Respondent - FINAL-HSF

TEAMCODE:
HS15D
7TH NUJS-HERBERT SMITH FREEHILLS NATIONAL

CORPORATE LAW MOOT COURT COMPETITION, 2015
O.S.A. No._____/2015
IN THE HIGH COURT AT CALCUTTA

The jurisdiction of this Court is
invoked under Clause 15 and
Clause 36 of the Letters Patent,
1865 r/w Rule 56 of the
Calcutta High Court Side Rules
(Original).
In this dispute between:

CELLTONE PLC
....
..Appellant
v.
1. INDMOBILE
TELECOMS
.Respondent 1
2. 5G
STAR
LIMITED
NETWORKS
LIMITED
Respondent 2
3. BAND
BANK
Respondent 3
4. M/S
DARSH
LEGAL
ASSOCIATES
Respondent 4
2015
-WRITTEN
SUBMISSION ON BEHALF OF THE
RESPONDENTS -
As Submitted to the Chief Justice & other

Companion judges of the Honble High Court
at Calcutta
-WRITTEN
RESPONDENTS-
-APPENDIX-
Page 1 of X
TA B L E O F C O N T E N T S
INDEX OF AUTHORITIES............................................................................................................i
LIST OF ABBREVIATIONS.........................................................................................................vi
STATEMENT OF JURISDICTION...............................................................................................ix
QUESTIONS PRESENTED..........................................................................................................xi
STATEMENT OF FACTS.............................................................................................................xii
SUMMARY OF PLEADINGS......................................................................................................xv
PLEADINGS AND AUTHORITIES..............................................................................................1
1.Whether IndMobile and 5G Star are liable for breach of Representations and Warranties under
the Share Acquisition Agreement?...................................................................................................1
1.That cancellation of the 5G license did not breach the Representation and Warranties under
the SAA....................................................................................................................................1
21.That discrepancies as to Average Return Per Unit (ARPU) did not result in a breach of
Representations and Warranties of the SAA............................................................................4
31.That Respondent 1 had the requisite title to sell the 9% shares to the Appellant.....................6
2.Whether Band Bank was obligated to release the escrow amount?.............................................9
12.That Respondent 3 does not have the requisite power or authority to decide whether the
SAA has been breached............................................................................................................9
2.That Respondent 3 is a dual agent and cannot act on unilateral instructions.........................10
32.That Respondent 3 fulfilled its duties as a trustee..................................................................11
42.That Respondent 3s actions were in accordance with the technical requirements prescribed
by the RBI..............................................................................................................................14
3.Whether M/s Darsh Legal Associates is liable for rendering an incorrect legal opinion?..........15
13.That Respondent 4 did not deliver an incorrect legal opinion...............................................15
23.That Respondent 4 cannot be held liable on the basis of the legal opinion...........................17
-WRITTEN
RESPONDENTS-
-APPENDIX-
Page 2 of X
3.That the Appellants claim is barred by the doctrine of unjust enrichment............................19

CONCLUSION/PRAYER FOR RELIEF......................................................................................20
APPENDIX......................................................................................................................................I
-WRITTEN
RESPONDENTS-
Page 3 of xv
-INDEX OF AUTHORITIES-
INDEX OF AUT HORITIES

CASES
1. A. L. Underwood Ltd. v. Bank of Liverpool & Martins (1924) 1KB 775 (CA)..............................4
2. Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. (1959) AC 133.......................15
3. Aiken v. Stewart Wrightson Members Agency Ltd. [1995] 2 Lloyds Rep. 618.............................11
4. Ashish Gupta v. IBP Co. Ltd. AIR 2006 Delhi 57.........................................................................10
5. Ayekam Angahal Singh v. Union of India, AIR 1970 Manipur 16...................................................5
6. Beatty v. Guggenhien Exploration Co. 225 N.Y. 380 at 386 (1919).............................................12
7. Bega Begum v. Abdul Ahad Khan AIR 1989 SC 272......................................................................2
8. Bristol& West BS v. Mothew [1988] Ch. 1, 17...............................................................................11
9. Canara Bank v.Canara Sales Corporation & Ors.AIR 1987 SC 1603...........................................3
10. Chairman, LIC v. Rajiv Kumar Bhasker, AIR 2005 SC 3087.........................................................3
11. Chandra Kumar Shah v.District Judge, Varanasi AIR 1976 All 328..............................................2
12. Commr. of Customs (Preventive) v. Aafloat Textiles (I) Pvt. Ltd. (2009) 11 SCC 18......................3
13. Cooper v. Phibbs (1867) LR 2 HL149............................................................................................5
14. Delhi Development Authority v. Skipper Construction (P.) Ltd. (1996) 4 Comp Cas. LJ 233........1
15. Devender Singh v. State of UP AIR 1987 All 306 (DB)..................................................................5
16. Dresser Rand S.A v. Bindal Agro Chem. Ltd. & Anr. AIR 2006 SC 871.........................................7
17. Edge v. Pensions Ombudsman [1998] 2 All ER 547.....................................................................13
18. Galli v. Metz 973 F.2d 145, 151 (2d Cir. 1992)...............................................................................4
19. Gobinda Chandra Ghosh alias G. Ghosh v. Abdul Majid Ostagar AIR 1944 Cal 163................12
20. Gopal L. Raheja of Mumbai, Indian Inhabitant & Sandeep G. Raheja of Mumbai, Indian
Inhabitant v. Vijay B. Raheja of Mumbai, Indian Inhabitant & Ors.2007(4) BomCR 288...........11
21. Gregg v. Cloney (In re Marriage of James & Dana Cloney), 110 Cal. Rptr. 2d 615, 623 (Cal. Ct.
App. 2001).......................................................................................................................................3
22. Hadley v. Baxendale [1854] EWHC J70.........................................................................................5
23. Hospital Products Ltd. v. United States Surgical Corporation Choice Inc. (1984) 156 CLR 41..12
24. Hyderabad Engineering Industries v. State of Andhra Pradesh(2011) 4 SCC 705........................7
25. In re Estate of Maxedon 946 P.2d. 104 (Kan. Ct. App. 1997).......................................................13
26. ITC Limited v. George Joseph Fernandes (1989) 1 SCR 469.........................................................5
27. Kantilal Vasanji Chheda v. Vrajesh Kantilal Patel &Ors. 2013 (2) BomCR 256.........................11
28. Liverpool City Council v. Irwin [1977] A.C. 239..........................................................................12
Page 4 of xv
29. Lucent Technologies v. ICICI Bank Ltd. 2010 (5) R.A.J 574..........................................................6
30. M.C Chacko. v. State Bank of Travancore (1969) 2 SCC 343.......................................................17
31. M.L. Subbaraya Settyv. M.L. Nagappa SettyAIR 2002 SC 2066..................................................12
32. Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536.......................................................19
33. Mancat Ram v. Delhi Development Authority AIR 1984 Delhi 246.............................................10
34. Mohammad Khan v. Ramnarayan Misra AIR 1956 Ori 156 (DB).................................................5
35. Morarji Premji Gokuldas v. Mulji Ranchhod Ved & Co. AIR 1924(Bom) 232..............................3
36. P.V. Shankara Kurup v. Leelavathy Nambiar AIR 1994 SC 2694.................................................13
37. Pushpa Katoch v. Manu Maharani Hotels Ltd. (2006) 131 CompCas. 42 (Del.)...........................8
38. R v. Kelly [1992] 2 SCR 170..........................................................................................................11
39. Re Jon Deauforte (London) Ltd. 1953 Ch. 131...............................................................................4
40. Royal British Bank v. Turquand (1856) 6 E & B 327......................................................................4
41. S Harnam Singh v. State (Delhi Admn.)AIR 1976 SC 2140............................................................2
42. S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 63 SCL 93 (SC)............................................1
43. S.P. Jain v. Kalinga Tubes Ltd. [1965]2 SCR 720...........................................................................9
44. Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs (2005) 3
SCC 738.........................................................................................................................................19
45. Shoshi Mohun Pal Chowdhary v. Nobo Kristo Poddar ILR (1874) 4 Cal 801...............................6
46. Siddhivinayak Realities Pvt. Ltd. v. Tulip Hospitality Services Ltd. AIR 2007 SC 1457................9
47. Soar v. Ashwell (1893) 2 QB 390..................................................................................................12
48. SPIC SMO, A Division of Southern Petrochemical Industries Corporation Ltd. v. Tamil Nadu
Electricity Board 2013(1) CTC 500................................................................................................4
49. T.C. Chacko v. Annamma AIR 1994 Ker 107...............................................................................12
50. Telco v. State of Bihar AIR 1965 SC 40..........................................................................................1
51. Tett v. PhoenixProperty & Investment Co. Ltd. (1986) 2 BCLC 149..............................................9
52. Turner Broadcasting System Inc. v. McDavid Et Al. 693 S.E. 2d. 873(Ga. Ct.App. 2010).............8
53. Union of India v. Bhimsen Walaiti Ram AIR 1971 SC 2295...........................................................7
54. United States of America v. Robert Lee Frick, Ellis Jay Pailet & Frank Harris 666 F. 2d 490....11
55. Utair Aviation v. Jagson Airlines Ltd. & Anr. 2012 (129) DRJ 630..............................................17
56. V.B. Rangaraj v. V.B. Gopalakrishnan AIR 1992 SC 453...............................................................8
57. Venkatachelam v. Ponnuswami, 1925 Mad 46: 82 IC 536............................................................11
58. Vodafone International Holdings B.V. v. Union of India & Anr. (2012) 6 SCC 613......................1
59. Williams v. Central Bank of Nigeria [2014] UKSC 10..................................................................12
Page 5 of xv
BOOKS
1. A. K. Majumdar & G. K. Kapoor, Taxmanns Company Law, Taxmann Publications Pvt. Ltd.,
New Delhi, 14th Edn., 2011.
2. A Ramayya, Guide to the Companies Act, Wadhwa and Company Nagpur, 15th Edn., Part I
2001.
3. Arthur Norman Field & Jeffrey M. Smith, Legal Opinions In Business Transactions at 1-3,
4.
5.
6.
7.
Practising Law Institute, 2nd Edn,. 2006.

Avtar Singh, Business Law, Eastern Book Company, Lucknow, 9th Edn., 2011.
Cheshire & Fifoot, Law of Contract, Oxford University Press, London, 5thEdn., 2006.
Dr. H.K. Saharay, Company Law, Universal Law Publishing Co., New Delhi, 6thEdn., 2012.
George W. Kuney, The Elements Of Contract Drafting with Questions and Clauses for
Consideration, Thomson West, 2nd Edn., 159-160, 2006.

