Singhal would not lose anything whether Mr. Kumar wins or lose the game.
There was only a loan agreement between the parties.

(3) No other interest in the event except amount of bet.

In a wagering contract neither of the contracting parties have any other interest in that contract
than the sum nor stake he will so win or lose, and there is no other real consideration for the
making of such contract by either of the parties. But it is different from other valid conditional
contract.

In this case Mr. Singhal had given loan for satisfying the needs of Mr. Kumar which was purely a
business transaction between the parties. Here the parties intended the performance of a future
contract which is not otherwise impossible. So it would be a valid business transaction rather
than a wagering contract.

In this contract of sale of shares, an actual delivery is intended on happening of the uncertain
event i.e. Mr. Kumars winning or losing the game, it cannot be considered to be a wagering
contract.

Hence none of the essentials of the wagering is fulfilled, thus the Contract is not void but
enforceable being a contingent contract, which will be proved by the following points related to
the contingent contract:

Contingent Contract defined:

Acc. to Sec. 31, a contingent contract is a contract to do or not to do something, if some event,
collateral to such contract, does not happen.

In this case, the parties contracted that Mr. Kumar would return the agreed amount at the table
and if he failed to do that the majority shares of his company would be transferred to Mr Singhal.

Here, the collateral agreement was returning of the loan amount.

25 Babasaheb v. Rajaram AIR 1931 Bom. 264.

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Hence the contract was a contingent contract enforceable by law.

Enforcement of Contingent Contract:

Here, the contract is contingent on not happening of a specified event (i.e. not returning the
agreed loan amount) within a fixed time (i.e. at the table).

So in this context the agreement between the parties is not void and therefore enforceable
under contingent contracts and defendant has full right to acquire the shares of the
company.

IV. THE INJUNCTION SHOULD NOT BE GRANTED AGAINST MR. SINGHAL FROM
SELLING MAJORITY OF THE SHARES OF THE COMPANY.

The injunction should not be granted against Mr. Singhal

Injunction is an order or command of the court preventing a party from doing something which
he is under a legal duty not to do.

In this case the shares were kept as security so there was contract of pledge between the parties
by way of constructive delivery. The Pawnee has the following rights:

A Pawnee has the following rights under the Act:

1 Right to retain the goods pledged.

2 Right to recover extraordinary expenses incurred by him.
3 Rights of suit to procure the debt, etc., and sale of the pledged goods.

Mr. Singhal had exercised his right of sale of pledged goods according to the 3 rd right available to
him under the right of Pawnee.26

Where the plaint does not contain facts which if proved would impose on the bank an obligation
to refrain from selling the pledged goods and on the contrary, the averments made in the plaint
would show that the firm was suing the bank as a Pawnee, requiring the latter to refrain from

26 Aspective Vanijya Pvt. Ltd. v. Industrial Financial Corporation of India

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selling the goods, let alone the firm having any right and the bank being subject to any
corresponding obligation not to sell the goods and se. 176, contract act confers a right on the
bank as a Pawnee to sell the pledged goods after giving notice to the pawnor .It is admitted in the
plaint that the notice as contemplated by section 176 contract act had already been served by the
bank on the firm before the institution of the suit. It was held that the plaint does not disclose any
cause of action for the grant of the relief of perpetual injunction against the bank or for the
specific performance of any contract.27

As Mr. Singhal was unable to return the amount at stipulated time, the Pawnee has the
following rights has the right to sell the pledged property as he becomes the real owner
now. He has a legal right to sell the shares and no injunction is sought against exercise of a
legal right.

PRAYER

In the light of issues raised, arguments advanced & authorities cited, the Plaintiff humbly prays
before this Honble Court to kindly adjudge & declare:

1) The Delhi Commercial Court does not have jurisdiction over the matter.
In the event it does have jurisdiction, the Respondents humbly plead that:

27 State Bank of Bikaner v. Ballabh Das & Sons A.I.R. 1984 Raj. 107

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 2) There being a valid contract between the parties, cannot be now declared void. This
way anybody would take advantage and get free from his obligations.
3) There was contingent contract between the parties, which gives right to Mr. Singhal
to sell the shares to anybody in case of default og the party.
4) That no injunction should be passed to stop Mr. Singhal to sell the shares of the Co. to
a Delhi based Co. A & M Pvt. Ltd. as he has the right to get profits by selling the
shares he own. The petitioner has no valid ground to file for injunction as he himself
was at fault.

And pass any other order that it may deem fit in the ends of justice, equity and good conscience.

ALL OF WHICH IS RESPECTFULLY SUBMITTED.

SD\-

THE RESPONDENT COUNCIL

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