3RD INTER SEMESTER MOOT COURT COMPETETION- 2014

Before
THE HONBLE HIGH COURT OF BOMBAY, BOMBAY

IN ACCORDANCE WITH THE ORIGINAL CIVIL SUIT (C.S No.

/2007)

Reliance Constructions Company (RCC) (Plaintiff)

Vs
New Sahara Consultancy Company (NSCC) (Defendant)

Most respectfully submitted to the Honble Chief Justice and other Judges of High Court of
Judicature of Bombay

MEMORIAL ON BEHALF OF:

THE PLAINTIFF
COUNSEL APPEARING ON BEHALF OF:
THE PLAINTIFF

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TABLE OF CONTENTS
Table of Contents.(i)
Index of Authorities(ii-iii)
Acts(ii)
Books & Articles (ii-iii)
Cases.(iii)
Websites............(iv)
Abbreviations(iv)
Statement of Jurisdiction................(1)
Statement of Facts...(2)
Issues Involved.(3)
Summary of Arguments..(4-5)
Arguments Advanced(6-19)
Issue 1(6-7)
Issue 2..........(8-10)
Issue 3(11-12)
Issue 4(13-15)
Issue 5(16-17)
Issue 6(18-19)
Prayer.(20)
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INDEX OF AUTHORITIES

Acts:

1. Indian Contract Act, 1872

2. Code of Civil Procedure,1908
3. Law of Tort

Books:

1. Pollock & Mullas revised and edited by Nilima Bhadbhade, 14th Edition: Indian
Contract Act, 1872
2. Dr. R.K Bangias: Indian Contract Act
3. Avtar Singhs: Contract and Specific Relief Act
4. M.C Bhandaris: Laws of Contract
5. Universals: Concise Commentary The Indian Contract Act, 1872 (9 of 1872) With
6.
7.
8.
9.

Exhaustive Case Law

M.C. Kuchhals: Mercantile Law
Dutt, revised by H.K Saharay: Dutt on Contract-The Indian Contract Act, 1872
Dr. R.K Bangias: Law of Tort
Ratanlal and Dhirajlals: The Law of Torts

Articles:

1. Fordham Law Review, Volume 62|Issue 1

2. Construction Articles: Nathan Chapman, Lee C. Davis and W. Henry Parkman
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3. Force Majeure and the Performance Excuse: Babatunde Osadare

4. Impact of Force Majeure on Contracts: P.C Markanda

Cases:

1. Associated Cinemas of America Inc. v. World Amusement Company

2. Supreme Court of Minnesota, (1937) 201 minn. 94
3. K & G Construction v. Harris 164 A.2d 451(md.1960)
4. M & W Masonry Constr, Inc. v. head 562 P.2d 957, 961-62(Okla. Ct. app. 1976)
5. Morgan v. Singley 560 S.W. 2D 746 (ex. Civ. App. 1977)
6. Crest Communication Ltd v. State Bank of India 1.2003 3 Mh LJ 163
7. V.V. Gupta v. New Delhi mc AIR 2006 DEL 1035(NOC)
8. Hindustan Construction Co. Ltd v. State of Bihar (1999) 8 SCC 436 : AIR 1999 SC 3170
9. AT Brij Paul Singh v. State of Gujarat(1984) 4 SCC 59 : AIR 1984 SC 1703
10. Pannalal Jankidas v. Mohanlal AIR 1951 SC 144, 153: 1950 SCR 979: 53 BOM LR 472
(1951) 21comp cas 1
11. Hadley v. Baxendale (1854) 9 Ex 340
12. New York Times Co. v. Sullivan(1964)
13. D.P Choudhary v. Manjulata AIR 1997 Raj. 170
14. S.N.M Abdi v. Prafulla Kumar Mohanta AIR 2002 Gawahati 75.
15. Toepfer V. Cremer (1975) LLOYDS REP 118
16.
Bhagwan Das Metals Ltd v. M/S Raghvendra Agencies
17. Ganga Saran v. Ram Chandra Ram Gopal AIR (1952) SCC 9
18. A.P V. Associated Engg. Enterprises AIR 1990 AP 294

Websites:

1. www.lexisnexis.com
2. www.indiankanoon.com
3. www.advocatekhoj.com
4. www.vakilno1.com
5. www.manupatra.com
6. www.outlaw.com
7. www.wikipedia.org
8. www.law-dictionary.com
9. www.mondaq.com
10. www.legalmatch.com
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Abbreviations:

1. NSCC: New Sahara Consultancy Company

2. RCC: Reliance Constructions Company
3. CPC: Civil Procedure Code
4. ICA: Indian Contract Act
5. AIR: All India Reporter
6. SCC: Supreme Court Cases
7. Co.: Company
8. Inc.: Incorporation
9. Ltd.: Limited
10. SC: Supreme Court
11. Sec.: Section

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STATEMENT OF JURISDICTION

The Honble High Court of Bombay has jurisdiction in the instant case under Section 6, Section
9, Section 15 and Section 20(a) of the Code of Civil Procedure, 1908.
Section 6 of the CPC, 1908
Pecuniary Jurisdiction Same in so far as is otherwise expressly provided, nothing herein
contained shall operate to give any court jurisdiction over suits, the amount or value of the
subject matter of which exceeds the pecuniary limits(if any) of its ordinary jurisdiction.
Section 9 of the CPC, 1908
The court shall (subject to the provisions herein contained) have jurisdiction to try all suits of
civil nature excepting suits of which their cognizance is either expressly or impliedly barred.
Section 15 of the CPC, 1908
Every suit shall be instituted in the court of lowest grade competent to try it.
Section 20(a) of the CPC, 1908
Subject to the limitations aforesaid, every suit shall be instituted in 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 suits, actually or voluntarily resides, or carries on business, or personally
work for gain.

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STATEMENT OF FACTS
1. NSCC is a growing private equity firm with an annual turnover of Rs. 200 crore for the fiscal
year 2005-2006. It is an Indian Company with its base in Mumbai. RCC, also an Indian
Company is a reputed name in the real estate industry. Several building contracts for top
corporate houses have been executed by it for years.
2. NSCC & RCC entered into a contract to build a corporate house for NSCC by December 2006
with the total cost of the project Rs. 60 crore, payable in four equal tranches. A bank guarantee,
which was 50% of the value of contract or Rs. 30 crore was also required to be furnished by
RCC in favour of NSCC to cover any breach on their part.
3. The construction work was started as per the schedule in Oct, 2005 and on 10th June 2006 a
fire broke out & caused severe damage to building and thereby delaying the work. A committee
setup found that reason of fire was the position of machinery kept by RCC, but it was not
concluding whether RCC was at fault or not. It also stated that there would be at least 20%
increase in cost of completion of contract and who would bear the extra cost was to be decided in
a meeting which was never held.
4. After completion of project in March 2007, RCC claimed last tranche of payment and Rs 5
crore as additional cost for delay and asked NSCC to refer to clause 11 & 12 which stated RCC
will not be liable for any delay or damaged and further RCC can levy charges in case where
delay occurred due to circumstances outside of the control of RCC
5. NSCC stated, RCC has failed to perform his side of contractual obligations and the delay has
caused loss to then and thats why they claimed Rs 50 lakhs and invoked the bank guarantee on
30th Mar, 2007 and collected Rs 50 lakhs from the bank.
6. On 20th may 2007 RCC filed a Civil Suit in the Bombay HC, claiming Rs15 crore pending of
final tranche of payment, Rs 5 crore for additional cost arose as consequence of accident, Rs50
lakh amount collected by NSCC under bank guarantee, interest on all these amount and Rs 5
crore as compensation of loss arising from libelous statement made by CEO of NSCC alleging
RCC to have performed in bad faith. The matter is fixed for final hearing in the Bombay HC.
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ISSUES INVOLVED

1234-

Whether there is a breach of contract?

Whether withholding of final tranche of payment by NSCC justified?
Whether NSCC had right to invoke bank guarantee?
Whether RCC is entitled to damages caused due to delay in construction and breach

of contract?
5- Whether RCC is entitled to compensation for libelous statement?
6- Whether RCC is liable for consequential loss that arose due to delay in completion
of construction?

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SUMMARY OF ARGUMENTS

ISSUE 1- Whether there is a breach of contract?

There is a breach of contract on part of NSCC, as it failed in performing its part of contractual
obligation promised under the contract. It had materially breached the contract by withholding
final tranche of payment, because terms of contract mentioned that payment would be made to
RCC as soon as construction of corporate house was completed.

ISSUE 2- Whether withholding of final tranche of payment by NSCC is justified?