8. H.G.Beale, Chitty on Contracts, Sweet & Maxwell, London, 31st Edn., Vol.1, 2012.
9. J. Beatson, Ansons Law of Contract, Oxford University Press, London, 28th Edn., 2002.
10. John McGhee, Snells Equity, Sweet & Maxwell, London, 13th Edn., 2000.
11. M.L.Tannan, Tannans Banking Law and Practice in India, India Law House, New Delhi, 20th
Edn., 2001.
12. N Gopalsamy, Corporate Governance The New Paradigm, Wheeler Publishing, New Delhi, 1st
Edn., 1998.
13. N.K.Jain, Corporate Laws, Deep & Deep Publications Pvt. Ltd., New Delhi, 2007.
14. Ormond, E. C., Robert Belchambers, J. H. Hechle, Maurice Remfry, & Bengal, High Court of
Judicature, The Rules of the High Court of Judicature at Fort William in Bengal (1914) on the
Original Side with the Relevant Charters and Acts, Butterworth and Co., Bombay, 4thEdn., 1940.
15. PC Markanda, The Law of Contract, LexisNexis Butterworths Wadhwa Nagar, Nagpur, 3 rd Edn.,
Vol. 1, 2013.
16. Richard Smerdon, Palmers Company Law Manual, Sweet & Maxwell, London, 1st Edn., 2000.
17. R.K.Abichandani, Pollock & Mulla on Indian Contract and Specific Relief Acts, N M Tripathi
Pvt. Ltd., Bombay, 11thEdn., Vol. 1, 1999.
18. SC Srivastava, Venkoba Raos Law of Agency, Butterworths, New Delhi, 3rd Edn., 2001.
19. Sudipto Sarkar & VR Manohar, Sarkars The Law of Civil Procedure, Wadhwa & Co., Nagpur, ,
11thEdn.,Vol. 1, 2006.
20. The Institute of Company Secretaries of India, Handbook on Mergers, Amalgamations &
Takeovers Law and Practice,Wolters Kluwer India Pvt. Ltd., 4thEdn, 2011.
21. T.S.Venkatesa Iyer, The Law of Contracts & Tenders, S.Gogia & Company, Hyderabad, 7th Edn.,
Vol. 1, 1999.
22. V Balakrishna Eradi, Consumer Protection Jurisprudence, LexisNexis Butterworths, New Delhi,
2005.
DICTIONARIES
Page 6 of xv
1. A. S. OPPE., WHARTONS LAW LEXICON, SWEET AND MAXWELL, NEW DELHI, 14TH EDN., 1997.
2. B. C. MITRA AND A. C. MOITRA, LEGAL THESAURUS, UNIVERSITY BOOK AGENCY, ALLAHABAD,
1997.
3. DICTIONARY OF WORDS AND PHRASES, SWEET AND MAXWELL, LONDON, 6TH EDN., VOL. 2, 2000.
4. HENRY CAMPBELL BLACK, BLACKS LAW DICTIONARY, 7TH EDN., 1999.
5. P. RAMANATHA AIYAR, ADVANCED LAW LEXICON, WADHWA AND COMPANY, NAGPUR, 3RD EDN.,
2005.
STATUTORY COMPILATIONS
1. The Letters Patent, 1865
2. The Rules of the High Court of Judicature at Fort William in Bengal on the Original Side,1914
3. The Companies Act, 2013
4. The Companies Act, 1956
5. The Prevention of Corruption Act, 1988
6. The General Clauses Act, 1897
7. The Legal Practitioners (Fees) Act, 1926
8. The Legal Practitioners Act, 1879
9. The Indian Contract Act, 1872
10. The Sale of Goods Act, 1930
11. The Indian Trusts Act, 1882
12. The Consumer Protection Act, 1986
13. The Code of Civil Procedure,1908
TREATIES
AND
REPORTS
1. Agreement Between The Government of The Republic of India and The Government of The
United Kingdom of Great Britain and Northern Ireland For The Promotion and Protection of
Investments, 14th March 1994.
2. Tribar Opinion Committee, Third-Party Closing Opinions: A Report of the Tribar Opinion
Committee, 53 Bus. Law, 642, 1998.
3. Restatement (Third) Of The Law Governing Lawyers 51(2), 2000.
NOTIFICATIONS/ CIRCULARS
1. RBI/2006-2007/413 A. P. (DIR Series) Circular No. 62.
2. RBI/2010-11/ 498 A. P. (DIR Series) Circular No. 58.
Page 7 of xv
3. Master Circular DBOD.AML.BC.No.22/14.01.001/ 2014-15 July 1, 2014.

4. General Circular No. 15/2013, dated 13-9-2013.
WEB SOURCES
1. www.scconline.com
2. www.westlaw.com
3. www.manupatra.com
Page 8 of xv
-LIST OF ABBREVIATIONS-
L I S T O F A B B R E V I AT I O N S
Abbreviation
Explanation
AC
Appeal Cases
AIR
All India Reporter
All
Allahabad
All ER
All England Law Reports
BCLC
Butterworths Company Law Cases
CA
Court of Appeal
Cal
Calcutta
Cal. App.
California Appellate Reports
C.B.N.S.
Common Bench Reports , New Series
Co.
Company/Corporation
CLR
Commonwealth Law Reports
Comp LJ
Company Law journal
CTC
Current Tamil Nadu Cases
CTR
Current Tax Reporter
DB
Division Bench
Del
Delhi
Del Ch
Delaware Chancery Reports
Del. Super. Ct.
Delaware Supreme Court
DLR
Dominion Law Reports
DLT
Delhi Law Times
DRJ
Delhi Reported Journal
E&B
Ellis and Blackburn's Queens Bench Reports
ECR
Excise and Custom Reports
EWCA Civ
England & Wales Court of Appeal Civil Division
EWHC (Comm.)
England & Wales High Court Commercial division
Page 9 of xv
EWHC (Ch.)
England & Wales High Court Chancery Division
Fed
Federal
F.2d.
Federal Reporter
Ga. Ct.App.
Georgia Court of Appeal
Guj.
Gujarat
HL
House of Lords
IC
Indian cases
ILR
Indian Law Reports
Kan Ct. App.
Kansas Court of Appeals
KB
Kings Bench
Lloyds Rep
Lloyds Law Reports
LR
Law reports
Ltd
Limited
MLJ
Madras Law Journal
NSW LR
New South Wales Law Reports
NY Misc Lexis Slip Op.
New York Miscellaneous Slip Opinion
Ori
Orissa
Punj
Punjab
QBD
Queens Bench Division
R.A.J.
Recent Arbitration Judgments
RBI
Reserve Bank of India
SC
Supreme Court
SCL
SEBI and Corporate Laws
SCC
Supreme Court Cases
SCR
Supreme Court Reports
Tex. Ct. App.
Texas Court of Appeals
UKSC
UK Supreme Court
Vol
Volume
Page 10 of
xv
WLR
Weekly Law Reports
-STATEMENT OF JURISDICTION-
Page 11 of xv
S TAT E M E N T O F J U R I S D I C T I O N
THE RESPONDENTS
SUBMIT TO THE JURISDICTION OF THE
BEEN INVOKED BY THE
APPELLANT
PATENT, 1865 R/W RULE 56
OF
UNDER CLAUSE
THE RULES
OF THE
15
HONBLE HIGH COURT

AND CLAUSE
HIGH COURT
36
WHICH HAS
OF THE
LETTERS
OF JUDICATURE AT
WILLIAM IN BENGAL ON THE ORIGINAL SIDE, 1914.

CLAUSE 15 OF THE LETTERS PATENT, 1865 WHICH READS AS UNDER:
Appeal from the Courts of original jurisdiction to the High Court in its appellate
jurisdiction: And we do further ordain that an appeal shall lie to the said High
Court of Judicature at Madras from the judgment (not being a Judgment passed in
the exercise of appellate jurisdiction in respect of a decree or order made in the
exercise of appellate jurisdiction by a Court subject to the superintendence of the
said High Court, and not being an order made in the exercise, of revisional
jurisdiction, and not being a sentence or order passed or made in the exercise of
the power of superintendence under the provisions of Section 107 of the
Government of India Act, or in the exercise of Criminal Jurisdiction) of one Judge
of the said High Court or one Judge of any Division Court, pursuant to Section
108 of the Government of India Act, and that notwithstanding anything
hereinbefore provided an appeal shall lie to the said High Court from a judgment
of one Judge of the said High Court, or one Judge of any Division Court pursuant
to Section 108 of the Government of India Act made (on or after the 1st day of
February 1929) in the exercise of appellate jurisdiction in respect of a decree or
order made in the exercise of appellate jurisdiction by a Court subject to the
superintendence of the said High Court, where the Judge who passed the judgment
declares that the case is a fit one for appeal; but that the right of appeal from other
judgments of the Judges of the said High Court or of such Division Court shall be
to Us, Our Heirs or Successors in Our or Their Privy Council, as hereinafter
provided.
FORT
-STATEMENT OF JURISDICTIONCLAUSE 36
OF THE
LETTERS PATENT, 1865
Page 12 of xv
WHICH READS AS UNDER:
Single Judge and Division Courts: And We do hereby declare that any function
which is hereby directed to be performed by the said High Court of Judicature at
Fort William in Bengal, in the exercise of its original or appellate jurisdiction, may
be performed by any Judge or by any Division Court thereof, appointed or
constituted for such purpose in pursuance of section one hundred and eight of the
Government of India Act, 1915 (a); and if such Division Court is composed of two
or more Judges are divided in opinion as to the decision to be given on any points,
such point shall be decided according to the opinion of the majority of the judges, if
there shall be a majority; but if the Judges should be equally divided, then the
opinion of the senior Judge shall prevail.
RULE 56
OF THE
RULES
OF THE
HIGH COURT
AT
CALCUTTA (ORIGINAL SIDE)
WHICH
READS AS UNDER:
Appeals from original jurisdiction to two Judges; and rehearing in case of

difference of opinion: Appeals from the decision of one Judge in the original
jurisdiction to two exercise of ordinary original civil jurisdiction shall be heard and
determined by at least two other Judges, and Judges; and the two Judges who
exercise the appellate jurisdiction differ in opinion, they may direct that the case
shall be re-heard before a Division Court consisting of themselves and some other
Judge or Judges, and if no such order be made, the decision shall be affirmed.
-QUESTIONS PRESENTED-
Page 13 of
xv
QUESTIONS PRESENTED
THE RESPONDENTS VERY RESPECTFULLY PUT FORTH TO THE HONBLE HIGH COURT AT
CALCUTTA, THE FOLLOWING QUERIES:
I.
WHETHER INDMOBILE
AND
WARRANTIES UNDER THE
II.
III.
5G STAR
ARE LIABLE FOR BREACH OF REPRESENTATIONS AND
SHARE ACQUISITION AGREEMENT?
WHETHER BAND BANK WAS OBLIGATED TO RELEASE THE ESCROW AMOUNT?
WHETHER M/S DARSH LEGAL ASSOCIATES IS LIABLE FOR RENDERING AN INCORRECT LEGAL
OPINION?
-STATEMENT OF FACTS-
Page 14 of xv
S TAT E M E N T O F FA C T S
IndMobile Telecoms Limited has been member of the Nifty 50 for the last two years. Mr. Sardar,
the chairman and managing director alongwith his family are its Promoters and hold 35% shares
in the company. In order to acquire the license granted by the Government for 5G mobile
networks, IndMobile set up a wholly owned subsidiary 5G Star Networks Limited in Kolkata.
After a highly competitive technical and financial evaluation, 5G Star bagged the licenses for
Kolkata and Hyderabad. The license agreements were executed between the Government and 5G
Star on November 1, 2013.

