TEAM CODE: LL-10

1ST NATIONAL ADR TOURANMENT

IN THE MATTER OF THE ARBITRATION

BETWEEN:

PRIME CONSTRUCTION PVT. LTD……………………….(CLAIMANT)

VS
ANTYLIA CERAMIC PVT. LTD………………………....(RESPONDENT)

BEFORE THE ARBITRAL TRIBUNAL

APPOINTED BY THE INDIAN DISPUTE RESOLUTION CENTRE IN
NEW DELHI.

MEMORIAL FOR THE RESPONDENT

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 TABLE OF CONTENT

I. INDEX OF AUTHORITIES………………………………………………………..…3
II. STATEMENT OF JURISDICTION…………………………………………………..4
III. STATEMENT OF FACTS…………………………………………………………….5
IV. ISSUES RAISED……………………………………………………………………...7
V. SUMMARY OF ARGUMENTS………………………………………………………8
VI. ARGUMENTS ADVANCED………………………………………………………..10
a. ACTIONS TAKEN BY THE CLAIMANT TANTAMOUNTS TO BREACH
OF CONTRACT.………………….……………………………………….....10
b. COMPENSATION DEMANDED BY THE RESPONDENT IS JUST, FAIR
AND REASONABLE AND ARISES DUE TO THE ACT OF BREACH OF
CONTRACT BY THE CLAIMANT.………………………………………...14
c. DETENTION OF PROPERTY OF THE CLAIMANT UNDER SECTION
17(1)(ii)(b) OF THE ARBITRATION AND CONCILIATION
ACT…………………………………………………………………………..18
d. NEED FOR THE PRINCIPLE OF EX AEQUO ET BONO…………………20
VII. PRAYER……………………………………………………………………………..21

2
 INDEX OF AUTHORITIES

CASES:

1. Rixon Electronics, Inc. v. U.S., 536 F.2d 1345 (Ct. Cl. 1976).
2. Bishamber Nath Agarwal v. Kishan Chand (1989), AIR 1990 All 65.
3. Satya Pal Anand v. State of Madhya Pradesh and Ors, [Civil Appeal No.6673 of 2014].
4. Citi Bank N A v. Standard Chartered Bank, Appeal (civil) 7426 of 1996.
5. Polymat India P. Ltd. & Anr vs National Insurance Co. Ltd. & Ors., Appeal (civil) 4366
of 1999.
6. K. Narayan Kurup v. Sankaranarayanan AIR 2000 Ker 296.
7. Maula Bux v Union of India 1970 SCR (1) 928.
8. Indian Oil Corporation vs Lloyds Steel Industries Ltd. 2007 (4) ARBLR 84 Delhi.
9. Forward Foundation& Ors. Vs. State of Karnataka & Ors. (2014) AIR.
10. Sundaram Finance Ltd vs P.Sakthivel, C.R.P.(MD).No.2013 of 2018.
11. M/S Tata Advanced Systems Limited vs M/S. Telexcell Information.
12. SBI v. Ericsson (India) (P) Ltd., (2018) 16 SCC 617.
13. Swaran Kaur vs State of Punjab & Ors, CWP No.14045 of 2012.

STATUES:

➢ The Indian Contract Act, 1872.

➢ The Arbitration and Conciliation Act, 1996.

ARTICLES:

➢ https://www.upcounsel.com/define-contractual-obligations.
➢ https://www.bc-llp.com/can-sue-contractor-using-substandard-materials.
➢ https://www.taxmann.com/post/blog/what-is-discharge-of-a-contract-under-indian-
contract-act-1872-featuring-case-studies.

3
 STATEMENT OF JURISDICTION

The counsel of the Respondent has approached this Arbitral Tribunal by invoking clause 104
of the agreement which was signed by both parties, the Respondent and the Claimant. which
contains an arbitral clause:

(1) All disputes arising out of this contract shall be finally settled by the Arbitral Tribunal
appointed by the Indian Dispute Resolution Centre in New Delhi.

(2) The proceedings shall be conducted pursuant to the IDRC Domestic Arbitration
Rules,2019.

(3) The version of the rules binding will be on the date on which a request for Arbitration was
made.

(4) The Arbitral Proceedings shall be conducted by Three Arbitrators selected in accordance
with the IDRC Domestic Arbitration Rules, 2019 of the Indian Dispute Resolution Centre.

(5) The arbitration procedures, both written and oral, shall be conducted in English.

The proceedings shall be commenced under article 4 of the “IDRC Domestic Arbitration Rules,
2019” read with the section 7 of the Arbitration and Conciliation Act, 1996.

