Delhi High Court
Dr. Bina Modi vs Mr. Lalit Modi & Ors. on 3 March, 2020
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 3rd March, 2020.
+ CS(OS) 84/2020 & IA No.2760/2020 (u/O XXXIX R-1&2 CPC)
DR. BINA MODI ..... Plaintiff
Through: Mr. Mukul Rohatgi, Mr. Rajiv Nayar,
Mr. Arvind Nigam and Mr. Sandeep
Sethi, Sr. Advs. with Mr. Gyanendra
Kumar, Ms. Amita Katragadda, Ms.
Shikha Tandan, Mr. Robin Grover,
Nikhil Rohatgi, Mr. Shashank
Khurana and Mr. Shivanshu
Bhardwaj, Advs.
Versus
LALIT MODI & ORS. ..... Defendants
Through: Mr. Abhishek Manu Singhvi, Sr.
Adv. with Ms. Anuradha Dutt, Ms.
Fereshte D. Sethna, Mr. Swadeep
Hora, Ms. Ekta Kapil, Mr. Haaris
Fazili, Mr. Kunal Dutt, Mr. Shobhit
Ahuja, Ms. Madhvi Khanna and Mr.
Abhishek Singh, Advs. for D-1.
AND
+ CS(OS) 85/2020 & IA No.2762/2020 (u/O XXXIX R-1&2 CPC)
CHARU MODI & ANR. ..... Plaintiffs
Through: Mr. Arvind Nigam, Sr. Adv. with Mr.
Mahesh Agarwal, Mr. Rishi Agarwal,
Ms. Niyati Kohli, Mr. Karan Luthra
and Mr. Pratham Vir Agarwal, Advs.
Versus
LALIT MODI & ANR. ..... Defendants
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 1 of 39
Through: Mr. C.A. Sundaram, Sr. Adv. with
Ms. Anuradha Dutt, Ms. Fereshte D.
Sethna, Mr. Swadeep Hora, Ms. Ekta
Kapil, Mr. Haaris Fazili, Mr. Kunal
Dutt, Mr. Shobhit Ahuja, Ms. Madhvi
Khanna and Mr. Abhishek Singh,
Advs. for D-1.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Both suits seek the reliefs 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 by defendant No.1 in both the suits and referred
to as ICC Case No.25137/HTG(EA); (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; and,
(iv) directing the International Chambers of Commerce to enforce the order
passed in terms of the aforesaid prayers.
2. The suits, being in the nature of anti-arbitration injunction suits and,
(A) a three Judge Bench of the Supreme Court in Kvaerner Cementation
India Limited Vs. Bajranglal Agarwal (2012) 5 SCC 214, followed by the
undersigned in several judgments, having taken a view that "bearing in mind
the very object with which the Arbitration and Conciliation Act, 1996 has
been enacted and the provisions thereof contained in Section 16 conferring
the power on the Arbitral Tribunal to rule on its own jurisdiction, including
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 2 of 39
ruling on any objection with respect to existence or validity of the arbitration
agreement, we have no doubt in our mind that the civil court cannot have
jurisdiction to go into that question"; (B) the suits being accompanied with
applications for interim relief seeking to restrain the defendant No.1 from
instituting or continuing with ICC arbitration; and, (C) the counsel for the
defendant No.1 having appeared on caveat to oppose the very admission of
the suits, the senior counsels for the plaintiff/s and the senior counsels for
the defendant No.1 were heard from 1030 hours to 1320 hours and again
from 1600 hours to 1640 hours, orders on admission of suits were reserved
on 27th February, 2020, when the suits had come up first before this Court.
3. The facts, insofar as necessary on the aspect of maintainability of the
suits, may be recorded as under:
(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;
(iii) CS(OS) 85/2020 has been instituted by Charu and Samir
against Lalit, with Bina as a proforma party thereto;
(iv) both suits are otherwise identical and the counsels have been
heard with reference to CS(OS) 84/2020;
(v) 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
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 3 of 39
(Original Trust Deed) of constitution of K.K. Modi Family Trust
(Trust);
(vi) Clauses 3.2, 3.3, 4 & 36 of the Trust Deed were/are as under:
"3.2. In the event of Mr. K.K. Modi ceasing to be the
Managing Trustee on his demise or in accordance with
Clause 26 hereof, Miss. Bina Modi shall forthwith and
without any further action assume the office of the
Managing Trustee.
3.3 Save and except where it is specifically provided
otherwise, both Mr. K.K. Modi and Mrs. Bina Modi as
the Managing Trustees shall have the powers the day to
day administration, execution and management of the
Trust, the assets forming part of the Trust fund including
Family Controlled Businesses, to execute all documents,
writing, deeds agreements etc. that may be required to be
executed for and on behalf of the Trust; to assign, sell,
exchange, distribute or dispose of any of the properties
or income or any part thereof of the Trust and generally
all other powers in relation to the Trust. So long as Mr.
K.K. Modi and after him, Mrs. Bina Modi continue to be
the Managing Trustee, the Trust, the assets forming part
of the Trust Fund including Family Controlled
Businesses shall be administered, executed and managed
in accordance with the decisions taken by them and
powers exercised by them as provided in this Deed. Any
decision taken by Mr. K.K. Modi and in his absence by
Mrs. Bina Modi in relation to the Trust, the Trust Fund,
the Family Controlled Business and generally in relation
to any matter for administration, execution,
management of the Trust shall be final and binding on all
parties concerned, including the Trustees and the
Beneficiaries of the Trust. During their tenure as the
Managing Trustees, none of the powers of the Board of
Trustees shall become applicable and any power given to
the Board of Trustees requiring either their unanimous
consent or a majority consent shall become applicable
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 4 of 39
and shall be exercised by the Board of Trustees only
after both, Mr. K.K. Modi and Mrs. Bina Modi cease to
be the Managing Trustees of the Trust and only in the
event of there being no Managing Trustee, appointed
under Clause 3.5.3 hereunder to manage the affairs of
the Trust.
4. Meeting the Trustees upon Mrs. Bina Modi becoming
Managing Trustee
4.1 Within 30 (thirty) days of the earlier of:
a. Mrs. Bina Modi assuming the office of a Managing
Trustee, or
b. Mr. K.K. Modi vacating the office of the Managing
Trustee and where Mrs. Bina Modi has
predeceased Mr. K.K. Modi,
a meeting of the Board of Trustees shall be convened by
Mrs. Bina Modi, or if Mrs. Bina Modi is not a Trustee,
the Board of Trustees shall meet, wherein the Board of
Trustees shall decide unanimously, in relation to the
Trust Fund (which includes the Family Controlled
Businesses), whether:
4.1.1 to continue to own and manage all assets of the
Trust Fund including the Family Controlled
Businesses; or
4.1.2 to sell a part of the Trust Fund (including the
Family Controlled Businesses) and continue to
own and manage the remaining assets comprising
of the Trust Fund; or
4.1.3 to sell the whole of the Trust Fund comprising of
various assets including Family Controlled
Businesses.