Meanwhile, IndMobile entered into a partnership with Celltone Plc via Vegus Investment
Advisors. Celltone appointed M/s. Lexman Associates and DBAD Partners, to advise it on the
legal, accounting and taxation aspects respectively.

During the due diligence, Mr. Gangston, the Celltone project manager leading the deal, in
pursuance of Celltones zero-tolerance policy towards corruption, quizzed intensively on the
process of licensing and was assured by 5G Star representatives that the award of license was
foolproof.
After conducting a background check on his own, Mr. Gangston came to knowthat in the past,
IndMobile had entertained government officials in expensive restaurants and showered them
with gifts. These revelations were of great concern to Mr. Gangston but he decided to keep the
matter to himself.
On October 3, 2013, a Share Acquisition Agreement (SAA)was executed between Celltone,
IndMobile and 5G Star under which Celltone was to subscribe to 40% shares of 5G Star, which
would be for a consideration of US$ 400 million that Celltone would pay 5G Star. Celltone
would acquire the remaining 9% (representing 125,998 shares) from IndMobile for a
consideration of US$ 90 million that it would pay IndMobile, thus holding 49% of 5G Star. On
November 25, 2013, the SAA was closed between them after due diligence and the essential
formalities were duly completed.

One of the conditions precedent in the SAA related to the issuance of a closing legal opinion by
M/s. Darsh Legal Associates, the legal counsel representing IndMobile and 5G Star. Darsh Legal
also had to obtain professional liability insurance worth at least US$ 100 million, which it
obtained from ProInsure.

Celltone, IndMobile and 5G Star also entered into an Escrow Agreement dated November 25,
2013 with Band Bank as per which Band Bank was to hold 10% of the consideration payable by
Celltone to IndMobile and 5G Star (respectively). This amount was to be used for satisfaction of
Page 15 of xv
any indemnification obligations of IndMobile and 5G Star that arose on account of breach of the
SAA. In the absence of such claim, Band Bank was to pay over the amount to IndMobile and 5G
Star at the end of a three-year period.

Navro Telecom Limited, one of the losing bidders for the license in Kolkata filed a writ petition
before the Calcutta High Court challenging the award of the Kolkata area license to 5G Star
alleging corruption in acquiring the license, on the part of Mr. Bantha Ranga, a project manager
in IndMobile (who was later transferred to 5G Star) and that he promised significant favours to
Mr. Debaraya, a member of the Government committee that was deciding the bids for the
Kolkata area, paying Rs. 2, 50,000 to his company.

The Calcutta High Court cancelled the license awarded to 5G Star for Kolkata. A special leave
petition to the Supreme Court was dismissed at the admission stage itself.
Celltone operated on the assumption thatthe projected monthly average revenue per unit (ARPU)
for Hyderabad area was Rs. 250. Celltone sought to clarify the method of calculation of the
ARPU during a telephone call with 5G Star. It was conveyed that the projected monthly ARPU
was without regard to discounts and rebates. However, this information was not properly
transmitted due to poor call connectivity. Celltone had no subsequent opportunity to clarify about
the same. After the closing of the SAA, Celltone discovered the projected monthly ARPU figure
of Rs. 250 was without regard to discounts and rebates. The net figure would be only Rs. 175.
Celltone also received a legal notice from Grovera Inc., a telecom consultancy company based in
Greenwich, Connecticut. It contained a Letter of Intent and claimed that IndMobile had agreed
to sell the 125,998 shares in 5G Star to Grovera, which it eventually sold to Celltone. The notice
ordered Celltone to immediately transfer those shares to Grovera at a price of US$ 40 million.
Celltone then issued instructions to Band Bank to release the escrow amount alleging breach of
the SAA by IndMobile and 5G Star. However, Band Bank, after consulting its own lawyers,
refused to release the escrow amount.

Celltone filed three civil suits before the Calcutta High Court against IndMobile and 5G Star,
Band Bank and Darsh Legal respectively to claim various remedies. It also initiated parallel
arbitration proceedings against the Government of India under Promotion and Protection of
Investments Agreement, claiming that the cancellation of the license for Kolkata was an
expropriation of its investment in 5G Star. As a Single Judge of the Calcutta High Court
dismissed Celltones civil suits on their merits, it has appealed against all the orders to a division
bench of the Calcutta High Court.
Page 16 of xv
-SUMMARY OF PLEADINGSPage 17 of xv
S U M M A RY O F P L E A D I N G S
I.
WHETHER INDMOBILE
AND
5G STAR
ARE LIABLE FOR BREACH FOR REPRESENTATIONS AND
SHARE ACQUISITION AGREEMENT?

It is submitted that Celltone is claiming refund of the purchase consideration or equivalent
WARRANTIES UNDER THE
damages of $490 million from IndMobile and 5G Star for the breach of representations and
warranties of the Share Acquisition Agreement. The Respondents submit that firstly, the
cancellation of the license did not result in breach the representations and warranties, secondly,
that the discrepancies in the computation of average return per unit did not result in any kind of
breach, and finally, that IndMobile had a valid title to sell the 9% shares to Celltone.
II.
WHETHER BAND BANK WAS OBLIGATED TO RELEASE THE ESCROW AMOUNT?

It is humbly submitted that Band Bank could not have acted on the unilateral instructions of
Celltone since the breach of the representations and warranties had not been conclusively
established. Band Bank respectfully submits that it does not have the necessary powers to
determine the whether a breach of the Share Acquisition Agreement had been caused or not.
Secondly, Band Bank contends that had to abide by certain duties in the capacity of a dual agent
as well as a trustee. Finally, Band Bank contends that its actions were in accordance with the RBI
regulations.
III.
WHETHER M/S DARSH LEGAL ASSOCIATES IS LIABLE FOR RENDERING AN INCORRECT LEGAL
OPINION?
It is submitted that Darsh Legal did not deliver an incorrect opinion since as per customary
practice the Opinion-Giver is entitled to rely upon the information provided by the client.
Furthermore, the subsequent events did not contravene the opinion issued by Darsh Legal.
Moreover, in accordance with the principle of privity of contract, Celltone was barred from suing
Darsh Legal since it was not its client. In any case the Opinion could not be treated as a guaranty
but was merely an expression of professional judgment. Lastly, the damages claimed by Celltone
cannot be permitted by the application of the doctrine of unjust enrichment.
-PLEADINGS AND AUTHORITIESPage 18 of 20

PLEADINGS AND AUT HORITIES
1.
W H E T H E R I N D M O B I L E A N D 5 G S TA R A R E L I A B L E
F O R B R E A C H O F R E P R E S E N TAT I O N S A N D W A R R A N T I E S
UNDER THE SHARE ACQUISITION AGREEMENT?
It is respectfully submitted before this Honble Court that Celltone 1 is claiming a refund of the
purchase consideration under clause 10.2 of the Share Acquisition Agreement (hereinafter
referred to as the SAA) on the ground that IndMobile2 and 5G Star3 have acted fraudulently.
1.1.
T H AT
C A N C E L L ATI O N O F T H E 5 G L I C E N S E D I D
R E P R E S E N T AT I O N A N D W A R R A N T I E S U N D E R T H E S A A
1.1.1.
It is submitted before this Honble Court that the Appellant can only raise the issue of
NOT
BREACH
THE
cancellation of the license in light of it being acquired through corrupt practices and its
getting cancelled for the same reason.
1.1.2.
It is humbly submitted that where it is found that the corporate character has been used
for committing illegalities and for defrauding people, corporate veil can be lifted with a
view to rendering full justice to the affected parties.4In a proper case of
lifting of corporate veil, the parent company and the subsidiary form one entity. 5 The
doctrine makes officers of the company, who committed an offence in the name of the
company and at the time of the offence being committed, were incharge and responsible
to the company for conduct of its business, personally liable for the offence. 6Mr. Bantha
Ranga, while committing the act of corruption, was part of the core team handling the
1Hereinafter referred to as the Appellant.

2Hereinafter referred to as Respondent 1.
3Hereinafter referred to as Respondent 2.
4Delhi Development Authority v. Skipper Construction (P.) Ltd. (1996) 4 Comp Cas. LJ 233; Telco v.
State of Bihar AIR 1965 SC 40.
5Vodafone International Holdings B.V. v. Union of India & Anr. (2012) 6 SCC 613.
6S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 63 SCL 93 (SC).

deal between Respondent 2 and the Appellant as a project manager 7 and is covered under
the term officer at default provided by the Companies Act, 2013. 8 Therefore, the
doctrine of lifting of corporate veil can be applied for affixing his liability for his
fraudulent act.
1.1.3.
It is submitted that the word bona fide means genuinely, sincerely or in good faith. The
Court has held this phrase to convey an idea of absence of any intent to deceive. 9 A
person is said to deceive another when, by practicing suggestion falsi or suppression
veri or both, he intentionally induces another to believe a thing to be true, which he
knows to be false or does not believe to be true. 10 It is submitted that the representatives
of Respondents 1 and 2 had disclosed all the requested details pertaining to the acquiring
of license and their method of working. The Appellant, their lawyers and their
accountants were also given full access to the relevant books and records. 11 Therefore,
intent to deceive cannot be made out from the conduct of the company. Respondents 1
and 2 did not possess actual knowledge about Mr. Rangas acts of corruption 12 and hence,
they acted in a bona fide manner.
1.1.4.
It has been held that:

Due diligence is an analysis and risk assessment of an impending
commercial transaction. It is the careful and methodological
investigation of a business or persons, or the performance of an act with
a certain standard of care to ensure that information is accurate, and to
uncover information that may affect the outcome of the transaction.13
7Factsheet 10.
8Section 2(60), Companies Act, 2013.
9Bega Begum v. Abdul Ahad Khan AIR 1989 SC 272; Chandra Kumar Shah v.District Judge, Varanasi
AIR 1976 All 328.
10S Harnam Singh v.State (Delhi Admn.)AIR 1976 SC 2140.
11Factsheet 5.
12 Factsheet 11.

It is respectfully submitted that before actual acquisition of shares took place and the SAA came into
effect, the Appellant conducted a full-blown legal and accounting due diligence 14 and was given
ample opportunity to verify the veracity of all representations and warranties made.
1.1.5.
It is submitted that
Knowledge may include not only actual knowledge, i.e., actual
awareness of the facts relevant, but also constructive knowledge, i.e.,
knowledge attributed by law to the party in the circumstances, whether
he actually had the knowledge or not and knowledge may be attributed
to a person who has sought to avoid finding out, or has shut his eyes to
obvious means of knowledge, e.g., the man who is offered valuables
cheaply in circumstances which suggest that they may well have been
stolen, but who refrains from enquiry.15
It is contended that during the due diligence enquiry, Mr. Gangston, a project manager in the Appellant
company, had acquired specific information which he thought to be vital enough to scuttle the
deal, but failed to report it to the senior management of the Appellant. 16 An agents knowledge of
specific information material to his duties that could have a substantial adverse effect on the
principal will be imputed to the principal to the same extent as if the principal had acquired it
with the same knowledge.17Mr. Gangston qualifies as an agent, since the definition of an agent
covers a person employed to do any act for another and the same applies to its use in ordinary
parlance.18 Therefore, a legal presumption of the Appellants knowledge can be made.
13The Institute of Company Secretaries of India, Handbook on Mergers, Amalgamations & Takeovers
Law and Practice, Wolters Kluwer India Pvt. Ltd , 4thEdn, 2011.
14Factsheet 5.
15Canara Bank v. Canara Sales Corporation & Ors. AIR 1987 SC 1603.
16Factsheet 6.
17Gregg v. Cloney (In re Marriage of James & Dana Cloney), 110 Cal. Rptr. 2d 615, 623 (Cal. Ct. App.
2001).
18Morarji Premji Gokuldas v. Mulji Ranchhod Ved &Co. AIR 1924(Bom) 232; Chairman, LIC v. Rajiv
Kumar Bhasker, AIR 2005 SC 3087.

