2206D

COMMERCIAL TRANSACTIONS – COURT ROOM EXERCISE

IN THE

LEARNED WEST DISTRICT COURT

AT DELHI

IN THE MATTER OF

CIVIL SUIT NO. XXXX/2024

MS. CHAWLA (REPRESENTED BY HERSELF)

[PLAINTIFF]

v.

CARDEKHO PVT. LTD. (REPRESENTED BY ITS CEO)

[DEFENDANT]

[Under Section 6, 9,15 and 19 read with Order VIII Rule 1 of the Code of Civil Procedure,

1908]

MEMORIAL on behalf of the DEFENDANT

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 TABLE OF CONTENTS

Index of Authorities ................................................................................................................. iii

Statement of Facts ..................................................................................................................... iv

Statement of Jurisdiction............................................................................................................ v

Issues for Consideration ............................................................................................................ vi

Summary of Arguments ...........................................................................................................vii

Arguments Advanced ................................................................................................................. 1

Prayer for Relief ......................................................................................................................... 7

Annexure 1 – Calculation of Costs ............................................................................................ 8

Affidavit in Support of the Memorial ........................................................................................ 9

Verification ............................................................................................................................... 10

Vakalatnama ............................................................................................................................. 11

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 INDEX OF AUTHORITIES

Case Laws

Bishopsgate Motor Finance Corpn Ltd v Transport Brakes Ltd, [1949] 1 KB 332, pp 336-337

................................................................................................................................................ 1

Cahn v Pockett’s Bristol Channel Steam Packet Co, [1899] 1 QB 643 ..................................... 5

Car and Universal Finance Co Ltd v Caldwell, [1964] 1 All ER 290 ...................................... 3

Commonwealth Trust v Akotey, [1926] AC 72 ........................................................................... 1

Cundy v Lindsay, (1878) 3 App Cas 459, p 464. ....................................................................... 3

Farquharson v King, [1902] AC 325 ......................................................................................... 1

King’s Norton Metal Co v Edridge , Merrett & Co, (1897) 14 TLR 98 (CA) ........................... 3

Newtons of Wembley Ltd v Williams, [1964] 3 All ER 532........................................................ 5

Purshottam Das Banarsi Das v The Union of India & ors, AIR 1967 All 549 ......................... 2

Stevenson v Newnham, (1853) 13 CB 285, p 302, 93 RR 532................................................... 3

Sumitra Debi Jalan v Satya Narayan Prahladka & ors, AIR 1965 Cal 355 ............................. 1

Tilley v Bowman, [1910] 1 KB 745. ........................................................................................... 3

Whitehorn Brothers v Davison, [1911] 1 KB 463 ...................................................................... 3

Statutes

General Clauses Act, 1897, § 3(20). .......................................................................................... 3

Indian Contract Act, 1872, §§ 19, 19A ...................................................................................... 2

Indian Contract Act, 1872, §19 .................................................................................................. 2

Sale of Goods Act, 1930, § 29 ................................................................................................... 2

Sale of Goods Act, 1930, § 30(2) ............................................................................................... 5

Sale of Goods Act, 1930, § 4(1) ................................................................................................. 4

Sale of Goods Act, 1930, § 45 ................................................................................................... 5

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 STATEMENT OF FACTS

Ms. Chawla listed her BMW X5 for sale at 90 lakhs through her friend Akhanadanand on

Catlecho.com. A Tulu-speaking buyer offered 93 lakhs and paid a 3-lakh cash deposit. The final

transaction occurred at Chawla's parents' house, where two men (the buyer and a taller

companion) arrived to complete the purchase.

The buyer provided a Bank of Baroda cheque for 90 lakhs. Satisfied with its appearance, Ms.

Chawla transferred the vehicle's documents, registration certificate, and keys. The buyer

requested to register the car under his uncle's company name, which Chawla agreed to despite

minor concerns. The men drove away with the vehicle, presumably for a final test drive, but

never returned.

When Ms. Chawla attempted to deposit the cheque at Punjab National Bank, it was discovered

to be counterfeit. She reported the theft to the police, who traced the vehicle to CarDekho Pvt.

Ltd., which had purchased it from a third party. CarDekho refused to return the vehicle,

claiming they bought it in good faith.

Ms. Chawla subsequently sued CarDekho for vehicle recovery, arguing that the original sale

was void due to the dishonored cheque, meaning the fraudulent buyers never obtained legal

title to transfer to CarDekho. CarDekho countered that they acquired the title in good faith and

invoked the principle of estoppel to assert their legitimate ownership of the vehicle.

Hence, the present matter before the court.

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 STATEMENT OF JURISDICTION

The Defendant most humbly submits that this Learned District Court at Jodhpur has the

requisite jurisdiction to hear and to adjudicate upon the present matters of CIVIL SUIT NO.

