MOOT COURT COMPETITION

2022-2023

19TH – 20TH APRIL 2023.

DEPARTMENT OF LAW

INVERTIS UNIVERSITY, BAREILLY.

 MOOT PROBLEM
Madhav, 25 years old, is a citizen of Indica and a resident of house no. 29, A-Block Sector-
18, Fidoa, Vidhayak Pradesh, 240005, belongs to a conservative family, yet he is an open-
minded person with modern ideology. His father Rakesh is a government employee of Grade
D & his mother is a housewife. Both parents somehow managed to send Rahul to IIM
Mehmdabad for pursuing MBA in entrepreneurship. Since he was a bright scholar, he got a
grant of rupees 10 lakh during his last year of the college, to start a business of his own
choice from the institute. After completing the course, Madhav stepped into the real world,
analysed the market and saw a great opportunity in the business of liquor manufacturing and
selling. However, he soon realised that the amount of grant would not be sufficient for
starting the business he wants. At very first Madhav asked his parents for financial support
but faced denial from them because of their stringent ideology that even touching liquor is a
sin for their family.

Rahul a friend of Madhav 24 years old, who belongs to a rich modern family, is a resident of
Sky-High Apartments, Mehmdabad. He was a junior to Madhav in IIM Mehamdabad & was
very popular in the college for his involvement in consumption of abusive substances and this
fact was not hidden from Madhav. After facing rejection from his parents in terms of
financial support, Madhav approached his friend Rahul, with a proposal of setting up a
partnership firm for opening a manufacturing unit and multiple outlet chain of Liquor Stores,
called “Town Down” exclusive of their brand, named ‘Johhnie Beam’ with alcohol content
43.2 % V/V throughout Indica. Considering, mercurial rise in the liquor business, and
persuaded by the idea of profits, after two days of proposal on 28-07-2017, Rahul agreed to
accept the offer made by Madhav to enter into partnership agreement with him.

It was mutually decided by both the parties that Rahul will cover rent and labour of
manufacturing units and outlets in addition to transportation expenses with 25 % of shares in
business and Madhav will pay all the remaining expenses with 75% of shares in this business.
They named the firm as ‘Avani Adult Beverages Ltd.’ Both conjointly, in the name of firm,
applied for the license of manufacturing and outlets for retail selling of liquor in the state as
mentioned aforesaid which was duly granted to the firm by Excise Department of the state on
07-03-2018. It was also decided mutually by the parties that any of the parties will not
profess any other trade or business of identical or similar kind during the term of partnership
agreement. The parties must refrain from using company’s resource for their own benefit of
any kind. The agreement shall stand valid until repudiated by both parties mutually with their
free consent or the firm is dissolved by any other authority, or the firm is liquidated.

As per the partnership agreement, they started manufacturing liquor and received an order for
their first batch on 03-09-2018. For delivering of manufactured liquor, the firm entered in an
agreement with a transporting agency, Fatafat Delivery Services Ltd., based in Mehmdabad.
The agreement signed by the Avani Adult Beverages Ltd. (hereinafter referred as Liquor
Firm) and Fatafat Delivery Services Ltd. (hereinafter referred as Delivery Firm) on 30-10-
2018 and duly notarised in Mehamdabad, with conditions that the Delivery Firm and Liquor
Firm will be bound by the agreement for 5 years until repudiated by both mutually. As
mutually agreed by the parties, the charge of the services rendered to the Liquor Firm would
be @12 Rupees/km from the manufacturing unit to the place of delivery for the beginning
year and will increase with the rate of 10% per annum from the subsequent years which
would be paid to the delivery firm after 4 days of the said transportation to the specified
destination by the Delivery Firm. The capacity of the vehicles shall be of 3 tonnes or 2800
bottles, whichever is available and the vehicle must be provided immediately by the delivery
firm as per the requirements. As mutually agreed by the parties, one member authorised by
the Avani Adult Beverages Ltd. would accompany the vehicle for the purpose of delivering
the manufactured liquor to the place of destination. Neither party would act in any manner
which would result in harming the goodwill of Avani Adult Beverages Ltd.

The Business started at a great pace after huge advertisement and promotion, only within 6
months the revenue generated by liquor firm was hitting new records. Madhav & Rahul
became youth icon in the society. They earned name and fame at the same time graced with
huge amount of wealth. With major shares in the business, Madhav made a fortune which
enabled him to be an independent entrepreneur and run the business on his own. Madhav’s
parent had a change of heart after having glimpse of Madhav’s success on social media and
decided to visit his manufacturing unit. The visit of his parents did not end well, as it led to
exchange of some heating arguments between Madhav and his parents as his parents
witnessed Rahul placing something suspicious in small brown packets in the transporting
vehicle number ending with 4847 on the morning of 15-06-2019. Madhav was not ready to
believe his parents, owing to their ideology as he thought, they were not supporting him from
the very beginning of his business. But it sown a seed of doubt in the mind of Madhav that
Rahul might be indulge in such kind of activities based on his prior experiences during their
MBA program.

