IN THE

HONBLE DELHI COMMERCIAL COURT, TIS HAZARI

Case no. ___ of 2016

IN THE MATTER OF
MR. SWARN KUMAR
(PLAINTIFF)

V.

MR. AKHIL SINGHAL

(DEFENDANT)

Memorial submitted to:

Memorial filed on behalf of the defendant

Counsel appearing on behalf of the defendant

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Table of Contents
Table of Contents

List of Abbreviations

Index of Authorities
Statement of Jurisdiction
Statement of Fact
Issues Presented

4-5
6
7-8
9

Summary of Arguments

10-11

Arguments Advanced

12-24

Prayer

25

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LIST OF ABBREVATIONS

AIR
Co.
HONBLE
H.C
I.C.A
Ltd.
MANU.
S.
S.C

ALL INDIA REPORTER

COMPANY
HONOURABLE
HIGH COURT
INDIAN CONTRACT ACT
LIMITED
MANUPATRA
SECTION
SUPREME COURT

S.C.C

SUPREME COURT CASES

U.O.I

UNION OF INDIA

V./Vs.

VERSUS

&

AND

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INDEX OF AUTHORITIES

STATUTES
Indian Contract Act, 1872
Civil Procedure Code,1908
The Commercial Court, Commercial Divisions and Commercial
Appellate Authorities of High Courts Act, 2015

BOOKS

Mullas Indian Contract Act, Mulla, 15th edition, 2016

Indian Contract Act, Pollock and Mulla, revised and edited by

Nilima Bhabhade, 14th edtion reprint, 2016

Indian Contract Act, Dr. R.K Bangia, 15th edition, 2016

LAW DICTIONARIES
Black's Law Dictionary
P. Ramnatna Aiyer's Law Lexicon

LIST OF CASE LAWS

1. M/S. Kusum Ingots & Alloys Ltd vs Union Of India And Anr ,
2004 (6) SC 254

2. Subodh Kumar Gupta v. Srikant Gupta, (1993) 104 PLR 621

3. The church of Christ Charitable Trust & Educational Charitable

Society, Versus M/s Ponniamman Educational, 2012 (8) SCC,
706
4. Mussummat Chand Kour v. Partap Singh, (15 IA 156)
5. Bloom Dekor Ltd. vs. Subhash Himat lal Desai & Ors., (1994) 6
SCC 322
6. Balan v. Sivagiri Sree Narayana Dharma, AIR 2006 Ker 58
7. Kanhaiyalal v. Har Singh, AIR 1944 Nag 232
8. Mohd Yakub v. Abdul Kuddus, MANU/BH/0090/1922: AIR
1923 Pat 187
9. Ram v. Lalji, ILR 8 Cal 149
10.
Rajshree sugars & Chemicals Limited v. Axis Bank Limited ,
(MANU/TN/0893/2008)

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STATEMENT OF JURISDICTION

It is humbly submitted that the plaintiff has approached the Honble

Delhi Commercial Court, Tis Hazari, Delhi.

The defendant humbly submits to the jurisdiction of this Honble

court which has been invoked by the plaintiff. However, the defendant
reserves the right to challenge the same.

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STATEMENT OF FACTS

1. Mr. Swarn Kumar is an influential businessman from Delhi with

a company of Rs.30 crores dealing in ice cubes. He is known to
enjoy gambling, socialising and is notorious for being a
womanizer. On a trip to Goa with his friends, Mr. Aditya Sahni,
an esteemed lawyer from Delhi, also accompanied him.
2. On 3/10/2016, Mr. Kumar was playing poker at casino Royale,
an offshore casino in Goa. After losing approximately Rs.3
crores, he was desperate for more money as he believed he
would have a winning hand. He signed a contract with Mr. Akhil
Singhal (the defendant) money lender of the casino) and the
defendant lent him Rs.5 crores. The contract contained a clause
that he would pay him double the loan amount (Rs.10 Crores) at
the table and in default, he would sign over his majority shares
in his company as surety. The contract was in a form of pre
written agreement.
3. Subsequently, the plaintiff lost all the money at the table and
was unable to return double the loan amount and as a
consequence lost his majority shares of the company at 2 AM on
04/10/2016. Thereafter, in a desperate attempt he called Mr.
Aditya, who then contacted the defendant to take double the loan
but not to take the majority shares of the company. The
defendant refused the offer.
4. Immediately after acquiring majority shares of the company of
the plaintiff, the defendant signed a contract with a Delhi based

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company A & M Pvt Ltd for selling majority shares of the

company.
5. The video from the casino shows that prior to signing the
contract, the plaintiff had consumed 8 alcohol beverages
(8x30ml).
6. Plaintiff, through his counsel, has filed a civil suit before this
Honble Court to prevent the defendant from taking over the
company.