XXXX/2024 Under Section 6,9,15 and 19 read with Order VIII Rule 1 of Civil Procedure

Code, 1908.

The respondents most humbly submit to the jurisdiction of this Hon’ble Court.

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 ISSUES FOR CONSIDERATION

I. Whether Ms. Chawla is estopped from setting up her title against CarDekho Pvt. Ltd.?

II. Whether the exception under section 29 of the Sale of Goods Act, 1931 will apply in the

current scenario?

III. Whether the Tulu-speaking buyer can be considered as a buyer in possession after sale?

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 SUMMARY OF ARGUMENTS

I. Whether Ms. Chawla is estopped from setting up her title against CarDekho Pvt.

Ltd.?

Ms. Chawla is estopped from setting up her title against CarDekho Pvt. Ltd. as she had given

both the possession of the car and the docments to the buyers who thus had appeared to have

authority to sell the car.

II. Whether the exception under section 29 of the Sale of Goods Act, 1931 will apply

in the current scenario?

The exception under section 29 will apply in the current scenario as there was fraudulent

activity on behalf of the buyer, but the contract was not rescinded before the transfer of

ownership to CarDekho due to which the obtained and indefeasible title.

III. Whether the Tulu-speaking buyer can be considered as a buyer in possession after

sale?

The Tulu-speaking buyer can be considered as a buyer in possession after sale as they had got

both the possession of the car and the documents with which they sold the car to CarDekho.

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 ARGUMENTS ADVANCED

1. Ms. Chawla is estopped from setting up her title against CarDekho Pvt. Ltd.

1.1. “In the development of our law, two principles have striven for mastery. The first is

for the protection of property: no one can give a better title than he himself possesses.

The second is for protection of commercial transactions: the person who takes in good

faith and for value without notice should get a good title. The first principle has held

sway for a long time, but it has been modified by the common law itself and by statute

so as to meet the needs of our times.”1

1.2. The owner of the goods may so act as to be precluded from disputing the validity of

the transactions and be estopped from setting up his title against the buyer.2

1.3. Estoppel may arise as an exception to nemo dat quod non habet by permitting ‘goods

to go into the possession of another with all the insignia of possession thereof and

apparent title’.3

1.4. The owner should have done something that amounted to a disregard for his duties

towards the person who relies on the negligence as generating an estoppel, or else the

buyer would not have been misled by the act.4

1.5. In the present case, CarDekho had acted in good faith and for value for which they

should get a good title due to the exceptions to section 27. Ms. Chawla, the owner of

the goods is precluded from disputing the validity of the transactions as she not only

gave the buyer they key of the car, but also handed over the registration certificate and

the logbook, while also mentioning that the transfer papers were inside the car. The

documents that were handed over along with car estop Ms. Chawla from contesting

the validity of the transaction.

1
Bishopsgate Motor Finance Corpn Ltd v Transport Brakes Ltd, [1949] 1 KB 332, pp 336-337.
2
Sumitra Debi Jalan v Satya Narayan Prahladka & ors, AIR 1965 Cal 355.
3
Commonwealth Trust v Akotey, [1926] AC 72.
4
Farquharson v King, [1902] AC 325.

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 1.6. The car was given with all the insignia of position to the buyers, which showed

CarDekho that they had apparent title.

1.7. Ms Chawla, buy allowing the buyers to keep the car with them led CarDekho into

believing that the buyers had proper title, where it was her duty to make sure that the

possession was transferred only after due diligence.

Therefore, Ms. Chawla is estopped from setting up her title against CarDekho Pvt. Ltd. due to

her own actions.

2. The exception under section 29 of the Sale of Goods Act, 1931 will apply in the current

scenario.

2.1. In the event that the buyer purchases goods in good faith and is unaware of the seller's

title defect, the buyer acquires good title to the goods when the seller obtained

possession of them under a contract voidable under section 19 or section 19A of the

Indian Contract Act, 1872,5 provided the contract has not been rescinded at the time of

the sale.6

2.2. As per section 19, the contract is voidable at the option of the party when there is fraud

or misrepresentation.7

2.3. In the case of sale by a person holding under a contract voidable for fraud or the like

at the other party’s option—here, the transaction being valid until rescinded, a third

person purchasing in good faith and for value gets an indefeasible title.8

2.4. When A ordered items from the plaintiffs under the name B & Co., and after receiving

delivery, resold them to the defendants, with B & Co. being a fictitious company that

A fraudulently registered to give the impression that he was conducting substantial

5
Indian Contract Act, 1872, §§ 19, 19A.
6
Sale of Goods Act, 1930, § 29.
7
Indian Contract Act, 1872, §19.
8
Purshottam Das Banarsi Das v The Union of India & ors, AIR 1967 All 549.