The written consent of all Trustees to the decisions taken
at the meeting would be required for the resolution to be
unanimously passed for the purpose of this Clause 4.1.
4.2 If the Board of Trustees is unable to take any decision as
stated in Clauses 4.1.1 to 4.1.3 above unanimously, then
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 5 of 39
the entire Trust Fund including all Family Controlled
Businesses shall be sold off in the manner provided in
Clause 11.
4.3 Notice of intent to dispose off Assets
So long as Mrs. Bina Modi continues to act as a
Managing Trustee, any decision to dispose of the Trust
Fund (including Family Controlled Businesses), either
under Clause 4.1.2 or under Clause 4.1.3, shall be taken
only at the meeting convened by Mrs. Bina Modi in
accordance with Clause 4.1 above, provided however
that in the event that any Trustee is unable to attend the
meeting personally and vote (including through video
conferencing or other electronic means) his/her written
approval to the decisions taken would have to be
obtained for the purpose of passing the unanimous
resolution will have to be obtained within 3 days thereof,
failing which the resolution will not be deemed to have
been passed unanimously. After both Mr. K.K. Modi and
Mrs. Bina Modi cease to be the Managing Trustee, such
decision shall be taken only at a meeting of the Board of
Trustees which shall be convened specifically to decide
on the action to be taken in terms of the options listed in
4.1.1, 4.1.2 and 4.1.3 above. Such a meeting shall be
convened only once at the end of every three year period;
the first period of three years to commence 30 days after
both, Mr. K.K. Modi and Mrs. Bina Modi shall have
ceased to be the Trustees.
4.4 The agenda for the meeting of the Board of Trustees
mentioned in Clause 4.3 above, should include all
relevant information in relation to the Trust Fund
(including Family Controlled Business), the proposed
business plans of the respective Family Controlled
Businesses for the next 3 years, the tax and other
implications etc. to give the Trustees adequate
information to enable them to take the appropriate
decision. Any decision unanimously taken by the Board
of Trustees in and pursuant to any of the meetings
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 6 of 39
convened under Clause 4.3 would be absolute, final and
binding on all the parties. It is clarified that if the Board
of Trustees cannot decide unanimously, then the
business/asset of the Trust Fund proposed to be sold
under the notice provided under clause 4.3 above, shall
be disposed off in the manner provided under clause 11
hereof.
4.5 Decision to continue whole or part of the business
After Mr. K.K. Modi vacates the office of the Managing
Trustee and so long as the Trust continues to own and
manage the whole or part of the Trust Fund including
Family Controlled Businesses then:
4.5.1 Mrs. Bina Modi shall continue to be the managing
Trustee and shall have complete authority to take
all decisions on any matter relating to the Trust
Fund including Family Controlled Businesses and
her decisions shall be final and binding on all the
Beneficiaries and Trustees provided that it has
been agreed to continue to keep the Trust and not
dispose of all the assets at the meeting to be held
within 30 days in accordance with clause 4.1; and
4.5.2 Upon Mrs. Bina Modi ceasing to be the Managing
Trustee, the Managing Trustee appointed
unanimously in accordance with Clause 3.5.3
above and in his/her absence the CEO, if any,
appointed in accordance with Clause 3.5.4 above,
acting under supervision and direction of the
Board of Trustees acting by majority consent,
shall manage the Trust Fund.
4.6 In the event that it is decided to sell the whole or part of
the Trust Fund including Family Controlled Businesses
or in the absence of unanimity between the Trustees to
continue to hold and operate the assets forming part of
the Trust Fund including Family Controlled Businesses,
the Trust Fund (or part thereof as decided by the Board
of Trustees) shall be sold and the process of sale as
described in paragraph 11 shall be followed.
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 7 of 39
36. In the event of:
a) any question arising as to the true import or
interpretation of this Deed or otherwise in relation
to their execution or implementation; or
b) any difference of opinion amongst the Trustees
touching the execution and exercise of any of the
Trustees' powers and provisions herein declared
and contained or the true intent, meaning or
construction of any of the clauses herein; or
c) or any dispute arising between the Settlor and the
Trustees or between the Trustees inter se' or
between the Trustees and the Beneficiaries out of
or in connection with any provision made in this
Deed; or
d) breach of any provision of the Deed by any
Trustee, any other non-defaulting Trustee or
Beneficiary, as the case may be can give a notice
of the breach along with the reasons thereof to the
defaulting Trustee, Managing Trustee and the
Secretary. In the absence of the Managing
Trustee, such notice shall be given to all the other
Trustees, the CEO and the Secretary of the Trust,
apart from the defaulting Trustee. An opportunity
shall be given to the defaulting party(ies) to rectify
the breach within a period of 90 days from the
date of the breach.
The Trustees may try to amicably resolve the difference,
dispute or breach of the provisions of the Deed as stated
above.
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.
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 8 of 39
The arbitration will be governed in accordance with the
laws of India and ICC will follow Indian law as the
substantive law for deciding the dispute arising between
the parties under/pursuant to this Deed.
Each party shall bear its own cost of arbitration.
The award given by the arbitrator shall be final and
binding and will not be challenged in any court by any of
the parties hereto.