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ISSUES PRESENTED
The issues framed by the Honble court are as
following:
1. Whether the Delhi Commercial Court has the jurisdiction to
entertain the matter or not?
2. Whether the essentials of valid contract have been fulfilled?
3. Whether the wagering contract entered between the parties
enforceable or not?
4. Whether the injunction be granted against the defendant from
selling the majority of the shares in the present case or not?

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SUMMARY OF ARGUMENTS
1. Whether the Delhi Commercial Court has jurisdiction to
entertain the matter or not?
It is humbly submitted that the Honble Delhi Commercial Court
lacks the jurisdiction to entertain the case. It neither has the
territorial jurisdiction over the matter nor the pecuniary jurisdiction
over the case, as the subject matter is beyond its pecuniary
jurisdiction confronted upon it by the Commercial Courts,
Commercial Divisions, Commercial Appellate Authorities Act.
2. Whether the essentials of a valid contract have been fulfilled in
this case or not?
It is humbly submitted that all the essentials of a valid contract as
per the provisions of Indian Contract Act, 1872 have been duly
fulfilled and the contract itself suffers from no irregularity.
3. Whether the wagering contract entered upon between the
parties is enforceable or not?
The defendant humbly submits that the contract between the
plaintiff and the defendant is by no means a wagering contract
under the provisions of S.30 Indian Contract Act,1872 and is thus
enforceable in its entirety.

4. Whether the injunction should be granted against the defendant

from selling the majority shares of the company in the present
case or not?

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The Defendant humbly submits that the injunction should not be

granted as due to the initial failure to fulfil the contract on the part
of the plaintiff, the shares stood forfeited in the name of the
defendant and thus are to be treated as defendants property, thereby
giving the defendant full right over alienating the shares in any legal
way he may please. Moreover, it is submitted that the defendant has
already entered into contract, before the commencement of this
litigation, for the sale of the shares in question with A&M Pvt. Ltd.
Any injunction thus granted shall be bad in law and very much
detrimental to the interests of the Defendant as well as to the
interests of the third party, A&M Pvt. Ltd., with which the contract
of sale has been made already.

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ARGUMENTS ADVANCED
1. That the Honble court does not have the jurisdiction to
entertain the present suit.
1.1.
The Honble court does not have the territorial
jurisdiction.
It is humbly submitted that the suit has been filed under the
provisions of S.20 of Civil Procedure Code, 1908. S.20 is
reproduced here below,

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 reside, or carry on business, or personally work for gain,
as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Explanation : A corporation shall be deemed to carry on business at
its sole or principal office in India or, in respect of any cause of
action arising at any place where it has also a subordinate office, at
such place.

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It is submitted that as per clause (a), and clause (c) of this section, the
suit is to be instituted in a court within the local jurisdiction of whose,
A) Either the defendant actually or voluntarily resides, or
B) Carries business, or
C) Personally works for gain, or
D) Where the cause of action, wholly or partly arises.
Thus, since the defendant neither actually or voluntary resides nor
carries business or personally works in Delhi, this court is not
empowered to try this suit.
As for the cause of action, it is submitted that the cause of action
wholly arose in Goa and no part of it arose in Delhi. It might be
argued by the plaintiff that since the plaintiffs company is in Delhi, a
part of cause of action arose in Delhi. However such an argument is
completely devoid of merit.
In The Church of Christ Charitable Trust & Educational
Charitable Society, Versus M/s Ponniamman Educational 1, the
Honble Supreme Court defined the term cause of action,
8) The cause of action is a bundle of facts which taken with the law
applicable to them gives the plaintiff the right to relief against the
defendant. Every fact which is necessary for the plaintiff to prove to
enable him to get a decree should be set out in clear terms.
Similarly, in Bloom Dekor Ltd. vs. Subhash Himatlal Desai & Ors.2
a three Judge Bench of this Court held as under:
28. By cause of action it is meant every fact, which, if traversed, it
would be necessary for the plaintiff to prove in order to support his
right to a judgment of the Court, (Cooke v. Gill, 1873 LR 8 CP 107).
In M/S. Kusum Ingots & Alloys Ltd vs Union Of India And Anr3,
the Honble Supreme Court defined Cause of Action as,

