KK Modi trust feud heading for arbitration in Singapore

PALAK SHAH Mumbai | Updated on March 03, 2020

Delhi HC dismisses plea by Bina Modi to hold arbitration in India

The arbitration process involving KK Modi Family Trust can now continue in Singapore. This is after the Delhi High Court (DHC) on Tuesday dismissed two petitions with regard to arbitration and settlement involving the KK Modi Family Trust. Justice Rajiv Sahai Endlaw said that the court does not have the jurisdiction to adjudicate the plea, which can be adjudicated by the arbitral tribunal relating to its own jurisdiction.

Two separate pleas were filed in the DHC by Bina Modi, the wife of late KK Modi, and her children Charu Modi and Samir Modi against Lalit Modi. Both of the pleas prayed for declaration and permanent and mandatory injunction against initiation, continuation of arbitration proceedings initiated by Lalit Modi in Singapore. They wanted the arbitration to be held in India.

“Once the conclusion hereinabove reached is that an anti-arbitration injunction suit does not lie, the suits are not maintainable and are dismissed,” the DHC order said.

Late KK Modi had prepared a family trust deed according to which the 10 members of the KK Modi Family Trust, who are his wife, children and grandchildren, were to receive the share of inheritance. Among the major assets of the trust are promoter stake in cigarette maker Godfrey Phillips and few unlisted companies. However, there is a disagreement between Lalit Modi and Bina Modi over certain aspects of the deed.


Mukul Rohatgi, senior counsel for Bina, Charu Modi and Samir Modi, contended that Lalit Modi was a fugitive. Rohatgi pleaded that Lalit Modi was 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.

Rohatgi’s argument was 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 with the Supreme Court under Article 142 and this court should thus refrain from acting on such considerations,” the Delhi HC judge said dismissing the pleas of Bina Modi and others.

Lalit Modi contended that after the demise of KK Modi, 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 Modi contend that on a true construction of the Trust Deed, no such sale has been triggered. The order further reveals that Bina Modi, in an attempt to amicably settle, asked Lalit Modi for a fair proposal; but he in response thereto disputed the appointment of Bina as the President and the Managing Director of Godfrey Philips India and Indofil Industries and pressed for sale of assets.

On the merit of the Trust Deed and its Clause 36, which mainly triggers the sale, the Delhi HC judge said, “I, 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, have not gone into the same (merits of the trust deed) and the said pleas remain open to the parties to take before the Arbitral Tribunal.”

Published on March 03, 2020

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