2
 business. The plaintiffs filed a trover action against the defendants after not receiving

payment for the products. It was decided that the defendants had acquired fair title to

the items and that there existed a contract between the plaintiffs and A.9

2.5. In Car and Universal Finance Co Ltd,10 it was held that recession took place only once

the plaintiff had taken all possible steps to regain possession of the goods, such as

asking the police to get the car back for him. Any such steps to avoid the contract had

to be taken before the fraud had completed his subsequent transactions.

2.6. The buyer will obtain a good title there even if it later turns out that there were

circumstances related to the contract that would have allowed the original owner of the

goods to reduce it and set it aside. This is because the buyer will have obtained the

chattel through a de facto contract, which is a contract that purported to pass the

property to him from the owner of the property.11

2.7. Fraud only gives the option to avoid the contract, it does not void the contract, therefore

the property will pass in the subject matter.12 Therefore title obtained by a party through

a voidable contract for valuable consideration in good faith by a third party when the

contract has not yet been avoided, is indefeasible.13

2.8. Good faith is doing something honestly, which may be negligent or not.14

2.9. When it comes to the issue of proving good faith or notice to the third party, the burden

of proof rests on the party seeking to invalidate the transaction to prove that either of

the elements were fulfilled.15

9
King’s Norton Metal Co v Edridge , Merrett & Co, (1897) 14 TLR 98 (CA).
10
Car and Universal Finance Co Ltd v Caldwell, [1964] 1 All ER 290
11
Cundy v Lindsay, (1878) 3 App Cas 459, p 464.
12
Stevenson v Newnham, (1853) 13 CB 285, p 302, 93 RR 532.
13
Tilley v Bowman, [1910] 1 KB 745.
14
General Clauses Act, 1897, § 3(20).
15
Whitehorn Brothers v Davison, [1911] 1 KB 463.

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 2.10. In the present case, CarDekho bought the goods from the buyers unaware of

their defect in their title, and since Ms. Chawla did not avoid the contract on time, the

second title passed on to CarDekho, though the contract was voidable at the option of

Ms. Chawla.

2.11. Since CarDekho had acquired the car before Ms. Chawla could rescind her

contract, they acquire a indefeasible title.

2.12. The recession of the contract only took place once Ms.Chawla had approached

the police after several days of depositing the cheque as there were no other possible

steps taken before it signified the recession, by which time third-parties had already

sold the goods to CarDekho due to which they got an indefeasible title. No steps were

taken to avoid the contract before CarDekho had received the possession of the car.

2.13. CarDekho had bought the car with good faith and without any notice of the

defect in title. Further, the burden of proof lies on Ms. Chawla to prove the absence of

good faith of the presence of notice as to the defect of the title of the buyer.

Therefore, exception under section 29 of the Sale of Goods Act, 1931 will apply in the current

scenario.

3. The Tulu-speaking buyer can be considered as a buyer in possession after sale.

3.1. A contract of sale of goods is a contract whereby the seller transfers or agrees to

transfer the property in goods to the buyer for a price. There may be a contract of sale

between one part-owner and another.16

3.2. The delivery or transfer of the goods or documents of title by that person, or by a

mercantile agent acting on his behalf, to any person receiving the same in good faith

and without notice of any lien or other right of the original seller in respect of the goods

16
Sale of Goods Act, 1930, § 4(1).

4
 shall have effect as if such lien or right did not exist. This occurs when a person, having

bought or agreed to buy goods, obtains, with the consent of the seller, possession of

the goods or the documents of title to the goods.17

3.3. If all other requirements of section 30(2) are fulfilled,18 rescission of the voidable

contract of sale by the true owner will not prevent an innocent buyer from acquiring a

good title under section 30(2) even if he cannot do so under section 29.

3.4. If the possession of the property is with the consent of the owner, it is immaterial if the

consent was subsequently withdrawn.19

3.5. In Newtons of Wembley Ltd v William, the owner agreed to sell a car and gave its

possession to the buyer on a condition that the property should not pass to the buyer

till payment of price. On the cheque being dishonoured the owner rescinded the

contract. The buyer, however, sold the car and the subsequent purchaser re-sold it to

the defendant. The Court upheld the defendants’ title to the car against the owner on

the ground that the car was purchased from the buyer in good faith and without notice

of the buyer’s title or of the fact that the consent of the owner by which the buyer was

in possession had been determined. 20

3.6. As per section 45, the seller will have certain rights when the whole price has not been

paid or tendered.21

3.7. In Cahn v. Pockett’s Bristol Steam Packet Co., the buyer never received ownership of

the copper; rather, the sellers gave their permission for the buyer to keep the bill of

lading, even though it was his responsibility to return it because he refused to accept

the bill of exchange that was attached to it. The buyer did not deceive the sellers into

17
Sale of Goods Act, 1930, § 30(2).
18
Sale of Goods Act, 1930, § 30(2).
19
Cahn v Pockett’s Bristol Channel Steam Packet Co, [1899] 1 QB 643.
20
Newtons of Wembley Ltd v Williams, [1964] 3 All ER 532.
21
Sale of Goods Act, 1930, § 45.

