LALY JOSEPH Vs. CHAZHIKATTU HOSPITALS PRIVATE LIMITED

JUDGEMENT

(1.) This is an Application filed under Sec. 11 of the Arbitration and Conciliation Act, 1996, to appoint an Arbitrator for adjudication and determination of all disputes arising out of and in respect of the claim of the Applicant pertaining to the Annexure-1 Agreement.

(2.) Annexure-1 Agreement titled as "Investment Agreement" dtd. 27/10/2024 is executed between the Applicant and the respondents 1 to 3. The Agreement was for the purchase of 100% equity shares of the 1st respondent company by the Applicant from the respondents 2 and 3 for a total consideration of Rs.170.00 Crores. As per the terms of the said Agreement, the Applicant shall pay an amount of Rs.30.00 Crores as advance consideration. Annexure-1 Agreement would indicate that the Applicant had issued Cheque No.10196422 dtd. 27/10/2024 drawn on the Federal Bank, Pathadipalam branch in favour of the 1st respondent and it is specifically stated that the said Cheque shall be honoured on 28/10/2024 and that the advance consideration shall be treated as paid only upon realisation of the cheque amount. Clause 6 of Annexure-1 Agreement provides for termination. It is specifically stated that the Agreement shall automatically terminate if the advance consideration, consideration or any part thereof is not paid to the 1st respondent or the pre-existing shareholders to their satisfaction within the respective timeline specified in the Agreement and that the Agreement shall be terminated immediately or at the option of the 1st respondent in the event of any instrument issued by or on behalf of the investor to the pre-existing shareholders or the 1st respondent is not honoured. The pleadings would reveal that Cheque No.10196422 issued by the applicant was not presented on 28/10/2024. The respondents 1 to 3 entered into another agreement dtd. 30/10/2024 with the 4th respondent as a business transfer agreement to sell the hospital belonged to the respondents 1 to

(3.) The Applicant filed O.S.No.305/2024 before the Munsiff's Court, Thodupuzha, seeking an injunction against alienation. It is submitted by both sides that though a temporary injunction against alienation was granted initially by the Munsiff's Court, the same was vacated later. It is seen that the Applicant filed a Not Press Memo and as per the said Memo, the suit was dismissed as Not Pressed as per the Judgment dtd. 17/12/2024. It is on record that the Applicant had approached the Commercial Court, Ernakulam by filing M.A.(Arb.) No.281/2024 under Sec. 9 of the Arbitration and Conciliation Act, 1996, seeking permanent prohibitory injunction to prevent the respondents 1 to 3 from transferring the equity shares of the 1st respondent or its assets to anyone other than the applicant. The Commercial Court, by a common order, dismissed M.A.(Arb.) No. 281/2024 and I.A. No.2/2024 therein for interim injunction, finding that the Applicant failed to prove a prima facie case for the reliefs sought. The Commercial Court found that the respondents 1 to 3 have been facing a financial crisis, which was critical in nature to their business; that the terms of the Agreement require payment of an advance amount of Rs.30.00 Crores and it was not honoured due to insufficient funds in the Applicant's account; that advance was a condition precedent for the validity of the Agreement; that the claim of the Applicant to enforce the Agreement lapse a foundational basis; and that without the requisite payment, the Agreement stands terminated according to its own terms undermining the Applicant's position. Thereafter, the Applicant has filed this Arbitration Request seeking the appointment of an Arbitrator in order to resolve the disputes arising out of the Annexure-1 Agreement. Even though the 4th respondent is not a party to the Annexure-1 Agreement, the 4th respondent is impleaded as a party to this Application on the ground that the 4th respondent is an assignee of the respondents 1 to 3.