New Delhi: The Delhi High Court has held as not maintainable, a plea by late industrialist KK Modi's wife challenging her son Lalit Modi's move to initiate arbitration proceedings in Singapore over property dispute of the family.
The high court said it does not have the jurisdiction to adjudicate the anti-arbitration injunction suits filed by Lalit Modi's mother Bina, his sister Charu and brother Samir and they are open to take such pleas before the arbitral tribunal in Singapore.
Justice Rajiv Sahai Endlaw said that an anti-arbitration injunction suit does not lie, so the pleas are not maintainable, and dismissed. Bina, Charu and Samir, in two separate suits, contended that there was a trust deed between the family members and the KK Modi family trust matters cannot be settled through arbitration in a foreign country as per Indian laws.
They had sought permanent injunction restraining Lalit Modi from prosecuting or continuing with the application for emergency measures and any arbitration proceedings against them.
As per the case, the Trust Deed was executed at London by KK Modi as settlor/ managing Trustee and Bina, Lalit, Charu and Samir as Trustees, and in pursuance to oral family settlement recorded between them on the February 10, 2006.
KK Modi died on November 2 last year after which the dispute emerged amongst the trustees. Lalit contended that after the demise of his father, in view of lack of unanimity amongst the trustees regarding sale of trust assets, a sale of all assets of the trust has been triggered and distribution to beneficiaries has to occur within one year thereof, the court noted.
His mother and the two siblings contended that on a true construction of the trust deed, no such sale has been triggered.
Senior advocate Mukul Rohatgi, representing Bina, Charu and Samir Modi, contended that Lalit was a fugitive and also accused of several gross violations of Indian law, including criminal breach of trust, cheating and criminal conspiracy under the IPC and proceedings under Prevention of Money Laundering Act are pending against him.
To this, the court said: "A thought occurred to the undersigned (judge), that Lalit may be interested in keeping the proceedings outside the country, to be able to reap benefits of his share in the Trust Fund outside India, to escape the liability from the proceedings already pending in this country against him, and whether this qualifies as a reason for this Court to entertain the suit."
The court also said there was no merit in the contention of the counsel for Bina and her two children that the procedure followed by International Chamber of Commerce, Singapore (ICC) was repugnant to Arbitration Act.
The court said the Arbitration Act is governed by the principle of freedom of the parties and Section 19 thereof expressly provides that the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting the proceedings.
The court added that a party, after having expressly agreed to a particular state of affairs, cannot raise the argument of 'forum non conveniens' (discretionary power that allows courts to dismiss a case where another court is much better suited to hear the case), which is available only in case of concurrent jurisdiction.
The judge mentioned in the 39-page judgement that before commencing hearing on the suits, he had from the senior advocates whether the disputes were not easily resolvable and why should this generation also repeat the mistake of the earlier generation, which has cost the larger family of the parties dearly.
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