The Beneficiaries shall agree that by executing the Deed
of Adherence they agree to and are bound by the
provisions of this arbitration clause.";
(vii) KK passed away on 2nd November, 2019, leaving Bina as his
widow and Lalit, Charu and Samir as his children;
(viii) 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;
(ix) on the demise of KK, in accordance with Clause 3.2 of Trust
Deed, Bina on 5th November, 2019 wrote to the Secretary of the Trust
to transfer in her name, the equity and preference shares jointly held
by KK as the sole holder of those shares and that the equity and
preference shares held by KK jointly with others, had to be also
transferred in her name to be jointly held with the existing second
holder, on behalf of the Trust;
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 9 of 39
(x) Lalit, vide letter dated 13th November, 2019 to Bina, Charu and
Samir requested for convening of a meeting of the Board of Trustees
in terms of Clause 4.1 of Trust Deed;
(xi) a meeting of the Board of Trustees was called on 30th
November, 2019 at Waldorf Astoria Dubai;
(xii) 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;
(xiii) Bina, in an attempt to amicably settle, asked Lalit for a fair
proposal; Lalit, in response thereto disputed the appointment of Bina
as the President and the Managing Director of Godfrey Philips India
Ltd. and Indofil Industries Ltd. in place of KK and also insisted on
sale of assets of the Trust;
(xiv) Lalit, on "without prejudice" basis, participated in the
settlement talks but at every step kept on changing his stand and
ultimately vide communication dated 27th January, 2020 alleged that
Bina, Charu and Samir had breached the provisions of the Trust Deed;
Lalit also released statements on social media to the effect that assets
of K.K. Modi Family Trust including Godfrey Philips India Ltd. are
for sale and also released certain confidential correspondence between
CS(COMM) 84/2020 & CS(COMM) 85/2020 Page 10 of 39
Godfrey Philips India Ltd. and Jupiter Asset Management, a
shareholder of Godfrey Philips India Ltd., in relation to the
governance of Godfrey Philips India Ltd;
(xv) after some other correspondence between the parties, Lalit on
18th February, 2020 filed an Application for Emergency Measures
before the International Court of Arbitration (ICA) of the International
Chambers of Commerce (ICC), impleading Bina, Charu and Samir as
respondents thereto and seeking, (a) to restrain Bina from holding
herself out as Managing Trustee of K.K.Modi Family Trust and in the
alternative of suspension of powers and authority of Bina to hold the
office of Managing Trustee of K.K.Modi Family Trust; (b)
appointment of an administrator of the Trust Fund; (c) to restrain
Bina, Charu and Samir from acting in relation to K.K.Modi Family
Trust and from transferring, alienating or creating any encumbrance in
relation to the assets, businesses and investments of the Trust Fund
and from exercising voting rights in the K.K.Modi Family Trust
controlled business forming part of the Trust Fund; and (d) suspension
of Titus & Company as the Secretary of K.K.Modi Family Trust;
(xvi) ICC has 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 22nd 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, Charu and Samir,
(i) Clause 36 of the Trust Deed providing for arbitration is not an
Arbitration Agreement between the parties, and in the alternative, is
null and void because of vagueness; no "Rules of Arbitration of the
International Chamber of Commerce, Singapore" exist, the rules of
arbitration under which ICC conducts institutional arbitration are
referred to as the „Rules of Arbitration of the International Chamber
of Commerce‟;
(ii) even if such a Clause was to be given effect, the same provides
that the Arbitral Seat is in India;
(iii) since all the signatories to the Trust Deed containing the
impugned Arbitration Clause are Indian Nationals, having permanent
residence in India, choice of foreign seat of arbitration is null and
void, unenforceable and contrary to public policy;
(iv) Clause 36 provides for the dispute to be decided in accordance
with the laws of India; the law of India as enunciated in Vimal Kishor
Shah Vs. Jayesh Dinesh Shah (2016) 8 SCC 788 is that disputes
inter se Trustees or between Trustees on the one hand and
beneficiaries on the other hand or between beneficiaries inter se, are
not arbitrable and are subject to the exclusive jurisdiction of the
Courts under the Indian Trusts Act, 1882 which is a complete Code
for the purposes of the said disputes;
(v) Vimal Kishor Shah supra represents the public policy of India
and the issue of arbitrability goes to the root of the eventual
enforceability of any award that may be passed and it would not be
appropriate that the issue of arbitrability is left to be decided by the
Arbitral Tribunal or by the Courts in Singapore or by the Emergency
Arbitrator;
(vi) such forums would also be forum non conveniens, oppressive,
manifestly unfair, unreasonable and prejudicial to the interest of Bina,
Charu and Samir;
(vii) while hardships would be caused to Bina, Charu and Samir,
who are all residents of India, in litigating in Singapore, no hardship
would be caused to Lalit if were to file proceedings in India;
(viii) Lalit has approached the ICC to evade the jurisdiction of this
Court to decide the disputes because Lalit left India after he was
accused of gross violations of Indian laws and a non-bailable warrant
has been issued against him in proceedings under the Prevention of
Money Laundering Act, 2002 pending against him.
5. Vimal Kishor Shah supra referred to in the plaints having held that
disputes relating to Trust, Trustees and beneficiaries arising out of a Trust
Deed and the Trusts Act are not capable of being decided by the arbitration
tribunal despite existence of Arbitration Agreement to that effect between
the parties, it was felt that the only question to be adjudicated was, whether
the said objection to the very arbitrability of the dispute be permitted to be
decided by the Arbitral Tribunal or notwithstanding the bar enunciated by
the Supreme Court in Kvaerner Cementation India Limited supra, it is open
to this Court to injunct arbitration commenced by Lalit at Singapore or
injunct Lalit from proceeding with the said arbitration.
6. Being aware of the long litigation between the earlier generation of
the parties, before commencing hearing, I enquired from the senior counsels,
whether not the disputes were 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. However finding that the parties
presently are not in a mood to settle, and are ready to litigate, attempt at that
was not taken further. I however still implore the parties to instead of,
settling after litigating for years giving regard to their relationship with each
other, attempt amicable settlement even now, to nip this litigation in the bud.
7. Mr. Mukul Rohatgi Senior Advocate, before proceeding to address on
the aforesaid controversy, has drawn my attention to Vidya Drolia & Ors.
Vs. Durga Trading Corporation 2019 SCC OnLine SC 358, 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) 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) Section 49 of the Trusts Act vests the
jurisdiction in Principal Civil Court of Original Jurisdiction to control the
exercise of power conferred on a Trustee, again making it clear that a private
consensual adjudicator has no part in the scheme of the Act; (iv)Section 53
of the Trusts Act bars the Trustee from, without permission of the Principal
Civil Court of Original Jurisdiction, buying or becoming mortgagee or
lessee of the Trust property or any part thereof and which permission can
also be granted only by an arm of the State; and, same is the position under
Section 74 of the Trusts Act.
8. Mr. Rohatgi, Senior Counsel has next drawn attention to the dicta of
the Division Bench of this Court in Mcdonald's India Pvt. Ltd. Vs. Vikram
Bakshi (2016) 232 DLT 394. The Division Bench was concerned with an
appeal against an ad-interim anti-arbitration injunction granted by a Single
Judge of this Court on the grounds of (a) the dispute subject matter of
arbitration before the London Court of International Arbitration overlapping
with the dispute pending before the Company Law Board; (b) the London
Court of International Arbitration being a forum non conveniens since all
parties save one were carrying on business in India, and, (c) the arbitration
before the London Court of International Arbitration was oppressive and
vexatious. The Division Bench, without noticing Kvaerner Cementation
India Limited supra, held that anti-arbitration injunction can be granted in
extreme circumstances, where the existence of the Arbitration Clause was in
peril because of the "properly arguable" case of the agreement to arbitrate
having been forged in order to defeat the proceedings properly brought
before the Courts. It was held that the Courts have jurisdiction to determine
the question as to whether the Arbitration Agreement was void or a nullity.
However having so enunciated the law, the Division Bench held that the
facts of that case did not qualify for injuncting the arbitral proceedings and
thus vacated the stay of arbitral proceedings granted by the Single Judge.