4
 STATEMENT OF FACTS

The Parties

Antylia Ceramic Pvt. Ltd. (hereinafter “Respondent”) is a prestigious manufacturer of ceramic

products. The company has been in the market since 1995, and earlier in 1999.

Prime Construction Pvt. Ltd. (hereinafter “Claimant”) is a construction company in New Delhi.

Facts of the case

In 1999, the respondent had hired Claimant for its Main Office Building. In the course of
construction, claimant had used a low-quality concrete, this unprofessional behaviour of the
Claimant led to the sour relations between the two parties. In September 2018, Respondent
started planning to expand the company by constructing its site in Mumbai. When the decision
was made, the type of concrete to be used was discussed with the greatest interest and concern.
The Management Board of the Respondent was asked to prepare reports with experts
containing the best products available in the market. Ultra-Dalmia concrete received the highest
rating from experts. The Respondent initially was reluctant to work again with a builder who
was not professional in the past and with whom the ties had curdled. After taking the
cognisance of economic benefit from the claimant’s offer, the respondent proceeded with the
offer. Protracted and drawn-out planning between both companies took place between
September 2018 and April 2019, the issue of the quality of the concrete was the centre point of
the negotiations. Therefore, respondent insisted on a written assurance that only Ultra Dalmia’s
concrete could be used in the construction process. Claimant was asked several times to
confirm this term and they confirmed the same as well. On 27th April 2019, Claimant entered
into a contract with the Respondent for the construction of the new site for the Respondent
2285 m² building consisting of office, warehouse and production spaces. Respondent had the
possession of 5000 m², situated at Peddar Road. The land was handed over to claimant.

Issue between the parties

The construction was conducted effectively and according to the time schedule until October
2019 when Ultra Dalmia Cement Pvt. Ltd. (hereinafter “Ultra Dalmia”) concrete production
got halted to labour unrest. Mr. Rishabh Pandya, Project Manager of the Claimant immediately
contacted Ultra Dalmia where he was informed that minimum time required for restoration of
supply is approximately 5 weeks. On 21st October 2019, when the Project Manager of the
Claimant contacted General Manager of the Respondent, Mr. Dravid Ganguly, he replied that
5
they would like to wait for Ultra Dalmia’s concrete since they are seeking only 5 weeks’ time.
However, he specified that no further time delay would be accepted. To the interpretation of
the respondent, the deferral as provided to the Claimant had the inherent connotation that after
the lapse of such 5 weeks only Ultra-Dalmia was to be used in the construction if there had
been any circumstances under which the product could not be procured, further deliberations
were warranted. On 30th November 2019, Ultra-Dalmia issued an official statement that there
had been a fire incident in their Plant and the warehouse and production place was destroyed.
All the pending orders were postponed by another 6 months. Repeating the same
unprofessional behaviour, the claimant, without taking any nod from the Respondent,
unilaterally decided to use the substitute concrete for the construction.

On 3rd August 2020, Claimant received an official communication from the respondent that
they felt cheated and did not want to continue with the Contract. Mr. Ganguly, he informed
that they discovered that a substitute concrete was being used instead of Ultra Dalmia’s
concrete, which tantamount to breach of contract. On 3rd August 2020, respondent took over
the construction site from the Claimant. Between August and September 2020, an exchange of
positions between both parties took place. While the claimant wanted to perform the balance
work according to the contract, respondents did not want to continue due to their repeated
unprofessionalism. The contract concluded between the parties contained a schedule
determining four work stages. Before August 2020, Claimant closed 1st stage and performed
95% of the 2nd stage. It was agreed in the contract that the claimant would be paid the total
amount of INR 53,20,00,000/- for the completion of the project. 1st stage was paid properly in
the amount of INR 10,00,00,000/-. According to the contract’s provisions the amount for the
2nd stage was INR 21,50,00,000/-. Claimant performed a significant part of the 2nd stage.
However, respondent denied further payment due to breach of contract. The Claimant is
demanding INR 30,00,00,000/- for completing a significant part of the 2nd stage of the project
and other construction material cost. However, respondent has denied any further payment to
claimants, as it is the view of the respondent that on account of a breach of contract as accord
on 3rd August 2020, which yields from the actions of the claimant, as they used the substitute
of Ultra-Dalmia. The Respondent hence is rightly demanding INR 45,00,00,000/- for charges
incurred in getting the remaining part of work done by another trustworthy Contractor.

