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TABLE OF CONTENTS
Table of contents………………………………………… (i)
Index of Authorities…………………………………….(ii-iii)
List of Abbreviations……………………………………(iv-v)
Statement of Jurisdiction……………………………… (vi)
Statement of Facts……………………………………….(vii-viii).
Issues Raised…………………………………………….(ix)
Summary of Arguments…………………………………(x)
Arguments Advanced……………………………………(1-6)
ISSUE 1: - Whether the agreement entered into between HI & FFPL was
Valid?...............................................................................(1-2)
ISSUE 2:- Whether there was an ‘operational debt’ in existence with respect to
this case?...........................................................................(3-4)
ISSUE 3: Whether the High Court had erred by not appointing an Arbitration
Tribunal?...........................................................................(5-6)
PRAYER………………………………………............... (7)
INDEX OF AUTHORITIES
1. CASES REFERRED:
Dodsal Pvt. Ltd. vs Delhi Electric Supply ... on 16 January, 1983
Abdul Hameed vs Mohd. Ishaq on 26 April, 1974
K.Nagamalleshwara Rao And Ors vs State Of Andhra Pradesh on 14 March, 1991
TVS Interconnect Systems Pvt. Ltd. v. ORG Informatics Ltd. 120/2017
M/s Value Line Interiors Private Limited v M/s Shipra Hotels Limited
Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors
Prakash.K. vs M/S.Sriram Transport Finance ... on 16 July, 2008
M/S Swatantra Properties (P) Ltd. vs M/S Airplaza Retail Holdings Pvt.
Ifgl Refractories Ltd vs Lindsay International Pvt. Ltd on 22 January, 2019
2. STATUTES:
2
3. BOOKS:
The Constitution of India, 1950
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4. CONSTITUTUIONAL PROVISIONS:
Article 136- Special leave to appeal by the Supreme Court:
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its
discretion, grant special leave to appeal from any judgment, decree, determination,
sentence or order in any cause or matter passed or made by any court or tribunal in
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or
order passed or made by any court or tribunal constituted by or under any law
5. ONLINE DATABASES
1. Manupatra (www.manupatra.com)
4. LexisNexis – Legal
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LIST OF ABBREVIATION
ABBREVIATIONS ACTUAL TERM
HI Hogsmeade Intelligensia
SC Supreme Court
AND &
V Versus
HC High Court
SEC Section
ACT Arbitration and Conciliation
Act,1996
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ANR Anothers
ORS Others
GOVT Government
LTD Limited
STATEMENT OF JURISDICTION
The Hon’ble Court has the jurisdiction to hear the matter under Article 136 of Constitution of
Grimmauldia.
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its
discretion, grant special leave to appeal from any judgment, decree, determination,
sentence or order in any cause or matter passed or made by any court or tribunal
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or
order passed or made by any court or tribunal constituted by or under any law
STATEMENT OF FACTS
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Backdrop- On May 14, 2018,FFI incorporated Felix Felicis Private Limited (“FFPL” or the
“Company”) as a wholly owned subordinate of the company. Recently launched Nimbus Fit,
an activity tracker works at monitoring physical activity in order to enable the user to live a
more active/healthy life. FFPL collected user’s fitness related data, as a part of the working of
this activity tracker. Meanwhile, the Personal Draft Data Protection Bill 2018 (“PDP Bill” or
the “Draft Bill”) was prepared and submitted by a committee especially created by the
Grimmauldian legislature. The company’s board of directors felt that if the Bill was passed in
its current state, FFPL would have to make major changes in its business plans and may even
face harsh negative growth in the current financial year. FFPL approached HI to engage their
services and to seek their advice with respect to the obligations under the various provisions
of and for research and suggestions on the PDP Bill. The Agreement for Services between HI
and FFPL was signed and effective from September 1, 2018.It came with an arbitration
clause, in which all disputes arising from or regarding the agreement, including the validity
thereof, would be referred to arbitration by the parties, governed by the Arbitration and
Conciliation Act, 1996.Under the arrangements between FFPL and HI, HI was to assist FFPL
in petitioning the government on some of the obligations under the PDP Bill. HI, in order to
secure the desired results for FFPL, prepared an extensive advocacy campaign. On September
