"Come Up With Solutions" : Supreme Court Tells Lalit Modi & His Mother Bina Modi In Family Property Issue

The bench of Chief Justice of India NV Ramana, Justices Krishna Murari and Hima Kohli asked the parties to come up with a solution to solve the dispute.

"Last time we appointed arbitrators but you could not decide... Both sides should be fair, you can't take an advantage or the other parties cannot take advantage. Please come up with solutions," the CJI said.

What Transpired In The Supreme Court ?

When the matter was taken up for hearing, the senior counsels informed the bench that the mediation in which the Top Court had appointed former Supreme Court judges, Justice Vikramjit Sen and Justice Kurian Joseph as mediator had failed.

Senior Advocate Kapil Sibal for the respondents raised preliminary with regards to the SLP challenging the Delhi High Court's judgment being filed through power of attorney of Lalit Mod.

"This dispute relates to a trust. The SLP was filed through the power of attorney," Sibal submitted.

Laying emphasis on Lalit Modi who is in the UK filing the SLP through power of attorney, Senior Advocate Mukul Rohatgi also appearing for the Respondents submitted that in a matter of trust and under the Trust Act, no part of the duty of the Trustee could be delegated. He further added that it was against the Trust Act.

Senior Advocate Harish Salve appearing for Lalit Modi submitted that the preliminary objection has to be rejected. If a power of attorney cannot be given in a matter related to trust, a lawyer can also not be entrusted to appear in such a matter, he said. He further argued that Mr Lalit Modi was not only a trustee but also a beneficiary. Salve further submitted that Lalit Modi as a beneficiary was seeking for dissolution of the trust deed.

Considering the submissions made by Salve, Senior Advocate Mukul Rohatgi urged the bench to firstly consider the preliminary objection.

"We're saying that we'll decide the issue. We're issuing notice, file your reply. Whatever response is there, give it," the bench said at this juncture.

On bench expressing its inclination to issue notice, Senior Advocate Harish Salve submitted that the respondents had started selling properties.

"That we don't allow. Status quo be maintained. Last time also we've sent the matter and you said you want mediation and now she's selling properties," the CJI said.

Objecting to the bench ordering status quo, Senior Advocate Kapil Sibal and Mukul Rohatgi submitted that an application should be filed urging to grant the interim relief for status quo.

"Issue notice. Application for interim relief should be listed on Monday. Mr Rohatgi, that's why I'm saying that I'll keep it on Monday. You see if you're going to make statement that you are not selling any property, I'll record the statement and close the case," the CJI said.

The present special leave petition has been filed challenging the judgment of a division bench of the Delhi High Court, which held that the anti-arbitration injunction suit filed by late industrialist KK Modi's wife Bina Modi against her son Lalit Modi is maintainable.

The suit was filed by Lalit Modi's mother Bina Modi, his sister Charu and brother Samiras was filed seeking to restrain the arbitration proceedings initiated by Lalit Modi in Singapore over property disputes in the family.

In March 2020, a single bench of Justice Rajiv Sahai Endlaw had dismissed the suits filed by the as non-maintainable.

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.

Division Bench Order:

The division bench of the High Court in the impugned order dated On December 24, 2020, had held that it was settled law 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".

The division bench observed that the appellants had raised a prima facie valid argument that disputes arising out of the family trust deed was not arbitrable and hence held that the single bench ought to have proceeded with the suit.

The division bench expressed the view that issues under the Trusts Act cannot be the subject matter of arbitration since the same are excluded from the purview of the Arbitral Tribunal by necessary implication.

It was held that 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.

Single Bench Order:

The single bench had taken the view that it was for the arbitral tribunal to decide the issue of arbitrability of the dispute as per Section 16 of the Arbitration and Conciliation Act. The division bench held that the reliance placed by the single bench on Section 16 was "misplaced".

The single bench had also held that Section 41(h) of the Specific Relief Act, 1963, barred courts from granting injunctions in cases where an equal and efficacious remedy could be obtained through any other mode of proceeding

According to the plaintiffs, KK Modi had trust deed in London before his death in November 2019 to record the terms of the oral family settlement between Bina, Lalit, Charu and Shamir made in 2006.

Lalit Modi's argument is that a clause in the trust deed permitted the sale of assets and distribution of proceeds if the family members failed to reach a settlement within the mandatory 30 days from the demise of KK Modi. According to the trust deed, the beneficiaries will get one year to complete the sale process.

His mother and the two siblings contended that on a true construction of the trust deed, no such sale has been triggered.

Case Title: Lalit Kumar Modi v. Bina Modi & Ors | SLP (Civil) 1134-1135/2021