9. Mr. Rohatgi Senior Counsel on the basis of the aforesaid, contended
that the law laid down by the Larger Bench of this Court being, that anti-
arbitration injunction suits are maintainable and the Court has the power to
grant such injunctions, I need not hesitate on the said aspect and consider the
case on merits. Mr. Rohatgi, Senior Counsel in this context also drew my
attention to Union of India Vs. Vodafone Group PLC United Kingdom
2018 SCC OnLine Del 8842, also holding that there is no unqualified or
indefeasible right to arbitrate and that the National Courts in India do have
and retain the jurisdiction to restrain International Treaty Arbitrations which
are oppressive, vexatious, inequitable or constitute an abuse of legal process.
However, I may mention, that having held so, in the facts of that case also,
injunction was declined.
10. It was thus sought to be contended that it was not open to the
undersigned, in view of Mcdonald's India Pvt. Ltd. supra and Vodafone
Group PLC United Kingdom supra, to foray into the question of
maintainability of the suit. It was also contended that there is neither any
express bar nor any implied bar to this Court exercising jurisdiction to grant
injunction against arbitration or against a party, restraining such party from
proceeding with the arbitration. It was argued that implied bar can be
inferred only when a full machinery is available and which is not so in the
present case. Else it was reminded that the Civil Courts have all-embracing
jurisdiction, as held in Dhula Bhai Vs. State of Madhya Pradesh AIR 1969
SC 78.
11. On merits, it was argued (i) that all the assets of the K.K.Modi Family
Trust are in Delhi, India; (ii) the parties are residing in Delhi; (iii) Lalit has a
permanent place of residence in Delhi; and, (iv) the procedural law as well
as the substantive law to be applied for adjudication of disputes, is of India.
12. It was also contended that the Arbitration Clause is vague and in the
year 2014, when the Trust Deed was executed there was no ICC Singapore.
Copy of dicta of the Single Judge of the High Court of Calcutta in the Board
of Trustees of the Port of Kolkata Vs. Louis Dreyfus Armatures SAS 2014
SCC OnLine Cal 17695 injuncting the respondent therein from proceeding
with the arbitral proceedings against the petitioner therein, was also handed
over.
13. Before Dr. Abhishek Manu Singhvi, Senior Counsel appearing on
behalf of Lalit commenced his arguments, I drew his attention to the
amendment to Section 8 of the Arbitration Act, with effect from 23rd
October, 2015 i.e. after the pronouncement of Kvaerner Cementation India
Limited supra, a judgment of 21st March, 2001, though reported after eleven
years, as 2012 (5) SCC 714, limiting the power of the judicial authority to
refer the parties to arbitration unless the judicial authority finds that prima
facie no valid Arbitration Agreement exists. It was enquired from him that
if owing to Vimal Kishor Shah and Vidya Drolia supra, there is no valid
Arbitration Agreement between the parties, why Kvaerner Cementation
India Limited supra should continue to hold the fray. 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.
14. Dr. Singhvi, Senior Counsel argued, (i) that Section 8 contained in
Part I of the Arbitration Act applied only to domestic arbitration and not to
International Arbitration; (ii) that the Rules of ICC Arbitration provide for
the objection, as raised here to arbitrability, being raised before the Arbitral
Tribunal; (iii) that the present is not a Part I Arbitration but a Part II
Arbitration because the Seat of Arbitration is outside India; (iv) that the
Original Trust Deed was executed at New Delhi and provided for arbitration
at Delhi; however in the Trust Deed executed at London, the parties
intentionally opted for arbitration of ICC; attention is invited to Section 2(2)
of the Arbitration Act, providing for Part I provisions to apply where the
place of arbitration is in India; (v) once the Arbitration Clause is undisputed,
it is the Arbitral Tribunal alone which should decide objections as to
arbitrability; (vi) that Section 8, being for Part I arbitrations, and the subject
arbitration hereof being not a Part I arbitration, the amendment thereto is
irrelevant; (vii) even otherwise, the amendment to Section 8 only requires
the Court to satisfy itself of the „existence‟, as distinct from „interpretation‟
of the Arbitration Agreement; (viii) in the present case, the existence of the
Arbitration Clause is not in dispute and has been admitted in the plaint itself;
(ix) that Clause 4 of the Trust Deed required a meeting of the Trustees to be
held within 30 days of Bina becoming the Managing Trustee and Clause 4.1
provides that if the Board of Trustees is unanimously unable to take any
decision as stated in Clauses 4.4.1 to 4.1.3, then the entire Trust Fund
including the family controlled businesses shall be sold in the manner
provided therein; (x) once no unanimous decision has been arrived at, the
K.K.Modi Family Trust is hollow and the assets earlier held by Trust are
being held by the Trustees as tenants-in-common; (xi) since the sale of the
assets has been triggered, the Trust has ceased to exist; and, (xii) this is also
evident from Clause 4.5.1 of the Trust Deed which provides for Bina to
continue as Managing Trustee and to have complete authority to take all
decisions "provided that it has been agreed to continue to keep the Trust and
not dispose of all the assets at the meeting to be held within 30 days in
accordance with Clause 4.1"; upon no agreement to continue the Trust
having been arrived at, as evident from the minutes of the meeting dated 30th
November, 2019 of the Trustees, Bina ceased to be the Managing Trustee of
the Trust.
15. Attention was drawn by Dr. Singhvi, Senior Counsel to my judgment
dated 3rd July, 2018 in CS(OS) No.1769/2003 titled Bharti Tele-Ventures
Ltd. Vs. DSS Enterprises Pvt. Ltd. wherein I have referred to my earlier
judgments in Roshan Lal Gupta Vs. Parasram Holdings Pvt. Ltd. (2009)
157 DLT 712, Spentex Industries Ltd. Vs. Dunavant SA, 2009 SCC
OnLine Del 1666 (RFA(OS) No.69/2009 preferred whereagainst was
dismissed on 29th August, 2009), Shree Krishna Vanaspati Industries (P)
Ltd. Vs. Virgoz Oils & Fats Pte Ltd. 2009 SCC OnLine Del 1665, M. Sons
Enterprises Pvt. Ltd. Vs. Suresh Jagasia 2011 SCC OnLine Del 82 and
Ashok Kalra Vs. Akash Paper Board Pvt. Ltd. 2013 SCC OnLine Del 3299,
all holding a suit for declaration of invalidity of Arbitration Agreement or of
arbitration commenced, and for permanent injunction to restrain arbitration,
to be not maintainable and also referring to A.Ayyasamy Vs. A.
Paramasivam (2016) 10 SCC 386, though not directly concerned with the
issue, but citing Kvaerner Cementation India Limited supra with approval.
It was contended that A.Ayyasamy supra is post-amendment to Section 8 of
the Arbitration Act, though it was admitted that the same does not notice the
said amendment.
16. Dr. Singhvi also drew attention to the recent judgment dated 10th
December, 2019 of the Supreme Court in BGS SGS Soma JV Vs. NHPC
Ltd. 2019 SCC OnLine SC 1585, on the aspect of Seat and „venue‟ of
Arbitration and to Chatterjee Petrochem Company Vs. Haldia
Petrochemicals Ltd. 2014 (14) SCC 574, also referred to by me in Bharti
Tele-Ventures Ltd. supra, declining the relief of declaration as null and void
of the Arbitration Clause, but after holding the Arbitration Clause to be
valid.