3, 2018, FFPL paid HI INR 50, 00,000 according to the agreement. On September 29, 2018,
HI also submitted its suggestions on the Draft Bill. By mid-November, a huge scandal broke
down through media reports, claiming that efforts were being made by lobbying firms to
influence law making across different sectors of governance. On December 14, 2018, it was
resolved between HI and all its clients that HI would be discharged of its obligations under
the respective contracts signed between the clients and HI. By December 31, 2018, many
demand notices were issued against HI seeking the refund of advances paid to it by different
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clients. HI refused to honour the demand notice and clarified that it does not owe any money
to any client. Later, in a press conference, FFPL stated that it considers its contract with HI
unenforceable and, respecting the suggestions of the government, will cease all professional
association with firms such as HI. It had a very negative impact on the reputation and
business of HI and EWI group. At the same time, FFPL had decided to pursue the recovery of
advance paid to HI. On March 1, 2019, FFPL sent a notice to HI, by registered post, an
acknowledgment due for the recovery of advance paid to them. HI did not respond to the
notice dated March 1, 2019.On March 12, 2019, FFPL filed an application before the NCLT
at Hogwarts, under Section 9 of IBC. Based on the grounds given in Section 9 and on a
perusal of the scheme of the Code, NCLT admitted the application filed by FFPL as an
operational creditor. Against this order of the NCLT, an appeal was preferred by HI under
Section 61 of the Code. The NCLAT upheld the decision of the NCLT. HI finally preferred
an appeal under Section 62 of the Code before the Supreme Court of Grimmauldia arguing
that it contains important question of law regarding the interpretation and scope of the term
operational debt under the Code. The apex court also stayed all proceedings in the matter
pending before the NCLT till the disposal of this appeal and ordered status quo to be
maintained as existed on March 12, 2019.
Present Case - On March26, 2019, HI sent a notice to FFPL, entreating the arbitration clause
under the contract dated September 1, 2018 and asked FFPL to appoint an arbitrator in
according to the contract. FFPL failed to appoint an arbitrator even after numerous reminders
by HI. Finally, on April 14, 2019, HI approached the High Court of Hogwarts under Section
11 of the Arbitration and Conciliation Act, 1996 praying to initiate arbitration between the
parties by appointing the tribunal as per the scheme of the Act. The High Court refused to
appoint the tribunal. Against this order, an appeal was immediately filed by HI in the
Supreme Court under Article 136 of the Constitution. Taking note of the single cause of
action and the common questions of law involved, Supreme Court decided to club both the
appeals.
ISSUES RAISED
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SUMMARY OF ARGUMENTS
ISSUE 1- Whether the agreement entered into between HI & FFPL was valid?
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The agreement entered between HI and FFPL is not valid and unenforceable. As the
agreement between them was to provide the services to FFPL from HI and to be advised in
respect to the obligations under the provisions of and for research and suggestions on the
PDP bill (Personal Draft Data Protection Bill, 2018) for which there will be two payments to
be done to HI. However, the government also made it clear that it does not support lobbying
and recognized it as a western import, where lobbying is an activity itself was branded as,
“against the public policy and law of Grimmauldia”. Therefore the agreement is not valid and
unenforceable according to the terms of the contract.
ISSUE 2-Whether there was an ‘operational debt’ in existence with respect to this case?
It is humbly contended before the Hon’ble Supreme Court of Grimmauldia that the
‘operational debt’ exist with respect to the agreement that was signed between FFPL and HI
which was effective from September 1,2018. The two payment respective to the
consideration of the agreement was to be done according to the agreement. According to the
agreement between the two parties it was mentioned before entering into the agreement that
the sum which was paid by FFPL on September 3,2018 was refundable advance to HI and
was subject to satisfactory and bona fide performances of its duties under the contract.
Therefore, FFPL has the right to recover the money which was given as a refundable amount.
ISSUE 3- Whether the High Court had erred by not appointing an Arbitration
Tribunal?
