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SURANA & SURANA INTERNATIONAL TECHNOLOGY LAW MOOT COURTTEAM CODE 2014ST-
COMPETITION, 12

SURANA & SURANA INTERNATIONAL


TECHNOLOGY LAW
MOOT COURT COMPETITION – 2014
Symbiosis Law School Surana & Surana
International Attorneys

___________________________________________________________________________

IN THE HONOURABLE HIGH COURT OF MUMBAI

___________________________________________________________________________

INDICO …………………………………………………...…………. APPLICANT

VS

CARCO …………………………………………………….……… RESPONDENT

MEMORIAL ON BEHALF OF THE APPLICANT


________________________________________________________________

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TABLE OF CONTENTS
___________________________________________________________________________

TABLE OF CONTENTS ……………………………………………………………… 2-3

INDEX OF AUTHORITIES …………………………………………………………. 4-7

STATEMENT OF JURISDICTION ………………………………………………...… 8

STATEMENT OF FACTS …………………………………………………………….. 9

STATEMENT OF ISSUES …………………………………………………………….. 10

SUMMARY OF PLEADINGS …………………………………………………..……... 11

ARGUMENTS ADVANCED ……………………………………………………..….… 12

THE ARBITRATION AGREEMENT UNDER THE CONTRACT IS


NOT VALID AND THE CHOICE OF JURISDICTION UNDER THE
CONTRACT BETWEEN CARCO AND INDICO IS MUMBAI HIGH COURT
............... 12
CHOICE OF ARBITRATION IS INVALID TAKING INTO ACCOUNT SUBJECT MATTER
ARBITRABILITY
……………………………….……………………………………………..………… 12
“INCAPABLE OF BEING PERFORMED” RENDERS THE ARBITRATION AGREEMENT
NON-ARBITRABLE …………………………………………………………………………………….…….……..…… 12
THE SUBJECT MATTER OF DISPUTE INVOLVES PUBLIC POLICY, WHICH RENDERS THE
AGREEMENT NON-ARBITRABLE ………………………………………………………………………..…….. 13
ARBITRATION AGREEMENT INVALID, BECAUSE DISPUTE CONCERNS INVASION OF
FUNDAMENTAL RIGHTS AND HUMAN RIGHTS ……….……………………………………………...… 14-17
IF THE ARBITRAL AWARD COULD BE AGAINST PUBLIC POLICY, THEN THE ARBITRATION
AGREEMENT SHOULD NOT BE PERFORMED
………………………………………………………..……………………….……. 17
a) THE ARBITRAL AWARD WOULD BE CONTRARY TO THE PUBLIC POLICY OF INDIA …………………. 18

B. JURISDICTION IN THE PRESENT CASE LIES WITH THE MUMBAI HIGH COURT ..................... 18
MUMBAI HIGH COURT HAS PECUNIARY AND TERRITORIAL JURISDICTION ………………………………………..
18
THE CAUSE OF ACTION LIES WITH THE MUMBAI HIGH COURT .……………………………..…………………….
19
THE BURDEN OF PROOF LIES ON THE PLAINTIFF ………………..……………………………………………..........
19
REAL AND SUBSTANTIAL WORK CARRIED OUT IN PUNE …………………….………………………………………
20

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OUSTER CLAUSE OF DISPUTE RESOLUTION IS INVALID ………………………………………..…………………....


21
PROCEEDINGS IN MUMBAI HIGH COURT ARE NOT OPPRESSIVE OR VEXATIOUS …………………………………...
21
PRINCIPAL PLACE OF BUSINESS WAS PUNE ………………………………………….………………………………..
22

CARCO SHOULD MAKE THE PAYMENT FOR THE


3RD INSTALLMENT AND SHOULD CEASE AND DESIST FROM USING
THE PROPOSALS FORWARDED BY INDICO
……………………………………………………. 23
CARCO WRONGFULLY TERMINATED THE AGREEMENT BECAUSE INDICO DID NOT
MATERIALLY BREACH THE AGREEMENT …………………………………………………………. 23
INDICO DID NOT MATERIALLY BREACH THE AGREEMENT BY DELAYING SUBMISSION OF
THE ADDITIONAL SOW …………………………………………………………………………………………….
23
INDICO DID NOT MATERIALLY BREACH THE AGREEMENT BY USING THIRD PARTY IPR ….
24
INDICO IS ENTITLED PAYMENT OF THE THIRD INSTALLMENT, AND THE COURT SHOULD ASK
CARCO TO CEASE AND DESIST FROM USING THE PROPOSALS ALREADY FORWARDED BY INDICO
TO CARCO ……………………………………………………………………………………….………………. 24
THIS COURT SHOULD REJECT CARCO’S PLEA FOR REFUND OF MONEY PAID, AND INTERES …
25
IF THE COURT HOLDS THAT INDICO BREACHED THE AGREEMENT, THE COURT SHOULD ASK
CARCO TO CEASE AND DESIST FROM USING THE PROPOSALS ALREADY FORWARDED BY INDICO
TO CARCO …………………………………………………………………………………………………….…… 26
B. CARCO WAS NOT ENTITLED TO RESCIND THE AGREEMENT AS INDICO MADE NO MATERIAL
MISREPRESENTATIONS ………………………………………………………………………………………………...… 26
INDICO DID NOT MISREPRESENT ITS CAPACITY TO COMPLETE THE SOW ………………………. 26
INDICO DID NOT FRAUDULENTLY CONCEAL THE FACT THAT ITS EMPLOYEES HAD WORKED
ON SIMILAR TECHNOLOGIES WITH PREVIOUS EMPLOYERS, AS IT HAD NO DUTY TO DISCLOSE
SAID FACT
………………………………………………………………………………………………………………… 27
THIS COURT SHOULD REJECT CARCO’S PLEA FOR REFUND OF THE MONEY PAID AND IT IS NOT
ENTITLED TO ANY DAMAGES AND INTEREST …………………………………………………………… 28

PRAYER …………………………………………………………………………….……. 29

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___________________________________________________________________________

INDEX OF AUTHORITIES
___________________________________________________________________________

STATUTES
24. (Indian) Arbitration & Conciliation Act, 1996.
25. Specific Relief Act, 1963.
26. The Code of Civil Procedure, 1908.
27. The Indian Contract Act, 1872.
28. The Indian Copyright, 1957.
29. The Sale of Goods Act, 1930.

TREATIES AND CONVENTIONS


European Convention on Human Rights.
Rome Convention on the Law applicable to Contractual Obligations, 1980.
The New York Convention, 1958
UNCITRAL Model Law, 1985.

INDIAN CASES
A.B.C. Laminart Pvt. Ltd. and Another v. A.P. Agencies, Salem, (1989) 2 S.C.C. 163.
Arinits Sales Pvt. Ltd. v. Rockwell Plastic Pvt. Ltd. And Ors, (2008) I.L.R. 2 Delhi 66.
Bhagwani Bai v. Life Insurance Corporation of India, Jabalpur, A.I.R. 1984
MP 126.
Bharat Aluminium Company v. Kaiser Aluminium Technical Service, 2012 (3) A.R.B.
LR. 515 (SC).
Chloro Controls (I) P. Ltd. v. Severn Trent Water Purification Inc. and Ors. 2012 (4)
A.R.B. LR. 1 (SC).
Enercon v. Enercon, 2014 S.C.C (Bom) 696.
Hansraj Bajaj v. The Indian Overseas Bank Ltd., A.I.R. 1956 Cal 33.
Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand
Jain (Dead) by Lrs v. State of Maharashtra; (1979) 2 S.C.C. 70.
Janab M.H.M. Yakoob v. M. Krishnan, A.I.R. 1992 Mad 80.
K.S. Satyanarayana v. V.R. Narayana Rao, A.I.R. 1999 SC 2544.