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Cause of action implies a right to sue. The material facts which are
imperative for the suitor to allege and prove constitutes the cause of
action. Cause of action is not defined in any statute. It has, however,
been judicially interpreted inter alia to mean that every fact which
would be necessary for the plaintiff to prove, if traversed, in order to
support his right to the judgment of the Court. Negatively put, it
would mean that everything which, if not proved, gives the defendant
an immediate right to judgment, would be part of cause of action. Its
importance is beyond any doubt. For every action, there has to be a
cause of action, if not, the plaint or the writ petition, as the case may
be, shall be rejected summarily.
Moreover, In Mussummat Chand Kour v. Partap Singh4 (15 IA
156)
"... the cause of action does not depend upon the character of the
relief prayed for by the plaintiff. It refers entirely to the ground set
forth in the plaint as the cause of action, or, in other words, to the
media upon which the plaintiff asks the court to arrive at a conclusion
in his favour."

Thus, relying upon these definitions of the term cause of action it can
be said that, cause of action implies only those material facts that have
led to the case in hand. Since the present case revolves around the
validity of the contract, the cause of action or any part there of, cannot
be said to be risen in Delhi, as both the offer and acceptance of the
contract took place in Panaji, Goa and not in Delhi.

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1.2 The Delhi Commercial Court, lacks the pecuniary

jurisdiction to try the case

It is humbly submitted that the subject matter of this case is beyond
the pecuniary limits of this Honble Court.
It is submitted that this court was established under,
THE COMMERCIAL COURTS, COMMERCIAL DIVISION
AND COMMERCIAL APPELLATE DIVISION OF HIGH
COURTS ACT , 2015,
A commercial court under this Act is the one dealing with commercial
disputes
The present dispute is covered as a commercial dispute within the
meaning of Section 2 (c) (i) of the said Act2. (1) In this Act, unless the context otherwise requires,
(c) Commercial dispute means a dispute arising out of
(i) Ordinary transactions of merchants, bankers, financiers and
traders such as those relating to mercantile documents, including
enforcement and interpretation of such documents;
Pecuniary jurisdiction of a commercial court is defined under S.6 of
the Act as following;
6. 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

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per the provisions of sections 16 to 20 of the Code of Civil Procedure,

1908.
Specified value for the purpose of this Act is defined under Section 2
(1) (i) as following
Specified Value, in relation to a commercial dispute, shall mean
the value of the subject-matter in respect of a suit as determined in
accordance with section 12 which shall not be less than one crore
rupees or such higher value, as may be notified by the Central
Government.
Though the upper limit of the jurisdiction is not specified in the Act
expressly, it can be implied for Section 7 of the Act.
7. All suits and applications relating to commercial disputes of a
Specified Value filed in a High Court having ordinary original civil
jurisdiction shall be heard and disposed of by the Commercial
Division of that High Court.
Now, as per THE DELHI HIGH COURT (AMENDMENT) ACT,
2015, by virtue of its section 2, an amendment was made to sub
section (2) of Section 5 of the Delhi High Court Act, 1966 whereby
which its pecuniary jurisdiction was raised from rupees twenty lakhs
to rupees two crores, thus conferring upon it the original jurisdiction
in cases where the subject matter is above worth of rupees two crore.
Section 2 of The Delhi High Court (Amendment) Act,2015 is
reproduced below:
2. In sub-section (2) of section 5 of the Delhi High Court Act, 1966,
for the words
rupees twenty lakhs, the words rupees two crore shall be
substituted.

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It is humbly submitted that after combined reading of Section 2 of

The Delhi High Court (Amendment) Act, 2015, and S. 2 (1) (i) of
THE COMMERCIAL COURTS, COMMERCIAL DIVISION AND
COMMERCIAL APPELLATE DIVISION OF HIGH COURTS ACT ,
2015, and S. 7 of THE COMMERCIAL COURTS, COMMERCIAL
DIVISION AND COMMERCIAL APPELLATE DIVISION OF
HIGH COURTS ACT , 2015, it can be inferred that the jurisdiction to
try suits with the monetary value of the subject matter of Rupees two
crores or higher lies exclusively with the commercial division of the
Delhi High Court.