5
 giving up the bill of lading, as they had sent it to him voluntarily. Because "from the

point of view of the bona fide purchaser, the ostensible authority based on the fact of

possession is the same, whether there is property in the thing, or authority to deal with

it in the person in possession at the time of the disposition or not," the plaintiffs thus

acquired good title to the copper in opposition to the original sellers.

3.8. In the present scenario, the buyers can be a buyer in possession after sale as per section

30 of the Sale of Goods Act as they paid an advance of 3 lakh rupees and received the

possession of the car and its documents.

3.9. The buyers had not only received the possession of the car, but they had also received

the ownership documents of the car, with the consent of Ms Chawla.

3.10. Irrespective of the fact that Ms. Chawla wanted to rescind the contract as her

consent was vitiated after the dishonour of the cheque, this section will apply to give

ownership of the car to CarDekho.

3.11. CarDekho shall have the ownership of the car as they bought the car in good

faith and without notice of the lack of title. Due to the fact that Ms. Chawla had

voluntarily given the documents to the buyer and had no problem when the same was

no returned, a bonafide purchaser such as CarDekho would view this as ostensible

authority due to the possession of the car and documents.

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 PRAYER FOR RELIEF

Wherefore in light of the facts stated, issues raised, arguments advanced and authorities cited,

it is most humbly and respectfully prayed that this Learned Court may be pleased to:

i. Dismiss the suit with costs;

ii. Declare CarDekho to have ownership of the BMW X5 car.

And pass any other order that the Learned Court may deem fit in the ends of justice and good

conscience.

All of which is most humbly and respectfully, submitted

Date: 9th October 2024 Counsel No. 2206D

Place: Delhi (Counsel for Defendant)

7
 ANNEXURE 1 – CALCULATION OF COSTS

Cost of Litigation Rs. 2,00,000

TOTAL COSTS Rs. 2,00,000

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 AFFIDAVIT IN SUPPORT OF THE MEMORIAL

IN THE LEARNED WEST DISTRICT COURT AT DELHI

CIVIL SUIT NO. XXX/2024

MS. CHAWLA (REPRESENTED BY HERSELF)…………..………………………..…[PLAINTIFF]

v.

CARDEKHO PVT. LTD. (REPRESENTED BY MR. X)………...……………………...[DEFENDANT]

AFFIDAVIT

I, Mr. X, aged 36 years, S/O Mr. Z, R/o 12, Malabar Hill Road Road, Walkeshwar, Delhi, Chief

Executive Officer of CarDekho Pvt. Ltd., Defendant above named swear in the name of God

and state as under:

1. That I am defendant in this case and conversant with the facts of the case.

2. That the contents of the memorial may be treated as part of this affidavit.

3. That the contents of the memorial are true to the best of my knowledge and information

received and believed to be true.

Place: Delhi

Date: 9th October 2024

S/d

9
 VERIFICATION

I, Mr. X, aged 36 years, S/O Mr. Z, R/o 12, Malabar Hill Road Road, Walkeshwar, Delhi, Chief

Executive officer of CarDekho Pvt. Ltd., Defendant above named swear in the name of God

and verify on oath that the contents of this affidavit are true to the best of my knowledge and

information received and believed to be true.

Place: Delhi

Date: 9th October 2024

S/d

10
 IN THE LEARNED WEST DISTRICT COURT AT DELHI

CIVIL SUIT NO. XXX/2024

MS. CHAWLA (REPRESENTED BY HERSELF )…………..…………...……………..…[PLAINTIFF]

v.

CARDEKHO PVT. LTD. (REPRESENTED BY MR. X)………………………...……...[DEFENDANT]

VAKALATNAMA

I, Mr. X, aged 36 years, S/O Mr. Z, R/o 12, Malabar Hill Road Road, Walkeshwar, Delhi , Chief

Executive Officer of CarDekho Pvt. Ltd., defendant abovenamed, do hereby appoint and retain

Counsel, Mr. Anirudh S K , to act and appear for me in the above Suit and on our behalf to

conduct or withdraw the same and all proceedings that may be taken in respect of any

application connected with the same or any decree or order passed therein, including

proceedings in taxation and application for Review, to file and obtain return of documents and

to deposit and receive money on my/our behalf in the said Suit and in application for Review

and to represent us and to take all necessary steps on our behalf in the above matter. I agree to

ratify all acts done by the aforesaid Advocate in pursuance of this Authority.

Dated this 9th day of October 2024

S/d Counsel for the Defendant

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