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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 ..... this Court under Section 37(2)(b) of the Arbitration Act and the true purport and nature of the Term Sheet, based upon interpretation of its various clauses. 3. The facts leading up to filing of the present petition are that the petitioner (original claimant), being a healthcare service provider, showed interest in the respondents selling their majority shareholding in respondent No. 2. The petitioner - Max Healthcare Private Limited is a healthcare service provider, while respondent No. 2 - Quality Care India Limited owns and operates Care Hospitals. Respondent No. 1 - Touch Healthcare Private Limited holds 96.94% of shareholding of respondent No. 2 and respondent No. 3 - Evercare Group Management Limited is the ultimate beneficial owner of respondent No. 2 through respondent No. 1. 4. Upon the petitioner submitting its expression of interest and pursuant to exchange of communications between the parties, on 16.03.2023, a Term Sheet was executed between the petitioner and the respondents. The petitioner proposed to acquire 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties addressed elaborate arguments before the learned Arbitrator in support of their respective stands and by the impugned order dated 19.07.2023, the learned Arbitrator rejected the application of the petitioner filed under Section 17 of the Arbitration Act. The learned Arbitrator, inter alia, held that the Term Sheet was merely an agreement to enter into an agreement and that the date of 12.04.2023 was sacrosanct for execution of the document contemplated under the Term Sheet. It was further held that in the absence of a written agreement between the parties, as contemplated under clause 16 of the Term Sheet, the date of 12.04.2023 was not extended. On this basis, the learned Arbitrator rendered specific findings against the petitioner, holding that no prima facie case was made, thereby rejecting the application filed under Section 17 of the Arbitration Act. 8. The petitioner filed the present petition, wherein pleadings were completed and the learned counsel appearing for the parties were heard at length. 9. Mr. Janak Dwarkadas, learned senior counsel appearing for the petitioner, attacked the findings in the impugned order on the ground that the learned Arbitrator had posed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 16 of the Term Sheet. He submitted that the whatsapp communications exchanged between the parties from the time the Term Sheet was executed, up to 18.04.2023 ought to have been appreciated in the correct perspective by the learned Arbitrator. He submitted that the date 12.04.2023, could not have been treated as sacrosanct in nature, particularly when clause 16 (b) and (c) specifically provided for extension of time in writing. In that context, specific reference was made to e-mails and whatsapp messages exchanged between the petitioner and the respondents from 10.04.2023 onwards, to claim that the date of 12.04.2023 stood extended. It was submitted that although the learned Arbitrator did refer to certain whatsapp messages and e-mails but the most crucial messages exchanged on 12.04.2023 and immediately thereafter were ignored, leading to erroneous and perverse findings. 13. It was further submitted that if the interpretation of the learned Arbitrator is to be accepted, it would amount to permitting the respondents to take benefit 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing reliance on judgment of the Delhi High Court in the case of Asian Hotels (North) Ltd. vs. Sital Dass Sons and Another (2023) 1 Arb LR 142. It was submitted that this Court could exercise jurisdiction under Section 37 of the Arbitration Act, to protect the legitimate interest of the petitioner, including modifying the order of the learned Arbitrator. By placing reliance on the judgment of the Supreme Court in the case of Ssangyong Engineering and Construction Company Limited vs. National Highway Authority of India (NHAI) 2019:INSC:647 : (2019) 15 SCC 131, it was claimed that the grounds of patent illegality, perversity and unreasonableness were available to the petitioner to assail the impugned order passed by the learned Arbitrator. Emphasis was also placed on judgment of this Court in the case of Amar Nagar (SRA) Sah. Gruhanirman Sanstha and others cs. Vikas Narayan Raikar and others AIR 2014 Bom. 31, to claim that this Court under Section 37 of the Arbitration Act, could even replace the findings of the learned Arbitrator. 16. The learned senior counsel for the petitioner relied upon judgment of the Supreme Court in the case of Godhra Electricity Co. Ltd. and another vs. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uffer form patent illegality or they can be said to be otherwise unconscionable in law or on facts. It was further laid down therein that it would be entirely inappropriate for the Court to find flaws in the order of the learned Arbitrator by vivisecting it microscopically. 18. On this basis, the learned senior counsel appearing for the respondents submitted that a perusal of the impugned order passed by the learned Arbitrator would show that all the relevant aspects of the matter, including the clauses of the Term Sheet, were taken into consideration and a view was adopted, which was certainly a plausible view in the facts and circumstances of the case, thereby indicating that jurisdiction under Section 37 (2)(b) of the Arbitration Act, cannot be exercised by this Court to interfere with the impugned order. 19. The learned senior counsel appearing for the respondents further submitted that the tenor of submissions made on behalf of the petitioner, indicates that the ground of patent illegality was being raised to assail the impugned order. In that context, it was submitted that the aforesaid ground is not available to the petitioner, for the reason that the present arbitration p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material, including emails and whatsapp messages exchanged between the parties, to reach a considered conclusion that there was no extension of the date beyond 12.04.2023 and the Term Sheet had consequently lapsed. Such a finding was clearly a plausible finding, which cannot be interfered with by this Court exercising jurisdiction under Section 37(2)(b) of the Arbitration Act. 23. In this backdrop, it was submitted that the exchange of communications after 12.04.2023, could be of no consequence and that in any case, the communication sent on behalf of the petitioner on 18.04.2023, was nothing but an offer on the part of the petitioner. It could not be a basis for claiming any relief by treating the Term Sheet as a binding offer. 