6
 STATEMENT OF ISSUES

ISSUE 1:

ACTIONS TAKEN BY THE CLAIMANT TANTAMOUNTS TO BREACH OF

CONTRACT.

ISSUE2:

COMPENSATION DEMANDED BY THE RESPONDENT IS JUST, FAIR AND

REASONABLE AND ARISES DUE TO THE ACT OF BREACH OF CONTRACT BY THE
CLAIMANT.

ISSUE 3:

TO SECURE THE AMOUNT OF CONSTRUCTION FROM PRIME CONSTRUCTION

UNDER SECTION 17(1)(ii)(b) OF THE ARBITRATION AND CONCILIATION ACT,
1996.

ISSUE 4:

THE TRIBUNAL SHALL ACT AS AMIABLE COMPOSITEUR AND FOLLOW THE

PRINCIPLE OF EX AEQUO ET BONO UNDER SECTION 28(2) OF THE ARBITRATION
AND CONCILIATION ACT, 1996.

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 SUMMARY OF ARGUMENTS

ISSUE 1: ACTIONS TAKEN BY THE CLAIMANT TANTAMOUNTS TO BREACH

OF CONTRACT.

The Respondent humbly contends that it is clearly evident from the factsheet that the
Respondent asked the Claimant on a written assurance that only Ultra-Dalmia’s concrete could
be used in the construction process. A breach of contract occurs when one party in a binding
agreement fails to deliver according to the terms of the agreement. If one party deviates from
the terms of the contract, and the other party does not agree to this deviation and the deviation
is serious enough to make a real difference in the intended result of the contract, then the
deviating party is said to have breached the contract. Hence, it refers to the Claimant’s failure
or reluctance to carry out its contractual duties during the course of their performance and
ultimately breaches the contract.

ISSUE 2: COMPENSATION DEMANDED BY THE RESPONDENT IS JUST FAIR

AND REASONABLE AND ARISES DUE TO ACT OF BREACH OF CONTRACT BY
THE CLAIMANT.

It is presented before this Arbitral Tribunal that the Compensation demanded by the responded
(INR 45,00,00,000/-) is just fair and reasonable, and demanded in accordance with law
governing contracts i.e., Indian Contract Act 1972. The breach of contract by the Claimant is
the reason for demanding compensation, Respondent have incurred heavy losses and in order
to compensate for those damages INR 45,00,00,000/- is demanded, the damages are not only
actual but also consequential, moreover the Claimant through their actions have been showing
unprofessionalism while completing the project, they have neglected the major concerns of the
respondent regarding this project and have been working without even consulting the financers
of the project. The compensation demanded is fairly reasonable as multiple factors have been
kept in mind while formulating the amount, the damages incurred are not only actual but
consequential as well, and these consequential damages were fairly foreseeable.

8
ISSUE 3: TO SECURE THE AMOUNT OF CONSTRUCTION FROM PRIME
CONSTRUCTION UNDER SECTION 17(1)(ii)(b) OF THE ARBITRATION AND
CONCILIATION ACT, 1996.

It is humbly submitted before this Tribunal to secure the amount in dispute that is INR
45,00,00,000/- from the Claimant under Section 17(1)(ii)(b) of the Arbitration and Conciliation
Act, 1996. As the Respondent has been under economic pressure after the Claimant following
their unprofessional behaviour, independently decided to use a substitute of higher cost, also
compromising the quality of the construction. Thus, the Respondent humbly requests the
tribunal to do so.

ISSUE 4: THE TRIBUNAL SHALL ACT AS AMIABLE COMPOSITEUR AND

FOLLOW THE PRINCIPLE OF EX AEQUO ET BONO UNDER SECTION 28(2) OF
THE ARBITRATION AND CONCILIATION ACT, 1996.

It is humbly requested to the Tribunal to apply the principle of Ex Aequo Et Bono under section
28(2) of Arbitration and Conciliation act (1996), which held that the Arbitral Tribunal shall
decide Ex Aequo Et Bono or as amiable compositeur only if the parties have expressly
authorised it to do so. It confers on arbitrators the power to decide a dispute in accordance with
their sense of fairness and good conscience, instead of rigorously applying terms of a specific
body of law. The contract was executed between the Respondent and the Claimant for the
construction of Respondent’s commercial building. The Contract was executed after the
intensive negotiation between the Respondent and the Claimant in which the issue of quality
of concrete is the central and most important point of entire eight-month negotiations and by
using another substitute concrete even after confirming all the imperative terms of the contract
shows a very unprofessional behaviour of the Claimant in fulfilling their specific obligations
towards the contract. The principal of Ex Aequo Et Bono is ideally suited to resolving the
disputes between parties who are engaged in complex and long-term relationship in which the
law is either inadequately developed or unsuitable to resolve complex disputes and for the
present case it will favour both the parties to reach in a justiciable decision.