It is humbly contended that the High Court has not erred by not appointing the Arbitration
Tribunal. The agreement entered between HI and FFPL on September 1, 2018 was about to
engage their services with various provisions for research and suggestions on the PDP Bill
(Personal Draft Protection), 2018 was not valid and unenforceable as lobbying is an activity
which is against public policy pointed out by the government as the firms like HI, which
misrepresents and trap gullible technology enterprises into signing the contract.
there has been no valid contract between the parties. It is contended that the agreement dated
28-4-1969 being invalid and unenforceable.1
In the Agreement HI stated that they will deliver all reliable quality service and
considerations to FFPL to the best possible industry standards at all times during the tenure of
the agreement, in which the HI failed to do so. According to the section 23 of the Indian
contract act the agreement became invalid and unenforceable. By virtue of Section 23 of the
Contract Act the consideration or object of the agreement is unlawful and such an agreement
is void. A void agreement is, in the eye of law non-existent and does not confer any right on
the parties to the agreement.2
Lobbying is an activity which is against the public policy and against the law, for which it
was contended that HI has done it. It is against the public policy because its influencing firms
to make law across different sectors of governance. Section 23 of the Contract Act
adumbrates that the consideration or object of an agreement is lawful unless it is forbidden by
law, or is of such a nature that, if permitted, it would defeat the provision of any law; or is
fraudulent; or the court regards it as immoral or opposed to public policy. In each of
these cases, the consideration or object of an agreement is unlawful. Thus, every agreement
of the consideration or object of which is unlawful is void. The word "object" would mean
the purpose and design which is the object of the contracts; it is opposed to public policy if it
tends to defeat any provision of law or purpose of law, and it becomes unlawful and void
under s. 23 of the Contract Act. Section 23 is concerned with only the object or consideration
of the transaction and not the reasons or motive which prompted it.3
1
Dodsal Pvt. Ltd. vs Delhi Electric Supply ... on 16 January, 1983
2
Abdul Hameed vs Mohd. Ishaq on 26 April, 1974
3
K.Nagamalleshwara Rao And Ors vs State Of Andhra Pradesh on 14 March, 1991
ISSUE 2- Whether there was an ‘operational debt’ in existence with respect to this
case?
It is humbly contended before the Hon’ble Supreme Court of Grimmauldia that the
‘operational debt’ exist with respect to the agreement that was signed between FFPL and HI
which was effective from September 1,2018. The two payment respective to the
consideration of the agreement was to be done according to the agreement. The first payment
under this agreement shall be of INR 50,00,000 to be deposited in HI’s account within five
business days of execution of this agreement for the services which the HI will provide to
FFPL. The last payment shall be of INR 50,00,000, payable upon the passage of the Personal
Data Protection Bill(PDP).
According to the agreement between the two parties it was mentioned before entering into the
agreement that the sum which was paid by FFPL on September 3,2018 was refundable
advance to HI and was subject to satisfactory and bona fide performances of its duties under
the contract.On March 1, 2019, FFPL has sent a notice to HI, an acknowledgement due for
the recovery of advance paid to them, for which HI did not respond. FFPL has filed an
application after a limited period of time before the NCLT 4 at Hogwarts, under section 9 of
IBC5 (If the corporate debtor does not come up with a proper response or does not repay the
debt that they owe to the financial/operational creditor after they have received the demand
notice, the operational creditor can file a section 9 petition to the NCLT(The adjudicating
authority in this matter) to start the insolvency resolution process). FFPL has filed an
application as an “Operational creditor” which was admitted by NCLT. Following all the
terms and conditions of the agreement FFPL has deposited the requisite amount of money in
the HI’s account on time. In between of the agreement HI has discharged its obligation and
regarded as “company or firms which misrepresent and trap gullible technology enterprises
into signing unlawful contracts, a lesson”. Not only FFPL but the other firms with whom HI
4
National company law Tribunal
5
Insolvency and bankruptcy code,2016
has signed the agreement has issued numerous demand notices. Damsung, a firm has also
filed an application under section 9 of IBC, asking for the recovery paid by them to HI. This
proves of the amount paid by every firm was a refundable amount. Therefore, FFPL has the
right to recover the money which was given as a refundable amount as a operational debt.
In a case, a contract awarded to ORG by the BSNL, MOKA supplied materials to ORG and a
sum was due towards supply and MOKA initiated arbitration proceedings. MOKA assigned
all debts in relation to ORG to the petitioner. The arbitrator passed an award amount under
section 8 to the respondent-corporate debtor, i.e, ORG, and filed petition under section 9.It
was held that since amount claimed by MOKA from ORG was towards supply of material
and services, amount claimed by MOKA from ORG in arbitration proceedings was an
‘operational debt’.6
In another case, it was held that an entity that provided interior fitting work to a corporate
debtor is an operational creditor.7
The Tribunal also referred to the recent case of the Supreme Court in the matter, wherein it
was inter alia observed that "an 'operational debt" would include a claim in respect of the
provision of goods or services, including employment, or a debt in respect of payment of
goods or services, including employment, or a debt in respect of payment of dues arising
under any law and payable to the Government or any local authority".8 The Tribunal further
elucidated on the concept of 'Operational Debt' and observed that such debts arise out of
operation of the company/corporate debtor and the goods and services are essential for the
company/corporate debtor as a going concern.