Since, the subject matter in the current case is no way under 2 crores,
as the relief sought is for release of the shares which amount for more
than 15 crores, the present suit lies far beyond the jurisdiction of this
Honble Court.
Thus, it is contended that, this Honble Court lacks the pecuniary
jurisdiction to try this case.

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2. That the Contract was successfully brought into

existence and does not suffer from any defect of validity.
It is humbly submitted that the contract entered upon between the
plaintiff and the defendant for the grant of the loan is perfectly valid
and does not suffer from any issue of validity.
S.10 of THE INDIAN CONTRACT ACT,1872, says following about
the elements of a valid contract.
Section 10 - All agreements that are made by people competent to
contract, with free consent, for a lawful object and lawful
consideration and not expressly declared to be void are contracts.
Thus, in order for a contract to be valid and enforceable, it must have
the following elements:
1. The parties must be competent.
2. Consent must be free.
3. Object must be lawful.
4. Consideration must be lawful.
5. It must not be expressly declared to be void.

It is humbly submitted that all the elements are duly present in the
contract in this case. The contract was a result of proper offer by the
defendant, which was in turn properly accepted by the plaintiff. Both
the parties were competent at the signing of the Contract. Both the
object and consideration are lawful within the meaning of THE
INDIAN CONTRACT ACT, 1872. And the contract was not expressly
declared to be void.

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However, it might be contended by the plaintiff that because the

plaintiff was intoxicated at the time of signing of the contract, the
contract is void ab initio and thus not enforceable.
The provision which deals with the issue of such drunkenness is
clearly laid out in S.12 of the INDIAN CONTRACT ACT,1872.
S.12 reads as thus:
12. What is a sound mind for the purposes of contracting.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 interests." A
person who is usually of unsound mind, but occasionally of sound
mind, may make a contract when he is of sound mind.
Illustrations:
(a) A patient in a lunatic asylum, who is, at intervals, of sound mind,
may contract during those intervals.
(b) A sane man, who is delirious from fever, or who is so drunk that he
cannot understand the terms of a contract, or form a rational
judgment as to its effect on his interests, cannot contract whilst such
delirium or drunkenness lasts.
Illustration (b) to S.12 thus clearly lays out that when a person is
drunk while signing of a contract, the contract shall be declared
invalid only if the person was so drunk that he was unable to
understand the terms of the contract or to form a rational judgement
as to its effect on his interests.
As for the burden of proof and the degree of proof required to show
that the drunkenness lead to such unsoundness of mind that the
plaintiff was impaired in his judgement while singing the contract, the
authorities are very clear on this point.

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1. Kanhaiyalal v. Har Singh5, AIR 1944 Nag 232.

The test of unsoundness of mind is whether a person is incapable of
understanding the business concerned and of forming a rational
judgment as to its effect upon its interest.
2. Mohd Yakub v. Abdul Kuddus6, MANU/BH/0090/1922: AIR 1923
Pat 187.
Unless a person is adjudged as of unsound mind by inquisition, there
is always a presumption of sanity. Therefore, a person who alleges
unsoundness of mind must prove sufficiently enough to satisfy his
case. Mere weakness of mind is not sufficient proof of unsoundness of
mind.
3. Ram v. Lalji7 ILR 8 Cal 149.
Although it is necessary to prove utter mental infirmity or congenital
idiocy in order to constitute unsoundness of mind, yet it is for the
Plaintiff to establish that the person was incapable of understanding
business and of forming a rational judgment as to its effect.
4. Kamala v. Kaura8 15 IC 404.
When a person owing to drunkenness and debauchery was quite
incapable of understanding the contract made by him and of forming a
rational judgment as to its effect upon his interest is held to be of
unsound mind and such a contract under the Indian law in view of
Section 11 must be held to be void contract. But the onus is upon the
person who alleges that due to extreme drunkenness, he was incapable
of understanding the contract made by him.
Thus, the defendant submits that the onus to prove that the
drunkenness affected the reasoning of the plaintiff so severely that he
was not able to understand the terms or the consequences of this
contract rests upon the plaintiff.