1.1.6.
It is submitted that The maxim of Caveat emptor (let the purchaser beware) applies to a
purchaser who is bound by actual as well as constructive knowledge of any defect in the
thing purchased, which is obvious, or which might have been known by proper
diligence.19 Where a buyer closes on a contract in the full knowledge and acceptance of
facts disclosed by the seller, which would constitute a breach of warranty under the terms
of the contract, the buyer should be foreclosed from later asserting the
breach.20Furthermore, the doctrine of constructive notice implies that because individuals
have access to the companys public documents, including the objects clause, its
presumed that they have taken action to investigate the companys affairs and therefore
do not have the right to enforce a contract by relying on the fact that one was unaware of
the companys incapacity.21 A vendor is under no duty to communicate the existence even
of latent defects in his wares unless by act or implication he represents such defects not to
exist.22 Even as part of the exceptions to the doctrine of indoor management, 23 when there
are suspicious circumstances, it is the duty of the outsider to make proper inquiries. 24 It
must be noted that since the Appellant emphasized on its strict anti-corruption policy,25 it
should have exercised a higher degree of care and carried out detailed enquiry. Therefore,
the Appellants lapse cannot be attributed to Respondents 1 and 2and they cannot be held
liable for any consequences of the cancellation of license.
1.2.
T H AT
D I S C R E PAN C I E S A S T O
N O T R E S U LT I N A B R E A C H O F
AV ER AGE R ET UR N
R E P R E S E N T AT I O N S
PER UNIT (ARPU) DID

AND WARRANTIES OF
19Commr. of Customs (Preventive) v. Aafloat Textiles (I) Pvt. Ltd. (2009) 11 SCC 18.
20Galli v. Metz 973 F.2d 145, 151 (2d Cir. 1992).
21Re Jon Deauforte (London) Ltd. 1953 Ch. 131.
22J. Beatson, Ansons Law of Contract, Oxford University Press, London, 28th Edn., 2002.
23Royal British Bank v. Turquand (1856) 6 E & B 327.
24A. L. Underwood Ltd. v. Bank of Liverpool & Martins (1924) 1KB 775 (CA).
25Factsheet 5.

THE
1.2.1.
SAA
It is humbly submitted that force majeure is an event or effect that can be neither
anticipated nor controlled. The term includes both acts of nature and acts of people. 26 The
Courts have laid down the considerations of externality, unpredictability and irresistibility
for the purpose of ascertaining whether an event is a force majeure event. 27 According to
Section 73 of the Indian Contract Act, 1872, the measure of damages in contract is
compensation for the consequences which flow as a natural and capable consequence of
the breach of contract , or in other words, which could be foreseen. 28 The plaintiff would
be entitled to such damages as may fairly and reasonably be considered either as arising
naturally or as the probable result of it or damages suffered by the plaintiff as a direct
consequence if the breach.29 It is therefore submitted that poor connectivity of the
telephone call was an event beyond the control of the parties and thus liability cannot be
affixed on Respondents 1 and 2 for such an event.
1.2.2.
It is humbly submitted that a unilateral mistake is a mistake or misunderstanding as to the

terms or effect of a contract, made or entertained by one of the parties to it but not by the
other.30 A unilateral mistake is not allowed as a defense in avoiding a contract, unless it is
brought about by the other persons fraud or misrepresentation. 31 In case the mistake is
about the quality, it will not affect assent unless it is the mistake of both parties which
makes the thing without the quality essentially different from the thing it was believed to
26Henry Campbell Black, Blacks Law Dictionary, 7th Edn., 1999.

27SPIC SMO, A Division of Southern Petrochemical Industries Corporation Ltd. v. Tamil Nadu
Electricity Board 2013(1) CTC 500.
28Devender Singh v.State of UP AIR 1987 All 306 (DB); Hadley v. Baxendale [1854] EWHC J70.
29Mohammad Khan v. Ramnarayan Misra AIR 1956 Ori 156 (DB).
30P. Ramanatha Aiyar, Advanced Law Lexicon, Wadhwa & Co, 3rd Edn., 2005.
31Dhulipudi Namayya v. UOI AIR 1958 AP 533; P.R.& Co. v. Bhagwandas Chaturbhuj(1908) 10
BOMLR 1113.

be.32 Further a contract will not be rendered voidable only because one of the parties to
the contract was under a mistake as to fact.33
1.2.3.
It is submitted that all relevant information relating to ARPU was disclosed by

Respondents 1 and 2 to the Appellant. Full access to all relevant books, record and
statement was provided.34 Enquiries as to the method of calculation of ARPU were also
addressed accordingly.35 Therefore, the continuance of the Appellants assumption of the
value of ARPU being Rs. 250 even after the method of calculation was disclosed, was a
unilateral mistake of fact.
1.2.4.
It is humbly submitted that if the consent of a party was caused by misrepresentation or

by silence or by fraudulent means, the contract, nevertheless, is not voidable, if the party
whose consent was so caused had the means of discovering the truth with ordinary
diligence.36
1.2.5.
It is contended that if due to circumstances which were beyond the control of Respondent
2, the information related to ARPU was not properly transmitted 37, Respondents 1 and 2
cannot be held liable for committing fraud or deliberate omission of facts. It is further
submitted that the definition of fraud as provided under Section 447 of the Companies
Act, 2013 takes into account the element of intent. When Respondent 2 has duly
addressed queries relating to ARPU, it would be entirely incorrect to state that
Respondent 2 had the necessary intention to defraud the Appellant. In arguendo, even if
Respondent 2 acted fraudulently or deliberately omitted from revealing relevant
32Cooper v. Phibbs (1867) LR 2 HL149; ITC Limited v. George Joseph Fernandes (1989) 1 SCR 469;
Ayekam Angahal Singh v. Union of India, AIR 1970 Manipur 16.
33Section 22, Indian Contract Act, 1872.
34Factsheet 5.
35Factsheet 12.
36Section 19, Indian Contract Act, 1872; Shoshi Mohun Pal Chowdhary v. Nobo Kristo Poddar ILR
(1874) 4 Cal 801.
37Factsheet 12.

information, the SAA cannot be held voidable at the Appellants option because it failed
to exercise ordinary diligence in verifying the details relating to ARPU when sufficient
opportunities to do so were available.
1.3.
T H AT R E S P O N D E N T 1
1.3.1.
It is humbly submitted that a letter of intent is a written statement detailing the
HAD
SHARES TO THE APPELLANT
THE
REQUISITE
TITLE
TO SELL
THE
9%
preliminary understanding of parties who plan to enter into a contract or some other
agreement; a letter of intent is not meant to be binding and does not hinder the parties
from bargaining with a third party.38 It has been held that:
Where the letter of intent uses phrases and concepts having clear
technical legal significance and does not manifest any intent that a final
and concluded contract has been entered into, such letter of intent does
not create any legal relations between the parties. In fact, the letter is
conditional and equivocal in creation of the liability of the issuer as same
are made subject to fulfillment of some conditions precedent.39
Further, mere letters of intent to award the contract would not constitute a concluded contract. 40 It is
clear from the language of the letter of intent executed between Respondent 1 and Grovera Inc. It
is submitted that there was no intention to create a contract of sale, substantiated by the fact that
no other documentation was executed between the parties.41
1.3.2.
It is submitted that:
A unilateral promise is a promise from one party and is intended to
induce some action by the party. The liability arises only when the
promisee has, by doing some act, on the faith of the promise, altered his
position. It follows that, wherever the promisee has done nothing, there
38Supra n. 26.
39Lucent Technologies v. ICICI Bank Ltd. 2010 (5) R.A.J 574.
40Dresser Rand S.A v. Bindal Agro Chem. Ltd. & Anr. AIR 2006 SC 871; Union of India v. Bhimsen
Walaiti Ram AIR 1971 SC 2295.
41Factsheet 13.

is no consideration and the promisee is not bound to act.42
In the instant matter, since Grovera Inc. did not pay any consideration for the shares offered,
Respondent 1 was not bound to act on its promise.
1.3.3.
It is submitted that the letter of intent only amounts to an agreement to sell. Furthermore,
shares are considered goods43 under the Sale of Goods Act, 1930 which also
differentiates between an agreement to sell and a contract of sale. 44 It has also been held
that:
A contract of sale of goods would be effective when a seller agrees to
transfer the property in goods to the buyer for a price and that such a
contract may be either absolute or conditional. If the transfer is in the
present, it is called a sale; but if the transfer is to take place at a future
time and subject to some conditions to be fulfilled subsequently, the
contract is called an agreement to sell.45
In the instant case, the shares were merely agreed to be transferred and were not actually transferred to
Grovera Inc. and hence this does not constitute a concluded contract of sale.
1.3.4.
It is respectfully submitted that the shares were to be transferred and the letter of intent
was to be given legal effect upon amendment of the Articles of Association of
Respondent 2 and completion and execution of definitive documentation in furtherance
of the letter of intent before the lapse of three months. 46 Further, this period of three
months expired on 16th November, 2013 and shares were only transferred to the Appellant
on 25th November, 2013.47 Therefore, the intention to contract expired when the actual
42Abdul Aziz v. Masum Ali AIR 1914 All 22.

