The Delhi High Court has held that it has the jurisdiction to decide 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.
A bench of Justices Siddharth Mridul and Talwant Singh set aside the judgment of a single judge of the high court which had said that 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.
The single judge had 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 have sought permanent injunction restraining Lalit Modi from prosecuting or continuing with the application for emergency measures and any arbitration proceedings against them in Singapore.
The division bench, in its 103-page judgment passed on December 24, said the subject dispute ought to have been prime facie adjudicated by the single judge, who had to exercise the jurisdiction vested in the court as all the parties are Indian citizens and situs of immovable assets of the trust is in India.
“In view of the foregoing discussion, we are of the considered view that the single judge gravely erred by failing to exercise the jurisdiction vested in the court, which statutorily required him to adjudicate, whether the disputes between the parties, in relation to the trust deed, were per se referable to arbitration.
“This, in our respectful view, is tantamount to wrong exercise of jurisdiction by the single judge. The impugned judgment cannot resultantly be sustained,” the bench said.
The bench said it was of the view that it is the Arbitral Tribunal that evidently lacks jurisdiction and not this court, which has the inherent jurisdiction to determine whether the disputes are arbitrable, particularly when, as in the present case, the ends of justice would otherwise be defeated.
“We also hold that inherent and substantive rights enure to the benefit of the appellants (Bina, Charu and Samir) to urge that the disputes between the parties in relation to the Trust Deed were not arbitrable and that consequently, they were duly entitled to prosecute their claim for the substantive relief of declaration and permanent injunction, as prayed for,” the bench said while allowing the appeals filed by Bina and her two children against Lalit Modi.
The bench remanded their two civil suits to the single judge for further proceedings, in accordance with law, from the stage of issuance of summons and directed the registry to list them for hearing on January 8. 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 February 10, 2006.
KK Modi died on November 2, 2019 after which the dispute emerged amongst the trustees. Lalit Modi 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 single judge had noted.
His mother and the two siblings contended that on a true construction of the trust deed, no such sale has been triggered.
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