Anuva Technologies Pte Ltd v Advanced Sierra Electrotech Pte Ltd

• Jurisdiction: Singapore
• Judge: Vincent Hoong JC
• Judgment Date: 14 October 2019
• Neutral Citation: [2019] SGHC 244
• Year: 2019
• Date: 14 October 2019
• Published date: 17 October 2019
• Hearing Date: 31 May 2019,28 May 2019,30 May 2019,07 June 2019,26 July 2019,29 May 2019,06 June 2019,17 September 2019,04 June 2019,05 July 2019
• Plaintiff Counsel: Pereira Kenneth Jerald and Lai Yan Ting Francine (Aldgate Chambers LLC)
• Defendant Counsel: Mohamed Nawaz Kamil and Wong Joon Wee (Providence Law Asia LLC)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 244
• Docket Number: Suits Nos 625 of 2018 and 910 of 2018

Vincent Hoong JC:

This judgment addresses two suits that were heard together: Suit No 625 of 2018 (“S 625/2018”) and Suit No 910 of 2018 (“S 910/2018”). Anuva Technologies Pte Ltd (“Anuva”) is the plaintiff in S 625/2018 and the defendant in S 910/2018. Mr Kota Karanth Suresh (“Mr Suresh”) is its Managing Director.

The defendant in S 625/2018 is Advanced Sierra Electrotech Pte Ltd (“Adset”). Adset, which is incorporated in India, is in the business of providing sophisticated avionics systems to governments, defence contractors and airlines.¹ It is part of a group of companies founded and controlled by Mr Ravichandra Sundaram (“Mr Ravi”), a plaintiff in the counterclaim under S 625/2018 and in the claim in S 910/2018. Also part of this group is ADTEC Electronic Instruments Pte Ltd (“Adtec”), which is a plaintiff in S 910/2018.

At the outset, I should state that the key difficulty presented by these suits arose from the fact that the accounts that were produced at trial, and the explanations provided for these, were far from satisfactory. The spreadsheets involved were at points incomplete, and their reasoning difficult to understand. The accounts for each individual company and/or person were also often not kept separate. This was a concern that I expressed at multiple points during the hearing of this trial, and one which made the determination of some of these claims, and the quantum thereof, extremely difficult. These therefore ultimately came down to a consideration as to where the burden of proof lay.

Given that these two suits involve distinct issues, I shall deal with them separately in this judgment. I turn now to examine each in turn.

S 625/2018

Anuva had been the primary supplier of electronic components to Adset.² This suit pertains to 71 invoices which Anuva claims remain unpaid despite the goods therein having been delivered to and accepted by Adset.³ These invoices were issued between 4 February 2010 and 12 September 2014. While the total sum claimed initially by Anuva was US$345,831.91, Anuva accepted in its reply to Adset’s Defence that payment had been made for 10 of these invoices, which amounted to US$57,535.94.⁴ The total sum claimed is therefore US$288,295.97.⁵ Adset further admitted in its Defence that US$35,038.23 is payable.⁶ The total amount in dispute is therefore US$253,257.74.

Adset avers that the invoices referred to by Anuva comprised two categories; namely, invoices pertaining to components ordered for research and development purposes (“R&D invoices”), and invoices for components supplied to Adset for use in avionics systems ultimately sold to Adset’s customers (“commercial invoices”).⁷ According to Adset, there was a verbal agreement entered into between the parties that Anuva would not charge Adset for components supplied for research and development purposes.⁸ Adset’s position is that 50 of the 71 invoices referred to by Anuva in its claim were R&D invoices.⁹ Further, according to Adset, these 50 invoices were not the invoices that accompanied the courier shipments. Instead, invoices which under-declared the value of the goods were issued for this purpose.¹⁰ According to Adset, Anuva should not be allowed to claim for these invoices as they were issued pursuant to illegal arrangements to defraud the Indian customs authority.¹¹

Adset further avers that claims for components delivered before 20 June 2012 are time-barred under s 6(1)(a) Limitation Act (Cap 163, 1996 Rev Ed).¹² This encapsulates 46 invoices, some of which were R&D invoices. Adset and Mr Ravi have also commenced a counterclaim in this suit in respect of a project which Adset undertook with Anuva and two other companies. These were Bharat Electronics Limited Ghaziabad India (“BEL Ghaziabad”) and Bharat Electronics Limited Panchkula India (“BEL Panchkula”), collectively referred to as the “BEL Companies”. Adset and Mr Ravi claim that they were not paid their share of the profits under the revenue sharing agreement they had with Anuva, and accordingly counterclaim $107,502.07 and $225,754.34 respectively.¹³

Issues to be determined

Following from the above, the issues to be determined in this suit are: whether the agreement between the parties was for Adset to pay for the commercial but not the R&D invoices; whether Anuva’s claim relating to invoices issued prior to 20 June 2012 is time-barred; whether Anuva’s claim should be denied because of illegality; and whether Anuva paid Mr Ravi and Adset their share of the profits pursuant to the profit sharing arrangement in relation to the project with the BEL Companies.