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 ARGUMENTS ADVANCED

ISSUE 1: ACTIONS TAKEN BY THE CLAIMANT TANTAMOUNTS TO BREACH

OF CONTRACT.

The Respondent humbly submits before this Arbitral Tribunal that using Ultra Dalmia’s
concrete was specifically mentioned in the contract. The terms of the contract were acceptable
by both the parties. The Claimant’s action of using substitute without the Respondent’s consent
amounts to the breach of the contract.

1.1 Using Ultra-Dalmia’s concrete was essence of the contract.

It is clearly evident from the factsheet that the Respondent asked the Claimant on a written
assurance that only Ultra-Dalmia’s concrete could be used in the construction process. “The
Claimant was asked several times to confirm this term and they confirmed the same as well”1.
The Claimant agreed to the terms of the contract before entering in it. It becomes more
important to specify this detail in the contract because the Claimant had previous records of
using substandard material in the construction and factsheet confirms the same2.

The best way to define contractual obligations is to say that they are the legal responsibilities
of each party involved in a contractual agreement. In a contract, both parties will exchange an
item or service of value, but certain expectations must be met in order for the exchange to be
properly completed. Such expectations will be defined by the terms of the contract. Failure to
meet these expectations by either party will in most cases mean a breach of contract, which
may result in damages being awarded to the non-breaching party. Thus, one’s contractual
obligations must be given great consideration3.

It is not unusual for construction contracts (or the plans and specifications incorporated into
them) to specify the manufacturer, brand, make, or model of the materials or products to be
used. On a public project, these specifications may appear in a bid request issued by the
government agency handling the project. Such “proprietary” or “restrictive” specifications may
be used for any number of reasons, including the safety or integrity of the finished project or
the preferences of the owner or architect. In general, there is no prohibition on including them

1
Factsheet, para 10.
2
Factsheet, para 7.
3
https://www.upcounsel.com/define-contractual-obligations.

10
in a contract or bid request. Therefore, insisting the Claimant to use Ultra-Dalmia’s concrete
fair, reasonable and completely legal.

According to a tribunal, “If a contractor can bind himself to build a snowman in August, it can
also bind itself to supply a brand name.”¹ A contractor, supplier, or vendor should heed
whatever the contract or project specifications require and make certain it is willing and able
to meet the specifications for the contract or bid price before agreeing to do so4.

In Bishamber Nath Agarwal v. Kishan Chand5, the Allahabad High Court had opined that when
an agreement specifies that a specific activities relating to a contract must be completed within
a certain period or manner, it must be performed in that manner or period only, and the parties
do not have the ‘right’ to perform it in their own way or time.

A detailed construction contract which specifies the nature, brand, type, or quality of materials
that a contractor must use for a particular project, the contractor must abide by the terms of that
contract. If a change needs to be made, all parties to the agreement should sign off on the
change in material selection and a written update to the contract should be made. If the
contractor simply substitutes in different materials without the consent of the other contracting
party, this could be considered a breach of contract6.

Hence, it refers to the Claimant’s failure or reluctance to carry out their contractual duties
during the course of their performance. It can also happen if a party fulfils its responsibilities
but refuses or fails to comply with the contract’s key terms and conditions.

1.2 The Claimant’s decision to use substitute without the Respondent’s consent.

The Respondent most respectfully submits that the Claimant instead of seeking a specific nod
from the Respondent, unilaterally decided to substitute Ultra Dalmia’s concrete with other
concrete available in the market7. This action of the Claimant tantamount to breach of the
contract.

In the case of Satya Pal Anand v. State of Madhya Pradesh and Ors. 8, it was stated that any
novation, rescission and alteration of contract, can be made only through bilaterally and with

4
Appeal of Meisel Rohrbau GmbH & Co., KG, ASBCA No. 35622, 94-1 B.C.A. (CCH) P26,530, 1992
ASBCA LEXIS 455, at *132050 (Armed Services Board of Contract Appeals Nov. 19, 1993) (quoting Rixon
Electronics, Inc. v. U.S., 536 F.2d 1345 (Ct. Cl. 1976)).
5
Bishamber Nath Agarwal v. Kishan Chand (1989), AIR 1990 All 65
6
https://www.bc-llp.com/can-sue-contractor-using-substandard-materials/
7
Factsheet, para 14.
8
Satya Pal Anand v. State of Madhya Pradesh and Ors, [Civil Appeal No.6673 of 2014].