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Kodo Minerals Steatite Mine & Mill-Owners and Anr. v. Rohtas Industries Ltd., A.I.R. 1954 Pat
147.
M/s. Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd., (2013) 9 S.C.C. 32.
Man Ronald Drickinachinen AG v. Multicolour Offset Ltd., A.I.R. 2004 SC 3345.
Matanhella Brothers and Ors. v. Shri Mahabir Industries Pvt. Ltd., A.I.R. 1970 Pat 91.
Modi Entertainment Network and Anr. v. W.S.G. Cricket Pvt. Ltd., (2003) 4 S.C.C. 341.
Mohan Lal v. Kumud Sagar, 1973 (2) A.L.J. 47.
North Eastern Electricity Power Corporation Ltd. v. Lakhi Enterprise, A.I.R. 1992 Gau
42.
Oil and Natural Gas Corporation Ltd. v. Western Geco International Ltd, 2014 S.C.C.
674.
P.S.R. Krishna and Ors. v. Union of India (UOI) rep., by its Secretary, Ministry of
Communication and Information Technology and Ors, 2006 (6) A.L.T. 593.
Pannalal Jankidas v. Mohanlal, A.I.R. 1951 SC 144.
People's Union of Civil Liberties (PUCL) v. Union of India (UOI) and Anr, A.I.R. 1997
SC 568.
Premchand v. Ram Sahai, A.I.R. 1932 Nag 148.
Ram Prakash Sharma v. Adhiraj Kapila, A.I.R. 2002 Raj 248.
Reliance Industries Limited and Anr. v. Union of India (UOI); 2014 (2) A.R.B. L.R. 423
(SC).
Shin–etsu Chemical Co Ltd v. Aksh Optifibre Ltd, (2005) 7 S.C.C. 234.
Shri Lal Mahal Ltd. v. Progetto Grano Spa, 2013 (3) A.R.B. L.R. 1 (SC).
Singhal Transport v. Jesaram, A.I.R. 1968 Raj 89.
Smt. Nandita Bose v. Ratanlal Nahata, A.I.R. 1987 SC 1947.
Venkatachalan v. Rajaballi, A.I.R. 1935 M 663.
Venture Global Engineering v. Satyam Computers, A.I.R. 2010 SC 3371.
Vikrant Tyres Ltd v. Techno Expert Foreign Trade Co. Ltd, I.L.R. 2005 KAR 4738.
Virbhadra v. Roshanlal, A.I.R. 1975 HP 13.
World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd., A.I.R. 2014
SC 968.
Zila Parishad (District Board) v. Smt. Shanti Devi and Anr, A.I.R. 1965 All 590.

U.S. CASES
Koster v. American Lumbermens Mutual Casualty Co., 330 U.S. 518 (1947).

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Loucks v. Standard Oil Co, 224 N.Y. 99.


Rhone Mediterranee Compagnie Francese v. Achille Lauro, 712 F 2.d. 50 (3rd Cir 1983).
Twilite International Inc (US) v. Anam Pacific, U.S. No. 243.
Wilko v. Swan, 346 U.S. 427 (1953).

U.K. CASES
Clough v. L &NWR, (1871) LR 7 E.x. 26.
Coast Lines Ltd v. Hudig & Veder Chartering NV, (1972) 2 Q.B. 34 (Ca),
Compagnie Tunisienne de Navigation SA v. Compagnie d’Armement Maritime
SA, (1971) A.C. 572,
Doyle v. Olby (Ironmongers) Ltd, (1969) 2 All E.R. 191,
R. v. Kylsant, 1931 All E.R. Rep 179.
Spiliada Maritime Corporation v. Cansulex Ltd. (1986) 3 All E.R. 842.
Vita Food Product Inc. v. Unus Shipping Co Ltd, (1939) A.C. 277.
Whitworth Street Estates (Manchester) Ltd v. James Miller and Partners Ltd,
(1970) A.C. 583.

OTHERS
C.S.R. Ltd. v. Cigna Insurance Australia Ltd., 1997 (189) C.L.R. 345.
Google Spain SL v. AEPD, Case C-131/12 of the European Court of Justice.

BOOKS

83. Avtar Singh, Contract and Specific Relief (11 ed. 2013), Eastern Book Company.
84. C.K Takwani, Civil Procedure with Limitation Act, 1963 (7 ed. 2013), Eastern Book
Company.
85. G.C. Bharuka, Mulla The Indian Contract Act (12 ed. 2009), Lexis Nexis
Butterworths Wadhwa.
86. Gary B. Born, International Commercial Arbitration, (1 Ed. 2009) Wolters Kluwer,
Vol. 1.
87. Justice A. Raman, MLJ Law of Contract and Specific Relief with special emphasis on
Law of Tenders (2 ed. 2009), Lexis Nexis Butterworths Wadhwa, Vol. 1

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88. O.P Malhotra & Indu Malhotra, The Law and Practice of Arbitration and
Conciliation (2 ed. 2006), Lexis Nexis Butterworths.
89. P. Ramanatha Aiyar, Advanced Law Lexicon 3717 (3 ed. 2005).
90. PC Markanda, Law relating to Arbitration and Conciliation: Commentary on the
Arbitration and Conciliation Act, 1996 (7 ed. 2009), Lexis Nexis Butterworths
Wadhwa.
91. Sudipto Sarkar & VR Manohar, Code of Civil Procedure (11th ed. 2006), Lexis Nexis
Butterworths Wadhwa.
92. Suranjan Chakraverti & Bholeshwar Nath, Cases and Materials on Code of Civil
Procedure (5th ed, 2012), Eastern Book Company.
93. Upendra Baxi, Inconvenient Forum and Convenient Catastrophe: The Bhopal Case,
Sweet & Maxwell.
94. V Dicey, J. H. C Morris & Lawrence Collins, Dicey and Morris on the Conflict of
Laws, (14 ed. 2006), Sweet & Maxwell, Vol. 1.
95. V Dicey, J. H. C Morris & Lawrence Collins, Dicey and Morris on the Conflict of
Laws, (14 ed. 2006), Sweet & Maxwell, Vol. 2.

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96.

___________________________________________________________________________

STATEMENT OF JURISDICTION
___________________________________________________________________________

THE APPLICANTS HAVE THE HONOUR TO SUBMIT BEFORE THE HONOURABLE


HIGH COURT OF MUMBAI, THE MEMORANDUM FOR THE APPLICANTS UNDER
THE JURISDICTION OF THIS HIGH COURT.

Indico, the Applicant in the instant case has invoked the jurisdiction of this court under
Section 20 of the Code of Civil Procedure. This court has jurisdiction in the present case as
the cause of action has arisen in Pune, India and the subject matter of the present case is
non-arbitrable as it concerns Public Policy.

THE PRESENT MEMORANDUM SETS FORTH THE FACTS, ISSUES, AND


ARGUMENTS IN THE PRESENT CASE.