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The defendant further submits that even though the evidence shows
that the plaintiff had consumed 8 alcoholic beverages prior to signing
of the contract; it cannot be shown beyond ordinary doubt that that
such consumption affected his rationale to the adverse. Moreover, the
conduct of the plaintiff before signing of the contract affirms that he
was in his senses and capable of making rational judgement at the
time of signing the contract as only a man with reasonable control
over his mind would be able to conceive of taking a loan.

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3. That the Contract in issue is not a wagering contract, and

thus enforceable in its entirety.

It is submitted that the Contract which took place between the parties
in Goa for the granting of loan is in no way a wagering contract.
The term wagering contract has not been defined anywhere in THE
INDIAN CONTRACT ACT,1872. S.30 of ICA merely renders
agreements by the way of wager void.
Section 30 in The Indian Contract Act, 1872
30. Agreements by way of wager, void.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 any wager is made.
Exception in favour of certain prizes for horse-racing.This section shall not
be deemed to render unlawful a subscription or contribution, or agreement to
subscribe or contribute, made or entered into for or toward any plate, prize or
sum of money, of the value or amount of five hundred rupees or upwards, to be
rewarded to the winner or winners of any horse-race.
Section 294A of the Indian Penal Code not affected.
Nothing in this section shall be deemed to legalize any transaction connected
with horse-racing, to which the provisions of section 294A of the Indian Penal
Code (45 of 1860) apply. Nothing in this section shall be deemed to legalize
any transaction connected with horse-racing, to which the provisions of section
294A of the Indian Penal Code (45 of 1860) apply."

Thus, S.30 merely says that agreements by way of wager shall be void
and no suit shall lie in any court for recovery of anything alleged to be
won on wager, or entrusted to any person to abide the result of any
game or other uncertain event on which any wager is made.
As to whether the contract between the parties
constitutes a wagering contract or not?

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As per Pollock and Mulla, the two most important

essentials of a wagering contract are
A) Uncertainty of the event - Uncertainty in the minds of the parties
about the determination of the event in one way or other is necessary.
A wager generally contemplates a future event; but it may even relate
to an event which has already happened in the past, but the parties are
not aware of its result or the time of its happening.
B) Equal chances of gain or loss to the parties - There is no wager if
there are no mutual chances of gain or loss, each party should stand to
win or lose. If one party wins and there werent any chances of them
losing, then in that case there is no wager.
In this contract,
There was neither any uncertainty as the loan
repayment and the forfeiture of surety in case of failure
to repay was already decided, nor can it be said that
there were equal chances of gain or loss to the parties
as the loan was essentially required to be paid back.
Moreover, in the similar case of Rajshree Sugars &Chemicals Limited v Axis
Bank Limited9
In March 2008, Axis Bank and Rajshree Sugars have been fighting a legal
battle over the foreign exchange derivatives contract, sold by the Bank to the
company, thereby resulting in huge losses for the company estimated to be
around Rs.46-50 crores. The company had refused to make any loan
repayment to the bank contending that the contract was a wagering deal, and
hence untenable on such grounds. The court answered this issue in the negative
and considered the agreement as a simple loan agreement and thus enforceable.

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Thus, the present contract is simply a loan agreement

and by no ways a wagering agreement and thus not
void and is perfectly enforceable.

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3. The injunction should not be granted against the

defendant from selling majority of the shares of the
company in the present case
It is humbly submitted that any injunction granted in
the present case would be bad in law and would
severely affect the rights of the defendant.
The defendant had acquired the shares of the plaintiff
in a legal way and thus upon forfeiture the defendant
stands as the owner of the shares.
The defendant humbly submits that, since he is the
legal owner of the shares he is free to dispose the same
in any manner he may please, provided it is not
contrary to the law.
It is further submitted that in case the injunction is
granted it would be highly inconvenient to the
defendant and the company A&M Pvt. Ltd. as the
contract for sale of the shares has already been entered
upon on 04/10/2016.

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PRAYER

WHEREFORE, in the lights of the facts used, issues

raised, arguments advanced and authorities cited, it is
most humbly and respectfully prayed that this Hon'ble
court may be pleased to adjudge and declare that:
1. This Honble Court does not have the jurisdiction to
try the present case, thus this case is not maintainable
in this Court and is liable to be dismissed with costs.
2. The Contract be enforced in its entirety.
The court may also be please to pass any other order,
which this Hon'ble court may deem fit in the light of
justice, equity and good Conscience.

All of which is most humbly prayed

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Counsel for the Defendant.