17. Mr. C.A. Sundaram, Senior Counsel also appearing for Lalit, in
response to my query qua Section 8 of the Arbitration Act, contended (i) 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; (iii) 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; (iv) thus there is no need for Lalit to apply under Section 8; (v)
alternatively, the amendment to Section 8 requires the Court to only prima
facie satisfy itself of the „existence‟ as distinct from „scope‟ of the
Arbitration Agreement; (vi) in the present case the Arbitration Agreement is
not in dispute; (vii) reliance is placed on Hema Khattar Vs. Shiv Khera
2017 (7) SCC 716, where the Court dealt with the plea of the Arbitration
Agreement ceasing to exist for the reason of the main contract in which the
arbitration agreement was incorporated, having been terminated, and held
that the arbitration agreement continued to exist; (viii) reliance was also
placed on Bhushan Steel Ltd. Vs. Singapore International Arbitration
Centre 2010 SCC OnLine Del 2236 relying on Kvaerner Cementation
India Limited supra and Roshan Lal Gupta supra holding, that once it is
held there is a valid Arbitration Agreement between the parties, a suit for
declaration that the Arbitral Tribunal has no jurisdiction or for permanent
injunction to restrain arbitration would not be maintainable; (ix) the ICC
Rules are akin to Section 16 of the Arbitration Act; and, (x) that Kvaerner
Cementation India Limited supra has recently been cited with approval in
National Aluminum Company Ltd. Vs. Subhash Infra Engineers Pvt. Ltd.
2019 SCC OnLine SC 1091 holding that if the plaintiff therein wanted to
raise an objection with regard to existence or validity of the Arbitration
Agreement, it was open for it to move an application before the Arbitrator
but with such plea he cannot maintain a suit for declaration and injunction.
18. Mr. C.A. Sundaram, senior counsel further contended that the plea of
the plaintiff, of the disputes, owing to the dicta of this Court in Vimal
Kishor Shah and Vidya Drolia supra, being not arbitrable, can also be
decided by the Arbitral Tribunal. However to satisfy this Court that,
notwithstanding Vimal Kishor Shah and Vidya Drolia supra, the disputes
urged before the Arbitral Tribunal are arbitrable, attention was invited to
Section 5 of the Trusts Act to contend that when the Trust is in relation to
immovable property provisions thereof i.e. the Trusts Act, are applicable
only when the writing is registered. It is contended that though the Trust is
with respect to immovable as was movable properties, but is not registered
in India. It is again emphasised that the Trust Deed itself was executed at
London and it is contended that the Indian Trusts Act does not apply. It is
argued that though all the said questions arise for adjudication but today the
question is, who is to decide the said questions, whether the Arbitral
Tribunal or the Courts in India.
19. Mr. C.A. Sundaram, senior counsel also invited attention to the case
of Lalit before the Arbitral Tribunal in the Application for Emergency
Measures, particularly to paragraph 124 thereof where it is pleaded that
"The Trust Deed has, upon the death of KK Modi, created an identity
between interests of Trustees and Beneficiaries, in that, each of the Trustees
is also a beneficiary of its branch. There is now a contractual relationship
between the parties to the Trust Deed and those deriving an interest through
them, in that the rights of Trust Fund have devolved, and the beneficiaries
are each tenants in common with defined interest in the Trust Fund
(including the businesses)" and to paragraph 125 as "Each of the Branches
has an equal interest in the corpus of the Trust Fund, and upon the
expression of intention to sell the assets (which includes all businesses and
investments), the entrustment has come to an end, with each of them now
contractually bound, including under and through the aegis of Deeds of
Adherence (by those who were minors at the time of execution of Restated
Trust Deed in 2014), to act in accordance with the procedure set forth in the
Trust Deed". It is argued that the disputes cannot be decided under the
Indian Trusts Act and the bar of jurisdiction of Vimal Kishor Shah and
Vidya Drolia supra does not apply.
20. Mr. C.A. Sundaram, senior counsel has also drawn attention to the
time table drawn up by the Emergency Arbitrator and has handed over a
copy of the communication of the representative of Bina to the Emergency
Arbitrator to the effect that pending the determination of these suits, Bina
"will of course continue to participate fully" in the emergency arbitration
proceedings. It is thus argued that no case for grant of even any interim
relief, if at all the suits are held to be maintainable, is made out and at best it
can be ordered that award, if any of the arbitrator will not be given effect to.
21. Mr. C.A. Sundaram, senior counsel has lastly referred to Imax
Corporation Vs. E-city Entertainment (India) Pvt. Ltd. (2017) 5 SCC 331
to contend that the present arbitration does not qualify as a domestic
arbitration.
22. Mr. Mukul Rohatgi, senior counsel, in rejoinder has stated that Bina
was served with notice of emergency arbitration on 21st February, 2020 and
was required to respond the very next day. It is contended that there is no
agreement to arbitrate in Singapore and from the arbitration clause, it is
evident that the Arbitration Act will apply. It is contended that as per the
arbitration clause, even curial law is the law of India. It is argued that the
arbitration clause does not say that the seat of arbitration is in Singapore. It
is again contended that there is no ICC, Singapore. It is further argued that
ICC has an office in India as well and once the seat of arbitration is not
defined in the arbitration agreement, it has to be determined from the bundle
of facts. It is also argued that the venue of arbitration has to be a place of
convenience. Reference is made to Enercon (India) Limited Vs. Enercon
GMBH (2014) 5 SCC 1 where it was held that when all the parties are
Indian, the venue of the arbitration proceedings at London is not convenient.
It is contended that since the seat of arbitration has not been agreed to be at
Singapore and is not at Singapore, Part I of the Arbitration Act will apply. It
is argued that Part II of the Arbitration Act applies only to International
Commercial Arbitration and the present arbitration, all the parties whereto
are nationals of and/or habitually resident of India, does not qualify as an
International Commercial Arbitration within the meaning of Section 2(1)(f)
of the Arbitration Act. It is thus contended that the principle of Section 8 of
the Arbitration Act would apply. Attention is drawn to Section 2(3) of the
Arbitration Act, which provides that Part I shall not affect any other law for
the time being in force by virtue of which certain disputes may not be
submitted to arbitration. It is contended that Vimal Kishor Shah and Vidya
Drolia supra qualify as "other law for the time being in force" within the
meaning of Section 2(3) of the Arbitration Act, under Article 142 of the
Constitution of India and the disputes cannot be resolved by arbitration. It is
contended that thus, within the meaning of Section 8, it has to be held that
there is no valid arbitration agreement. It is contended that the Trust Deed is
of the year 2014 i.e. of prior to Vimal Kishore Shah supra and when, as per
the parties‟ understanding, the disputes were arbitrable. However, Supreme
Court subsequently in the year 2016 in Vimal Kishor Shah supra held
disputes arising out of the Trust Act to be not arbitrable and added to the
same to the list of non-arbitrable disputes as laid down in Booz Allen and
Hamilton Inc. Vs. SBI Home Finance Limited (2011) 5 SCC 532. It is
argued that invocation of arbitration by Lalit is invalid. It is further argued
that the arbitration proceedings qualify as vexatious and oppressive, within
the meaning of McDonald's India Private Limited supra. Principle of
forum non-conveniens is also invoked and it is contended that the arbitral
award, even if any, will be inexecutable because it would be contrary to
public policy. It is further contended that Kvaerner Cementation India
Limited supra does not qualify as precedent, as contains no discussion and
no reasoning. It is argued that in fact, the facts on which it was pronounced
are also not disclosed and the same in any case, does not notice Section 2(3)
of the Arbitration Act.