The withholding of final tranche of payment by NSCC was not justified because reasons for
withholding were not reasonable and just. Withholding was in contravention of terms of the
contract, as terms mentioned the time of payment to be made. And as per terms of contract RCC
had completed the project.

ISSUE 3- Whether NSCC had right to invoke the bank guarantee?

NSCC had no right to invoke bank guarantee as bank guarantee was furnished by RCC to cover
breach of contract on their part. There was no fault and breach of contract on part of RCC rather
RCC had performed its part of contractual obligation promised under the contract, thus the
invoking of bank guarantee was wrong as per terms of the contract.

ISSUE 4- Whether RCC is entitled to damages caused due to delay in construction and
breach of contract?

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RCC is entitled to damages caused due to delay in construction and breach of contract because
there was a breach of contract on part of NSCC and RCC had performed its part of contractual
obligation promised under the contract, the non payment for which had put RCC at complete loss
and also suffered loss due to withholding.

ISSUE 5- Whether RCC is entitled to compensation for libelous statements?

RCC is entitled to compensation for libelous statement because it is a reputed company in the
real estate industry and the defamatory against it was published in a popular magazine under an
article containing interview of CEO of NSCC. The libelous statement was false and defamatory
and was made in bad faith. This proved to be injurious for RCC

ISSUE 6- Whether RCC is liable for consequential loss that arose due to delay in
completion of construction?
RCC is not liable for any consequential loss fire broke out by reason of force majeure and RCC
was not at fault for delay and fire. There was no breach on part of RCC thus not liable for any
actual or consequential losses and NSCC had knowledge of fire and delay.

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ARGUMENTS ADVANCED

1. Whether there is a breach of contract?

It is humbly submitted before honble High court that there is a breach of contract by NSCC as it
failed to perform his part of promise under the contract. The terns of the contract mentioned that
NSCC is required to make final settlement as soon as the project was completed.
On 15th September 2005 NSCC and RCC signed the contract that provided:
NSCC will make payment in four equal tranches of Rs 15 crore each, in October-2005,
February-2006, june-2006. The final settlement was to be made in December-2006, when the
project was completed and was handed over to NSCC.
The construction was finally completed in march-2007, three months behind the schedule. The
final tranche of payment (15 crore) was withheld by NSCC till the construction was complete on
march 1,2007, RCC sent a letter to NSCC claiming the last tranche of payment ,but in reply to
this letter NSCC refused to make final tranche of payment to RCC, though the construction was
completed.
Section 37 of Indian Contract Act, 1872:
Obligation of parties to contract.-the parties to a contract must either perform, or offer to
perform their respective promises, unless such performance is dispensed with or excused under
the provision of this act, or of any other law.
Therefore there is breach of contract on part of NSCC. The breach of contract is defined as
follows in case of Associated Cinemas of America Inc. v. World Amusement Company1:
1

Supreme court of Minnesota, (1937) 201 minn. 94

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A breach of contract occurs when a party thereto renounces his liability under it, or by his own
act makes it impossible that he should perform his obligation under it or totally or partially fails
to perform such obligation.
1.1 Renounciation of liability by NSCC
As per the contract agreement NSCC was liable to make final settlement to RCC on completion
of construction of corporate house. But in violation of terms and condition of contract, NSCC
refused to make final tranche of payment, on completion of construction on non-justifiable
grounds.
1.2 Partial failure to perform obligation imposed under the contract
As per definition of breach of contract, the failure in performing obligation may be total or
partial under the contact. Thus NSCC partially failed to perform its part of obligation imposed
under the contract by non-payment of final settlement to RCC. Thus resulting in breach of
contract.
1.3 Refutation made upon contentions of RCC was based upon non-justifiable grounds
NSCC refuted the contentions made by RCC by stating that construction had not been completed
as per schedule agreed under contract and due to delay in construction it had suffered loss of 50
lakhs as a rental charges of leased office premise. But these reasons for non-performing of his
part of promise were absolutely non-justifiable due to following reasons:
A. NSCC was acquainted with fire in the building and the delay that was supposed to be
caused.
B. NSCC showed his negligence towards deciding the fault of RCC for fire in building.
C. NSCC had knowledge of delay, and the contract was voidable at his option, but he did not
take any action at that time and allowed the continuing of contract.