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_________________________________________________________________________

STATEMENT OF FACTS
___________________________________________________________________________

I
Indico is a Private Limited Company incorporated in India and situated at Pune specializes in
Information Technology Services. It entered into its first international Agreement award with a
Detroit based US company, Carco. As per a Government notification such privacy invasive
technology, could only be manufactured and used with the prior permission of the Government.
II
Based on representations made by Indico, about its capabilities and experiences, Carco agreed to
enter into a contract with Indico, Scope of Work (SOW) and the total fee payable to Indico was
USD 7 Million, which was payable to Indico in installments, upon completion of certain
milestones by Indico. The SOW was deliverable within three months with an option to extend by
one month, upon delay due to certain circumstances out of Indico’s control. The entire
manufacturing process was done in Pune, India.
III
Indico ensured that it will not use any external IPR without prior written consent of Carco and
Carco shall have non-exclusive rights of the programs submitted by Indico, which Indico can use
only for any vendor after a period of 6 months from the date of completion of the SOW.
IV
Parties agreed to resolve disputes by arbitration would be held under the aegis of the New York
International Arbitration Centre (NYIAC).
V
Within ten days of signing of the agreement, Carco requested Indico to enhance the SOW, and
Indico agreed to do so for same cost. Indico informed the enquiring authorities and sought
permission to work as the codes for devices were to be used by Carco outside India. Indico
thereafter submitted the preliminary version of the products. Payment of the same was made in
Pune. Indico submitted modifications of the preliminary programs. But Carco terminated the
agreement on grounds of misrepresentation and breach of contract and stopped further payments
after 10 days of submission of beta version of the products. Indico filed a composite suit for

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payment of third installment and for protection of their copyright to the software programs in
Mumbai. Thus this suit before this honourable court.

_________________________________________________________________________

STATEMENT OF ISSUES
___________________________________________________________________________

-- I --

WHETHER THE ARBITRATION AGREEMENT UNDER THE CONTRACT


BETWEEN CARCO AND INDICO IS VALID AND WHETHER THE CHOICE OF
JURISDICTION UNDER THE CONTRACT BETWEEN CARCO AND INDICO IS
USA.

-- II --

WHETHER CARCO RIGHTFULLY TERMINATED THE CONTRACT WITH


INDICO OR NOT, ON THE BASIS OF WHICH IT IS ASKING FOR AMOUNTS
WITH INTEREST AND DAMAGES FROM INDICO, IN EXCHANGE OF
SUBMISSIONS MADE BY INDICO.

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_________________________________________________________________________

SUMMARY OF PLEADINGS
___________________________________________________________________________

I. THE ARBITRATION AGREEMENT UNDER THE CONTRACT IS NOT VALID


AND THE CHOICE OF JURISDICTION UNDER THE CONTRACT BETWEEN
CARCO AND INDICO IS MUMBAI HIGH COURT.

97. The Mumbai High Court would not refer the parties back to arbitration, as the
agreement is invalid, since it is ‘incapable of being performed’, because the subject
matter is non-arbitrable.
98. As the subject matter of the agreement is based on public policy, which is a ground
for determining invalidity in Section 45 of the (Indian) Arbitration & Conciliation
Act, 1996.
99. The arbitral award, which could come about from the arbitration proceedings, could
violate the public policy of India, therefore such an arbitration agreement should be
held invalid.
100. Mumbai High Court has pecuniary and territorial jurisdiction and the cause of
action had arisen in Pune, since Indico’s company was situated in Pune, India.
101. Mumbai High Court is a more appropriate forum as it has the most real and
substantial connection in terms of convenience of the parties or the expenses, and the
proceedings in Mumbai High Court will not be oppressive or vexatious.

II. CARCO SHOULD MAKE THE PAYMENT FOR THE 3RD INSTALLMENT AND
SHOULD CEASE AND DESIST FROM USING THE PROPOSALS
FORWARDED BY INDICO.
102. Indico did not breach the terms of the contract and did not misrepresent its
capacity to complete the SOW.
103. Carco wrongfully terminated the contract, and it cannot get amounts with
interest and damages from Indico, in exchange of Indico’s proposals.

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104. Indico should get the 3rd installment for submitting the Beta version of the
software program and Carco should cease and desist from using the proposals already
forwarded by Indico to it, as the proprietary rights of the same still vest with Indico.
___________________________________________________________________________

ARGUMENTS ADVANCED
___________________________________________________________________________

105. WHETHER THERE EXISTS A VALID CHOICE OF ARBITRATION,


AND IF NOT, WHETHER JURISDICTION UNDER THE CONTRACT WILL
LIE IN USA.
106. The arbitration agreement is not valid because the subject matter of the dispute is non-
arbitrable as it involves issues related to public policy, and thus, NYIAC does not hold
jurisdiction to solve the dispute in question. Mumbai High Court holds jurisdiction because it
is the natural forum.
A. Choice of arbitration is invalid taking into account subject matter arbitrability.
107. The Honorary High Court would hold the arbitration agreement non-arbitrable
because it is ‘incapable of being performed’ since the subject matter of the dispute involves
the public policy of India. Incapability of being performed renders an arbitration agreement
non-arbitrable, thus making the agreement wholly invalid.
i. “Incapable of being performed” renders the arbitration agreement non-arbitrable.
108. The arbitration agreement is invalid because it is incapable of being performed and
thus, the parties cannot be referred back to arbitration. “Under section 451, which deals with
arbitrations to which the New York Conventions applies, a specific provision has been made
to examine the validity of the arbitration agreement in the manner provided in section 45.”2
The (Indian) Arbitration and Conciliation Act, 1996 states that the parties will be referred
back to arbitration by the judicial authority, unless the agreement is ‘null’, ‘void’,
‘inoperative’ or ‘incapable of being performed’.3
109. “The phrase ‘null and void, inoperative or incapable of being performed’ is to be
interpreted narrowly to encompass only those situations- such as fraud, mistake, duress and
waiver- that can be applied neutrally on the international scales, or when it contravenes

1
Section 45 of (Indian) Arbitration and Conciliation Act, No. 26 of 1996.
2
Shin–etsu Chemical Co Ltd v. Aksh Optifibre Ltd, (2005) 7 S.C.C. 234.
3
Supra note 1.

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fundamental policies of the forum state.”4 “The words “null and void” may be interpreted as
referring to those cases where the arbitration agreement is affected by some invalidity right
from the beginning, such as lack of consent due to misrepresentation, duress, fraud or undue
influence.”5 “The word “inoperative” can be said to cover those cases where the arbitration
agreement has ceased to have effect, such as revocation by the parties.”6 “The expression
‘incapable of being performed’ refers to the cases which render the arbitration agreement
inoperative because the subject matter of the agreement is not arbitrable in India.”7 Thus, if
the subject matter is against public policy, it will not be arbitrable in India.8
110. The subject matter of dispute in our case lies around the products manufactured and
the rights of those products. Carco could improperly use the products in question if the rights
would still lie with them. This improper use could lead to invasion of privacy. Thus, the
subject matter of the dispute lies around payment for third installment, non-exclusive rights
and privacy issues. Privacy issues are a matter of public policy and thus, are non-arbitrable.
a. The subject matter of dispute involves public policy, which renders the agreement
non-arbitrable.
111. The subject matter of the dispute involves products that could invade privacy, and are
banned by the Government of India. These issues are concerns of public policy, which
includes fundamental policies of India, interests in India, justice and morality and patent
illegality.9 Fundamental policies pertain to the issues affecting the rights of the citizens of
India, as righteous ‘judicial approach’ is safeguarding the rights of the people of India.10
Thus, invasion of privacy is contrary to public policy, since the right to privacy is a
fundamental right of the people of India, which might get violated. Thus, the arbitration
agreement is ‘incapable of being performed’, since the subject matter of such an agreement is

4
Twilite International Inc (US) v. Anam Pacific, yearbook commercial arbitration, Vol XX111-1998 (US No
243) 960; Rhone Mediterranee Compagnie Francese v. Achille Lauro, 712 F 2.d. 50 (3rd Cir 1983).
5
Albert Jan Van Den Berg, “The New York Convention, 1958 – An Overview”, http://www.arbitration-
icca.org/media/0/12125884227980/new_york_convention_of_1958_overview.pdf; World Sport Group
(Mauritius) v. MSM satellite (Singapore) Pte. Ltd., A.I.R. 2014 SC 968.