11
the amicable consent of both the parties. The terms and conditions of a contract may be altered
but cannot be done unilaterally unless there exists any provision in the contract, or in any law,
or there is an implied acceptance through silence.

The Supreme Court in the case of Citi Bank N A v. Standard Chartered Bank9 held that
novation, recission, and alteration under Section 62 requires that both the parties should agree
to substitute, rescind or alter the existing contract with a new one. Such substitution, rescission
or alteration has to be done bilaterally. In the case of Polymat India P. Ltd. & Anr vs National
Insurance Co. Ltd. & Ors10, it was held that the terms of a contract cannot be varied without
the mutual agreement of the parties.

1.3 Both the actions of the Claimant lead to the breach of the contract.

A breach of contract occurs when one party in a binding agreement fails to deliver according
to the terms of the agreement. If one party deviates from the terms of the contract, and the other
party does not agree to this deviation and the deviation is serious enough to make a real
difference in the intended result of the contract, then the deviating party is said to have breached
the contract.

In contract law, a "material" breach of contract is a breach (a failure to perform the contract)
that strikes so deeply at the heart of the contract that it renders the agreement "irreparably
broken" and defeats the purpose of making the contract in the first place. The breach must go
to the very root of the agreement between the parties. If there is a material breach (sometimes
referred to as a "total" breach), the other party can simply end the agreement.

Straying from the project plans will often result in a material breach. Using substandard
materials (or materials that are obviously inferior to the ones required by contract) could result
in a material breach. Failing to make payment could cause a breach (more on payment disputes
below).

Whether the breach is a material breach or not, and the remedies available, will vary depending
upon the specifics of the substitution. If the contractor’s choice of replacement materials
renders the completed project substantially different than what was contracted for, then the
breach may be considered a material one.

9
Citi Bank N A v. Standard Chartered Bank, Appeal (civil) 7426 of 1996.
10
Polymat India P. Ltd. & Anr vs National Insurance Co. Ltd. & Ors., Appeal (civil) 4366 of 1999.

12
Even if your contract or bid specifications contain an “or equal” clause, be wary about using
substitutes, especially if safety, quality, or performance is – or even may be – a reason a certain
product is specified. A contractor, supplier, or vendor who deviates from the specifications
likely does so at its own peril. In the words of one Texas court, there is no law compelling him
to submit his bid, but, if he bids, he must execute his contract or respond in damages.

Discharge of a contract means to end a contract. Discharge of the contract can take place
through: (a) Death, (b) Insolvency, (c) Merger, (d) Lapse of time, (e) Unauthorised material
alteration11.

Section 37 of the Indian Contract Act,1872 provides that the parties to the contract are under
obligation to perform or offer to perform, their respective promises under the contract, unless
such performance is dispensed with or excused under the provisions of the Indian Contract Act
or of any other law.

Therefore, it is humbly requested before this Tribunal that all the actions of the Claimant are
unlawful and breaches the terms of the contract.

11
https://www.taxmann.com/post/blog/what-is-discharge-of-a-contract-under-indian-contract-act-1872-
featuring-case-studies/

13
ISSUE 2: COMPENSATION DEMANDED BY THE RESPONDENT IS JUST, FAIR
AND REASONABLE AND ARISES DUE TO THE ACT OF BREACH OF CONTRACT
BY THE CLAIMANT.

It is humbly submitted and strongly contended before this Arbitral Tribunal that the
compensation demanded by the Respondent is just, fair and reasonable and arises due to the
act of breach of contract by the Claimant. The compensation demanded is also in accordance
with law governing contracts i.e. Indian Contract Act 1872. When the decision regarding the
construction of a new site in Mumbai was made, the type of concrete to be used was discussed
with the greatest interest and concern12. The Management Board of respondent was to decide
the best available concrete in the market. Ultra-Dalmia concrete received the highest rating
from experts across India which was the reason that the contract specified that only Ultra
Dalmia concrete is to be used throughout the construction process13. Before entering into the
contract negotiations were held between the parties and it was assured by the claimant that they
would be using Ultra Dalmia Concrete only. Later on, the claimant disrespected the contract
which resulted into its breach, and this very breach authorizes the Respondent to be
compensated under section 7314 of the Indian Contract Act 1872.