2. Whether withholding of final tranche of payment by NSCC is justified?

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It is humbly submitted before the honble high court that the withholding of final tranche of
payment by NSCC was not at all justified. The terms and condition of contract were worded as
below:
On 15th September 2005 NSCC and RCC signed the contract that provided:
NSCC will make payment in four equal tranches of Rs 15 crore each, in October-2005,
February-2006, june-2006. The final settlement was to be made in December-2006, when the
project was completed and was handed over to NSCC.
As per the terms of the contract NSCC was required to make final tranche of payment as soon as
the construction of corporate house was completed.
The construction of corporate house was completed by RCC in March 2007 three months behind
the schedule. Where RCC was not responsible for delay as its fault was not proved by the
investigating committee. Therefore on completion of construction RCC is entitled to final
tranche of payment as per terms of the contract. Thus withholding of final tranche of payment by
NSCC where substantial performance of promise has taken place , is totally non-justifiable.
According to Fordham law review2, article 5 it has stated:
Sometimes the withholding of payment will be considered to be a breach of the contract .the
terminology will remain the same, however even though the withholding party is also
technically a breaching party. In a limited number of situations the withholding party will
withhold payment without any breach or justification by the other party.
Under the above article court examined issues of withholding by applying Doctrine of
Constructive condition and Material breach.
2

Volume 62 issue 1. The problem of withholding in response to breach: a proposal to minimize risk in continuing
contract. William J. Geller

Court examine issue of withholding usually do so by applying the doctrine of constructive

condition, under which each contracting partys duty to perform a contractual obligation is
constructively conditioned on the other partys substantial performance of the prior obligation.
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Under the contract if a party fails to substantially perform the contract when its performance is
due the party has materially breached the contract. In event of a material breach the constructive
condition of performance has not occurred. The injured party then has a right to cancel the
contract and terminate the remaining executory obligation of each side. The injured party may
then also sue the breaching party to recover damage incurred as a result of total breach of
contract. An example of the operation of this doctrine is provided by K & G Construction v.
Harris3
As per this doctrine of constructive condition and material breach following deductions can be
made:
1
2

There is no failure of substantial performance of contract by RCC.

The delay that occurred due to accidental fire was an excusable delay, as it was not in
control of RCC to avoid such accidental fire such delay cannot be termed as failure of

3
4
5

substantial performance of contract.

No fault of RCC could be concluded by the committee set up to investigate fire.
Therefore there is no material breach by RCC in this case.
Thus when there is no material breach and the performance of contractual obligation has
been substantially rendered by RCC. Now it is the duty of NSCC to perform his part of
contractual obligation.

Thus it can be concluded on the basis of above doctrine that withholding of final tranche of
payment by NSCC is not justified.
In case of M & W Masonery Constr, Inc. v. Head4:
The contractor improperly withheld payment of sub-contractor that had substantially
performed. Therefore it was held if a material breach does not precede a withholding;
3

164 A.2d 451(md.1960)

562 P.2d 957, 961-62(Okla. Ct. app. 1976

the withholding itself is considered a breach.

The Fordham law review, article 5 had also made a certain conclusion regarding withholding
when justified.
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This is a second standard used by court allows withholding when the finder of facts determines
that the withholding is justified. Court applying this have approved jury instruction that treat the
determination of whether a party was justified in withholding payment as entirely question of
facts.
In case of Morgan v. Singley5 , according to facts of case the contractor was justified in
withholding payment of subcontractor.
Considering the facts of the case the withholding of payment by NSCC was not justified for the
following reasons:
1. The substantial delay in the completion of construction of corporate house was due to fire
that broke out in the incomplete structure was accidental and was out of control of RCC
to avoid it.
2. No fault of RCC could be concluded by the committee of officers of NSCC & RCC set
up to investigate fire.
3. NSCC had knowledge of fire and substantial delay but no action was taken by NSCC for
recovery of losses and for further performance of contract at that moment.
4. NSCC did not take any initiative in deciding fault of RCC which was recommended by
investigating committee neither it hold a meeting in which it was to be decided as to who
is to bear extra cost.
5. NSCC allowed the further performance of contractual obligation on part of RCC without
any objection and further condition.
6. As per the promise made under the RCC performed its contractual obligation and the
construction was finally completed in March 2007.
5

560 S.W. 2D 746 (ex. Civ. App. 1977)

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3. Whether NSCC had right to invoke bank guarantee?

