Delhi HC dismisses as not maintainable pleas by Lalit Modi's family against arbitration over family property

The Delhi High Court today dismissed as not maintainable the suits by family members of Lalit Modi against the initiation of arbitration proceedings in Singapore by him in connection with their family property. (Dr Bina Modi vs Lalit Modi).While doing so, the Court refused to rely on the contention that the Lalit Modi was interested in keeping the arbitration proceedings outside the country in order to escape the liability pending in India.. It said, ."..while exercising Ordinary Original Civil Jurisdiction and has vested such powers only in the Supreme Court under Article 142 and this Court should thus refrain from acting on such considerations."Delhi High Court.The order was passed by a Single Judge Bench of Justice Rajiv Sahai Endlaw in anti-arbitration injunction suits preferred by Dr Bina Modi, Charu Modi and Samir Modi in connection with the arbitration proceedings initiated by Lalit Modi in Singapore for KK Modi’s estate..While KK Modi and Dr Bina Modi are the parents of Lalit Modi, Charu and Samir Modi are Lalit Modi’s siblings..The arbitration arose out of a Family Trust Deed executed at London by KK Modi as settlor/managing Trustee and Bina, Lalit, Charu and Samir as Trustees..The Trust Deed was made in pursuance to an oral family settlement recorded in February, 2006..After the demise of KK Modi in November 2019, disputes emerged amongst the surviving parties..While Lalit contended that all the assets were to be sold, Bina Modi and others contended that on a true construction of the Trust Deed, no such sale had been triggered..Subsequently, on February 18, 2020, Lalit Modi filed an Application for Emergency Measures before the International Court of Arbitration (ICA) of the International Chambers of Commerce (ICC) to restrain Bina from, interalia, holding herself out as Managing Trustee of the Trust. .Modi also sought to restrain Bina, Charu and Samir from from transferring, alienating or creating any encumbrance in relation to the assets, businesses and investments of the Trust Fund..Pursuant to the Application, the ICC appointed Matthew Secomb as the Emergency Arbitrator..Bina Modi, Charu Modi and Samir Modi (Plaintiffs) thus moved the High Court for redressal of their grievance..The Plaintiffs argued that the Trust Deed did not provide for arbitration. It was submitted that Clause 36, which was invoked for initiating arbitration, was vague as when the Trust Deed was executed there was no ICC Singapore. .It was added that even if Clause 36 was to be given effect, the Arbitral Seat had to be in India, and not Singapore. .The Plaintiffs argued that Lalit Modi had chosen to approach the ICC to evade the jurisdiction of Indian Courts as he had left India after being accused of gross violations of Indian laws and a non-bailable warrant was issued against him in proceedings under the Prevention of Money Laundering Act, 2002. .Choice of foreign seat of arbitration was null and void, unenforceable and contrary to public policy, it was thus submitted..Lalit Modi, on the other hand, contended that suits for declaration of invalidity of Arbitration Agreement and for permanent injunction against arbitration were not maintainable. .It was argued that the ICC Rules were akin to Section 16 of the Arbitration & Conciliation Act, 1996 and therefore, objections regarding arbitrability had to be raised before the Arbitral Tribunal itself. .Lalit Modi added that the Trust Deed was executed at London and not India, and the parties had intentionally opted for arbitration of ICC. .It was also clarified that since the seat of Arbitration was outside India, the present instance was not covered by Part I of the Arbitration Act. .After considering the arguments put forth by the parties, the Court opined that it did not have the jurisdiction to adjudicate upon a plea which could be adjudicated by the Arbitral Tribunal itself..It noted that the reliefs of 'declaration and injunction' were governed by the Specific Relief Act, 1963 and Section 41(h) of the Act barred the grant of injunction when equally efficacious relief could be obtained by any other usual mode of proceeding..At this juncture, the Court pointed out that it was not the Plaintiffs' contention that the Arbitral Tribunal constituted by ICA of ICC was not empowered to decide any of the objections raised before the Court. .The Court also rejected the Plantiffs' plea that the arbitration proceedings were forum non conveniens. It said, .The parties, though in the original Trust Deed provided for arbitration in New Delhi, while re-stating the Trust Deed, consciously changed the same to arbitration of ICC, Singapore. Considering the status of the parties, who belong to a business family and are well alive to litigations and arbitration of all kinds, it cannot be said that they were not aware of the procedure of ICC.Delhi High court.In response to the Plaintiffs' contention that that Lalit Modi was a fugitive was concerned, the Court stated, ."..on a deeper consideration, I am of the view that the Constitution of India, though has vested this Court with jurisdiction, while exercising powers under Article 226 of the Constitution of India to grant relief which law does not entitle a party to or to not grant relief to which a person is entitled to in law, but has not vested this Court with such discretion while exercising Ordinary Original Civil Jurisdiction and has vested such powers only in the Supreme Court under Article 142 and this Court should thus refrain from acting on such considerations."Delhi High Court .In view of the above, the Court held that an anti-arbitration injunction suit did not lie and the suits were not maintainable..Dr Bina Modi was represented by Senior Advocates Mukul Rohatgi, Rajiv Nayar, Arvind Nigam, Sandeep Sethi with Advocates Gyanendra Kumar, Amita Katragadda, Shikha Tandan, Robin Grover, Nikhil Rohatgi, Shashank Khurana, Shivanshu Bhardwaj..Charu Modi was represented by Senior Advocate Arvind Nigam with Advocates Mahesh Agarwal, Rishi Agarwal, Niyati Kohli, Karan Luthra, Pratham Vir Agarwal..Lalit Modi was represented by Senior Advocates Abhishek Manu Singhvi, CA Sundaram with Advocates Anuradha Dutt, Fereshte D Sethna, Swadeep Hora, Ekta Kapil, Haaris Fazili, Kunal Dutt, Shobhit Ahuja, Madhvi Khanna, Abhishek Singh.