2.1 Compensation demanded is for direct losses and in accordance with law.

It is humbly submitted before this Arbitral Tribunal that the Compensation demanded is in
accordance with law, Section 73 of the Indian Contract Act 1872 provides for compensation in
case of breach of contract. When a contract is broken, the party who suffers by such breach is
entitled to receive compensation for any loss or damage caused to him from the party who has
broken the contract15. When it was contracted between the parties that the concrete to be used
throughout the construction was only Ultra-Dalmia, even then the Claimant resorted to a
substitute, without even consulting the Respondent who were financing the project, the
Claimant decided to act on their own whims and fancies which. This very act resulted into
degradation of the quality of the material to be used in construction which was the focal point
of the contract, and the focal point for eight months of negotiations. Claimant are of the view
that their substitute was of better quality, even though Ultra-Dalmia was rated as the best
quality concrete by a number of experts across India. The contract was breached at the moment

12
Factsheet para 8
13
Factsheet para 8
14
Section 73 Indian Contract Act 1872: Compensation for loss or damage caused by breach of contract,
Compensation for failure of discharge obligation resembling those created by contract
15
K. Narayan Kurup v. Sankaranarayanan AIR 2000 Ker 296

14
the substitute was found to be used. The Claimant moved on with a substitute which was never
discussed between the parties, it is a legal obligation of the contractor in a contract to not move
ahead with any act without getting it assented by the other party, here the claimant has failed
to discharge the obligation those are created by the 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 provisions Indian Contract Act 1872, or of any other law 16 and
because these obligations were not complied with claimant become liable to compensate the
respondent.

Moreover Ultra-Dalmia had passed an official notice stating that all pending orders were
postponed till 6 months, the Claimant resorted to a substitute of so called better quality and
used that substitute for 8 months from the date on which Ultra-Dalmia passed the statement,
the claimant had a chance to resort back to Ultra-Dalmia but they decided not to and carried on
with the substituted material, even when they knew that only Ultra-Dalmia is to be used for
construction and this was the main concern of the respondent and the focal point of eight month
negotiations. This act of the Claimant resulted into completion of the major portion of the
project with a substituted material which was never advised by the respondent, and the quality
of which was not assured. This resulted into direct loss of the respondent, as of now 95% of
the second stage has been completed in which major construction has been performed by a
material which was not Ultra-Dalmia but a substitute which was never given a green flag by
the Respondent.

In Maula Bux case17 the court held that “It is true that in every case of breach of contract the
person aggrieved by the breach is not required to prove actual loss or damage suffered by him
before he can claim a decree, and the Court is competent to award reasonable compensation in
case of breach even if no actual damage is proved to have been suffered in consequence of the
breach of contract.”18 Thus the Respondent demand compensation for the direct losses
suffered.

2.2 Compensation demanded is reasonable and losses to be compensated for are also
consequences of the breach of contract.

16
Section 37 Indian Contract Act 1872: Obligation of parties to contract
17
Maula Bux v Union Of India 1970 SCR (1) 928
18
Reiterated in Indian Oil Corporation vs Lloyds Steel Industries Ltd. 2007 (4) ARBLR 84 Delhi

15
It is humbly submitted before the Arbitral Tribunal that the Compensation demanded is
reasonable in nature, and the losses are not only direct but also consequential of the breach of
contract. The material to be used was sin qua non19 of the contract, it had to be ultra dalmai
only and it was evident form the very conduct and concern of the respondent that if any other
material is used in construction it would tantamount to breach of contract and such breach has
to be compensated. Respondent emphasized on the quality of concrete because of the fact that
their previous experiences with claimant had not been very good, and the reason for the sour
relations was none other than a low-quality concrete used by the Claimant previously. When
the Claimant acted without taking a specific nod from the Respondent, they began to dishonour
the contract, as a result of which it became important for the Respondent to take over
construction site from the Claimant to prevent any further loss. It is because of the breach of
contract by the Claimant that now respondent is to find a new contractor, formulate new
stringent contract for which they need top notch lawyers who are to be paid in huge amounts.

Losses are of two types, one which is general damage arising out of breach of terms of
agreement and the other one is the apparent profit loss and expenditure incurred as the
consequence of breach, can be claimed by the aggrieved20, the expenditure incurred due to the
breach is the same that will be used in formulating a new contract and finding and financing a
new contractor, it is not going to be an easy job for the Respondent to bring contractor who
would like to work on an unfinished, half-baked business. Thus, the compensation of INR
45,00,00,000 /- is reasonable and consequential of the breach.