6
Id.
1. 7
O P Malhotra & Indu Malhotra, The Law and Practice of Arbitration and Conciliation 1359 (2 ed.
2006), LexisNexis Butterworths.
8
Supra note 2, at12; Wilko v. Swan, 346 U.S. 427 (1953).
9
Shri Lal Mahal Ltd. v. Progetto Grano Spa, 2013 (3) A.R.B. L.R. 1 (SC).
10
Oil And Natural Gas Corporation Ltd. v. Western Geco International Ltd, 2014 S.C.C. 674.

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concerned with public policy and such matter cannot be arbitrated.11 Conflict of law rules
state that the forum’s mandatory laws should be abided by, and if a certain application goes
against those mandatory laws, including public policy, then that application would not be
given heed to.12 Indian law clearly states that right to privacy is law in the public interest of
the people, 13 and going against public interest is contrary to public policy. Thus, any
arbitration agreement concerning public policy cannot be arbitrated14 in India, and such an
agreement is ‘incapable of being performed’, and thus the parties cannot be referred back to
arbitration.
I) Arbitration agreement invalid, because dispute concerns invasion of
Fundamental Rights and Human Rights.
112. Since the subject matter of the dispute is interlinked with the fundamental rights of
the people in India, along with their human rights, the matter cannot be submitted to
arbitration, since it is against the public policy of India. The conflict of law rules state that if
a certain application of a rule of law would go against either the mandatory law or the public
policy (ordre public) of the forum, then the rule of law will not be upheld.15 The application
of this rule with reference to arbitration would be waived when, what is contracted over is
against the mandatory forum laws and public policy.
113. The notification issued by Government of India mentioned that the manufacture and
use of any product which could invade privacy of people in India is to take place with due
permission from the government.16 This exemplifies the importance of right to privacy in the
Indian forum. The goods Indico was producing did not invade privacy because of due consent
to be taken from consumers, along with a provision of an overriding button. But Carco
possesses the non-exclusive rights of those products at this moment, and is capable of
abusing such goods. Thus, the above is contrary to public policy, because right to privacy of
individuals will be violated, which is a fundamental right in India17 and a human right in the
international arena as well.18

11
Supra note 8.
12
V Dicey, J. H. C Morris & Lawrence Collins, Dicey and Morris on the Conflict of Laws, 1626 (14 ed. 2006),
Sweet & Maxwell, Vol. 2.
13
People's Union of Civil Liberties (PUCL) v. Union of India (UOI) and Anr, A.I.R. 1997 SC 568.
14
Supra note 8, at 13.
15
Id.; Loucks v. Standard Oil Co, 224 N.Y. 99; Art. 16 of the Rome Convention.
16
Para 2 of the Fact Sheet.
17
Supra note 13.

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114. In the case of Reliance v. Union of India,19 it was stated that if the subject matter of
the dispute were concerned with the public policy, then the laws of India would be applied to
govern the arbitrability of the dispute.20 This is not in equation with the judgment in Venture
Global Engineering v. Satyam Computers21, which allowed applicability of Part 1 in relation
to public policy concerns, where ‘public policy’ was given an expansive definition. In
Reliance’s case, the definition is restricted to Shri Lal Mahal’s22 definition of public policy,
thereinafter is approved by Bharat Aluminium Company v. Kaiser Aluminium Technical
Service,23 as explained above. The obiter in Reliance’s judgment runs in tandem with the
conflict of law rules, because it states that if the forum’s fundamental laws are being violated,
then the judicial authorities should work towards solving the dispute, instead of the arbitrator.
The arbitration agreement is rendered ‘incapable of being performed’ when the fundamental
policies of the forum are violated.24
115. An integral clog to this case here is that along with being the law of the forum, Indian
Law is also the law governing the contract, since the implicit choice of both the parties was to
make Indian law the governing law of the contract, which can be interpreted through facts
and circumstances.25 The entire manufacturing process was to be performed in India. Only
the final installation was required to be carried out in USA. Along with that India is the
natural forum for jurisdiction, since maximum work was carried out here.26 If the court still
holds that these facts do not show sufficient intention on part of both the parties, it is
submitted that in case of no explicit or implicit choice made in terms of the law governing the
contract, then that country’s law will be considered to govern the contract with which the
transaction had “its closest and more real connection”.27 The first and second installment fees

18
Google Spain SL v. AEPD, Case C-131/12 of the European Court of Justice; Article 8.1 of the European
Convention on Human Rights.
19
Reliance Industries Limited and Anr. v. Union of India (UOI), 2014 (2) A.R.B. L.R. 423 (SC).
20
Id.; Vita Food Product Inc. v. Unus Shipping Co Ltd, (1939) A.C. 277.
21
Venture Global Engineering v. Satyam Computers, A.I.R. 2010 SC 3371.
22
Supra note 9, at 13.
23
Bharat Aluminium Company v. Kaiser Aluminium Technical Service, 2012 (3) A.R.B. LR. 515 (SC).
24
Twilite International Inc (US) v. Anam Pacific, Yearbook Commercial Arbitration, Vol XX111-1998 (US No
243) 960.
25
Whitworth Street Estates (Manchester) Ltd v. James Miller and Partners Ltd, (1970) A.C. 583.
26
Enercon v. Enercon, 2014 S.C.C (Bom) 696.
27
Coast Lines Ltd v. Hudig & Veder Chartering NV, (1972) 2 Q.B. 34 (Ca); Compagnie Tunisienne de
Navigation SA v. Compagnie d’Armement Maritime SA, (1971) A.C. 572.

