The Delhi High Court has refused to set aside a 2016 arbitral award directing Lalit Modi to complete the sale of his Vasant Vihar property to BDR Builders and Developers Private Limited.
Justice Harish Vaidyanathan Shankar found that Modi could not establish that the sole arbitrator was legally disqualified from hearing the dispute or that there were sufficient grounds to question the arbitrator’s independence or impartiality.
The ruling was delivered after the Court examined Modi’s objections to the arbitration process, including allegations concerning the arbitrator’s earlier professional association with BDR Builders and its directors.
An unusual feature of the judgment was the judge’s candid postscript. The Court disclosed that it had initially been inclined to accept Modi’s challenge during the hearing, but changed course after a closer examination of the applicable law and the material placed before it.
Dispute over Vasant Vihar property
The case relates to an approximately 858-square-yard property at 32, Pashchimi Marg, Vasant Vihar.
BDR Builders had provided financial assistance to Modi between 2009 and 2012. The parties later entered into an agreement in June 2014 for the sale of the property, following which their differences were referred to arbitration.
In October 2016, both sides jointly appointed advocate Naresh Gupta as the sole arbitrator.
During the arbitration, the parties informed the arbitrator that they had reached an amicable settlement. An award issued on November 21, 2016 directed specific performance of the sale agreement and the transfer of possession of the property to BDR Builders.
Modi and BDR director Rajesh Gupta separately signed an acceptance confirming that they accepted the award in full and would not challenge it.
The dispute nevertheless returned to court when Modi sought to have the award set aside.
Challenge centred on arbitrator’s past professional links
Modi argued that the arbitrator had previously undertaken professional work for BDR Builders and its directors and had not made the disclosure required under the Arbitration and Conciliation Act.
The High Court, however, drew a distinction between a failure to disclose a circumstance and proof that the circumstance actually creates legal ineligibility or a reasonable basis to doubt an arbitrator’s impartiality.
The Court noted that records relied upon by Modi showed professional engagements between the arbitrator and BDR Builders between 2008 and 2012. But the arbitration commenced only in 2016.
The Court observed that the relevant provisions of the Fifth Schedule concerning previous professional relationships focus on engagements within the three years preceding the arbitration.
Modi also relied on a typed copy of an alleged 2018 response purportedly issued by the arbitrator. The document was said to acknowledge earlier professional work for BDR, receipt of professional fees and the acquisition of shares by the arbitrator’s wife in a company after the arbitration.
The Court declined to place reliance on that material because the original document had not been produced and its authenticity and authorship had not been established.
The judgment stressed that proceedings concerning an arbitrator’s eligibility or an award cannot rest on unverified or doubtful material, particularly when the allegations could affect the arbitrator’s professional integrity.
Arbitration award remains enforceable
The Court ultimately dismissed Modi’s petition under Section 34 of the Arbitration and Conciliation Act.
As a result, the November 2016 award directing the transfer of the Vasant Vihar property remains in force, while BDR Builders can continue with proceedings aimed at enforcing the award.
The execution proceedings are scheduled to come up before the roster bench on October 28.