43Section 2(7), Sale of Goods Act, 1930.
44Section 4, Sale of Goods Act, 1930.
45Hyderabad Engineering Industries v. State of Andhra Pradesh (2011) 4 SCC 705.
46Appendix-C.
47Factsheet 8.

transfer of property in the goods took place.48
1.3.5.
Further, it is contended that Respondent 1 is a public company49 and Respondent 2, by

virtue of being its wholly owned subsidiary, is also a public company for the purposes of
the Act.50 Since the letter of intent is dated 16th August 2013 and the Companies Act,
2013 was notified in the Gazette of India only on 30 th August, 201351, the provisions of
Companies Act, 1956 will continue to govern the letter of intent. It is submitted that,
applying Section 111A (2) of the said Act, the shares of a public company are freely
transferable. The manner of transferability of these shares has been provided in Section
82 of the above Act.
1.3.6.
It has been held that the only restriction on the transfer of the shares of a company is as
laid down in its Articles, if any. A restriction which is not specified in the Articles is, not
binding either on the company or on the shareholders.52 Furthermore,
Even if there was a provision for pre-emptive rights in the articles of
association of a public limited company, it would have been ultra vires
the provisions of the Act, as no company can provide in the articles of
association any matter which offends the specific provision of an Act,
namely, sub-section (2) of section 111A of the Act.53
It has also been held that since the terms of an agreement between a non-member and two members of
the company could not be incorporated in the Articles of Association of the public company, the
company was not bound by the agreement and it was not enforceable. 54 Therefore, such
48Turner Broadcasting System Inc. v. McDavid Et Al. 693 S.E. 2d. 873(Ga. Ct.App. 2010).
49Section 3 (1) (iv), Companies Act, 1956; Factsheet 1.
50Section 3 (1) (iv) (c), Companies Act, 1956.
51 General Circular No. 15/2013, dated 13-9-2013.
52V.B. Rangaraj v. V.B. Gopalakrishnan AIR 1992 SC 453.
53Pushpa Katoch v. Manu Maharani Hotels Ltd.(2006) 131 CompCas. 42 (Del.).
54S.P. Jain v. Kalinga Tubes Ltd. [1965]2 SCR 720.

restrictions should be expressly incorporated in the Articles. 55 Since the letter of intent expired
before the SAA came into force and the restrictions were not incorporated in its Articles of
Association, Respondents 1 and 2 cannot be held liable.
2.
WHETHER
BAND
BANK
WA S
RELEASE THE ESCROW AMOUNT?
O B L I G AT E D
TO
It is humbly submitted that the Appellant and Respondents 1 and 2 entered into an escrow
agreement with Band Bank56 to cater to the indemnification obligations of Respondents 1 and 2
under the SAA which might arise due to the breach of the SAA. 57 The Appellants claim for
release of the escrow money cannot be satisfied as Respondent 3 cannot act on its unilateral
instructions. It also bears an obligation to act prudently as a trustee and to refrain from making a
judgment about breach of the SAA.
2.1.
T H AT R E S P O N D E N T 3 D O E S N O T
AUTHORITY TO DECIDE WHETHER THE
2.1.1.
H AVE T H E R E Q U I S I T E P O W E R
HAS BEEN BREACHED
OR
SAA
It is respectfully submitted that an escrow arrangement is normally arrived at in order to

safeguard the interest of the parties for the purpose of a contract and the escrow agents
are normally persons who are trusted by the parties to act fairly and without bias
notwithstanding their relationship with the respective parties. 58 Hence, examining the
SAA, it becomes clear that the indemnification clause can be invoked only when
representations and warranties are breached.
2.1.2.
Further, according to the RBI Circular on Opening of Escrow Accounts for FDI
transactions, the relevant permitted debit is in the case of failure/ non-materialization of
55Richard Smerdon, Palmers Company Law Manual, Sweet & Maxwell, London, 1st Edn. 2000; Tett v.
Phoenix Property & Investment Co. Ltd.(1986) 2 BCLC 149.
56 Hereinafter referred to as Respondent 3.
57Factsheet 9.
58Siddhivinayak Realities Pvt. Ltd. v. Tulip Hospitality Services Ltd. AIR 2007 SC 1457.

the FDI transaction.59 However, Respondent 3 does not have the requisite authority or
power to determine whether the SAA has been breached. The dispute whether or not
there has been a breach of contract should be determined by an ordinary civil court as in
every case between the ordinary litigant.60 The breach of the SAA is purely an issue of
contractual law and only courts of law have the necessary authority and powers to decide
as to whether or not there has been an instance of actual breach. Therefore, Respondent 3
would be exceeding its powers and authority if it were to pass a judgment or decide
whether the representations and warranties have been breached or not.
2.1.3.
It is further submitted that in the instant matter, when Respondent 3 refused to release the
escrow amount in the Appellants favor, it never issued a statement as to whether an
actual breach of the SAA has occurred to invoke the indemnification clause or not. Thus,
it relied upon the advice of its legal counsel and decided not to release the escrow
amount.61
2.2.
T H AT R E S P O N D E N T 3 I S
U N I L ATE R A L I N S T R U C T I O N S
2.2.1.
DUAL
AGENT
AND
CANNOT
ACT
ON
It is submitted that where an agent is appointed by more than one principal, he is liable
to them jointly. He is not bound to account separately to any one of them and if he does
so, he is not thereby absolved from his liability to others. 62 This liability to account to
two principals does not arise only by virtue of a contract between the parties, but is a
liability that is annexed by law to the office of the agent. 63 It is submitted that by virtue of
being an escrow agent, Respondent 3 had obligations as a dual agent for the Appellant on
59 RBI/2010-11/ 498 A. P. (DIR Series) Circular No. 58.

60Ashish Gupta v. IBP Co. Ltd. AIR 2006 Delhi 57; Mancat Ram v. Delhi Development Authority AIR
1984 Delhi 246.
61Factsheet 14.
62SC Srivastava, Venkoba Raos Law of Agency, Butterworths, New Delhi, 3rd Edn., 2001.
63 H.G.Beale, Chitty on Contracts, Sweet & Maxwell, London, 31stEdn., Vol.1, 2012.

one hand and Respondents 1 and 2 on the other.
2.2.2.
An agent though bound to exercise his authority in accordance with all lawful
instructions which may be given to him from time to time by his principal, is not subject
in its exercise to the direct control or supervision of the principal. 64 The primary
consideration in performing the duties of the agent must be to always act in the best
interests of the principal. However, the agent must not exceed the authority which was
delegated by the principal.65
2.2.3.
Furthermore, an agent is bound to act with reasonable diligence and to use such skill as
he possesses.66 Since his position is one involving confidence, therefore in the discharge
of his duties, he must act with the most perfect good faith towards his principal, and
should not abuse the confidence reposed in him. 67 In arguendo, an agent is not
responsible for any loss caused on account of an error of judgment provided he exercises
reasonable skill and diligence.68It is therefore submitted that Respondent 3, being a dual
agent, could not have exceeded its authority by acting upon premature instructions of
merely one of its principals and cannot be held liable for its judgment considering that it
took the necessary precautions.
2.2.4.
It is further submitted that in relation to escrow agreements, once an escrow agreement

has been consummated, and a valid deposit of the escrow has been made, neither party
can revoke the agreement without the others consent. 69 In the absence of clear
concurrence, Respondent 3 is justified in deciding not to release the escrow amount upon
the Appellants instructions.
64Halsburys Laws of India, LexisNexis Butterworths, New Delhi, Vol. 11, 2002.
65R v.Kelly [1992] 2 SCR 170.
66Aiken v. Stewart Wrightson Members Agency Ltd. [1995] 2 Lloyds Rep. 618; Kantilal Vasanji Chheda
v. Vrajesh Kantilal Patel &Ors. 2013 (2) BomCR 256.
67 PC Markanda, The Law of Contract, LexisNexis Butterworths, Wadhwa Nagpur, 3rd Edn., 2013.
68Venkatachelam v. Ponnuswami 1925 Mad 46: 82 IC 536.
69United States of America v. Robert Lee Frick, Ellis Jay Pailet & Frank Harris 666 F. 2d 490.

2.3.
T H AT
RESPONDENT
FULFILLED ITS DUTIES AS A TRUSTEE
2.3.1. It has been held that if the equitable duties have been complied with, the action is in effect in a
common law one, and no different results are obtained by designating it as one for breach of
fiduciary duty.70 A fiduciary is defined as a trustee, a person holding a character of trustee or a
character analogous to that of a trustee. The concept of a fiduciary involves a relationship
founded upon a trust or confidence.71 While the archetype of a fiduciary is of course the trustee,
it is recognized by decisions of Courts that there are other classes of persons who normally stand
in a fiduciary relationship to one another like agents, solicitors, etc. 72 The fiduciary duties are
well-established as separate and to some extent counterbalance the strict rules on implication of
terms at common law.73 It is submitted that by virtue of being an agent, Respondent 3 was bound
by fiduciary duties towards the Appellant.
2.3.2.
Where a person has assumed, either with or without consent, to act as a trustee
of money or other property, i.e., to act in a fiduciary relation with regard
to it, and has in consequence been in possession of or has exercised
command or control over such money or property, a Court of Equity will
impose upon him all the liabilities of an express trustee, and will class him
with and will call him an express trustee of an express trust.74
Therefore, in light of its fiduciary position, the equitable duties of an express trustee can be affixed to
Respondent 3.
2.3.3.
It is further submitted that the escrow agreement can be construed as a constructive trust
which has been explained by Justice Cardozo as, a constructive trust is the formula
70Bristol& West BS v. Mothew [1988] Ch. 1, 17.

71Gopal L. Raheja of Mumbai, Indian Inhabitant & Sandeep G. Raheja of Mumbai, Indian Inhabitant v.
Vijay B. Raheja of Mumbai, Indian Inhabitant & Ors.2007(4) BomCR 288.
72Hospital Products Ltd. v. United States Surgical Corporation Choice Inc. (1984) 156 CLR 41.
73Liverpool City Council v. Irwin [1977] A.C. 239.
74Soar v. Ashwell (1893) 2 QB 390; Gobinda Chandra Ghosh alias G. Ghosh v. Abdul Majid Ostagar
AIR 1944 Cal 163; Williams v. Central Bank of Nigeria [2014] UKSC 10.

through which the conscience of equity finds expression. When property has been
acquired through such circumstances where the holder of the legal title may not in good
conscience retain the beneficiary interest, equity converts him into a trustee.75 A
constructive trust arises upon an inference of imposing a trust upon the conscience of the
person liable for the obligation.76 Such a trust is considered as an equitable remedy in
law.77It is hereby submitted that in the instant case, by holding the security consideration,
Respondent 3acted as a trustee. As a result, the escrow agreement assumed the character
of a constructive trust.
2.3.4.
It is submitted that the duty of impartiality of a trustee is to act in the best interests of all
his beneficiaries and exercise his power for the proper purpose.78

A trustee must not set up or abet an adverse title or claim of another
person against his beneficiaries, or undertake a duty or put himself in a
position which is inconsistent with his duty as trustee, or act in a
manner inconsistent with that duty. He has a right to know the title of
those who pretend to be his beneficiaries, and, if he receives notice of an
adverse claim and of an intention to hold him liable if he disregards it,
he may obtain a decision of the court as to his course of action.79
2.3.5.
In arguendo, according to the provisions of the Indian Trusts Act 1882, an agent or other
person bound in a fiduciary character to protect the interests of the principal and the
former would hold the property for the benefit of the principal or the person on whose
behalf he acted as an agent. The property in the hands of the agent is for the principal and
the agent stands in the fiduciary capacity for the beneficial interest he had in the property
75Beatty v. Guggenhien Exploration Co. 225 N.Y. 380, 386 (1919).

