Modi recently rejected Cairns's submission to join this year's auction for the lucrative Twenty20 competition in India, intimating that Cairns had been sacked from the rebel Indian Cricket League because of match fixing.
The writ was issued in the High Court, London, on Friday.
"I had no alternative but to sue Mr Modi for libel," Cairns told Britain's Telegraph newspaper yesterday.
"Until he retracts what he has said, my name will always be tainted by the cheat label.
"Had he really had any concerns about my probity as a sportsman he could have called me at any time or instructed any of his executives to do the same. He chose not to.
"Instead he chose to make his allegation in public and to repeat it in public.
"For any doubting Thomases out there: I have never rigged a match."
Cairns was captain of the Chandigarh Lions in the non-sanctioned Indian Cricket League (ICL) and insists his sacking in 2008 was due to fitness issues. Before that year's tournament Cairns, whose sister Louise died in a train accident in 1993, had walked 1000km for his own foundation, which was set up to increase rail safety awareness in New Zealand.
"I was knackered, my knees were shot," Cairns, 39, said.
"I couldn't run for a week-and-a-half. I played three games but couldn't bowl. I was nowhere near fit."
Cairns now lives in Dubai and accepts he will probably never play cricket again. "All this is about now is my being able to walk comfortably around grounds like Lord's and Trent Bridge," he said.
"Mr Modi has extinguished that at the moment. I doubt my case against such an important man will cause him to lose much sleep. But for me it is the centre of my universe."
Cairns played 62 tests, 215 one-dayers and two Twenty20s for New Zealand. He made his test debut against Australia in 1989 and finished his international career with a Twenty20 match against West Indies in February 2006.