On 30-07-2019, the liquor firm got a big consignment of volume 4000 bottles of liquor which
was to be delivered in two parts of 1500 and 2500 bottles on 12-08-2019 & 20-12-2019
respectively. At 4 pm on 15-12-2019, a commercial vehicle, with registration number VP 24
AX 5346 loaded with 2500 bottles was to be departure from manufacturing unit, Madhav
insisted Rahul to accommodate the vehicle as per the agreement for that particular delivery.
Rahul left the unit at 5 pm on the same day with driver, Satyendra Pal. While passing from
the National Highway34, the vehicle was stopped for regular checking by a police inspector,
Hakim Singh. After due inquiry it was found that the vehicle is registered in the name of the
Delivery Firm (Fatafat Delivery Services Ltd). Hakim Singh asked Satyendra Pal to open the
backdoor of vehicle for regular check. At first the Satyendra Pal hesitated and frightened, but
later on repeated demand, he opened the back door of the vehicle. The inspector directed a
constable named Suhan Singh to check the vehicle, while he was examining the business
invoice.

Suhan Singh found a bag consisting of 6 packets, each weighing around 50-60gm. The bag
was opened in front of the inspector, and he has reason to believe that Rahul is carrying
something illegal, as packets were wrapped in a brown covering, and were heavily taped. On
opening the packet, Hakim Singh found something in form of powder, suspecting Rahul of
carrying illegal substances in such a large quantity. He arrested Rahul and Satyendra Pal and
seized the vehicle and substances on the spot and lodged a FIR. The seized substances were
sent to Forensic Department on 10-01-2020 for further investigation under the supervision of
Magistrate. The report sent by Forensic Department clearly indicated that, the six packets
found in vehicle were comprising of drugs called Cocaine, Morphine & Diacetylmorphine.
As per report sent by the forensic unit, the quantity of each drug was in equal proportions of
1kg and was divided into two packets weighing 50grams each.

During investigation, the driver, Satyendra Pal, stated: “This vehicle was loaded in the
storage unit of Avani Adult Beverages Ltd. on 15-12-2019 in afternoon around 3-4 pm, and
my duty was only to deliver the loaded goods to the specified place. Rahul accompanied me,
and he must have hidden the packets during loading of liquor bottles in the vehicle.”
Subsequently, Madhav was arrested from his house. The manufacturing unit got sealed,
business was closed. The chargesheet was filed on 04-02-2020 against the Delivery Firm and
Liquor Firm in the names of: Satyendra Pal (Driver), Rahul and Madhav. During trial, Rahul
gave statement to media against Madhav by stating: “Madhav is a drug addict & he operates a
drug business in the name of liquor business. He also delivers various drugs through their
exclusive outlets to the young children and making the youth drug-addict.” This statement
was telecasted by various news agencies, which led to controversy. The lower court, in
absence of strong evidences acquitted Madhav and ordered for reopening the Liquor firm and
convicted Rahul and Satyendra Pal with rigorous imprisonment of one year with fine of 2000
rupees & one year imprisonment with fine 1000 rupees, respectively.

Once again Madhav stepped into the real world and reopened his business. He asked the
Delivery Firm to send a vehicle for transportation of manufactured goods to a specific place,
however, it was denied by the Delivery Firm stating non-availability of vehicle for two
weeks. Meanwhile, Avani Adult Beverages Ltd hired four vehicles from different
transporting services, for two weeks @ whooping price of 20 Rupees/km each of which
eventually covered 800km for said deliveries. Even after two weeks, Fata Fat Delivery Firm
denied to provide vehicle to Avani Adult Beverages Ltd, due to which Madhav had to bear
huge losses.

This time, the sales of liquor were very low, due to the derogatory statements made by Rahul
against Madhav and non-delivery of goods on time, which led to mammoth loss to the liquor
firm. Consequently & resentfully Madhav, filed a suit of defamation along with a suit of
breach of partnership agreement against Rahul and a suit for specific performance & breach
of agreement against Delivery firm in the lower court. In which the trial court convicted
Rahul and impose a punishment of imprisonment of 2 years with a fine of 15000 rupees. In
the suit of breach of contract, the civil court order a 100% stake to Madhav and also
compensated damages of 17000 rupees. In the suit between Liquor firm and Delivery Firm,
the court held delivery firm is liable for the breach of contract and awarded damages of
rupees 10,00,000 payable to Liquor Firm by the delivery firm. Aggrieved by the decision of
lower court, Rahul and Fata-fat Delivery services appealed in district court to which the
District Court upheld the decision of Lower Court. Further, Rahul & Fata-Fat services
appealed, in High Court of Vidhayak Pradesh, against the decision of District Court.

Issues:

1. Whether the appeals are maintainable or not?

2. Whether the lower court erred in giving decision in defamation case?
3. Whether the lower court erred in giving decision in breaching partnership agreement
against Rahul or not?
4. Whether damages granted to Avani Adult Beverages Ltd. are justified or not?