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were paid to Indico by Carco in India, along with the above mentioned relation with the
contract. Thus, applying the conflict of laws to determine what law governs the contract,
Indian law governs the contract as it satisfies all the conditions.
116. Since Indian law is the law governing the contract, and the law of the forum, the
mandatory laws of the forum, including public policy, have to be abided by. If in a dispute
public policy is being invaded, it cannot be arbitrated upon.28 Since Indian law is the judge of
the arbitrability of the dispute,29 it can decide whether the parties should be referred back to
arbitration or not. In this case, as stated before, the non-exclusive rights for the products lie
with Carco, and Indico or any other company cannot use the products for six months. They
require interests and damages to be paid by Indico for the mistakes made by Carco, in
exchange of the rights. Since, Indico would not pay interests and damages because of no fault
of its own, the non-exclusive rights would still lie with Carco, and it could abuse the software
to extract personal details about individuals of India or around the world. The former would
be violating the fundamental right to privacy of the people of India,30 while the latter would
be a blatant violation of Human Rights, since privacy is also a human right. 31 Right to
privacy is a fundamental right for the people granted by the Constitution of India under
Article 21, viz. the right to life and personal liberty.32 The government’s notification banning
use or manufacture of the Smart TV products which sent data to the database of the channels
gives a more blatant explanation that invasion of privacy in India is against the fundamental
policy of the state.33
117. The products in the contract were not privacy invasive because the consumers would
have given implicit consent after buying the automobile. There was intention to provide
information about the features of the car to the buyers, because an overriding switch was also
being provided along with the other software’s. The idea of providing an overriding switch
would have been redundant if information about the same was not communicated. Thus,
Indico was taking precautions that the rights of the people were not getting violated, which
Carco would not have given heed to.

28
Supra note 11, at 13.
29
Supra note 18, at 14.
30
Supra note 13, at 14.
31
Supra note 18, at 14.
32
Supra note 28.
33
Supra note 16, at 14.

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118. The rights of the citizens are inextricably tied with the fundamental policies of
India,34 and fundamental policies of India are a part of the public policy of India.35 Violation
of human rights is a blatant ignorance of justice and morality, which is also contrary to public
policy.36 Hence, the violation of people’s rights is against public policy, and thus this dispute
is not arbitrable as per Indian law. Thus, on the basis of the dispute’s non-arbitrability, the
agreement is ‘incapable of being performed’. Because of this, the judicial authority would not
refer the parties back to arbitration, and this decision of the court will be binding on the
parties.37
ii. If the arbitral award could be against public policy, then the arbitration
agreement should not be performed.
119. Privacy issues are non-arbitrable because such disputes might lead to arbitral awards,
which cannot be enforced in India because they would be contrary to public policy. Section
48 (2) of the (Indian) Arbitration and Conciliation Act, 1996 states that if the court finds that
the enforcement of an arbitral award will be refused by India if its enforcement is contrary to
the public policy of India. Section 45 of the said Act states that if the arbitration agreement is
‘incapable of being performed’, then it is invalid. By reading both these sections together, we
can interpret that if there is a possibility that a dispute might lead to absurd arbitral awards
contrary to public policy, adjudged by an arbitrator not bound by a particular forum’s law,
then the agreement should be incapable of being performed from the start. This would save
costs incurred by the parties because they would be saved from going through the arbitral
proceedings, when in the end the arbitral award decided by the arbitrator would not be
recognized and enforced. 38 Courts in USA have started determining the potential arbitral
award that could come out of a dispute, and thus decide at the threshold itself whether the
arbitration agreement would be capable of being performed entirely, with an enforceable
arbitral award.39 The theory behind legitimizing this practice is that no arbitration agreement
is successfully performed if the last stage of arbitration is successful. Thus, in order to save
time and money, it should be determined at the second stage itself, where validity of an

34
Supra note 10, at 13.
35
Supra note 9, at 13.
36
Id.
37
Vikrant Tyres Ltd v. Techno Expert Foreign Trade Co. Ltd, I.L.R. 2005 KAR 4738.
38
Chloro Controls (I) P. Ltd. v. Severn Trent Water Purification Inc. and Ors. 2012 (4) A.R.B. LR. 1 (SC).
39
Karl-Heinz Böckstiegel, Public Policy as a Limit to Arbitration and its Enforcement, IBA Journal of Dispute
Resolution 123 (2008).

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agreement is checked, whether the fourth stage, viz. enforcement of the arbitral award, can be
successfully finished. Hence, those arbitration agreements should not be held valid, if there is
a possibility that the solving of such a dispute could lead to non-enforceable arbitral awards.
a. The arbitral award would be contrary to the Public Policy of India.
120. The arbitrator could on some basis award the rights of the product to Carco
exclusively, on the basis of an assumed breach of contract, if Indico refuses to pay the
interests and damages to Carco for something Indico did not commit. This award would be
contrary to public policy.
121. Fundamental policy, included in public policy40 is interpreted as any decision, which
is coterminous with the righteous judicial approach.41 Safeguarding rights of the people is a
righteous judicial approach, which is why rights of the people are included in the
fundamental policies of India, as mentioned above.
122. An arbitral award, which would grant exclusive rights of the products to Carco in case
Indico refuses to pay interests and damages for something it was not at fault for, would be
against the fundamental policies of India, as it violates right to privacy. Carco might later
make improper usage of the products in question, which record destinations, a person visited,
photographing and recording conversations, therein violating right to privacy.
123. Thus, such an award will not be enforceable, and the agreement should be held
incapable of being performed, which would therein give jurisdiction to the courts to solve the
dispute.
B. JURISDICTION IN THE PRESENT CASE LIES WITH THE MUMBAI HIGH
COURT.
124. Mumbai High Court has pecuniary and territorial jurisdiction.
125. In the present case, the amount, which is under dispute, is the 3rd Installment, for
which Indico has filed a composite suit for its recovery. This 3rd Installment was 30% of USD
7 million, which amounts to USD 2.1 million. Any suit, the value of which was above Rs.
1,00,000, has to be filed in the High Court on its Original Side. The Mumbai High Court has
territorial jurisdiction in the present case as the value of the composite suit filed by Indico is
above Rs. 1,00,000.42 Thus, the cause of action for filing the suit arose within the jurisdiction
of the Mumbai High Court and the Mumbai High Court has territorial jurisdiction to entertain

40
Supra note 9, at 13.
41
Supra note 10, at 13.
42
Smt. Nandita Bose v. Ratanlal Nahata, A.I.R. 1987 SC 1947.

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the suit.43
126. The cause of action lies with the Mumbai High Court.
127. Cause of action means every fact, which would be necessary for the complainant to
prove, if traversed, in order to support his right to the jurisdiction of the court. Every fact,
which is necessary to be proved, as distinguished from every piece of evidence, which is
necessary to prove such fact, comprises cause of action.44
128. As per Section 20 of the Code of Civil Procedure, every suit shall be instituted in a
Court within the local limits of whose jurisdiction, the cause of action, wholly or in part,
arises. It is for the plaintiff to prove that the court has jurisdiction to entertain the suit. It has
been held that the cause of action is said to arise at a place (i) where contract was made or (ii)
where work under the contract work was to be performed or goods were to be delivered or
(iii) where money under the contract was to be paid.45 A court will not have jurisdiction if
there is no cause of action which exists or where the Defendant is not residing or working for
gain within the jurisdiction of the court.46
129. Indico in the present case was situated in Pune and a substantial part of the work was
required to be done at Pune, India.47 The work as per the agreement was to be required to be
performed in Pune, however only the last milestone as per the Agreement was required to be
carried out in Detroit. The claim however in the present case is only with the work which has
been carried out by Indico, which is in Pune. Thus the cause of action lies in Mumbai High
Court as the work was carried out in Pune and the money which is in dipute, i.e. USD 2.1
Million is to be paid to Indico in Pune.
130.The Burden of Proof lies on the Plaintiff
131. Parties by agreement cannot confer jurisdiction over a court where no cause of action
has arisen.48 Suit against another party can be filed at the place where assignment is made.49
The burden of proof is on the plaintiff to prove that the court has jurisdiction in the case that

43
World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd., A.I.R. 2014 SC 968.
44
P.S.R. Krishna and Ors. v. Union of India (UOI) rep., by its Secretary, Ministry of Communication and
Information Technology and Ors, 2006 (6) A.L.T. 593.
45
North Eastern Electricity Power Corporation Ltd. v. Lakhi Enterprise, A.I.R. 1992 Gau 42.
46
Arinits Sales Pvt. Ltd. v. Rockwell Plastic Pvt. Ltd. And Ors, (2008) I.L.R. 2 Delhi 66.
47
Para 3 of the Fact Sheet.
48
Ram Prakash Sharma v. Adhiraj Kapila, A.I.R. 2002 Raj 248.
49
Mohan Lal v. Kumud Sagar, 1973 (2) A.L.J. 47.