Moreover this very project was the beginning of expansion of respondent’s business into the
southern India, at no cost the Respondent could have compromised with the quality of the
material to be used in this project, it has been because of the Claimant’s actions that now the
project is at halt and a new contract is to formulated with a different contractor this delay in
time also puts Respondent at a disadvantageous position and also results in loss of profit that
could have been made.

2.3 Compensation demanded by the claimant is unreasonable

It is humbly submitted before this Arbitral Tribunal that the Compensation of INR
30,00,00,000/- contented by the claimant is purely unreasonable on several grounds. Firstly,

19
Sin qua non: The phrase sine qua non is Latin for “without which not.” When something is described as sine
qua non, it is a necessary or indispensable requirement. The phrase represents an essential element, component,
or condition of something else.
20
Forward Foundation& Ors. Vs. State of Karnataka & Ors. (2014) AIR.

16
Claimant has breached the contract by using a substitute without taking any specific nod from
the respondent who are the financer of the project, moreover when they had the opportunity to
resort back to the concrete of Ultra-Dalmia when Ultra-Dalmia had started their concrete
production after 6 month halt they never did the same

Secondly, the major portion of second stage of the project is completed using the substitute,
quality of which is unknown to the Respondent, the claimant used a substitute which was never
for once advised by the respondent. The performance of any promise may be made in any
manner, or at any time which the promisee prescribes or sanctions 21 in the present case the
Claimant failed to fulfil the promise in the manner prescribed resulting into breach and hence
Claimant is in no position to demand compensation but are there to compensate the
Respondent.

21
Section 50 Indian Contract Act 1872: Performance in manner or at time prescribed or sanctioned by promisee.
Illustration (f) Section 73 Indian Contract Act 1872: A contracts to repair B’s house in a certain manner, and
receives payment in advance. A repair the house, but not according to contract. B is entitled to recover from A the
cost of making the repairs conform to the contract.

17
ISSUE 3: TO SECURE THE AMOUNT OF CONSTRUCTION FROM PRIME
CONSTRUCTION UNDER SECTION 17(1)(ii)(b)

In the given matrix, the respondent humbly submits before this Tribunal, that the amount of
construction shall be secured from the Claimant in the form of assets or shares, under Section
17(1)(ii)(b) of the Arbitration and Conciliation Act, 1996. Section 17(1)(ii)(b) reads as “(b)
securing the amount in dispute in the arbitration”.

In the case of Sundaram Finance Ltd vs P.Sakthivel22, it was held that “Under the amended
Section 17 of Arbitration and Conciliation Act, Arbitral Tribunals are empowered to pass
orders as an interim measure of protection.

It is pertinent to mention here that the claimant had intentionally and unprofessionally
compromised the terms of the contract by using the substitute of Ultra-Dalmia, hence
amounting to breach of contract. In the light of the above events, the respondent is of the view
that the construction amount of INR 45,00,00,000 shall be secured from the claimant.

3.1 Due to Breach of Contract and non-completion of project according to the terms of
the contract, the Respondents have been facing a financial downturn.

As the Respondent is one of the growing names in the industry of tiles and decorative items,
and to expand its business, they decided to open a functioning building in Peddar Road,
Mumbai, which is considered to be one of the upscale areas of Mumbai and hence cost of
construction and the pressure to maintain a good reputation are both high. The Respondent
initially was reluctant to work again with a builder who was not professional in the past but
after taking the cognisance of economic benefit from the claimant’s offer, the Respondent
proceeded with the offer. On 21st October 2019 when the 5-week delay by Ultra-Dalmia was
communicated to Mr Dravid Ganguly, General Manager of the Respondent, he replied that they
would wait for 5 weeks but not any further. The Respondent apparently was of the view that if
under any unavoidable circumstance the product could not be procured further deliberations
were warranted. It is pertinent to mention here that anyone in this situation would have
reasonably comprehended that if the said product could not be delivered within 5 weeks, it
simply would open the avenue for further deliberation on persisting issue.

Following the same unprofessional behaviour, the Claimant unilaterally decided to use a
substitute and compromised the quality of construction. This act of the Claimant not only

22
Sundaram Finance Ltd vs P.Sakthivel, C.R.P.(MD).No.2013 of 2018

18
amounts to breach of contract but puts a fiscal burden on the Respondent. It is pertinent to
mention here that the delay in construction and higher cost of the substitute used has caused
the Respondents to turn to other general contractors for which the respondents are rightfully
demanding INR 45,00,00,000.