whether the agreement was for Adset to pay for the commercial but not the R&D invoices

Anuva argues that the parties had never drawn a distinction between commercial invoices and R&D invoices. There was no reference to R&D invoices in any document,¹⁴ and it is not clear how Adset determined which invoices were for R&D or commercial purposes. Indeed, some of the emails relating to what Adset had classified as invoices for R&D components indicate that they were not meant for R&D but instead were intended for a particular customer.¹⁵

In contrast, Adset identified 50 R&D invoices that it claims pertain to R&D components for which there was a verbal agreement that Anuva would not be paid. This agreement was allegedly entered into between Mr Suresh and Mr Ravi around December 2008.¹⁶ The verbal arrangement was for these components to be used to research and develop hardware products, and for the jointly developed products to be sold worldwide by Anuva, and within India by Adset.¹⁷

Adset contends that Anuva’s claim that it is entitled to benefit both from selling the products developed through Adset’s R&D efforts to Anuva’s customers and by charging Adset a 15% mark up for the components delivered to Adset is ludicrous.¹⁸ While Anuva asserts that it had a profit sharing arrangement with Adset for the components sold by Anuva to its own clients, Adset contends that no evidence has been produced of any such payments being made to Adset.¹⁹ In contrast, Adset’s position is commercially sensible and is borne out by the evidence,²⁰ including the fact that: Adset did not record invoices pertaining to the R&D components in its accounting system, a ledger which had been shown to Mr Suresh on numerous occasions in 2011 and 2012.²¹ Mr Suresh chose to deliver the goods by hand and by courier despite the fact that Indian law would only allow payment for goods which have been delivered through the customs authority. He did so because he did not expect Adset to pay for the R&D components.²²

In his affidavit, Mr Ravi further asserted that the alleged non-payment agreement was also supported by Anuva’s inclusion of the term “SAMPLE” on the payment terms for some of the R&D invoices, in contrast to the commercial components.²³ This argument was not raised in closing submissions,²⁴ perhaps because it transpired in the course of cross-examination that the labelling of the invoices as samples or otherwise was not entirely consistent or determinative.²⁵

My decision

I find that the agreement between Adset and Anuva was for Anuva to be paid for the R&D invoices. This is a reasonable inference to make from the invoices and purchase orders in evidence. In contrast, there is no evidence of any agreement that the alleged R&D components would be provided without payment, save for Mr Ravi’s testimony.

Adset argues that the fact that purchase orders were not raised for most of the R&D invoices means that there is no proof Adset ordered any of the items on the basis that they would be paid for.²⁶ I am not persuaded by this argument. In the first place, I note that the practice of issuing purchase orders was not entirely consistent: some of the alleged R&D invoices had corresponding purchase orders.²⁷ Further, Mr Ravi suggested at one point that Mr Suresh would call his staff when he wanted to ship an item via courier and request that the staff issue a purchase order for his records.²⁸ This cast some doubt on the significance of purchase orders issued by Adset.

Crucially, the evidence instead suggests that there had always been an understanding that the R&D components would be paid for. This is indicated by the spreadsheets in which the “R&D components” were accounted for. An example of this is the email sent by Adset’s Mr Pratap Reddy (“Mr Reddy”) on 26 April 2012, with the subject title “Reconcile ANUVA-SET/EWAS”.²⁹ A spreadsheet was attached to this email, in which a table of various invoices issued to Adset was included and the “pending amount”, presumably, the amount to be paid, totalled up. Notably, this spreadsheet included ATS-11/CI-355, which Adset asserted was a R&D invoice.³⁰ Under cross-examination, Mr Ravi agreed that this spreadsheet demonstrated Mr Reddy’s belief that all of the invoices in that spreadsheet were to be paid.³¹ His position was that it was “a completely informal system” between Mr Suresh, Mr Manikanta (who was in charge of Adset’s imports and exports), and Mr Reddy:³² A: To tell you the truth it was completely an informal system between [Mr Suresh], [Mr Manikanta] and [Mr Reddy]. It was a completely informal system. Q: Informal system, okay? A: Like whatever [Mr Suresh] says they would oblige, that simple.

…

A: If [Mr Suresh] says, “Send me, whatever are the payments due”, I mean the guy would not understand, simply -- he would cut and paste and send whatever, you know, it comes to his mind.

Mr Ravi’s position was therefore that Mr Reddy only handled the accounts and would not know whether the invoices should be paid. Instead, Mr Reddy, as an accounts executive, was “simply keeping track” of “[w]hatever invoices [Mr Suresh] sent”.³³ This is curious in light of the fact that Mr Ravi testified that his staff knew that the alleged R&D components would not be paid for,³⁴ and that Mr Reddy was also the person in charge...