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he is alleging.50 Where as per the contract money was payable at a place A, or at any other
place, then the cause of action will also arise at A, even if some other place had been agreed
upon by the parties.51 Part of cause of action also arises where payment is to be made.52 The
non-payment is also a part of the cause of action in a suit for damages for the non-payment,
that is, in a suit for a termination of a contract.53
132. The place where the communication of the breach of the contract or cancellation of
the contract is received is a place where in such a suit a part of the cause of action can be said
to have arisen.54 In a suit for damages for breach of contract the cause of action consists in
the making of the contract and of its breach, and consequently such a suit may be filed at the
place where the contract was made or at the place where it should have been performed but
for the breach which had occurred.55
133. Indico submits that since substantial part of the work as per the agreement was
required to be carried out in Pune, where Indico’s company was located. Also, the fee
payable to Indico as well as the monies to be received by Indico were to be received in Pune,
and since there was non-payment by Carco and termination of contract by Carco, hence under
section 20(3) of the Code of Civil Procedure, cause of action lies in the Mumbai High Court.
Where the parties have agreed on a particular forum, such an agreement is valid, as long as it
is not being contrary to public policy or contravenes Section 23 of the Indian Contract Act.56
134. Real and Substantial work carried out in Pune.
135. In the Spilliada case it has been laid down that in order to determine the criteria as to
which court is a more appropriate forum, the court will first look for that forum with which
the action had the most real and substantial connection in terms of convenience or expense,
availability of witnesses, the law governing the relevant transaction and the places where the
parties resided or carried on business.57
136. Carco in the present case cannot claim or proceed in any other court, apart from the
Mumbai High Court as Indico in the present case is a more appropriate forum as it has the

50
Virbhadra v. Roshanlal, A.I.R. 1975 HP 13.
51
Singhal Transport v. Jesaram, A.I.R 1968 Raj 89.
52
Venkatachalan v. Rajaballi, A.I.R. 1935 M 663.
53
Zila Parishad (District Board) v. Smt. Shanti Devi and Anr, A.I.R. 1965 All 590.
54
Matanhella Brothers and Ors. v. Shri Mahabir Industries Pvt. Ltd., A.I.R. 1970 Pat 91.
55
Kodo Minerals Steatite Mine & Mill-Owners and Anr. v. Rohtas Industries Ltd., A.I.R. 1954 Pat 147.
56
Man Ronald Drickinachinen AG v. Multicolour Offset Ltd., A.I.R. 2004 SC 3345.
57
Spiliada Maritime Corporation v. Cansulex Ltd. (1986) 3 All E.R. 842.

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most real and substantial connection in terms of convenience of the parties or the expenses.
Substantial part of the work was to be done at Pune, India where Indico’s company was
situated, and the cause of action also lies in Mumbai High Court. Thus, the law governing
this matter will be Indian law as Indico carried out its business in Pune, and the cause of
action also lies in India and not in New York.
137. Ouster clause of Dispute Resolution is invalid.
138. It has been laid down by the Supreme Court that, any clause that ousts the jurisdiction
of all courts having jurisdiction and confers jurisdiction on a court as per an agreement is
invalid. It is well settled principle that the parties cannot by agreement confer jurisdiction on
a court which does not have jurisdiction; and that only where two or more courts have the
jurisdiction to try a suit or proceeding, an agreement that the disputes shall be tried in one of
such courts if is not contrary to public policy.58
139. It has also been held that when jurisdiction of a certain court is specified in a contract,
an intention to exclude all others from its operation may be inferred; the exclusion clause has
to be properly construed and the maxim “expression unius est exclusio alterius” (expression
of one is the exclusion of another) may be applied.59
140. Thus in the present case, the Dipsute Resolution clause which confers jurisdiction on
the New York court is invalid. Sine the clause mentions that Seat of Arbitration is New York,
it in itself imples the intention to specifically oust the jurisdiction of the (Indian) Arbitration
and Concilliation Act, 1996 and thereby the jurisdiction of Indian Courts, hence it is invalid.
Thus the jurisdiction lies in the Mumbai High Court and the Dispute Resolution clause
conferring jurisdiction on New York is invalid.
141. Proceedings in Mumbai High Court are not oppressive or vexatious
142. The Supreme Court has said that it cannot be laid down as a general principle that
once the parties have agreed to submit to the jurisdiction of a foreign court, the proceedings
or the action brought either in the court of natural jurisdiction or in the court of choice will
per se be oppressive or vexatious. It depends on the facts of each case and the question
whether the proceedings in a court are vexatious or oppressive which has to be decided on the
basis of the material brought before the court.60
143. Court would choose that forum as an appropriate forum in which the case could be

58
A.B.C. Laminart Pvt. Ltd. and Another v. A.P. Agencies, Salem, (1989) 2 S.C.C. 163.
59
M/s. Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd., (2013) 9 S.C.C. 32.
60
Modi Entertainment Network and Anr. v. W.S.G. Cricket Pvt. Ltd., (2003) 4 S.C.C. 341.

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tried more suitably for the interests of all the parties and for the ends of justice.61 The courts
should rarely disturb the position of the plaintiff’s choice of forum.62 Court can only stay an
action brought within its jurisdiction in respect of a cause of action arising entirely out of the
jurisdiction when it is satisfied that the plaintiff will thereby suffer no injustice whereas if the
action is continued the defendant will, in defending the action, be the victim of such injustice
as to amount to vexation and oppression and which vexation and oppression would not arise
for the defendant if the action were brought in another accessible Court where the cause of
action arose.63
144. In such a case the onus is upon the defendant to satisfy the Court, first, that the
continuance of the action would work an injustice because it would be oppressive or
vexatious to him or would be an abuse of the process of the Court and, secondly, also that the
stay will not cause any injustice to the plaintiff. In the present case, Mumbai High Court is
the natural forum of jurisdiction as substantial part of the work, which Indico as per the
Agreement had agreed to perform, was to be carried out at Pune, India. Indico filed the
composite suit in the Mumbai High Court, because the cause of action arose in Pune, India
and Mumbai High Court has jurisdiction over the matter, as it is the natural forum.
Substantial portion of the work which was needed to be carried out as per the agreement was
also required to be done in Pune, hence the proceedings for Carco are not be oppressive or
vexatious.
145. Principal Place of Business was Pune
146. In Advanced Law Lexicon, ‘principal place of business’ is defined as “where the
governing power of the corporation is exercised, and where those people meet who have a
right to control the affairs and prescribe what policy of the corporation. The place of a
particular corporation's chief executive offices is viewed as the place designated as the
principal place of business of the corporation in its certificate of incorporation.” 64 In the
present case, Indico is a company incorporated under the Indian Companies Act and its
principal place of business was Pune, India. Hence, the suit can be filed in Pune.

