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TMI Blog2023 (12) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned Arbitrator passed under Section 17 of the Arbitration Act, merely because another view is possible in the matter. The discretion exercised by the learned Arbitrator, based upon a plausible view and upon taking into consideration all relevant material, cannot be lightly interfered with by this Court exercising jurisdiction under Section 37(2)(b) of the Arbitration Act - This Court intends to consider the impugned order passed by the learned Arbitrator in this backdrop and based upon the material available on record, in the light of the rival submissions made on behalf of the parties. The findings rendered by the learned Arbitrator that the Term Sheet was prima facie an agreement to enter into an agreement, was not even a plausible view. This Court finds that the learned Arbitrator took into consideration all the relevant material, including the clauses of the Term Sheet in detail, while rendering findings on the said aspect of the matter, which cannot be termed as wholly implausible. Therefore, on the said aspect of the matter, no ground is made out on behalf of the petitioner for holding that the finding rendered by the learned Arbitrator could be said to be perver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire 100% of the shareholding in respondent No. 2 and the petitioner also proposed to run and operate the units of respondent No. 2 till September, 2025. As per the Term Sheet, the parties were to eventually execute a Share Purchase Agreement (hereinafter referred to as SPA ). The parties were to share the information in the backdrop of a due diligence exercise to be carried out by the petitioner with co-operation from the respondents. 5. There were series of interactions between the parties in the light of execution of the Term Sheet and according to the petitioner, such interaction continued till 18.04.2023 when the petitioner sent a letter to the respondents forwarding the commercial offer for the SPA to be executed. According to the petitioner, as per clause 16 of the Term Sheet, the time period for execution of SPA by 12.04.2023, stood extended by the exchange of written communications between the parties and that since the Term Sheet was a binding offer, upon acceptance of the same by the petitioner, it was converted into a concluded contract. As opposed to this, the respondents took a position that the date of 12.04.2023 could have been extended only by a written agreement b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arkadas, learned senior counsel appearing for the petitioner, attacked the findings in the impugned order on the ground that the learned Arbitrator had posed a wrong question, as a consequence of which, erroneous findings were rendered against the petitioner, resulting in dismissal of the application filed under Section 17 of the Arbitration Act. It was submitted that the petitioner had never claimed before the learned Arbitrator that the Term Sheet in itself was a concluded contract between the parties, but it was specifically contended that the Term Sheet was a binding offer by the respondents given to the petitioner, subject to acceptance by the petitioner. According to the learned senior counsel appearing for the petitioner, if and when the petitioner accepted the binding offer, the Term Sheet stood converted into a concluded contract between the parties in relation to the proposed SPA. On this basis, it was submitted that the entire discussion in the impugned order of the learned Arbitrator on the aspect of the Term Sheet being merely an agreement to agree and not being a concluded contract, amounts to a complete misreading of the submissions made on behalf of the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of their own wrong, for the reason that the respondents did not cooperate with the petitioner in carrying out the exercise of due diligence, due to which the date of 12.04.2023 could not be adhered to, for completion of due diligence and execution of the contemplated document. All the while, the respondents gave an impression to the petitioner that they were discussing and finalizing the commercial terms and in such a situation the respondents cannot be permitted to turn around and insist that after 12.04.2023, the Term Sheet had lapsed. It was emphasized that the malafide conduct of the respondents was further evident from the fact that one day prior to the aforesaid date i.e. 12.04.2023, the respondents entered into a transaction with a third party in respect of the same subject matter, thereby demonstrating the ill-intention of the respondents. Yet, the learned Arbitrator held in favour of the respondents. 14. It was submitted that in the light of the material placed on record on behalf of the petitioner and the nature of contentions raised as regards interpretation of the Term Sheet, not only was a strong prima facie case made out in favour of the petitioner, but the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned senior counsel for the petitioner relied upon judgment of the Supreme Court in the case of Godhra Electricity Co. Ltd. and another vs. State of Gujarat and another 1974:INSC:174 : (1975) 1 SCC 199, to contend that this Court could appreciate the conduct of the parties to interpret the clauses of the said Term Sheet. It was further submitted that upon a proper reading of the Term Sheet, and appreciating the conduct of the parties, it would be evident that the interpretation placed by the learned Arbitrator on the same cannot be said to be even a plausible view and that therefore, interference in the impugned order is warranted. On this basis, it was submitted that the impugned order may be set aside and the reliefs claimed on behalf of the petitioner in its application under Section 17 of the Arbitration Act, may to be granted. 17. On the other hand, Mr. Darius Khambata, learned senior counsel appearing for the respondents opened his arguments by emphasizing upon the limited jurisdiction available to this Court under Section 37 of the Arbitration Act, to interfere with an order passed by the learned Arbitrator under Section 17 thereof. He also placed reliance on the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that context, it was submitted that the aforesaid ground is not available to the petitioner, for the reason that the present arbitration proceeding is an international commercial arbitration. Reliance was placed on Section 34(2-A) of the Arbitration Act, to support the aforesaid contention. On this basis, it was submitted that the scope for interference in the impugned order, was further reduced in the present case. 20. Upon referring to the clauses of the Term Sheet, it was submitted that the same could not be said to be a binding offer or an agreement, of which specific performance could be sought. The learned senior counsel for the respondents referred to the clauses of the Term Sheet and submitted that further negotiations were contemplated therein and that the commercial terms were yet to be finalized before a concluded agreement or contract could come into being. 