Justice AP Shah's role in Hiranandani arbitration can come under cloud
Rohit Bansal | April 20, 2012
The sordid sex video freely circulating in the social media purportedly linking elevation of the impugned lady to judgeship flows beyond the senior MP and parliamentary committee chairman allegedly promising the lady to precisely what coincidentally/subsequently was recommended by the AP Shah collegium.
The multi-billion dollar family feud between the Hiranandani siblings, Priya Vandrevala and her brother Darshan Hiranandani, has had a twist. The choice of arbitrators in the panel, which includes Queen’s Counsel Cherie Blair, can be questioned on grounds of public interest, undoing hard work put in by Blair over two years of arbitration.
The fitness of justice (retd) AP Shah as one of the arbitrators is suspect after the leak of the name of the lady lawyer who the Delhi high court collegium chaired by him as chief justice had recommended for elevation to the bench, but whose entire set of recommendations the chief justice of India, SH Kapadia, had refused to entertain (http://www.indianexpress.com/news/cji-sends-back-5-names-cleared-by-delhi-hc-c/627667/).
Shah’s favourable judgments on the Hiranandanis during the period he was at the Madras high court were borderline cases on conflict of interest and wouldn’t have washed under norms governing choice of arbitrators. But the sordid sex video freely circulating in the social media, which is linked to the elevation of the impugned lady to judgeship, overflows beyond the senior MP and parliamentary committee chairman purportedly promising the lady precisely to what coincidentally/ subsequently was recommended by the Shah collegium.
Justice Shah, who started his career in Mumbai in the late 70s, was one of the most popular judges in the Bombay high court, and rose to become chief justice of the Madras high court before his transfer to the Delhi high court as chief justice in 2008.
Relevant to the multi-billion dollar arbitration he accepted, valuation of which is done by E&Y and Houlihan Lokey, his verdict on the Hiranandani matter included disallowing the state police from investigating the allegations against the builder has subsequently been upturned by the supreme court. In this July 2006 verdict, justice Shah approved the transfer of 750 acres of land in Tamil Nadu belonging to a finance company, which had gone bust, to five sponsoring companies, of which Niranjan Hiranandani was the director. Hiranandani was asked to pay Rs 34 crore at a time when the market price of the said land was estimated to be more. The Economic Offences Wing (EOW) of the local police appealed against the land deal but justice Shah rejected the plea. The EOW went to the supreme court, which admitted their plea, thus overruling justice Shah’s judgment.
This, among reasons that haven’t being officially commented by the chief justice of India, is commonly understood as the cause of the rejection of his candidature for elevation. An RTI query on the subject filed by one Deb Bhattacharya seeking minutes of the collegium meeting and exact reasons why justice Shah was denied elevation has been rejected by the apex court.
Post-retirement, Shah was appointed to head the complaints council of the Indian Broadcasting Federation (IBF). Unlike his senior colleague, Justice JS Verma, a former chief kustice of India, who charges an honorary pay of Re 1 for his role as chair of the News Broadcasting Standards Authority, justice Shah charges a fee.
Compared to the exalted standards of his brother judge, this puts justice Shah’s position under a conflict of interest, as here he is expected to rein in erring broadcasters, who coincidentally also pay him. In other words, here the group of accused pay the former judge, a sordid example being porn star Sunny Leone and her broadcaster Network 18 getting away scot free from Justice Shah’s jury despite proven cross-promotion of her porn sites/mobile downloads on inhouse MTV’s social media platforms and “Bigg Boss 5” promos on her business solicitation website.
Any one party in an arbitration can challenge the appointment of an arbitrator if circumstances exist that give rise to justifiable doubts as to his independence or impartiality. Family tussles having wider public interest overtones have attracted the court’s intervention to protect the interest of the public and other stakeholders.
The tussle between the Hiranandani family members - Priya Vandrevala and her brother Darshan Hiranandani – came out in the public in 2009 after Vandrevala accused her father Niranjan Hiranandani and brother of cheating. Niranjan, who started out in the real estate business in the 80s, along with his son has been accused of violating a non-compete agreement signed between them and Priya in 2006. At the heart of the controversy is prime land in and around Mumbai and Pune bought under the name of Hirco PLC, a company which was started in London and later listed on the London Stock Exchange.
According to the agreement, the father and son duo could purchase and develop property in India on an exclusive basis with Vandrevala and the profits from all such projects had to be shared equally. However, the father and son duo stand accused of violating the agreement by buying plots after involving other developers in the project.
The arbitration, which is being heard under the London Court of International Arbitration, has DLA Piper and noted Mumbai-based lawyer Parimal Shroff representing the Hiranandanis and Pepper Hamilton and Karanjawalla & Associates representing Vandrevala.
In State of Orissa v. Gokulnanda Jena AIR 2003 SC 4205, the appellant had challenged the decision of the high court in holding that a writ Petition under Article 226 of the constitution of India challenging the validity of an order made by the judge designate of the chief justice of the high court under Section 11(6) of the Arbitration Act. The apex court declared that the view taken by the high court as to the non-maintainability of a writ petition against an order made by the designated judge under Section 11(6) of the Act cannot be sustained and held that the writ petition in such cases is maintainable against an order made by the designate judge.
That said, courts have denied stranger petitions in normal course on public interest locus of a stranger. The ground has to yet be tested, a leaf can be taken from the Reliance family dispute where the court heard the central government though it was not a party to a family settlement.
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