K.K. Modi vs K.N. Modi & Ors.
[1998] 1 S.C.R. 601; 1998 INSC 63
Coram: Hon’ble Justice Sujata V. Manohar & Hon’ble Justice D.P. Wadhwa
Forum: Hon’ble Supreme Court of India
Case No.: Civil Appeal No. 613 of 1998 with Civil Appeal No. 614 of 1998
Date of Decision: February 04, 1998
Conclusion
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Facts & Background:

  • K.K. Modi, who was part of Group B, consisting of the five sons of Seth Gujjar Mal Modi—K.K. Modi, V.K. Modi, S.K. Modi, B.K. Modi and U.K. Modi was the Appellant.
  • Group A, consisting of Kedar Nath Modi (K.N. Modi) and his sons, M.K. Modi and D.K. Modi, was Respondent.
  • A dispute arose between Group A and Group B, which controlled several public companies and assets. Differences regarding their management and control led to negotiations facilitated by financial institutions to resolve the conflict.
  • On January 24, 1989, a Memorandum of Understanding (MoU) was executed between Group A and Group B. The MoU outlining the division of companies, with specific companies managed by each group, and the allocation of assets based on a 40:60 ratio.
  • Notwithstanding multiple valuation reports and division schemes from 1991 to 1994, both groups remained dissatisfied. The Chairman of IFCI formed a Committee of Experts, which issued a decision on December 8, 1995, directing independent resolution of remaining issues.
  • In 1996, the appellants filed an arbitration petition seeking interim relief, but the Delhi High Court held that the Chairman’s decision was not an arbitration award, dismissing the petition and striking down the suit filed by Group B as an abuse of process.
  • Group B appealed, and the Delhi High Court's Division Bench reinstated an interim order restraining the Modipon Board from conducting meetings on specific matters until further directions were issued.
  • S.L.P. (Civil) Nos. 14905/1997 and 18711/1997 were filed before the Supreme Court, which consolidated them with the appeal. Interim orders restraining meetings and share acquisitions were issued in November 1997 and January 1998.
  • Hence the present appeal.

Main Issues:

  1. Does Clause 9 of the Memorandum of Understanding dated 24th of January, 1989 constitute an arbitration agreement?
  2. Whether the decision of the Chairman, IFCI dated 8th December, 1995 constituted an award?
  3. Does Suit No. 1394/1996 constitute an abuse of the court process? (Page 4)
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