It is humbly submitted before honble high court that NSCC had no right to invoke bank
guarantee except only in case of breach of contract on part RCC, a per the terms of contract
agreement. There was no breach of contract by RCC, thus the invoking of bank guarantee by
NSCC in the instant case is wrong and RCC is entitled to compensation.
The terms of contract stated that:
RCC was required to furnish bank guarantee6 in favor of NSCC to cover breach of contract on
their part, which was 50% of the value of contract or Rs. 5 crore.
As per terms of contract NSCC was entitled to invoke bank guarantee only in case of breach of
contract on part of RCC. There was no breach of contract by RCC, thus NSCC had no right to
invoke bank guarantee furnished in favor of NSCC to cover breach.
In Syndicate Bank v. Vijay Kumar7 , it is well settled that:
Bank guarantee is an autonomous contract. It is in common parlance that the issuance of
guarantee is what a guarantor creates to discharge liability when the principal debtor fails in his
duty and guarantee is in the nature of collateral agreement to answer for the debt,
Taking into consideration the facts of the case, the invoking of bank guarantee by NSCC was
non-justified for following reasons:
3.1 Bank guarantee was furnished by RCC in favor of NSCC to cover breach, if occurs
The bank guarantee was furnished by RCC in favor of NSCC to cover breach on part of RCC
thus the breach was condition attached to guarantee. NSCC was entitled to invoke bank
guarantee only in case of any breach on part of RCC. There was no breach of contract by RCC,
therefore invoking of bank guarantee was non-justifiable.
6

Guarantee-Section 126 of ICA, 1872, states that a contract of guarantee is a contract to perform the promise or
discharge the liability of third person in case of his default.
7
AIR 1992 SC 1066.
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In Crest Communication Ltd v. State Bank of India8:

The contract was performed and accepted to the extent of 100% satisfaction and full payment
made, an attempt to encash the bank guarantee was stayed.
V.V. Gupta v. New Delhi MC9, the plaintiff was allowed relief of injunction where no breach of
contract or loss could be proved, where terms of guarantee required such condition.
Hindustan Construction Co. Ltd v. State of Bihar10, since a bank guarantee represents an
independent contract between bank and beneficiary both of them are bound by its term and they
are extremely material.
3.2 RCC performed its part of contractual obligation promised under the contract
RCC performed its part of contractual obligation promised under the contract. Thus there was no
breach of contract on part of RCC. Therefore invoking of bank guarantee by NSCC was
absolutely wrong which was furnished for the mere purpose of covering loss from breach of
contract.
3.3 Delay due to fire was by reason of force majeure cannot amount to breach of contract
Delay that occurred due to fire in completion of construction of corporate house was caused by
reason of force majeure11, the unforeseeable circumstances which were not under the control of
contractor to avoid. Therefore such delay cannot amount to breach of contract and invoking of
bank guarantee for such reason is non justifiable by NSCC.
8

1.2003 3 Mh LJ 163
AIR 2006 DEL 1035(NOC)
10
(1999) 8 SCC 436: AIR 1999 SC 3170
11
Force Majeure- Standard clause found in construction and supply contracts, it exempts the contracting parties from
fulfilling their contractual obligations for causes that could not be anticipated and/or are beyond their control. It
essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the
control of the parties, such as a war, strike, riot, crime, or an event described by the legal term act of God (such as
hurricane, flooding, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations
under the contract. In practice, most force majeure clauses do not excuse a party's non-performance entirely, but
only suspends it for the duration of the force majeure.
9

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4. Whether RCC is entitled for damages caused due to delay in construction and breach of
contract?
It is humbly submitted before honble high court that RCC is entitled to additional charges of Rs.
5 crore for delay in construction for the following reasons:
1. The delay in construction was by reason of force majeure, the fault of RCC was not
concluded by investigation committee.
2. The meeting was supposed to be held for deciding that who shall bear the extra cost of
completion which would increase by atleast 20% due to loss by fire but the meeting was
never convened by NSCC.
3. The contract clause 11 & 12 states the following:
11.0 RCC will not be liable for any loss or damage arising out of the work carried out
under this contract.
12.0 further more RCC is entitled to levy additional charges (I) extra work is required to
prepare project before handing over the finished project.(II) increase in costs arising from
delay in completion of project, where delay occurs from cause outside the contract of
RCC.
Therefore in absence of any fault and any meeting for deciding that who shall bear the extra cost
the clause 11 & 12 of contract will be referred here. Thus in light of clause 11 & 12 RCC is
entitled to additional cost caused due to delay in construction. As clause 12 mentions that RCC is
entitled to levy additional charges for increase in cost arising from delay in completion of project
where delay occurred from causes outside the contract of RCC.
4.1 RCC is entitled to damages caused due to breach of contract
RCC is entitled to damages claimed in suit filed, as there is a breach of contract on part of
NSCC. The Indian Contract Act, 1872 provides for specific provision relating to relief which can
be claimed by injured party from breaching party who had failed in performing its contractual
obligation or a promise made under the contract. Such provision can be read as follow:

Section 73- Compensation for loss of damages caused by breach of contract:

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When a contract has been broken, the party who suffers by such breach is entitled to receive
from the party who has broken the contract, compensation for loss or damages caused to him
thereby, which naturally arose in usual course of things from such breach or which parties knew,
when they made the contract , to be likely to result from breach of it.
In a case of AT Brij Paul Singh v. State of Gujarat12, the Supreme Court came to the conclusion
that:
Since works and building contracts are undertaken only with a view of earning profits, the
party committing the breach would be liable for contractors loss in terms of expected profits.
PATANJALI SASTRI J of Supreme Court observed in Pannalal Jankidas v. Mohanlal13:
That the party in breach must make compensation in respect of the direct consequences flowing
from breach and not in respect of loss or damage indirectly or remotely caused.
Section 73 incorporates two rules of Hadley v. Baxendale14:
This section clearly lays down two rules related to whether compensation is recoverable for any
loss or damage:
1. Arising naturally in usual course of things from breach, or
2. Which the parties knew at the time of contract as likely to result from breach.
On basis of section referred above and various court decision quoted, it can be said that RCC is
entitled to damages caused by breach of contract. For the following reasons:

12

(1984) 4 SCC 59: AIR 1984 SC 1703

AIR 1951 SC 144, 153: 1950 SCR 979: 53 BOM LR 472 (1951) 21comp case 1
14
(1854) 9 Ex 340
13

4.2 Failure of NSCC in making final tranche of payment to RCC, after completion of
project (breach of contract)
The contract terms mentioned that NSCC will make final settlement when the project was
completed. But when project was completed and RCC claimed for its final payment the NSCC
refused to make payment and withheld the final tranche of payment for non justifiable reasons.
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Therefore resulting in breach of contract by not fulfilling the contractual obligation imposed
under the contract and failed in performing the promise made under the contract.
4.3 RCC performed his part of contractual obligation and any non-payment by NSCC
would bring RCC in loss
The building contract undertook by RCC in completion of its construction RCC the contractor
had incurred many costs in construction such as labour cost , material cost , machinery cost,
equipment cost etc. apart from it lots of effort and time on project and had also borne extra cost
which occurred due to the fire which was force majeure. In case of non-payment of final
settlement to be paid on completion of project promised as per contract by NSCC would put
RCC to a great loss and would upset many a settled expectation of RCC. Therefore RCC is
entitled to all compensation and damages due to breach of contract including interest on all
amount for wrongly withholding its payment.

5. Whether RCC is entitled to compensation for libelous statement?

It is humbly submitted before the Honble court that RCC is entitled to compensation for libelous
statement made by NSCCS CEO in an interview published in a popular business magazine.
RCC is an Indian company, a real estate contractor and a reputed name in the real estate industry.
The publication of an article containing an interview with CEO of NSCC in a popular business
magazine as to how the contract entered with RCC was performed in a bad faith, resulted in
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defamation of RCC, which is a libel and caused a great harm to reputation and name of RCC in
the business world. Therefore RCC is entitled to compensation for loss
due to defamation caused by NSCC.
5.1 Defamatory statement was published in a popular business magazine
The defamatory statement against RCC was published in a popular business magazine under an
article containing an interview with CEO of NSCC. Such a defamatory statement had a vast
adverse impact on the reputation and name of RCC established in real estate industry
RCC is a reputed name in the real estate industry15 and has executed several prestigious building
contracts for top corporate houses over the years. Such a defamatory statement against RCC
resulted in lowering the reputation and name of RCC, for which it took years for establishing
such name and reputation by the hard work and efforts.
In case of New York Times Co. v. Sullivan16, the U.S Supreme court found:
The New York times guilty of libel for printing an advertisement that criticized Alabana
officials.
In D.P Choudhary v. Manjulata17,
It was that all defamatory words are actionable per se and in such a case general damages will
be presumed.
15