23. Mr. Mukul Rohatgi, senior counsel, with respect to the contention of
Mr. C.A. Sundaram, senior counsel, on Section 5 of the Indian Trusts Act
has contended that, (a) the Trust deed also relates to movable properties and
the value of immovable properties therein is a pittance in value in
comparison to the value of movable properties; it is emphasized that a Trust
with respect to movable properties does not require any registration; (b) that
once it is the contention of Lalit that the Trust Deed is not valid, Lalit also
cannot rely on the same; attention in this regard is drawn to the Application
for Emergency Measures filed by Lalit and it is contended that Lalit himself
is relying on the same; (c) on an interpretation of the Trust Deed, it cannot
be said that the Trust has disappeared. Thus, it is contended that the
disputes arise out of the Trust Deed.
24. Mr. Mukul Rohatgi, senior counsel has further contended that the
Arbitration Act has certain derogable provisions which cannot be ousted by
the parties by contract; the Arbitration Act does not provide for emergency
arbitration, the manner in which it is being done, by giving one day‟s time.
Alternatively, it is argued that Clause 36 of the Trust Deed providing for
arbitration, at best can be interpreted as meaning that the Rules of ICC qua
timelines will apply. Else, it is stated that the Arbitration Act provides for
timelines and the hastily carried out / commenced arbitration is invalid and
not in accordance with the public policy of India. Reference is also made to
the provisions of the Trust Deed to contend that Bina, on demise of KK has
automatically become the managing trustee and during her lifetime, the
Trust cannot be dissolved. Attention in this regard is invited to Clause 3.33
of the Trust Deed.
25. Mr. C.A. Sundaram, senior counsel for Lalit, during the arguments of
Mr. Mukul Rohatgi, senior counsel, contended that Lalit, within the meaning
of Section 2(1)(f)(i) of the Arbitration Act, is habitually resident of a
country other than India and also stated that it is not as if the arbitration is
getting over on 7th March, 2020. It is contended that regular arbitration has
also been invoked by Lalit and the proceedings with respect whereto are also
underway and it is only the emergency arbitration which is scheduled on 7 th
March, 2020.
26. Mr. Arvind K. Nigam, senior counsel, also appearing for Bina, Samir
and Charu, to controvert the contention of the Trust coming to an end,
besides relying on Clause 3.3 of the Trust Deed, also referred to Clause 2.11
defining the „Dissolution of Trust‟ and Clause 2.30 defining „Trust Period‟.
It was reiterated that after the pronouncement in Vimal Kishor Shah supra,
arbitration in accordance with the arbitration clause in the Trust Deed,
qualifies as vexatious because the result thereof would be inexecutable and
unenforceable and the arbitral award will not be worth the paper it is scribed
on. It is also contended that once disputes arising out of the Trust Deed are
non-arbitrable, the Arbitral Tribunal has no jurisdiction to also decide the
objection as to arbitrability; the principle that jurisdiction cannot be
conferred by consent is invoked. It is contended that any adjudication will
be „still born‟.
27. Mr. Arvind K. Nigam, senior counsel, responding to the arguments of
Mr. C.A. Sundaram, senior counsel, pertaining to Section 5 of the Trusts
Act, also drew attention to Sections 6 and 77 thereof to contend that the
Trust does not stand extinguished as contended. Attention is drawn to the
list of beneficiaries of the Trust at page 112 of Part III-A file. It is
contended that if the disputes are non-arbitrable "what is the fun of going
ahead with arbitration" and that there is lack of inherent jurisdiction in the
Arbitral Tribunal and the same is coram non judice.
28. Mr. Rajiv Nayar, senior counsel, also appearing for Bina, Charu and
Samir has argued that the jurisdictional fact is to be determined by the Court
and not by the Arbitral Tribunal. Attention is drawn to Natraj Studios (P)
Ltd. Vs. Navrang Studios (1981) 1 SCC 523 holding, in the context of
applicability of the rent control statute, that the jurisdictional fact is to be
decided either by the Rent Controller (in that case Court of Small Causes) or
the ordinary Civil Court and that if the jurisdictional question is decided in
favour of the Court of exclusive jurisdiction, the suit or proceedings before
the ordinary Civil Court must cease to the extent its jurisdiction is ousted.
With respect to Kvaerner Cementation India Limited supra, it is contended
that the same was considered by the Division Bench of this Court in Dr.
Devinder Kumar Gupta Vs. Realogy Corporation 2011 SCC OnLine Del
3050.
29. Mr. C.A. Sundaram, senior counsel for Lalit responded to the
aforesaid contentions, (a) by referring to the language of Clauses 3.3, 4.1,
4.5, 4.5.1 and 6.1 and Schedule B to the Trust Deed at page 117 of Part III-
A file to contend that it is only "so long as the Trust continues..." and thus
the Trust Deed does not provide that the Trust, notwithstanding unanimous
decision having not been arrived at within one month of demise of KK,
continues; (b) attention is invited to Clause 10.4 in relation to minors; (c) it
is argued that the contention, that the jurisdictional fact is to be determined
only by the Court, would make Section 16 of the Arbitration Act otiose.
30. I have considered the rival contentions and am unable to take a view
different from that taken by me consistently in Roshan Lal Gupta, Spentex
Industries Ltd., Shree Krishna Vanaspati Industries (P) Ltd., M. Sons
Enterprises Pvt. Ltd., Ashok Kalra and Bharti Tele-Ventures Ltd. supra i.e.
that suits such as the present one, to declare the invalidity of an arbitration
clause/agreement and to injunct arbitration proceedings, whether falling in
Part I or Part II, are not maintainable. My reasons therefor are as under:
(A) The contention, that Kvaerner Cementation India Limited
supra (a dicta of the three Hon‟ble Judges of the Supreme Court), is
not a binding precedent for the reason of having no facts, no
discussion and citing no precedent, at least before this Bench, cannot
be sustained. It has been recently reiterated in Peerless General
Finance and Investment Company Ltd. Vs. Commissioner of
Income Tax 2019 SCC OnLine SC 851 that a pronouncement of the
Supreme Court, "even if it cannot be strictly called the ratio decidendi
of the judgment would certainly be binding on the High Court".
