Sections 17 and 37(2)(b) of AA – Legality of Arbitrator order refusing interim relief since Term Sheet is not a concluded contract.
Judgment dated 19.12.2023 in Commercial Arbitration Petition (L) No.20533 of 2023 in Max Healthcare Institute Limited Vs. Touch Healthcare Private Limited and others
Sections 17 and 37(2)(b) of the Arbitration Act – Legality of order of the Arbitrator on the interpretation of Term Sheet if it is concluded contract or not between the parties
On 10.3.2023, the Term Sheet was executed between the petitioner and the respondents. The petitioner proposed to acquire 100% of the share holding of the respondent no.2 and to run & operate its units till September 2025. Eventually, the parties were to execute a share purchase agreement by 12.04.2023 as per clause 16 of the Term Sheet. However, there was dispute between the parties.
In section 9 application of the petitioner, the sole Arbitrator was appointed and section 9 application was converted into the application under section 17 before the Arbitrator for interim relief to restrain the respondent no.1 from creating third party rights in the share holding.
By the order dated 19.7.2023, the Arbitrator rejected the interim application holding that the Term Sheet was an agreement to enter into an agreement and date of 12.4.2023 was sacrosanct for execution of such an agreement. It was not extended.
In the appeal before the High Court, the important question was whether the Term Sheet was a concluded contract or merely an agreement to agree and scope of interference under Section 37(2)(b) of the AA.
HELD, the Arbitrator examined each clause of the term sheet and rendered the findings, view of the Arbitrator was plausible and the Term Sheet was to terminate without liability without liability to either party on execution of agreement on or before 12.4.2023. The extension of date ought to have been in writing between the parties.