24. It was further submitted that there was variance in the relief sought in the petition filed under Section 9 of the Arbitration Act, which stood converted into an application under Section 17 thereof before the arbitrator, as compared to the relief sought in the present petition. It was emphasized that the petitioner deliberately deleted the words "under the relevant documentation which the petitioner will supply to the respondents". According to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the matter pertains to the interpretation of the Term Sheet executed between the parties, with specific reference to the nature of the document and whether the time period specified in clause 16 of the Term Sheet could be said to have been extended in the facts and circumstances brought to the notice of the learned Arbitrator and this Court. 28. Both sides have referred to judgments in the context of jurisdiction of this Court while considering a petition filed under Section 37(2)(b) of the Arbitration Act. Before referring to the said judgments, it would be appropriate to refer to the provision itself. Section 37 of the Arbitration Act, pertains to appealable orders and it provides for filing of an appeal before the Court, inter alia, to challenge an order granting or refusing interim measure under Section 17 of the Arbitration Act. In the very same provision under Section 37 (1)(c) of the Arbitration Act, an appeal can be filed against an order setting aside or refusing to set aside an arbitral award under Section 34 of the Arbitration Act. In this context, one of the aspects for consideration can be that the limitations applicable to exercise of jurisdiction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. Thus, the position of law that emerges from the aforementioned judgments, indicates that so long as the learned Arbitrator has considered the relevant material and a plausible view has been adopted in the facts and circumstances of the case, this Court would be loathe to interfere with the order passed by the learned Arbitrator. This Court would not interfere with the order 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. Hence, the party approaching the Court has to make out a very strong case to indicate that the view adopted by the Arbitrator cannot be said to be even a plausible view in the facts and circumstances of the case. 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. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the finding rendered by the learned Arbitrator that the Term Sheet was only an agreement to enter into an agreement, was not a plausible view in the matter. This Court is called upon to examine as to whether the Term Sheet could be said to be a binding offer as claimed by the petitioner. According to the respondents, the Term Sheet was merely a non binding document and the clauses indicated that further negotiations were contemplated between the parties. 35. The learned Arbitrator examined the Term Sheet in great detail, referring to almost each clause, to render findings against the petitioner. This Court is required to examine as to whether the view adopted by the learned Arbitrator was a plausible view, in the light of the clauses of the Term Sheet executed between the parties. 36. A perusal of the clauses of the Term Sheet indicates that the parties were required to take various steps and upon due diligence, the petitioner was to accept the commercial terms set out in the Term Sheet by 12.04.2023, if the petitioner was desirous of signing the SPA. The insistence of the petitioner that the Term Sheet was a binding offer has to be seen from this perspective. The ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the term and termination of the Term Sheet. In order to examine as to whether the findings rendered by the learned Arbitrator on the said aspect of the matter can be said to be perverse or implausible, it would be necessary to refer to the said clause. Clause 16 reads as follows : "16. Term and Termination : This Term Sheet shall terminate without liability to either party on the earlier occurrence of : a) the execution of Transaction Documents; (b) 12th April 2023 ("Term"), unless extended in writing; or (c) as otherwise agreed by the Parties in writing." 40. A careful analysis of the above quoted clause, shows that the Term Sheet was to terminate without liability to either party "on the earlier occurrence of", the execution of the transaction documents or on 12.04.2023, unless the date was extended in writing or as would be otherwise agreed by the parties in writing. A proper analysis of the said clause would show that the date 12.04.2023, can prima facie be said to be sacrosanct, as regards the term of the document i.e. the Term Sheet. The occurrence of the said date terminated the Term Sheet, unless the transaction documents were executed prior to that date. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is nothing to indicate that the parties agreed in writing to extend the date beyond 12.04.2023. Even if the whatsapp messages exchanged between the parties on 12.04.2023 are to be taken into consideration, there is nothing to indicate that the petitioner sought extension of the date beyond 12.04.2023, to which the respondents agreed by way of a response. In this context, e-mail sent by the petitioner on 12.04.2023 to the respondents becomes crucial. In the said e-mail, the petitioner claimed that there was an "automatic extension of the date." This was clearly in the teeth of clause 16 (b) and (c) of the Term Sheet, further indicating that there was indeed no extension of the said date in writing between the parties. This aspect was indeed appreciated by the learned Arbitrator in the impugned order and therefore, it cannot be said that the view adopted by the learned Arbitrator in this context was not even a plausible view. 44. The emphasis placed on behalf of the petitioner on messages and e-mails exchanged after 12.04.2023, cannot takes its case any further for establishing a prima facie case for grant of interim measures. In any case, even in the period beyond 12.04.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon judgment of the Supreme Court of India in the case of Joshi Technologies International Inc. vs. Union of India and others (supra) and the judgment of the Supreme Court of United Kingdom in the case of Rock Advertising Limited vs. MWB Business Exchange Centres Limited (supra), while contending that the extension of the date beyond 12.04.2023 ought to have been in writing between the parties. 49. Having analyzed the material on record, particularly the clauses of the Term Sheet and the manner in which the learned Arbitrator proceeded to hold against the petitioner, the judgments relied upon by the petitioner cannot take its case any further. There is also no substance in the contention raised on behalf of the petitioner as regards balance of convenience and irreparable loss that it would suffer, for the reason that once the petitioner is found to have failed in making out a prima facie case in its favour, the aspects of balance of convenience and irreparable loss pale into insignificance. This aspect has also been appreciated by the learned Arbitrator in the impugned order passed against the petitioner. 50. Thus, applying the law pertaining to the scope of jurisdiction while co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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