6
TVS Interconnect Systems Pvt. Ltd. v. ORG Informatics Ltd. 120/2017
7
M/s Value Line Interiors Private Limited v M/s Shipra Hotels Limited
8
Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors
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ISSUE 3- Whether the High Court had erred by not appointing an Arbitration
Tribunal?
It is humbly contended that the High Court has not erred by not appointing the Arbitration
Tribunal. The agreement entered between HI and FFPL on September 1,2018 was about to
engage their services with various provisions for research and suggestions on the PDP
Bill(Personal Draft Protection), 2018 was not valid and unenforceable as lobbying is an
activity which is against public policy pointed out by the government as the firms like HI,
which misrepresents and trap gullible technology enterprises into signing the contract.
HI approached the High Court of Hogwarts under section 11 of the Arbitration and
Conciliation Act, 1996 prayed to appoint an arbitrator between the parties according to the
terms and conditions of the agreement.Under sub section 2 of Section 11 parties are free to
agree on a procedure for appointing the arbitrator or arbitrators. It is subject to sub section 6.
Under sub section (3) of Section 11, failing any agreement in terms of sub section 2, in an
arbitration with three arbitrators, each party could appoint one arbitrator and the two
arbitrators so appointed could appoint the third arbitrator. Under sub section 4, the Chief
Justice or any person or institution designated by him could make the appointment, in a case
where sub section (3) has application and where either the party or parties had failed to
nominate their arbitrator or arbitrators or the two nominated failed to agree on the third
presiding arbitrator. Sub section (6) provides that where under an appointment procedure
agreed upon by the parties, a party fails to act as required under the procedure or the parties
or the two appointed arbitrators fail to reach an agreement expected of them or a person
including an institution, fails to perform any function entrusted to him or it under that
procedure, a party may request the Chief Justice or any person or institution designated by
him to take the necessary measure, unless the agreement on the appointment procedure
provide other means of securing the appointment9. As stated above the agreement done
between the parties was unenforceable and against the public policy is not valid, therefore the
appointment of arbitrators cannot be done.
Another reason why the contract was not valid because according to the terms and conditions
of the agreement to provide all the servicers to FFPL and the considerations which the HI has
failed to do so and discharges all the obligations and duties regarding the contract. The
Arbitration clause of the agreement states that the disputes which will arise from or
regarding, including the validity thereof, would be referred to arbitration by the parties,
9
Prakash.K. vs M/S.Sriram Transport Finance ... on 16 July, 2008
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governed by the Arbitration and Conciliation Act, 1996. In case of any difference or dispute
arising between the parties herein or any of the terms and conditions contained herein, such
difference or dispute shall be referred to sole arbitrator. The provision of the Arbitration
and Conciliation Act, 1996 and any modification thereof shall be applicable for settlement of
dispute10. But there was no valid arbitration as the contract itself was unenforceable according
to section 23 of Indian Contract Act, 1862. The High Court has not erred by appointing the
arbitrator as there was no valid contract which results in no valid arbitration. This is the
reason why the High Court has stated that prima facie there was no valid arbitration in the
agreement.11
10
M/S Swatantra Properties (P) Ltd. vs M/S Airplaza Retail Holdings Pvt.
11
Ifgl Refractories Ltd vs Lindsay International Pvt. Ltd on 22 January, 2019
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PRAYER
Wherefore, in the light of the facts of the case, issues raised, arguments advanced and
authorities cited, the Hon’ble Supreme Court of Grimmauldia may be pleased to:
1. DECLARE, the agreement between the respondent and appellant is not valid, void
and unenforceable.
2. THAT, there is an ‘operational debt’ does exist according to the facts of the case.
3. TO HOLD, that the High Court had not erred by not appointing the arbitrator.
AND/OR
Render any other opinion that it deems fit in the interest of Justice, Equity and Good
Conscience.