76T.C. Chacko v. Annamma AIR 1994 Ker 107.
77M.L. SubbarayaSetty v. M.L. NagappaSetty AIR 2002 SC 2066.
78Edge v.Pensions Ombudsman [1998] 2 All ER 547.
79Supra n.58.

as a trustee.80
2.3.6.
In case of a real doubt as to the meaning of any provision of the trust deed, the trustee can
get the question settled by making an application to the principal civil court of original
jurisdiction in the locality. The trustee stating in good faith the facts in such a petition
and acting upon the opinion, advice, or direction given by the court shall be deemed so
far as regards his own responsibility, to have discharged his duty as such trustee in the
subject-matter of the application.81 Therefore, Respondent 3 could avail of the option of
depending on the courts decision, as it did in the instant case.
2.3.7.
Furthermore, it has been held that the standard of care of a bank trustee is higher than an
ordinary non-professional trustee. If a trustee held himself out as having a higher degree
of skill he may incur a liability for failing to come up to the standard he has set. 82It is
therefore submitted that Respondent 3, being a bank trustee, had to comply with a higher
standard of care and was justified in relying upon its counsels advice. In undertaking
such a course of action, Respondent 3 has neither breached its duty of impartiality nor
abetted the adverse possession of any of the principals in consideration of the premature
suit filed by the Appellant.
2.4.
T H AT R E S P O N D E N T 3 S A C T I O N S W E R E I N
TECHNICAL REQUIREMENTS PRESCRIBED BY THE
2.4.1.
ACCORDANCE
WITH
THE
RBI
It is humbly submitted that the RBI Circular on Opening of Escrow Accounts for FDI
transaction states that in the event, the proposal under the said acquisition/transfer does
not materialize, the AD Category I bank may allow repatriation of the entire amount
lying to the credit of the Escrow Account on being satisfied with the bonafides of such
remittances.83
80P.V. ShankaraKurup v. Leelavathy Nambiar AIR 1994 SC 2694.

81 Section 34, Indian Trusts Act, 1882.
82In re Estate of Maxedon 946 P.2d. 104 (Kan. Ct. App. 1997).
83RBI/2006-2007/413 A. P. (DIR Series) Circular No. 62.

2.4.2.
It is respectfully submitted that in the instant matter the transaction was successful as
both the parties performed their respective obligations of transferring shares and making
payment under the SAA. Since the acquisition had materialized, the refund of the escrow
consideration was not warranted.
2.4.3.
It is humbly submitted that in accordance with the Know Your Customer Guidelines,
banks are required to carry out ongoing due diligence of existing clients in order to
ensure that their transactions are consistent with the banks knowledge of the client, his
business and risk profile and where necessary, the source of funds.84 Since it was the
Appellants first venture in the Indian corporate market and considering the lucrative
nature of the deal, Respondent 3 was justified in conducting due enquiry and making an
informed choice before acting upon the Appellants instructions.
3.
WHETHER
LIABLE
FOR
OPINION?
M/S
DARSH
RENDERING
LEGAL
A S S O C I AT E S
IS
AN
INCORRECT
LEGAL
It is respectfully submitted that the issuance of a legal opinion was a condition precedent for the
SAA. Further, it is important to note that since the Appellant is not the client of Darsh Legal 85, it
does not have contractual obligations towards the Appellant. Moreover, the opinion cannot be
declared as incorrect as it was in consonance with all customary practices and was based on
assumptions which were clearly stated in the opinion itself.
3.1.
T H AT R E S P O N D E N T 4
3.1.1.
It is respectfully submitted that the opinion issued by Respondent 4 is not incorrect.
DID NOT DELIVER AN INCORRECT LEGAL OPINION
Furthermore, its veracity has been confirmed by Respondents 1 and 2. 86 Rather than
establishing certain facts, opinion preparers as a matter of customary practice sometimes
84Master Circular DBOD.AML.BC.No.22/14.01.001/ 2014-15 July 1, 2014; RBI/2006-2007/413 A. P.

(DIR Series) Circular No. 62.
85 Hereinafter referred to as Respondent 4.
86 Factsheet 8.

rely on factual assumptions.87 It is submitted that an effort should be made to give effect
to each clause of the agreement and a clause should not be rejected unless it is manifestly
inconsistent with or repugnant to the rest of the agreements. 88 The opinion that the
Company has been duly incorporated and the opinion that it has been duly organized
address compliance with applicable incorporation requirements in effect at the time the
Company was incorporated.89 The opinion90 stated that Respondents 1 and 2 have all
corporate powers to enter into the agreement. It is submitted that this fact is not disputed.
3.1.2.
The duly authorized opinion means that, the shares to which the opinion relates, were,
or will be, included within the shares that the Company had the authority to issue
immediately prior to their issuance.91 It has been held that the corporate power opinion
does not address whether those actions are restricted by other laws, such as those
requiring the receipt of licenses or permits. 92 It is humbly submitted that therefore the
legal opinion issued by Respondent 4 did not cover the potential consequences arising out
of the cancellation of the license.
3.1.3.
The opinion states that the execution, delivery and performance of the SAA will not
contravene any law.93 It is submitted that the no breach or default opinion does not
signify that no adverse consequences will result from the Companys entering into (and,
87George W. Kuney, The Elements Of Contract Drafting with Questions and Clauses for Consideration,
Thomson West, 2nd Edn., 159-160, 2006.
88Adamastos Shipping Co. Ltd v. Anglo-Saxon Petroleum Co. Ltd. (1959) AC 133.
89Tribar Opinion Committee, Third-Party Closing Opinions: A Report of the Tribar Opinion Committee,
53 Bus. Law, 642, 1998.
90 Clause 3(a), Appendix B.
91Scott T. FitzGibbon & Donald W. Glazer, Legal Opinions on Incorporation, Good Standing & Qualification to
do Business. Business Lawyer, 41, no.2, 461-481, 1985.
92Supra n.89, 653.

93Clause 3 (b) of Appendix-B.

if covered, performing its obligations under) the agreement.94
3.1.4.
It is submitted that:
Provisions in existing contracts that will be breached or result in a default

only if specified events have (or have not) occurred or specified
circumstances exist (or do not exist) at the time the Company is called on
to perform its obligations under the agreement are beyond the scope of
the no breach or default opinion since the opinion preparers have no way
to determine on the date of the opinion letter what the effect of those
provisions will be when performance by the Company is required to
occur.95
The obligations of the parties under the SAA were to pay the purchase consideration and transfer the
title of shares. These obligations have been duly performed and no law has been violated due to
the performance of the SAA.
3.1.5.
It is further submitted that according to the opinion, Respondent 2 is qualified to carry on

business in all jurisdictions where it is carrying on business as on the date of the
opinion.96 Opinion preparers almost always assume the legal capacity of individuals that
the copies of documents furnished to them conform to the originals, that the original
documents furnished them are authentic and that the signatures on executed documents
are genuine.97 The alternative of requiring the opinion preparers to establish these matters
is likely to generate costs that produce no corresponding benefit.98
3.2.
T H AT R E S P O N D E N T
LEGAL OPINION
4CANNOT
BE HELD LIABLE ON THE BASIS OF THE
94Supra n. 89, 656.

95Supra n. 89.
96 Clause 3(c), Appendix-B.
97Babb, Barnes, Gordon & Kjellenberg, Legal Opinions to Third Parties in Corporate Transactions, 32
Bus.Law. 553, 1977.
98Supra n. 89.

3.2.1.
It is humbly submitted that opinion letters are legal analysis of provided or assumed facts
that are obtained from opinions of other counsel, officer certificates, representations or
statements from clients and other parties, and other sources of information. 99 An opinion
is not a guaranty of an outcome, but rather an expression of professional judgment or
even a recommendation.100 Such a professional judgment is necessarily limited by a
variety of factors.101
3.2.2.
It is reverentially submitted that holding Respondent 4 liable for its opinion will
contravene the contractual principle of privity of contract. It is settled law that a person
not a party to the contract cannot enforce the terms of the contract. 102 Respondent 4 is
representing Respondents 1 and 2 for the transaction entered into between its clients and
the Appellant.103 No agreement has been entered into between the Appellant and
Respondent 4 and hence the Appellant cannot initiate proceedings against it.
3.2.3.
It is further submitted that the opinion states that Respondent 4 is representing

Respondents 1 and 2 in relation to the SAA.104 It can be inferred that the Opinion
Recipient is not the Opinion Givers client and is not entitled to rely on the opinion as it
were.105 The counsel for the Recipient is responsible for advising the Opinion Recipient
on what opinions to request, the adequacy of the opinions actually received and the
meaning of particular opinions.106In the instant case, since the Appellants own counsels
Lexman Associates were aware of the terms and legal effects of the Letter of Intent and
99Arthur Norman Field & Jeffrey M. Smith, Legal Opinions In Business Transactions, Practising Law Institute, 2nd
Edn., 2006.
100Supra n. 97.
101Supra n. 89.
102M.C. Chacko v. State Bank of Travancore (1969) 2 SCC 343; Utair Aviation v. Jagson Airlines Ltd.
& Anr. 2012 (129) DRJ 630.
103Factsheet 8.
104 Clause 1, Appendix-B.
105Supra n. 91.

the details of the transactional due diligence, Respondent 4 is therefore entitled to
presume that the details had been rightly disclosed to the Appellant.
3.2.4.
It is further submitted that under the legal opinion, Respondent 4 has made the
assumption of certain facts under the SAA.107 One of the maxims governing legal
opinions is that they are only as good as the factual information upon which the opining
lawyer has relied in rendering the legal opinion.108 It has been held that:
If an opinion is qualified or reasoned (or both), the Opinion Recipient
must decide whether to proceed with the transaction in view of the
qualification or reasoning set forth in the opinion letter. Opinion
preparers are often permitted to rely on assumptions when the cost of
establishing the facts exceeds the likely benefit (often because of the
improbability that what is assumed would on investigation prove to be
untrue.109
It is submitted that the legal opinion was based on information warranted by Respondents 1 and 2.
Therefore, Respondent 4 cannot be held liable for any dispute arising out of these assumptions.
3.2.5.
Neither third-party legal opinions nor opinions addressed to clients purport to

evaluate a transactions inherent business wisdom. An opining lawyer has
had no duty to evaluate the business merits of the underlying transaction
beyond the obvious ethical and legal obligations of not knowingly
furthering a fraudulent transaction.110
It is submitted that reasoned legal opinions engage in a substantive discussion of the applicable law and
qualify that discussion as appropriate with reasonable assumptions, cautionary language and
106Ibid.
107Clause 2, Appendix-B.
108Karen S. Rieger &Eric S. Fisher, Maneuvering the Mundane Minefield: A Practical Guide to Legal
Opinions in Healthcare Transactions, 32 Journal of Health Law, 173, 1999.
109Supra n.89.
110Restatement (Third) Of The Law Governing Lawyers 51(2), 2000.

disclosure of uncertainties.111 If the opinion recipient wishes to proceed despite these cautions
and uncertainties, they do so forewarned and at their own risk. 112 It is therefore submitted that the
Appellant had consented to the uncertainties of the opinion and thereafter cannot claim damages.
3.3.
T H AT
THE APPELLANT S
UNJUST ENRICHMENT
3.3.1.
The doctrine of unjust enrichment states that the power of the Court is not meant to be
CLAIM
IS
BARRED
BY
THE
DOCTRINE
OF
exercised for unjustly enriching a person.113 It has been held that Unjust enrichment
means retention of a benefit by a person that is unjust or inequitable. Unjust enrichment
occurs when a person retains money or benefits which in justice, equity and good
conscience, belong to someone else.114It is submitted that by claiming damages
equivalent to the purchase consideration from Respondents 1 and 2 as well as Respondent
4, the Appellant is availing of a benefit at the expense of Respondent 4 and it is barred
from doing so under the legal doctrine of unjust enrichment.
111Special Committee on Legal Opinions in Commercial Transactions, New York County Lawyers Association
Legal Opinions to Third Parties: An Easier Path, 34 Bus. Lawyer 1891, 1979.
112Steven L. Schwarcz, The Limits of Lawyering: Legal Opinions in Structured Finance, Duke Law
School Faculty Scholarship Series, Paper 12, 2005.
113Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536.
114Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs (2005) 3 SCC
738.
-CONCLUSION/ PRAYER FOR RELIEFPage 39 of 20

C O N C L U S I O N / P R AY E R F O R R E L I E F
WHEREFORE, IN THE LIGHT OF THE ISSUES RAISED, ARGUMENTS ADVANCED, REASONS GIVEN AND
AUTHORITIES CITED, THIS
I.
HONBLE COURT MAY BE PLEASED TO:
HOLD RESPONDENTS 1
AND
NOT LIABLE FOR THE BREACH OF REPRESENTATIONS AND
WARRANTIES AND HENCE NOT LIABLE TO PAY $490 MILLION AS DAMAGES TO THE APPELLANT.
II.
III.
ORDER RESPONDENT 3 NOT TO RELEASE OF THE ESCROW AMOUNT.