61
C.S.R. Ltd. v. Cigna Insurance Australia Ltd., 1997 (189) C.L.R. 345.
62
Koster v. American Lumbermens Mutual Casualty Co., 330 U.S. 518 (1947).
63
Hansraj Bajaj v. The Indian Overseas Bank Ltd., A.I.R. 1956 Cal 33.
64
P. Ramanatha Aiyar, Advanced Law Lexicon 3717 (3 ed. 2005)

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II. WHETHER CARCO RIGHTFULLY TERMINATED THE CONTRACT WITH


INDICO OR NOT, ON THE BASIS OF WHICH IT IS ASKING FOR AMOUNTS
WITH INTEREST AND DAMAGES FROM INDICO, IN EXCHANGE OF
SUBMISSIONS MADE BY INDICO.
147. As
stated above, by applying the conflict of law rules, Indian law would govern the contract. A.
Carco wrongfully terminated the Agreement because Indico did not materially breach
the Agreement.
i. Indico did not materially breach the Agreement by delaying submission of the
Additional SOW.
148. Acco
rding to section 11 of the Sale of Goods Act, “Whether any other stipulations as to time is of
the essence of the contract or not depends on the terms of the contract.”65 Since, on the there
is nothing in the terms of the contract that explicitly states that time is of the essence, we
cannot conclude that time is of the essence in this contract.
149. Acco
rding to section 55 of the Indian Contract Act, when time is not the essence of the contract
according to the intention of the parties at the time they entered into the contract, the contract
does not become voidable by the failure to do such thing at or before the specified time, but
the promisee is entitled to compensation from the promisor for any loss occasioned to him by
such failure.66
150. It is
also very well supported by case law that even if a particular contract prima facie seems to
connote time as an essence of the contract, it might still have stipulations within it like facility
to seek extension of time in advance of reasonable grounds etc., which render the contract as
one where time is not of the essence.67 In the given case, the contract did have a provision that
enabled the parties to extend the delivery of the SOW by a month if certain circumstances
arise beyond the control of Indico.

65
Section 11 of the Sale of Goods Act, No. 3 of 1930.
66
Section 55 of the Indian Contract Act, No. 9 of 1872.
67
Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (Dead) by Lrs v. State of
Maharashtra; (1979) 2 S.C.C. 70.

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151. Indic
o confirmed that it was capable of completing the additional SOW and agreed to include the
same within the actual SOW for the same cost. There was no mention of the time by which
Indico was supposed to complete the additional SOW. Thus, the fact that the parties allowed
such provisions to remain in the contract, makes it quite obvious that time is not an essence of
this contract, in terms of both the original SOW and the additional SOW. Hence, terminating
it on the grounds of section 55 does not hold good in this situation.
152. Even
if we say time was an essence of the contract, Indico did abide by the Milestones clause of the
contract while completing the SOW for Carco, as it did finish the original SOW within the
stipulated time itself, as it had contended. The additional SOW was an extra task that Indico
had to perform for the same cost but not necessarily within the same time, as laid out in the
original terms of the contract.
153. The
delay in the submission of the SOW took place because of the enhancement of original scope
of work by Carco. It was already mentioned in the contract that if delay happened in the
delivery of the SOW due to circumstances beyond the control of Indico, the date of
submission would be extended by a month.68 That is why Indico could extend the submission
of the additional SOW by a month.
154. Even
if the submissions were late, Carco had waived any objections as it accepted the delayed
submissions of the SOW and made no objections based upon late submission. Thus, there was
no material breach by Indico, and Carco has wrongfully terminated the contract.
ii. Indico did not materially breach the Agreement by using third party IPR.
155. Indic
o’s partner did work on the AACN technology abroad, but there is no mention of a company
for which he worked there. Hence, he would have been Indico’s employee at that time also
and thus, the AACN technology belongs to Indico, according to section 17(c) of the Indian
Copyright Act, 1957. According to this section, employer owns the copyright first if employee
(author) made it during the course of employment under a contract of service or
apprenticeship.69

68
Para 3 of the Fact Sheet.
69
Section 17(c) of the Indian Copyright Act, No. 14 of 1957.

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156. Even
if we say that the partner was not employed at that time with Indico and minor tweaking of
AACN’s logic was done to make Indico’s software codes, Indico still completely reworked
any external third party IPR such that the preliminary versions contained only Indico’s IP.
iii. Indico is entitled payment of the third installment, and the court should ask Carco
to cease and desist from using the proposals already forwarded by Indico to Carco.
157. Accord
ing to section 64 of the Indian Contract Act, “When a person at whose option a contract is
voidable rescinds it, the other party thereto need not perform any promise therein contained in
which he is the promisor. The party rescinding a voidable contract shall, if he had received
any benefit thereunder from another party to such contract, restore such benefit, so far as may
be, to the person from whom it was received.70
158. Anothe
r benefit that Carco unjustly received under the contract was the Beta version of the program.
It is a well-known fact that “... Any civilized system of law is bound to provide remedies for
cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man
from retaining the money of, or some benefit derived from, another which it is against
conscience that he should keep…”71. 3rd installment is payable within one week of submission
of the Beta version, subject to satisfaction of Carco.72
159. The
beta version stage generally begins when the software is feature complete. It is conduction of
usability tests for the software so that any glitch that might be there in the working of the
software, does not impact the final users. Since in the given scenario, Carco had already
accepted the preliminary programs by making payments for the same, the software was
feature complete now.
160. Indico
submitted the beta version of the program with modifications after Carco made payments for
the 2nd installment. Since Carco had already accepted the basic features of the software
program, it shouldn’t have had a problem with the beta version of the program as well. Thus,
Indico must be paid for the beta version submissions of the software program.

70
Section 64 of the Indian Contract Act, No. 9 of 1872.
71
K.S. Satyanarayana v. V.R. Narayana Rao, A.I.R. 1999 SC 2544.
72
Para 3 of the Fact sheet.

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161. The
preliminary programs are Indico’s intellectual property as proved in sub section A. After
rescinding the contract, Carco should return all benefits received under the contract from
Indico. Thus, Carco should not use the preliminary programs submitted by Indico and return
them back to Indico as well.
iv. This Court should reject Carco’s plea for refund of money paid, and interest.
162. The
question of section 75 does not arise in this situation at all because the contract was not
rightfully rescinded by Carco, as it has been argued above. Thus there can be no compensation
demaded from Indico under the pretext of this section.
163. Follow
ing the rationale of section 73 of the Contract Act, whichever party is breaching the contract
must make compensation in respect of the direct consequences flowing from the breach and
not in respect of loss or damages which is remotely or indirectly caused.73 In this case, it is too
improbable to say that eventually Carco would have suffered losses due to Indico’s late
submission, and hence, it should be given damages for this improbable loss that might happen
in the future.
164. Accord
ing to section 55 of the Contract Act, in cases of a contract becoming voidable on account of
the promisor’s failure to perform his promise at the time agreed, the promisee accepts such
promise at any time other than agreed, the promisee cannot later on go on about trying to
claim compensation for any loss occasioned by the non-performance of the promise at the
time agreed, unless, at the time of the acceptance he gives notice to the promisor of his
intention to do so.74
165. Even if
we say that time is the essence of the contract in this case, the fact that Carco accepted the
submission of the 2nd milestone, without the additional SOW, at a time different from the one
agreed upon, shows that Carco cannot go ahead and claim compensation from Indico for
losses occurred due to Indico’s non-performance, if any. Hence, Indico should not pay
amounts with interests and damages to Carco.
v. If the Court holds that Indico breached the Agreement, the court should ask Carco