21. It was submitted that in the present case, for the Term Sheet to be converted into a binding document, the petitioner was required to take necessary steps and indicate such an intention on or before 12.04.2023. In that sense, the aforesaid date was sacrosanct. Referring to clause 16 of the Term Sheet, it was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berately deleted the words under the relevant documentation which the petitioner will supply to the respondents . According to the respondents, the said words were deleted to overcome the finding of the learned arbitrator that prima facie, the petitioner had failed to prove that a conclusive contract had come into existence between the parties. 25. It was further submitted that there were differences between the clauses of the Term Sheet and the commercial offer, thereby indicating that the commercial offer of the petitioner, did not amount to acceptance of the Term Sheet. The differences were sought to be elaborated on the part of the respondents. The learned senior counsel for the respondents also sought to distinguish the judgements upon which the petitioner had placed reliance, indicating that the judgment of the Delhi High Court in the case of Asian Hotels (North) Limited vs. Sital Dass Sons and another (supra) was contrary to the law laid down by the Supreme Court in the case of Wander Ltd. vs. Antox India Pvt. Ltd. (supra). It was further submitted that the petitioner was not justified in relying upon judgment of the Supreme Court in the case of Godhra Electricity Co. Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his context, one of the aspects for consideration can be that the limitations applicable to exercise of jurisdiction under Section 34 of the Arbitration Act, while considering an application for setting aside an arbitral award also apply to an appeal filed under Section 37 of the Arbitration Act, to challenge an order passed under Section 34 thereof. But, an appeal or petition filed under Section 37(2) (b) of the Arbitration Act, is in a situation where the arbitral proceedings are still pending before the Arbitral Tribunal and the Court is required to consider as to whether the interim measure granted or refused by the Arbitral Tribunal needs any interference. 29. Considering the said peculiar jurisdiction to be exercised by the Court under Section 37(2)(b) of the Arbitration Act, in a recent order passed on 06.02.2023 in Commercial Arbitration Petition (Lodging) No. 40252 of 2022 (Swan Energy Limited vs. Peninsula Land Limited), this Court held that while exercising jurisdiction under Section 37(2)(b) of the Arbitration Act, the Court ought to apply the principles applicable to an Appeal from Order under Order 43 of the CPC. In that context, the principles laid down by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p and based upon the material available on record, in the light of the rival submissions made on behalf of the parties. 32. A frontal attack was launched on behalf of the petitioner on the findings rendered by the learned Arbitrator, inter alia, indicating that the learned Arbitrator passed an unnecessarily detailed order rendering emphatic findings against the petitioner, virtually leaving no scope for the petitioner to ventilate its grievances in the main arbitration proceedings. This Court is of the opinion that if a party invites the Arbitrator to discuss and render findings on a plethora of issues and indulges in detailed arguments at the interim stage itself, the Arbitrator cannot be blamed for passing a lengthy judgment and order, encompassing or touching upon various issues that go to the root of the matter. In fact, the learned Arbitrator was called upon to deal with the detailed contentions raised on behalf of the parties to examine as to whether interim measures sought by the petitioner could to be granted or not. Hence, it cannot be said that the learned Arbitrator should not have gone into the issues raised on behalf of the petitioner in such detail. 33. It was vehemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he insistence of the petitioner that the Term Sheet was a binding offer has to be seen from this perspective. The tenor of submissions made before the learned Arbitrator and the admitted position that the date of 12.04.2023 came and went by, shows that the petitioner itself was in negotiations and the intention to sign the binding SPA at the same commercial terms as set out in the Term Sheet, was not expressed by the petitioner till the specified date of 12.04.2023. Not extension was sought in writing. 37. Viewed from this angle and in the light of the ultimate reliefs sought by the petitioner in the arbitral proceedings, it cannot be said that the findings rendered by the learned Arbitrator that the Term Sheet was prima facie an agreement to enter into an agreement, was not even a plausible view. This Court finds that the learned Arbitrator took into consideration all the relevant material, including the clauses of the Term Sheet in detail, while rendering findings on the said aspect of the matter, which cannot be termed as wholly implausible. Therefore, on the said aspect of the matter, no ground is made out on behalf of the petitioner for holding that the finding rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terminated the Term Sheet, unless the transaction documents were executed prior to that date. The said date could have been extended only in writing by the parties. Clause 20 of the Term Sheet also indicates that alterations, additions or modifications of the Term Sheet would be valid and binding only if the same were made in writing and signed by all the parties. Even if it is to be held that the amendment contemplated and the procedure prescribed in clause 20 of the Term Sheet was not to apply to clause 16, the mechanism provided in clause 16 of the Term Sheet is self-operating. In other words, extension of the term beyond 12.04.2023 could only be made in writing, upon an agreement between the parties for such extension. 41. In this context, the learned Arbitrator analyzed in great detail the e-mails and whatsapp messages exchanged between the parties. Upon an analysis of such material, the learned Arbitrator found that the date 12.04.2023 occurred and yet the transaction document was admittedly not executed. The learned Arbitrator also found that there was no extension in writing and that therefore, by operation of clause 16 (b) of the Term Sheet, the same stood terminated. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prima facie case for grant of interim measures. In any case, even in the period beyond 12.04.2023 and upto 18.04.2023, the petitioner itself was seeking further time to place documents before the respondents, thereby indicating that it had not expressed its intention of signing the binding SPA as contemplated in the Term Sheet. 45. In this context, the contention raised on behalf of the respondents about the variance in the prayers made in the petition filed under Section 9 of the Arbitration Act and in the present petition filed under Section 37 thereof, assumes significance. In the petition filed under Section 9 of the Arbitration Act, the petitioner had used the words under the relevant documentation which the petitioner will supply to the respondents. These words indicate that even at the stage of filing and pressing the petition filed under Section 9 of the Arbitration Act, the petitioner contemplated supplying relevant documentation to the respondents. The aforesaid words are conspicuously absent in the prayer made in the present petition. There is substance in the said contention raised on behalf of the respondents that this was only to get over the findings rendered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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