Delhi High Court Upholds Arbitral Award
The Delhi High Court has ruled against Lalit Modi, rejecting his plea to overturn a 2016 arbitral award that mandated the specific performance of an agreement to sell his property in Vasant Vihar to BDR Builders and Developers Private Limited. This decision was rendered by Justice Harish Vaidyanathan Shankar, who found that Modi did not successfully demonstrate the arbitrator’s statutory ineligibility or the presence of circumstances that would raise reasonable doubts about the arbitrator’s independence or impartiality.
Court’s Detailed Examination
Justice Shankar delivered the judgment on August 18, with a noteworthy postscript revealing that his initial inclination was to side with Modi. However, after a thorough examination and consideration of the legal context, he concluded otherwise. “This Court considers it necessary to add this candid Post Script since, initially, during the hearing, this Court was of the view that the Petition should be allowed, but upon closer scrutiny and circumspection, and consideration of the relevant law, decided otherwise,” the Court explained.
Background of the Dispute
The disagreement revolves around a property spanning approximately 858 square yards located at 32, Pashchimi Marg in Vasant Vihar. Between 2009 and 2012, BDR Builders offered financial help to Modi, leading to a property sale agreement in June 2014. The matter was subsequently moved to arbitration, with both parties appointing advocate Naresh Gupta as the sole arbitrator in October 2016.
During arbitration, both parties informed the arbitrator of an amicable settlement. Consequently, an award was issued on November 21, 2016, directing the specific performance of the agreement and transferring possession to BDR Builders. Modi and BDR director Rajesh Gupta signed an “Acceptance,” agreeing to the award fully and waiving their right to challenge it.
Modi’s Grounds for Challenge
Modi’s primary contention was that the arbitrator had prior professional connections with BDR Builders and its directors, failing to disclose this as mandated by Section 12 of the Arbitration Act. However, the Court clarified that non-disclosure alone does not nullify arbitration. It must be demonstrated that the circumstance makes the arbitrator ineligible under Section 12(5) and the seventh schedule or that it casts justifiable doubts on the arbitrator’s independence or impartiality under Section 12(3).
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The documentation presented by Modi indicated professional engagements between the arbitrator and BDR Builders from 2008 to 2012. The Court pointed out that relevant entries in the fifth schedule refer to professional engagements within three years preceding arbitration, which commenced in 2016.
Dismissal of Unsubstantiated Claims
Modi also cited a typed copy of an alleged 2018 response by the arbitrator, purportedly acknowledging previous work for BDR, payment of professional fees, and his wife’s acquisition of shares in a company post-arbitration. The Court refused to consider this document, citing the absence of its original, and the lack of established authorship and authenticity. “Proceedings under Section 12 or Section 34 of the A&C Act are not intended to permit findings founded upon unproved or doubtful material, particularly where allegations affecting the integrity of an arbitrator are involved,” the Court stated.
Conclusion and Representation
The Court ultimately dismissed Modi’s Section 34 petition, enabling BDR Builders to proceed with execution for enforcement of the November 2016 award. The execution petition is scheduled for listing before the roster bench on October 28. Representing Modi were Senior Advocate Inderbir Singh Alagh and advocates Tushar Parashar, Amit Pandey, and Bhanu Pratap Singh Phore. Advocates Prashant Mehta, Diksha Goswami, Prachi Kohli, Nitin Bajaj, and Niharika Tiwari acted on behalf of BDR Builders, with Advocate Nandni Sahni appearing for objector Romi Garg.
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[Read Judgment]
