- Bench - MR. JUSTICE RAJIV SAHAI ENDLAW
- Appellant - Dr. Bina Modi
- Respondent - Lalit Modi & Ors.
Issues
The suit seeks relief of
(i) declaration as null and void, inoperative, unenforceable and contrary to public policy of India of the arbitration agreement contained in Clause 36 of the Restated Trust Deed dated 9th April, 2014 (Trust Deed);
(ii) declaration as null and void, unenforceable and contrary to public policy of India of the Application for Emergency Measures filed;
(iii) permanent injunction restraining the defendant No.1 Lalit Modi, in both the suits, from prosecuting or continuing with the Application for Emergency Measures and/or from instituting or proceeding with any arbitration proceedings against the plaintiff/plaintiffs in both the suits, under Clause 36 of the Trust Deed
(iv) directing the International Chambers of Commerce to enforce the order passed in terms of the aforesaid prayers.
Facts
(i) Charu Modi (Charu), Lalit Modi (Lalit) and Samir Modi (Samir) are the children of K.K. Modi (KK) and Bina Modi (Bina)
(ii) CS(OS) 84/2020 has been filed by Bina against Lalit, with Charu and Samir as proforma parties thereto; CS(OS) 85/2020 has been instituted by Charu and Samir against Lalit, with Bina as a proforma party thereto;
(iii) The Trust Deed was executed at London by KK as settlor/managing Trustee and Bina, Lalit, Charu and Samir as Trustees, and in pursuance to oral family settlement recorded in the Oral Family Settlement dated 10th February, 2006 between them and in supersession of the earlier Trust Deed dated 10th February, 2006
(iv) The Trustees may try to amicably resolve the difference, dispute or breach of the provisions of the Deed as stated in the clauses. In case the dispute or the breach continues for a period of more than 90 days, then all such disputes shall be settled under the Rules of Arbitration of the International Chamber of Commerce, Singapore (“ICC”) by one or more arbitrators appointed in accordance with the said Rules.
(v) KK passed away on 2nd November, 2019, leaving Bina as his widow and Lalit, Charu and Samir as his children; upon the demise of KK, dispute has emerged amongst the Trustees of the Trust; while Lalit contends that after the demise of KK, 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, Bina, Charu and Samir contend that on a true construction of the Trust Deed, no such sale has been triggered.
(vi) In the meeting held on 30th November, 2019 of the Trustees of the Trust, viz. Bina, Lalit, Charu and Samir, while Lalit expressed desire to sell the whole of Trust Fund comprising of various assets including family controlled businesses, in terms of Clause 6.2 of the Trust Deed, Bina, Charu and Samir decided to continue to own and manage all assets of the Trust Fund; the draft minutes of the meeting recorded that no unanimous decision was reached regarding the sale of assets of the Trust;
(vii) ICC had appointed one Mr. Matthew Sccomb as the Emergency Arbitrator and who, besides giving other directions, scheduled a preliminary call / meeting of the Emergency Arbitration proceedings on 22 nd February, 2020; on 22nd February, 2020, Bina, Charu and Samir, without waiving any of their rights and objections, participated in the hearing before the Emergency Arbitrator and in the said hearing the Emergency Arbitrator issued procedural timelines and set a date for physical hearing of the Application for Emergency Measures on 7th March, 2020. 4. It is the pleading / contention of Bina,
Appellant's Contentions
(i) The counsel appearing on behalf of the appellant drew the attention of the Court to Vidya Drolia & Ors. Vs. Durga Trading Corporation also holding that arbitrability of disputes arising under the Indian Trusts Act is excluded by necessary implication, reasoning that (i) under Section 34 of the Trusts Act, a Trustee, without instituting a suit, is entitled to apply by petition to Principal Civil Court of Original Jurisdiction for its opinion, advice or direction on any present questions respecting management or administration of Trust property; obviously the arbitral tribunal cannot possibly give such opinion, advice or direction;
(ii) He further held that under Section 46, a Trustee who has accepted the Trust cannot afterwards renounce it except with the permission of the Principal Civil Court of Original Jurisdiction; this again cannot be subject matter of arbitration;
(iii) He further cited McDonald's India Pvt. Ltd. Vs. Vikram Bakshi and contended that the law laid down by the Larger Bench of this Court being, that antiarbitration injunction suits are maintainable and the Court has the power to grant such injunctions.
Respondent's Contentions
(i) The Defendant's counsel started by enquiries upon Vimal Kishor Shah and Vidya Drolia – that since there was no valid arbitral agreement between the parties why Kvaerner Cementation India Limited supra should continue to hold the fray.
(ii) Later, it was enquired, whether not the said amendment to Section 8 is indicative of the legislative intent, to not vex the parties by compelling them to arbitrate and take objections to arbitrability before the Arbitral Tribunal, when it was writ large that the disputes were not arbitrable.
(iii) It was also contended that the reliefs claimed in the plaints in the present suits are of declaration of the Arbitration Agreement and the arbitration commenced as null and void and of permanent injunction to restrain arbitration; (ii) that Section 8 is not attracted in the present suit; Section 8 applies when on action is brought in a matter which is the subject matter of an Arbitration Agreement and it is not so here; thus Section 8 does not apply;
(iv) Further arguing, the counsel put forth - that in the present suit, there is no dispute before the Court which is subject matter of arbitration and the only claim is of the declaration of the Arbitration Agreement as null and void
Judgement
It was held that an anti-arbitration injunction suit does not lie, making the suits not maintainable and the Court dismissed them without costs
Relevant Paragraphs
• 32. Being of the view that this Court does not have the jurisdiction to adjudicate a plea which can be adjudicated by the Arbitral Tribunal relating to its own jurisdiction, I have not gone into the same and the said pleas remain open to the parties to take before the Arbitral Tribunal.
• The Division Bench of this Court in Mcdonald's India Pvt. Ltd. supra, noticed that since the case involved an anti-arbitration injunction, the governing principles could not be the same as governing an anti-suit injunction, reasoning that the principles of autonomy of arbitration and competence-competence (kompetenz-kompetenz), still without considering that the alternative remedy under Section 16 of the Arbitration Act and as stated to be available under the ICC Rules also, is available in relation to antiarbitration injunction suits as distinct from anti-suit injunctions, proceeded to hold that the Court would have jurisdiction to grant antiarbitration injunction, where the party seeking the injunction can demonstrably show that the agreement is null and void, inoperative or incapable of being performed, especially referring to cases where it was evident that the Arbitration Agreement had been forged and fabricated.
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