Similarly, in Oriental Insurance Co. Ltd. Vs. Meena Variyal (2007)
5 SCC 428 it was held that even an observation or an obiter of the
Supreme Court is binding on the High Court in the absence of a direct
pronouncement on that question, of the Supreme Court and in Sanjay
Dutt Vs. State (1994) 5 SCC 402 it was held that even the obiter dicta
of the Supreme Court is binding on other Courts in the country. Of
course, the counsels have the privilege to contend so, to build a case
for finally arguing before the Supreme Court itself.
(B) The aforesaid argument cannot also be accepted because of
Kvaerner Cementation India Limited supra having been cited with
approval in A. Ayyansamy supra and very recently in National
Aluminium Company Limited supra. It is thus not as if Kvaerner
Cementation India Limited supra running into less than one page and
pronounced on 21st March, 2001 but published as (2012) 5 SCC 214
has remained hidden and no other bench of the Supreme Court has
had an occasion to go into the same.
(C) It is also not as if there is any contrary view of the Supreme
Court qua suits for declaration of invalidity of the Arbitration
Agreement / proceeding and for injuncting arbitration, for this Court
being required to match the facts of the present case with the facts of
two different views of the Supreme Court, to consider which one of
the two to follow. Kvaerner Cementation India Limited supra holds
the fray for the last nearly twenty years and binds the undersigned. It
is just, reasonable and the need of the hour, that a view which has
held fort for the last twenty years and on which parties have acted be
not disturbed. It has been held in State of Himachal Pradesh Vs.
Ashwani Kumar (2015) 15 SCC 534, Sakshi Vs. Union of India
(2004) 5 SCC 518, Union of India Vs. Paras Laminates (P) Ltd.
(1990) 4 SCC 453 and Bangalore Water Supply and Sewerage
Board Vs. A. Rajappa (1978) 2 SCC 213 that an interpretation of
statute which has stood for long and on which parties have acted, and
based their dealings, should not be readily interfered with.
(D) That brings me to the reliance on behalf of Bina, Charu and
Samir, on McDonald's India Private Limited and Vodafone Group
PLC United Kingdom supra. Both do not notice Kvaerner
Cementation India Limited supra. Though McDonald India Pvt.
Ltd. supra being a dicta of the Division Bench of this Court would be
binding on me but once the same is found to be per incuriam qua
Kvaerner Cementation India Limited supra, a dicta of the three
Judges Bench of the Supreme Court, it has been held in Pal Singh Vs.
National Thermal Power Corporation Limited 2002 SCC OnLine
Del 178 that a dicta of a larger bench of the High Court does not bind
when the law even if earlier in point of time pronounced by the
Supreme Court is otherwise and especially when the larger bench of
the High Court has not noticed the law as declared by the Supreme
Court.
(E) Interestingly, both McDonald's India Private Limited and
Vodafone Group PLC United Kingdom supra, though hold the Court
to be vested with the jurisdiction to injunct arbitration, do not on facts
injunct arbitration. I may in this context address an interesting facet
of judicial decision making experience by the undersigned and
inferred by the undersigned in other judgments. The Court is
reluctant to denude itself of jurisdiction, especially when, in the facts
before it, not opting to exercise jurisdiction. This is for the fear of
such denudation of jurisdiction in future coming in the way of
granting relief in a deserving case. Though I admit, the same to have
governed my judicial decision making also, but find that the
reluctance to return a finding of the Court having no jurisdiction,
though for good reasons as aforesaid, results in the Courts being
flooded with cases with each litigant taking a chance, that in the facts
of his case, the Court which has not declined to be having jurisdiction,
may grant the relief of injuncting arbitration.
(F) The Division Bench of this Court in Mcdonald's India Pvt.
Ltd. supra, though held that under the Arbitration Act, whether Part-I
thereof or Part-II thereof is applicable, the focus seems to have shifted
towards directing the parties to arbitration rather than deciding the
same subject matter as a civil suit, by referring to Sections 8 and 45 of
the Arbitration Act, thereafter noticing LMJ International Ltd. Vs.
Sleepwell Industries Co. Ltd 2012 SCC OnLine Cal 10733 (DB),
dicta of the Division Bench of the Calcutta High Court which was
concerned with the power and jurisdiction of a Civil Court to restrain
a party from making a reference to an International Commercial
Arbitration and to have the said dispute resolved by such international
arbitration and which in turn referred to a dicta of the Supreme Court
in Modi Entertainment Network Vs. W.S.G. Cricket Pte Ltd. (2003)
4 SCC 341 pertaining to anti suit injunction, proceeded to hold that
the principles laid down therein would apply to anti-arbitration
injunction suits as well. 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 anti-
arbitration injunction suits as distinct from anti-suit injunctions,
proceeded to hold that the Court would have jurisdiction to grant anti-
arbitration 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. It would thus be seen that the reasoning which prevailed
with the Supreme Court in Kvaerner Cementation India Limited
supra for holding the anti-arbitration injunction suit to be not
maintainable, i.e. owing to the availability of the same remedy under
Section 16 of the Arbitration Act, was not even argued before the
Division Bench. Perhaps had the same been argued, a Google search
would have taken also to Kvaerner Cementation India Limited supra.
(G) That brings me to another relevant aspect concerning the suits
of the present nature i.e. for the reliefs of declaration and injunction.
The grant of such reliefs by the Indian Courts is governed by the
provisions of the Specific Relief Act, 1963, that of grant of
declaratory decrees being governed by Section 34 thereof and that of
grant of injunction being governed by Sections 38 to 42 thereof. The
grant of relief of declaration to any person entitled to any legal
character or to any right as to any property, is discretionary, with the
proviso that declaration shall not be granted where the plaintiff being
able to seek further relief than a mere declaration of title, omits to do
so. Section 41(h) bars grant of injunction when equally efficacious
relief can certainly be obtained any other usual mode of proceeding.
It has been held in Pushpa Saroha Vs. Mohinder Kumar 2009 SCC
OnLine Del 57 and Roshan Lal Gupta supra that declaration with
consequential relief shall not be granted if there is alternative
efficacious remedy available by any other ususal mode of proceeding
to the person seeking such declaration and consequential relief. The
Scheme of the Arbitration Act of the year 1996 as noticed by the
Division Bench in Mcdonald's India Pvt. Ltd. supra also is to direct
the parties to arbitration rather than deciding the same subject matter
as a civil suit. The Arbitration Act, 1996 in a major change from the
1940 Act empowers the Arbitral Tribunal to rule on its own
jurisdiction. It is not the contention of any of the senior counsels for
the Bina, Charu and Samir that the Arbitral Tribunal constituted by
ICA of ICC is not empowered to decide any of the objections which
have been taken by them for injuncting arbitration. Once the statute
has provided for the mode of obtaining the same relief before the
Arbitral Tribunal, the Court under Section 41(h) would not grant the
same relief i.e. of anti-arbitration injunction. Once the relief of
permanent injunction cannot be granted, the grant of declaration
would not serve any purpose and in any case cannot be made when
consequential relief though prayed cannot be granted by the Court.