73
Pannalal Jankidas v. Mohanlal, A.I.R. 1951 SC 144.
74
Id.

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to cease and desist from using the proposals already forwarded by Indico to Carco.
166. Accord
ing to Clough v. L &NWR, “No man can at once treat the contract as avoided by him, so as to
resume the property which he parted with under it, and at the same time keep the money or
other advantages which he has obtained under it”.75 Since Carco is terminating the contract, it
has to cease and desist from using proposals already forwarded by Indico, even if Indico has
to compensate Carco for the losses Carco suffered.
B. Carco was not entitled to rescind the Agreement as Indico made no material
misrepresentations.
i. Indico did not misrepresent its capacity to complete the SOW.
167. Even if Indico is deemed to have failed to complete the Additional SOW in a timely
manner, it had no intent to deceive Carco. Hence, Indico has not fraudulently misrepresented
its capacity to complete the Additional SOW under Section 17 of the Contract Act.
168. According to section 18 of the Indian Contract Act, “Misrepresentation means and
includes the positive assertion in a manner not warranted by the information of the person
making it.”76 Indico did not assert in a manner, not warranted by the information it knew
about its own capacity to complete the SOW. It is a reputed Indian company in this field and
that is why it got this International Agreement award from Carco at the first place, which
means that Carco would have also done some due diligence77 before signing this contract with
Indico.
169. Misrepresentation also means and includes causing, however innocently, a party to an
agreement, to make mistake as to the substance of the thing, which is the subject of the
agreement.78 In the given contract, Carco wanted Indico to complete the SOW as per certain
specifications. These specifications were the substance of the SOW, which in turn was the
subject matter of the agreement. When Indico submitted the 2nd milestone of the SOW and
Carco accepted the same, there was an implied acceptance of the specific quality of the
preliminary programs as made by Indico. Hence, it did not misrepresent in any way so that it
could enable Carco to make a mistake as to the substance of the thing, which is the subject
matter of the agreement.

75
Clough v. L &NWR, (1871) LR 7 Ex 26.
76
Section 18 of the Indian Contract Act, No. 9 of 1872.
77
Exception to Section 19 of the Indian Contract Act, No. 9 of 1872.
78
Id.

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170. In order to prove the contract to be voidable under the Indian Contract Act and rescind
it eventually, the party rescinding it has to prove that its consent to the contract was so caused
by the other party’s misrepresentation. 79 According to Bhagwani Bai v. Life Insurance
Corporation of India, Jabalpur, “The perusal of explanation attached to section 19 clearly
goes to show that in order to avoid a contract, misrepresentation or fraud must be proved to be
the main cause in obtaining the consent of the other party to the contract and if it is not found,
the fraud or misrepresentation ipso facto would not render the contract voidable.”80
171. The additional SOW was only an extra task that Indico had to perform. Indico’s
capacity or incapacity to perform it did not cause the consent of Carco to the original contract.
Also, enhancement of the Scope of Work cannot be considered as an alteration of the contract
as there is no variation of rights, liabilities or legal position of the parties as ascertained by the
deed, from its original state.81 Indico did not misrepresent its capacity to complete the SOW.
ii. Indico did not fraudulently conceal the fact that its employees had worked on
similar technologies with previous employers, as it had no duty to disclose said fact.
172. Misrepresentation of a party to the contract can arise also through suppression or non-
disclosure of vital facts82, either fraudulently83 or otherwise. Indico’s partner did work on the
AACN technology abroad, but there is no mention of a company for which it worked there.
Hence, it would have been Indico’s employee itself at that time also and thus, the AACN
technology also belongs to Indico, according to section 17(c) of the Indian Copyright Act,
1957, as proved in the above sub issue. Thus, it did not hide anything substantial from Carco,
which is fraudulent in nature and use it to cause the consent of Carco to the contract.
173. Still if Carco believes that Indico committed misrepresentation or fraudulent
misrepresentation to cause the consent of Carco to the contract, Carco should have exercised
some due diligence before entering into the contract. Exception to section 19 of the Indian
Contract Act 1872 says that if a party’s consent to a contract was caused by misrepresentation
or silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not
voidable, if the party whose consent was so caused had the means of discovering the truth
with ordinary due diligence. Thus, under the above-mentioned grounds, Indico did not

79
Section 19 of the Indian Contract Act, No. 9 of 1872.
80
Bhagwani Bai v. Life Insurance Corporation of India, Jabalpur, A.I.R. 1984 MP 126.
81
Janab M.H.M. Yakoob v. M. Krishnan, A.I.R. 1992 Mad 80.
82
R. v. Kylsant, 1931 All E.R. Rep 179.
83
Section 17(2) of the Indian Contract Act, No. 9 of 1872.

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misrepresent its ability to deliver requirements under the SOW; the contract is not voidable as
a result and hence, Carco wrongfully terminated the contract.
iii. This Court should reject Carco’s plea for refund of the money paid and it is not
entitled to any damages and interest.
174. As already proved above, Indico did not misrepresent to Carco in order to cause its
consent to the contract. Thus, there can be no rescission of the contract on those grounds and
no claiming of compensation as a result.
175. Misrepresentation anyways is not equivalent to breach. Thus, Carco will not be
entitled to get damages, as envisaged under section 73 and section 75 of the Contract Act, on
this ground.
176. When the consent to an agreement is caused by misrepresentation, the promisee can
either avoid the contract or ask for specific performance but he cannot sue for damages.84
Thus, even if innocent misrepresentation is proved, Carco cannot sue for damages. It can only
avoid the contract and get compensation for the extra benefit that Indico has got.
177. Even if fraudulent misrepresentation is proved, we do know that the damage to the
misrepresented party must have flowed directly from the fraud perpetrated on him.85 This link
between Carco’s suffered losses arising out of Indico’s claimed misrepresentation is nearly
impossible to be proved and thus, does not give rise to damages and interests from Indico to
Carco.

________________________________________________________________________

PRAYER
___________________________________________________________________________

In light of the issues raised, arguments advanced, and authorities cited, Indico requests this
Honorable Court to adjudge and declare that:

178. Arbitration agreement between Carco and Indico is non-arbitrable.

84
Premchand v. Ram Sahai, A.I.R. 1932 Nag 148, 149.
85
Doyle v. Olby (Ironmongers) Ltd, (1969) 2 All E.R. 191.

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179. Mumbai High Court has Jurisdiction under the contract between Carco and
Indico.

180. Indico shall not pay amounts with interests and damages to Carco, and
Carco should make the payment for the 3rd installment to Indico and it should cease
and desist from using the proposals forwarded by Indico.

And Pass any other Order, Direction, or Relief that it may deem fit in the Best Interests of
Justice, Fairness, Equity and Good Conscience.

For This Act of Kindness, the Respondent Shall Duty Bound Forever Pray.

ALL OF WHICH IS RESPECTFULLY SUBMITTED

MEMORIAL ON BEHALF OF THE APPLICANT