The Respondent humbly requests before this Tribunal to secure the amount of INR
45,00,00,000 from the claimant in the form of assets or shares, if the Tribunal is of the opinion
that the actions of the Claimants have amounted to breach of contract, then the secured assets
or the shares can later be liquidated to procure the said amount. Furthermore, in the case of M/S
Tata Advanced Systems Limited vs M/S. Telexcell Information23, the court had ordered an
interim relief on the counter claim of the Respondents, setting out a prima facie case and
showing a cause for irreparable loss to the Respondent.

In the case of SBI v. Ericsson (India) (P) Ltd24, The Arbitral Tribunal passed an order under
Section 17 of the Arbitration and Conciliation Act, 1996 restraining the Claimants and its heirs
from alienating, encumbering, transferring any of its assets without permission of the Arbitral
Tribunal. The reason given for passing the order is balance of convenience and irreparable
injury. The said order has been confirmed by the High Court under Section 37 of the Arbitration
and Conciliation Act, 1996.

23
M/S Tata Advanced Systems Limited vs M/S. Telexcell Information.
24
SBI v. Ericsson (India) (P) Ltd., (2018) 16 SCC 617

19
ISSUE 4: THE TRIBUNAL SHALL ACT AS AMIABLE COMPOSITEUR AND
FOLLOW THE PRINCIPLE OF EX AEQUO ET BONO UNDER SECTION 28(2) OF
THE ARBITRATION AND CONCILIATION ACT, 1996.

It is humbly requested to this Arbitral Tribunal to apply the principles of ex aequo et bono25
provided within the provisions of Arbitration and Conciliation Act 1996 i.e., Section 28(2)26.
It confers on arbitrators the power to decide a dispute in accordance with their sense of fairness
and good conscience, instead of rigorously applying terms of a specific body of law. The parties
through Ad Idem27 decided to take any dispute arising between them to Arbitral tribunal and
not to courts where laws are strictly and rigorously followed it was wanted by the parties that
the dispute resolution process should be amicable and easy and it should not be bound by any
strict norms or laws justice dispensed should be on the principles of ex aequo et bono because
the principal of Ex Aequo Et Bono is ideally suited to resolving the disputes between parties
who are engaged in complex relationship in which the law is either inadequately developed or
unsuitable to resolve complex disputes also if the operation of law will not be favourable to
both the parties to reach in a conclusion then this principle of taking decision in accordance of
equity and conscience will favour both the parties.

In the case of Swaran Kaur v State of Punjab & Ors28 , it was said that ‘a case to be decided ex
aequo et bono, overrides the strict rule of law and requires instead a decision based on what is
fair and just, given the circumstances.’. It is the need of the hour to approach the way of ex
aequo et bono which will be beneficial and in goodwill for both the parties. The Claimant and
the Respondent in clause 104 of the contract mutually decided to opt for Arbitration if any
dispute arose. This shows that the parties sought that Arbitration would be an amicable and
easy solution to any dispute rather than being bound by a strict order passed by a court hence
it is requested by arbitral Tribunal in the contract to deal the present case in the light of section
28(2) of the Arbitration and Conciliation Act 1996, while keeping in mind the concept of ex
aequo et bono and act as an amicable compositeur.

25
Black Law Dictionary definition of Ex Aequo Et Bono: It is a Latin term which means "according to the right
and good" or "from equity and conscience" or “it means a person who adopts a flexible approach brimful with
fairness and reality”
26
Section 28(2) of Arbitration and Conciliation Act 1996: The arbitral tribunal shall decide ex aequo et bono or
as amiable compositeur only if the parties have expressly authorised it to do so.
27
Black law dictionary definition of Ad idem: To the same point, or effect. Ad idem facit, It makes to or goes to
establish the same point. Bract, fol. 27b.
28
Swaran Kaur vs State of Punjab & Ors, CWP No.14045 of 2012

20
 PRAYER

Wherein, in the light of issues raised, arguments advanced and the authorities cited, the
Respondent humbly prays that this Tribunal adjudge that:

I. The actions of the Claimant amount to breach of contract.

II. The compensation demanded by the Respondent is reasonable.
III. The Claimant is liable to deposit in custody of the Tribunal, assets of itself, liquid or
otherwise, until the conclusion of these proceedings.
IV. The principal of ex aequo et bono should be used while delivering the award.
V. Reject every contention pleaded by the Claimant.

And pass any other order, direction, or relief that this Tribunal may deem fit in the interest of
justice, equity and good conscience.

Respectfully Submitted,

Counsels for the Respondent

21