The Bombay High Court has refused to grant interim relief to Max Healthcare Institute Ltd. in its breach of contract case against TPG Inc.-backed Touch Healthcare Pvt. and Quality Healthcare Ltd.
Max Healthcare and Touch Healthcare had signed a term sheet for the sale of hospital chain Care Hospitals, which is owned by Quality Healthcare. Touch Healthcare, in turn, owns 96% stake in Quality Healthcare.
Max's grievance is that while Touch Healthcare had signed a term sheet, it proceeded with a different offer from U.S.-based private equity firm Blackstone.
According to Max Healthcare, the term sheet had certain clauses, which by construction, are binding on both the parties.
First, an exclusivity agreement between both parties and second, an agreement that gave the buyer the right to execute a sale and purchase agreement at its instance. The agreement was supposed to be executed by April 12. However, according to Max Healthcare, Touch Healthcare executed yet another agreement with Blackstone on April 11, before the expiration of its terms with it. This is in breach of the contract undertaken by both parties, it has alleged.
Further, Touch Healthcare has taken an inconsistent position throughout the period of the term sheet, according to Max.
They agreed to marry someone else while they were engaged to marry us, senior advocate Janak Dwarkadas said, while arguing for Max Healthcare.
According to Touch Healthcare, the term sheet is a non-binding agreement and must be treated as such.
Max cannot claim any exclusivity, unless a specific agreement is executed between them. Moreover, Max Health had the option to execute the agreement by April 12, which it failed to do. Touch Healthcare has already executed a share purchase agreement with Blackstone, the company's counsel told the court.
The Bombay High Court didn't agree with the argument that the term sheet was binding. The term sheet should be read as a whole and not in parts, the court remarked. It further refused to consider the merits of the matter and referred the matter to arbitration.
According to the court, there is no prima facie evidence to prove that the agreement was binding upon Touch Healthcare and therefore requires no relief. The court has instead referred the matter to arbitration before Justice SJ Kathawalla.
The matter will next be heard by the court on May 8, for the limited purpose of appraising the arbitrator.
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