Moot Proposition (2)

(1964)
17
AIR 1997 Raj. 170
16

In S.N.M Abdi v. Prafulla Kumar Mohanta18, it was held that:

It is not necessary that the statement need not show a tendency of imputation to prejudice the
plaintiff in the eye of everyone in the community or all of his associates.
5.2 Statement was false and defamatory
The statement made by CEO in his interview about the performance of contract of RCC was a
false statement because no where it was found that RCC performed his contract in a bad faith.
RCC completed its project as per promise made under the contract and the delay which occurred
due to fire was by reason of force majeure for which RCC was not at fault. Thus the statement
was false and defamatory lowering its reputation and name.
5.3 The statement was injurious
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The statement made by CEO of NSCC in his interview was injurious to the reputation and name
of RCC in the real estate industry as RCC was a reputed name in the real estate industries and
has executed various prestigious building contracts. Any such statement made in respect of RCC
will result in a fall of its business and its overall reputation in the real estate industry.

18

AIR 2002 Gauhati 75.

6. Whether RCC is liable for consequential loss that arose due to delay in completion of
contract?
It is humbly submitted before the Honble court that RCC is not liable for any consequential loss
that arose due to delay in completion of construction because the delay was not deliberately
caused.
The fire that broke out in the incomplete structure was by reason of force majeure i.e., due to
unforeseen circumstances which could not have been avoided after due care and caution and
such circumstances were out of control of RCC. Thus when there was no breach and fault on part
of RCC, it cannot be made liable for any loss.
The Indian contract act, 1872 provides for specific provision for relief in form of compensation
and damages enshrined under section 73.but such relief can only be sought only in case of breach
of contract and no other circumstances.

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Considering the facts of the instant case, it can be said RCC is not liable for any consequential
loss for the following reasons:
6.1 RCC was not responsible for fire and subsequent delay in completion of construction
RCC was not responsible for fire that broke in an incomplete building because it was by reason
of force majeure; the unforeseen circumstances could not have been avoided anticipated by RCC.
It was not under control to avoid such circumstances. Thus the delay in completion of
construction of corporate house was not deliberately caused by RCC. Thus it cannot be made
liable for consequential loss considering it breach of contract.
In Toepfer V. Cremer19: fire broke out, it was held that:
Contactor was not responsible for extra cost, presence of force majeure.
19

(1975) Lloyds Rep 118

In Bhagwan Das Metals Ltd v. M/S Raghvendra Agencies20 ,held:

Non- availability of relays was force majeure hence no special damage could be awarded.
In another case Ganga Saran v. Ram Chandra Ram Gopal21:
Plaintiff not entitled for any special damages on non supply of relays on promised time
because reason of delay was force majeure.
6.2 NSCC had knowledge of fire and subsequent delay to be resulting due to fire, but no
step was taken immediately
NSCC had knowledge of fire and delay, it knew that by reason of fire the work would be
substantially delayed, but at that time no step and action was taken by NSCC which amounted to
its acquiescence for delay. So, he could not claim any consequential loss which arose due to
delay, as he waived his right at time when the incident took place.
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In State of A.P V. Associated Engg. Enterprises22:

Accepted site for construction out of time without giving notice of intention to sue for
consequences of delay no compensation was recoverable.
6.3 No fault, no breach of contract, thus no actual or special damages could be claimed by
NSCC.
No fault and breach of contract on part of RCC was there thus NSCC is not entitled to any kind
of damages.
20

C.S No., 392 OF 1998

AIR (1952) SCC 9
22
AIR 1990 AP 294
21

PRAYER

In the light of the issues raised, arguments advanced and authorities cited, may this Honble
Court be pleased to:

1. Pass an order against NSCC to pay the sum of Rs. 15crores, the amount of final tranche
of payment, Rs 5crores for the extra cost that was caused due to delay in construction, Rs
50lakhs being the amount collected as bank guarantee and interest on these amounts.

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2. Pass an order asking NSCC to compensate RCC for making libelous statements against
its reputation.

3. Declare that RCC was not at fault and NSCC made default in relation to abiding with the
terms of the contract.
AND
Pass any other order that it deems fit in the interest of Justice, Equity, and Good Conscience.
And for this, the Plaintiff, as in duty bound, shall humbly pray.

COUNSELS ON BEHALF OF THE

PLAINTIFF

MEMORIAL ON BEHALF OF THE PLAINTIFF