HC upholds award directing Lalit Modi to transfer Vasant Vihar property

Court rejects Modi's challenge to the 2016 arbitral award, finding no grounds to establish the arbitrator's ineligibility or raise doubts over his independence or impartiality

The Delhi High Court has upheld an arbitral award directing businessman Lalit Modi to complete the sale of his Vasant Vihar property to BDR Builders and Developers Private Limited, rejecting his challenge to the 2016 award.

 

Justice Harish Vaidyanathan Shankar found that Modi failed to demonstrate either that the arbitrator was legally disqualified from acting in the matter or that there were sufficient grounds to question his independence or impartiality.

 

The dispute relates to an 858-square-yard property at 32, Pashchimi Marg, Vasant Vihar.

 

BDR Builders had provided financial assistance to Modi between 2009 and 2012. The parties subsequently entered into an agreement in June 2014 for the sale of the property, following which their disputes were referred to arbitration.

 

 

Advocate Naresh Gupta was jointly appointed as the sole arbitrator in October 2016. During the proceedings, the parties informed him that they had reached a settlement. On November 21, 2016, the arbitrator passed an award directing specific performance of the agreement and handing over of the property to BDR Builders.

 

Modi and BDR director Rajesh Gupta separately signed an acceptance of the award, agreeing to its terms and stating that they would not challenge it.

 

Modi nevertheless approached the High Court under Section 34 of the Arbitration and Conciliation Act, alleging that the arbitrator had previous professional associations with BDR Builders and its directors and had not made the disclosures required under Section 12 of the Act.

 

The High Court rejected the challenge, holding that a failure to disclose a past professional association does not, by itself, render an arbitral award invalid.

 

The relevant question, it said, was whether the circumstances either resulted in the arbitrator becoming ineligible under Section 12(5) read with the Seventh Schedule or created justifiable doubts about his independence or impartiality under Section 12(3).

 

The Arbitration and Conciliation Act, 1996, makes an arbitrator legally ineligible if their relationship with the parties or dispute falls under the Seventh Schedule. This is distinct from Section 12(3), which deals with general circumstances giving rise to justifiable doubts about independence or impartiality.

 

The court noted that the documents relied upon by Modi showed professional dealings between the arbitrator and BDR Builders between 2008 and 2012. Since the arbitration commenced in 2016, the court held that these engagements fell outside the three-year period relevant to the entries in the Fifth Schedule concerning previous professional relationships.

 

Modi also relied on a typed copy of an alleged 2018 communication in which the arbitrator purportedly acknowledged his earlier professional work for BDR, receipt of fees and his wife's subsequent purchase of shares in a company. The court declined to rely on the document, noting that the original had not been produced and its authenticity and authorship had not been established.

 

The court said proceedings under Sections 12 and 34 cannot be used to reach findings based on unproved or questionable material, particularly when allegations concern an arbitrator's integrity.

 

In a postscript, Justice Shankar disclosed that he had initially been inclined to allow Modi's petition but changed his view after a closer examination of the record and applicable law.

 

The court accordingly dismissed Modi's challenge and permitted BDR Builders to proceed with execution of the November 2016 award. The execution proceedings are next scheduled before the roster Bench on October 28.