HOLD RESPONDENT 4
NOT LIABLE FOR RENDERING AN INCORRECT LEGAL OPINION AND
HENCE NOT LIABLE TO PAY $490 MILLION AS DAMAGES TO THE APPELLANT.
AND ANY OTHER RELIEF THAT THIS
HONBLE
COURT MAY BE PLEASED TO GRANT IN THE INTERESTS
OF JUSTICE, EQUITY AND GOOD CONSCIENCE, ALL OF WHICH IS RESPECTFULLY SUBMITTED.
COUNSELS FOR THE RESPONDENTS
APPENDIX
1. S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. (2005) 63 SCL 93:

In this case, a complaint petition was filed by the appellant alleging that the Company
represented by its Managing Director had called for inter-corporate deposit for a short period of
15 days to the extent of rupees two crores and to such a proposal it agreed. The rate of interest
for such deposit was stipulated at 25% per annum therefore payable within 15 days. A
promissory note was executed by the accused No. 2 on behalf of the Company. Upon expiry of
the period of deposit, Company represented by its Managing Director( the Accused) allegedly
issued a cheque for a sum of rupees two crores and the said cheques upon presentation were
dishonoured on the ground of insufficient funds. The Court said:
The normal rule in the cases involving criminal liability is against
vicarious liability, that is, no one is to be held criminally liable for an act
of another. This normal rule is, however, subject to exception on
account of specific provision being made in statutes extending liability
to others. Section 141 of the Act is an instance of specific provision
which in case an offence under Section 138 is committed by a Company,
extends criminal liability for dishonour of cheque to officers of the
Company. Section 141 contains conditions which have to be satisfied
before the liability can be extended to officers of a company. Since the
provision creates criminal liability, the conditions have to be strictly
complied with. The conditions are intended to ensure that a person who
is sought to be made vicariously liable for an offence of which the
principal accused is the Company, had a role to play in relation to the
incriminating act and further that such a person should know what is
attributed to him to make him liable. In other words, persons who had
nothing to do with the matter need not be roped in. A company being a
juristic person, all its deeds and functions are result of acts of others.
Therefore, officers of a Company who are responsible for acts done in
the name of the Company are sought to be made personally liable for
acts which result in criminal action being taken against the Company. It
makes every person who. at the time the offence was committed, was
incharge of and was responsible to the Company for the conduct of
business of the Company, the Company, liable for the offence. The
proviso to the sub-section contains an escape route for persons who are
able to prove that the offence was committed without their knowledge or
that they had exercised all due diligence to prevent commission of the
offence.
2. S. Harnam Singh v. The State (Delhi Admn.) AIR 1976 SC 2140:

The Appellant, a Goods Loading Clerk in the Railway was tried on charges under Sections 120B,
477A Penal Code and under Section 5(2) of the Prevention of Corruption Act. The trial Court
acquitted him of the charge of criminal conspiracy, but found him guilty of the other two charges

and sentenced him on each of those counts to rigorous imprisonment for one year. On appeal, the
High Court of Delhi set aside the conviction of the appellant under Section 5(2) of the Prevention
of Corruption Act but maintained his conviction and sentence under Section 477A, Penal Code.
The appellant was accused of falsifying the entries in the Marking-Cum-Loading Register
maintained by him as Goods Clerk abusing his position as a public servant from corrupt motives.
The Court said:
The Code does not contain any precise and specific definition of the
words intent to defraud. However, it has been settled by a catena of
authorities that intent to defraud contains two elements viz., deceit
and injury. A person is said to deceive another when by practising
suggestio falsi or suppressio very or both he intentionally induces
another to believe a thing to be true, which he knows to be false or does
not believe to be true. Injury has been defined in Section 44 of the Code
as denoting any harm whatever illegally caused to any person, in body,
mind, reputation or property.
3. Canara Bank v. Canara Sales Corporation and Ors. AIR 1987 SC 1603:
The plaintiff was a private Limited Company and had a current account with the Appellant-Bank.
The second defendant was attending to the maintenance of accounts of the plaintiff and was also
in charge and custody of the cheque books issued by the Bank to the plaintiff. During his
absence, his Assistant noticed certain irregularities in the account and brought this to the notice
of the plaintiff. On verification, it was found that cheques were forged. It was pleaded that the
amounts as per the forged cheques were not utilized for the purpose of the plaintiff, that they
were not authorized ones and that the plaintiff was unaware of the fraud till the new accountant
discovered it. In this case, the Court said that:
For this purpose, dictionary meanings of the word knowledge was
brought to our notice. Knowledge may include not only actual
knowledge, i.e., actual awareness of the fads relevant, but constructive
knowledge, i.e., knowledge attributed by law to the party in the
circumstances, whether he actually had the knowledge or not and
knowledge may be attributed to a person who has sought to avoid
finding out, or has shut his eyes to obvious means of knowledge, e.g.,
the man who is offered valuables cheaply in circumstances which
suggest that they may well have been stolen, but who refrains from
enquiry.

4. Commr. of Customs (Preventive) v. Aafloat Textiles (I) Pvt. Ltd. and Ors (2009) 11 SCC 18:
Commissioner of Customs confirmed the duty demand of Rs.6,69,40,149/- on 9 consignments of
gold and silver imported by M/s Aafloat Textiles (India) Ltd. under Section 28 alongwith
appropriate interest under Section 28AB of the Customs Act, 1962. Penalty equal to duty amount
on the importer under Section 114A of the Act was imposed. The department stated that the
license purchased by the importer from brokers for clearance of gold and silver was forged and,
therefore, was not valid for the consignments in question. The stand of the revenue was that since
the licenses were forged and were void, the buyer cannot have better title than the seller. The
Court held:
The maxim caveat emptor is clearly applicable to a case of this
nature. As per Advanced Law Lexicon by P. Ramanatha Aiyar,
3rd Edn. 2005 at page 721: Caveat emptor means "Let the
purchaser beware." It is one of the settled maxims, applying to a
purchaser who is bound by actual as well as constructive
knowledge of any defect in the thing purchased, which is
obvious, or which might have been known by proper diligence.
5. ITC Limited v. George Joseph Fernandez [1989] 1 SCR 469:

The first defendant, was the sole and absolute owner of two fishing trawlers and it was agreed to
charter and the plaintiff as charterer agreed to take on charter for the purpose of deep sea fishing
subject to the owner first defendant obtaining the requisite permission in writing from the Chief
Controller of Imports & Exports and the No Objection Certificate. The defendant owner will
deliver the said trawlers to the plaintiff charterer for carrying out the inspection of the said
trawlers by its authorized agents to ascertain repairs to be carried out to the trawlers for making
them fully operational without any defect provided the owner furnishes to the Charterer all
documents certifying sea-worthiness and also supplies proof of compliance of pre-condtions. The
parties agreed to modify the agreement in the manner stated in a subsequent written agreement.
The Court held that:
A mistake will not affect assent unless it is the mistake of both parties,
and is as to the existence of some quality which makes the thing without
the quality essentially different from the thing as it was believed to be. A
distinction, therefore, should be drawn between a mistake as to the
substance of the thing contracted for, which will avoid the contract and
mistake as to its quality which will be without effect. According to

circumstances even a mistake as to the substance of the thing contracted
for may not necessarily render a contract void as was observed in Solle
v. Butcher 1950 1 KB 671 (supra). Similarly in Frederick E. Rose
(London) Ltd. v. William H. Pim Junior & Co. Ltd. (1953) 2 QB 450
where both parties entered into a contract for the sale of horse-beans,
which were quite different from the feverless which they each believed
them to be, yet the contract was held not to be void.
6. Dresser Rand S.A v. Bindal Agro Chem. Ltd. & Anr. AIR 2006 SC 871:
The respondent company invited bids for the supply of equipments for its fertilizer plant and the
appellant responded to it. After discussions the Respondent issued General conditions of
purchase and this was modified several times and later placed a letter of intent. This letter of
intent mentioned that the Respondent would place a purchase order for the supply of the
equipment but it never placed a purchase order, and later expressed its decision not to procure the
equipment from the appellant. The Respondent filed a separate suit against the appellant seeking
a declaration that there was no binding contract between them and the appellant and that there
exists no valid arbitration agreement between them. Meanwhile, the appellant had commenced
arbitration proceedings before ICC and filed its application in the trial court, seeking the staying
of the suit proceedings initiated by the respondents. Having failed before the division bench of
the High Court, the Appellant appealed to the Supreme Court. The Court held that:
It is no doubt true that a Letter of Intent may be construed as a letter of
acceptance if such intention is evident from its terms. It is not
uncommon in contracts involving detailed procedure, in order to save
time, to issue a letter of intent communicating the acceptance of the
offer and asking the contractor to start the work with a stipulation that
the detailed contract would be drawn up later. If such a letter is issued to
the contractor, though it may be termed as a Letter of Intent, it may
amount to acceptance of the offer resulting in a concluded contract
between the parties. But the question whether the letter of intent is
merely an expression of an intention to place an order in future or
whether is a final acceptance of the offer thereby leading to a contract,
is a matter that has to be decided with reference to the terms of the letter.
Chitty on Contracts (Para 2.115 in Volume 1- 28th Edition) observes
that where parties to a transaction exchanged letters of intent, the terms
of such letters may, of course, negative contractual intention; but, on
the other hand, where the language does not negative contractual
intention, it is open to the courts to hold the parties are bound by the
document; and the courts will, in particular, be inclined to do so where
the parties have acted on the document for a long period of time or have

expended considerable sums of money in reliance on it. Be that as it
may.
7. V.B. Rangaraj v. V.B. Gopalakrishnan, AIR 1992 SC 453:

The third defendant was a private limited company which all along had a total shareholding of
50. In course of time, the family acquired the rest 37 shares and became the sole shareholder of
the company. The plaintiffs alleged that there was an oral agreement between the fathers of
defendants 1 and 2, that if any member in either of the branches wished to sell his share/shares,
he would give the first option of purchase to the members of that branch and only if the offer so
made was not accepted, the shares would be sold to others. Although on behalf of defendants, it
was disputed that there was any such agreement entered into between the two brothers, the
finding recorded by the courts is against the defendants. It is not in dispute that the Articles of
Association of the company were not amended to bring them in conformity with the said
agreement. Contrary to the said agreement, the first defendant sold the shares to defendants 4 to
6. Hence the plaintiffs filed the suit for a declaration that the said sale was void and not binding
upon the plaintiffs and the second defendant, among other reliefs. The Court held that:
Whether under the Companies Act or Transfer of Property Act, the
shares are, therefore, transferable like any other movable property. The
only restriction on the transfer of the shares of a company is as laid
down in its Articles, if any. A restriction which is not specified in the
Articles is, therefore, not binding either on the company or on the
shareholders. The vendee of the shares cannot be denied the registration
of the shares purchased by him on a ground other than that stated in the
Articles.
8. Gopal L. Raheja of Mumbai, Indian Inhabitant and Sandeep G. Raheja of Mumbai, Indian
Inhabitant v. Vijay B. Raheja of Mumbai, Indian Inhabitant and Ors.- 2007(4) BomCR
288:
The case of the Plaintiffs was that they were interested in commencing a hotel at Bangalore and
were negotiating with United Breweries (Holdings) Ltd. (UB) for the acquisition of the land in
question. The transaction between the parties, in other words, is according to the Plaintiffs, one
in which upon the land being purchased the Plaintiffs on the one hand and the First and Second
Defendants on the other, would be equal partners in regard to the property acquired, the
development of the land and the conduct of the Hotel.