(H) The Arbitration Act is a complete code in itself (see Morgan
Securities and Credit (P) Ltd. Vs. Modi Rubber Ltd. (2006) 12 SCC
642, Fuerst Day Lawson Limited Vs. Jindal Exports Limited (2011)
8 SCC 333 and Pam Developments Private Limited Vs. State of West
Bengal (2019) 8 SCC 112). The Courts cannot interfere with the
code pertaining to arbitration laid down in the statute, by exercising
jurisdiction to do, for which equally efficacious relief can certainly be
obtained before the Arbitral Tribunal.
(I) As far as the contention of the senior counsels for Bina, Charu
and Samir, of them being situated at Delhi, the Trust assets being at
Delhi, the arbitration proceedings at Singapore being costly and thus
oppressive and vexatious, are concerned, all that may be observed is
that the parties, notwithstanding the same, deemed it fit to execute the
Trust Deed at London and to consciously provide for arbitration of
ICC, Singapore and when required, after the demise of KK, to hold a
meeting of the Board of Trustees, of their own volition chose to hold
it at Waldorf Astoria Dubai. They certainly cannot now be heard to
contend that arbitration proceedings at Singapore are vexatious /
oppressive to them. Even in the context of anti-suit injunction, in
Modi Entertainment Network supra it was held that normally anti-
suit injunction restraining the defendant would not be granted when
parties have agreed to submit to the exclusive jurisdiction of a Court,
including a foreign Court, a forum of their choice, in regard to the
commencement or continuance of proceedings in the Court of choice,
save in a exceptional case for good and sufficient reasons, in
circumstances which permit a contracting party to be relieved of the
burden of a Court. No such exceptional circumstances have been
pleaded.
(J) Coming back to the judgments, relied upon by senior counsel
for plaintiffs, a reading of Vodafone Group PLC United Kingdom
supra shows that the same was concerned with Bilateral Investment
Treaty arbitration, outside the scope of Arbitration Act. What has
been held therein, cannot apply to the present controversy which is
fully covered by Kvaerner Cementation India Limited and other
judgments supra.
(K) As far as the contentions of the counsels on the merits of the
objection to arbitrability are concerned, once I have held that this
Court does not have jurisdiction to decide the said merits, it would not
be proper for the undersigned to foray into the same. All that needs to
be observed is that the senior counsels for Lalit have made out an
arguable case qua the non-applicability of Vimal Kishor Shah and
Vidya Drolia supra.
(L) Reliance by Mr. Rajiv Nayar, Senior Advocate for Bina, Charu
and Samir on Natraj Studios (P) Ltd. supra is not apposite. All that
the same holds is that the Civil Court retains the jurisdiction to decide
whether the Rent Act applies to the tenancy, notwithstanding the Rent
Controller also being authorized to do so. Reliance on the said
judgment loses sight of the fact that in a lis brought before the Civil
Court, on the plea of the suit being maintainable owing to the Rent
Act being not applicable, on the plea by the opposite party of the Rent
Act being applicable, Civil Court cannot direct the Rent Controller to
be approached if it is still to be decided whether the Rent Act applies
and only in which case the Rent Controller would have jurisdiction.
However as aforesaid the Scheme of the Arbitration Act is to direct
the parties to arbitration, rather than deciding the same subject matter
as a civil suit. The decision, whether Vimal Kishor Shah and Vidya
Drolia supra are applicable or not and owing thereto disputes not
arbitrable, will be much more expeditious before the Arbitral Tribunal
than before the Civil Court.
(M) No merit is also found in the contention, of the procedure being
followed by ICC being repugnant to Arbitration Act. 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 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. Thus the
ground of haste makes waste, cannot be invoked. A party, after
having expressly agreed to a particular state of affairs, cannot raise
the argument of forum non conveniens, which is available only in
case of concurrent jurisdiction. Reliance on Mcdonald's India Pvt.
Ltd. supra in which argument of forum non conveniens was rejected,
also negates the said argument.
(N) The principles pertaining to anti-suit injunction suits, as held in
Mcdonald's India Pvt. Ltd. supra also, are not attracted to anti-
arbitration injunction suits, for the reason of the Arbitration Act being
a complete code in itself and the 1996 Act as distinct from the 1940
Act, empowering the Arbitral Tribunal itself to rule on its own
jurisdiction. The reliance on the judgment of the High Court of
Calcutta in Louis Dreyfus Armatures SAS supra which though
records the argument qua Kvaerner Cementation India Ltd. supra,
does not in the decision/discussion deal with the same and in any case
concerned Arbitration Rules of the United Nations Commission on
International Trade Law, 1976, on the basis of a Bilateral Treaty
Agreement between Govt. of India and the Government of France, is
also apposite.
(O) With respect to Enercon (India) Limited supra, I may state that
the same was referred to generally in the arguments, without even
citing or relying on the same and the need thus to deal therewith is not
felt.
(P) With respect to the query posed by me qua the amendment to
Section 8 of the Arbitration Act, I am satisfied with the contentions
noticed above of Mr. C.A. Sundaram, senior counsel, that Section 8 or
amendment thereto would have no application. The amendment to
Section 8, does not change the bar to the jurisdiction of this Court
vide Section 5 of the Act and which, notwithstanding the amendment
to Section 8, remains unchanged. No window has been opened
therein to permit a judicial authority to intervene, if finds no valid
arbitration agreement existing, to injunct arbitration. It is only when a
substantive action is brought before the Court and a plea of Section 8
is taken, that the Legislature has permitted the Court to go into the
question of existence of a valid arbitration agreement, before referring
the parties to arbitration.
31. Mr. Mukul Rohatgi, Senior counsel for Bina, Charu and Samir has
also contended that Lalit is a fugitive from the country. In the plaint also, it
is pleaded that Lalit is accused of several gross violations of Indian law and
is accused of offences under Sections 409, 420, 468, 477A and 120B of
Indian Penal Code and proceedings under Prevention of Money Laundering
Act, 2002 are also pending against him. Therefrom a thought occurred to
the undersigned, 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. However 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.
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.
33. Once the conclusion hereinabove reached is that an anti-arbitration
injunction suit does not lie, the suits are not maintainable and are dismissed.
However in view of Mcdonald's India Pvt. Ltd. and Vodafone Group PLC
United Kingdom supra singing a different tune and Kvaerner Cementation
India Limited supra remaining unpublished for nearly twelve years, no
costs.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
MARCH 03, 2020
„bs/ak/gsr‟..