The Agreement between the parties was recorded in a writing dated 27th September, 2003 and
the Plaintiffs had at all times been fully involved in preparing/finalizing the Agreements to be
entered into between UB and the acquiring Company and other documentation for the
transaction/acquisition. The Plaintiffs said that having regard to the Agreement between the
parties Defendants Nos. 1 and 2 were required to act on behalf of the Plaintiffs, in the matter of
acquisition of the said property for construction of a hotel thereon and in the matter of the said
Hotel project. According to the Plaintiffs, they requested the First and Second Defendants in
these meetings to carry out changes in the Memorandum and Articles of Association of the
Fourth Defendant to reflect the joint venture agreement between the parties. The Plaintiffs had
addressed a letter on for the completion of the formalities of the transfer of and followed this by
a further communication. According to the First Defendant, no agreement was ever reached
between the parties at any stage. The Court held that:
The case of the Plaintiffs, however, is that there is a relationship of
agency under the document of 27th September 2003 and the First and
Second Defendants were bound in a fiduciary character to protect their
interest. Section 88 of the Indian Trusts Act, 1882 comprehends first,
certain specified relationships - those of a trustee, executor, partner,
agent, director of a company and legal adviser. The second category
comprises of "a person bound in a fiduciary character to protect the
interest of another person". The categories which have been specifically
provided in the first part of the definition are, therefore, not exhaustive
since the subsequent part comprehends a person bound in a fiduciary
character to protect the interests of another. A fiduciary is defined as a
trustee, a person holding a character of trustee or a character analogous
to that of a trustee. The concept of a fiduciary involves a relationship
founded upon a trust or confidence.
9. Williams v. Central Bank of Nigeria [2014] UKSC 10:
Dr Williams claimed to be the victim of a fraud instigated by the Nigerian State Security
Services in 1986. His case was that he was induced to serve as guarantor of a bogus transaction
for the importation of foodstuffs into Nigeria. In connection with that transaction, he paid
$6,520,190 (USD) to an English solicitor to be held on trust for him on terms that it should not
be released until certain funds had been made available to him in Nigeria. Dr Williams claimed
that Mr Gale, knowing that those funds were not available to him in Nigeria, paid out $6,020,190
of the money to an account held by the Central Bank of Nigeria with Midland Bank in London,
and that he pocketed the remaining $500,000. Dr. Williams claimed against the Central Bank on
the basis that the Bank was a constructive trustee. The Bank was alleged to have dishonestly

assisted Mr. Gale to pay away the amount, and to have received the $6,020,190 knowing that it
represented trust funds paid to it in breach of trust. The Court said:
55. However, as Millett LJ explained in Paragon Finance Plc v DB
Thackerar & Co (a firm) [1999] 1 All ER 400, 409, the Courts of Equity
treated as a trustee not only an express or implied trustee and a trustee
de son tort, but also a person, who "though not expressly appointed as
trustee, has assumed the duties of a trustee by a lawful transaction
which was independent of and preceded the breach of trust and is not
impeached by the [claimant]". As he then said, such a person is known
as a constructive trustee, and really is a trustee, as "his possession of
the property is coloured from the first by the trust and confidence by
means of which he obtained it, and his subsequent appropriation of the
property to his own use is a breach of that trust.
10. Beatty v. Guggenhien Exploration Co. 225 N.Y. 380 at 386 (1919):
The plaintiff, a mining engineer was employed by the defendant corporation to perform such
duties as he might be called upon to perform by the company, and especially to visit such places
and perform such services in any part of the world as the officers of the company might from
time to time designate. This was followed by a general restriction upon the right of plaintiff to
engage professionally as engineer, or to become interested as a stockholder in certain classes of
securities. The defendant corporation sought to purchase some properties had been brought to its
attention by one Treadgold. The defendant Perry was sent to examine the properties under an
arrangement which left his compensation to be agreed upon thereafter. Perry and plaintiff were of
the opinion that if the company finally decided to exercise its options and acquire the properties
it then had under consideration. Treadgold, however, retained the right to repurchase the claims
from Perry by repayment of the money advanced, and a certain proportion of the preferred and
common stock of any company which might acquire the claims. Perry was not financially in a
position to provide the whole amount of the initial payment of $45,000 to Treadgold, so plaintiff,
who shared in Perry's valuation of the property, agreed to advance and did advance $35,000 of
the amount. At the same time an exploration company made a contract with Perry engaging his
services for two years as manager of the Yukon properties, and providing for his compensation
for his services in examining and reporting upon those properties and assisting in their

acquisition. The amount of this compensation was entirely a matter of negotiation, as he had no
contract with the company covering these services. In the meantime Treadgold paid Perry
$45,000, apparently in lieu of the stock which he had agreed to secure to Perry, but which could
not be issued because of the sale to the exploration company. The Court held that:
We think, therefore, that aside from the special provisions of this
contract, the agent became a trustee at the election of the principal. But
the contract reinforces that conclusion. It is true that an agent or a
partner who breaks a covenant not to engage in some other business
does not, as a matter of course, become chargeable as a trustee for the
profits of the forbidden venture (Dean v. MacDowell, L. R. 8 Ch. Div.
345; Trimble v. Goldberg, 1906, A. C. 494, 500; Aas v. Benham, 1891, 2
Ch. Div. 244; Latta v. Kilbourn, 150 U. S. 524, 547, 548). The agent may
be discharged; the partnership may be dissolved; there may be an action
for damages. But to raise a trust there must be more. It is sometimes
said that the profits of the forbidden venture must have been diverted
from the business of the principal or the partnership (See cases, supra).
We think it may fairly be found that there was a diversion of profits
here. But the test of diversion is not exhaustive. For most cases it may
supply a working rule, but the rule is a phase or illustration of a
principle still larger. A constructive trust is the formula through which
the conscience of equity finds expression. When property has been
acquired in such circumstances that the holder of the legal title may not
in good conscience retain the beneficial interest, equity converts him
into a trustee (Moore v. Crawford, 130 U. S. 122, 128; Pomeroy Eq. Jur.
sec. 1053). We think it would be against good conscience for the plaintiff
to retain these profits unless his employer has consented. The tie was
close between the employers business and the forbidden venture. The
profits which the agent claims have come from the employers coffers. If
the agent must account as a trustee, the price which the employer pays is
to that extent diminished. If the agent retains the profit, the price is to
that extent increased.
11. M.C. Chacko v State Bank of Travancore (1969) 2 SCC 343:

The Kottayam bank had an overdraft account with State Bank. MC Chacko was the manager of
the said bank and his father had guaranteed the repayment of debt. His father gifted his
properties to members of his family. The gift deed provided that liability if any under the said
guarantee should be met either by MC Chacko personally or through property gifted to him
under the said deed. State Bank sued all the heirs under the deed alongwith MC Chacko; albeit
limitation period to sue on letter of guarantee had already passed. The Court held that:
Clause (d) of Section 2 of the Contract Act widens the definition of
consideration so as to enable a party to a contract to enforce the same
in India in certain cases in which the English Law would regard the
party as the recipient of a purely voluntary promise and would refuse to
him a right of action on the ground of nudum pactum. Not only,
however, is there nothing in Section 2 to encourage the idea that
contracts can be enforced by a person who is not a party to the contract,
but this notion is rightly excluded by the definition of promisor and
promisee. Under the English Common Law only a person who is a
party to a contract can sue on it and that the law knows nothing of a
right gained by a third party arising out of a contract: Dunlop
Pneumatic Tyre Company v. Selfridge and Company [1915] A.C. 847 It
has however been recognised that where a trust is created by a contract,
a beneficiary may enforce the rights which the trust so created has given
him. The basis of that rule is that though he is not a party to the
contract his rights are equitable and not contractual. It must therefore
be taken as well settled that except in the case of a beneficiary under a
trust created by a contract or in the case of a family arrangement, no
right may be enforced by a person who is not a party to the contract.
12. Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs (2005)
3 SCC 738:
According to the Appellant, it is engaged in manufacturing sugar falling under sub item (1) of
Item No. 1 of the First Schedule to the Central Excise and Salt Act, 1944. The appellant claimed
rebate on the basis of Notification issued by the Government in exercise of the powers under
sub-rule (1) of Rule 8 of Central Excise Rules, 1944. It inter alia provided for exemption from

payment of excise duty leviable thereon in excess of average production of sugar of the
corresponding period of preceding three years. According to the appellant it was entitled to
benefit of exemption from octroi duty for excess production. The appellant, therefore, submitted
its claim for Rs. 6,92,779.59 ps. Being aggrieved by the order passed by the Assistant Collector,
the appellant preferred an appeal before the Collector of Central Excise (Appeals), Ahmedabad
who dismissed the appeals. In the instant case, the Court said:
30. Stated simply, Unjust enrichment means retention of a benefit by a person that is unjust or
inequitable. Unjust enrichment occurs when a person retains money or benefits which in
justice, equity and good conscience, belong to someone else.
The Court held that irrespective of applicability of the Act, the doctrine of unjust enrichment can
be invoked to deny the benefit to which a person is not otherwise entitled.

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7TH NUJS-HERBERT SMITH FREEHILLS NATIONAL

IN THE HIGH COURT AT CALCUTTA

In this dispute between:

SUBMISSION ON BEHALF OF THE

As Submitted to the Chief Justice & other

SUBMISSION ON BEHALF OF THE

SUBMISSION ON BEHALF OF THE

3.That the Appellants claim is barred by the doctrine of unjust enrichment............................19

SUBMISSION ON BEHALF OF THE

INDEX OF AUT HORITIES

Practising Law Institute, 2nd Edn,. 2006.

Consideration, Thomson West, 2nd Edn., 159-160, 2006.

3. Master Circular DBOD.AML.BC.No.22/14.01.001/ 2014-15 July 1, 2014.

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WILLIAM IN BENGAL ON THE ORIGINAL SIDE, 1914.

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