Emjay Enterprises Pte Ltd v Thakral Brothers (Private) Ltd and Others

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang JC
• Judgment Date: 31 July 2000
• Neutral Citation: [2000] SGHC 153
• Docket Number: Originating Summons No 440 of 2000
• Date: 31 July 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: Madan Assomull and Rathna Nathan (Assomull & Partners)
• Citation: [2000] SGHC 153
• Defendant Counsel: Darshan Singh Purain (Darshan & Teo)
• Court: High Court (Singapore)
• Subject Matter: When attachment order takes subject to writ of seizure and sale,Whether material non-disclosure by applicants for attachment order,Attachment order,Setting aside of attachment order,Extent of duty of disclosure,ss 17 & 20 Debtors Act (Cap 73, 1985 Rev Ed),O 74 r 11 Rules of Court,Whether conditions for granting attachment order satisfied,Whether competing creditors having locus standi to apply to set aside attachment order,Civil Procedure,Judgments and orders

: On 15 February 2000, the 15 defendants in this originating summons commenced Suit 600156/2000 against Lachman s/o Teckchand and Jethi Bai Bhagwandas, trading as Shah Electronics, and against Ramesh s/o Lachman, formerly trading as Shah Electronics (hereinafter referred to as `the debtors`). On the same day, the present defendants applied by ex parte summons-in-chambers for an attachment order before judgment pursuant to s 17 Debtors Act and for an order that the Sheriff be directed to seize the properties listed in a schedule attached to the summons-in-chambers as a pledge or surety to answer the just demand of the present defendants until the trial of the action and satisfaction of any judgment in the sum of $1,435,879.64 and costs estimated at $25,000. The properties described in the schedule comprised a shop unit B1-08 High Street Centre 1, a residential unit in Dunman Road, a motor car, all the stock-in-trade lying at the debtors` shop premises at [num ]02-11, Satnam House, High Street and all moneys in the names of the debtors with DBS Bank, Raffles City Branch.

The affidavit in support of the above application was affirmed by one Raj Kumar who stated as follows (the `plaintiffs` mentioned in the affidavit being a reference to the present defendants):

1 I am the Operations Manager of the ninth plaintiffs and the duly appointed and authorised representative of the all the other plaintiffs in this action to make this affidavit.

2 I depose that the facts and matters stated in this affidavit that are within my own personal knowledge are true and that the facts and matters stated in this affidavit that are not within my own personal knowledge are true to the best of my knowledge, information and belief.

3 My appointment have been made on the basis that I am known to the various plaintiffs and I was previously appointed as one of the members of the creditors committee which was formed to enter into a scheme of arrangement with the defendants. I have been in the electronics industry for the last twenty four (24) years and I am personally known to most established electronics traders in Singapore.

4 The plaintiffs in this action have a good cause of action against the defendants. Now produced herewith and marked as exh `RK-1` to `RK-15` are copies of invoices/statements of account supporting the plaintiffs` claims. The plaintiffs` claims total S$1,435,879.64.

5 The defendants` firm `Shah Electronics` was a customer of the plaintiffs and had purchased electronics goods from time to time. A perusal of the invoices would reveal that bulk of the electronics goods were purchased by the defendants in the third quarter of 1999, shortly before ceasing business.

6 About early December 1999 the defendants informed their creditors that they were facing financial difficulties and would be unable to pay their creditors. The defendants` total debts are in the region of about S$2,000,000.

7 The defendants firm `Shah Electronics` comprised three (3) partners, consisting of father and mother. The first and second defendants (husband and wife) left Singapore for India in or about late December 1999 and have not returned since. The third defendant is in Singapore although his exact whereabouts are not known. The third defendant has intimated to me recently that he may leave for India as his parents are not in good health. I have difficulty tracing the physical whereabouts of the third defendant presently.

8 In the absence of the first and second defendants, the third defendant, being the son of the first and second defendants, had purported to enter into a scheme of arrangement with creditors and had applied for an interim order under the bankruptcy act for a stay. I verily believe that such order was discharged principally on grounds that the third defendant has since withdrawn as a partner of the defendants firm of Shah Electronics and had no locus standi to in the matter to affirm affidavits.

9 Now annexed herewith marked `RK-16` is a recent Registry of Business search on the defendant firm which confirm the withdrawal of the third defendants as a partner.

10 The third defendant did not inform the creditors of his withdrawal. To the best of my knowledge the third defendant is carrying on business in electronics trade in Serangoon Road. There is no indication whatsoever of the return to Singapore of the first and second defendants. Their precise place of abode in India cannot be discovered. Being late in years their return to Singapore is unlikely.

11 In the proposed scheme of arrangement the assets for distribution proposed by third defendant, (without disclosure that he had ceased to be a partner) offered the following ownership whereof have been admitted. A copy of the written proposal is annexed marked `RK-17`.

12 Despite repeated requests for details of bank statements, to show his bona fides, the third defendant has refused to disclose his financial movements. This is clearly inconsistent with the proposal of scheme of arrangement made by the third defendant. On or about 15 December 1999, a cheque drawn by the defendants on their bankers DBS Bank, Raffles City branch, Singapore was countermanded. Although it is obvious there were funds in the said account, payment was intentionally stopped by the defendants. To date in spite of the rejection by the court of the defendants` application for an interim order, the defendants have failed to take any step towards payment or account for the said sum to the 15 plaintiffs. Now produced herewith and marked as `RK-18` is a copy of the cheque and return advise from the bank dated 15th December 1999 which is self-explanatory. In the light of the fresh involvement by the third defendant in business, it is apparent that his non-disclosure of his current banking transactions indicate the defendants` intention to obstruct or delay the execution of any judgment or order that may be made against them.

13 On or about the 31 December 1999, the defendants` tenancy of their business premises, namely, No 67, High Street, [num ]01-07 Satnam House expired. Although the registered principal place of business remains unaltered in the Registry of Business, the stock-in-trade of the defendants have been removed to unit [num ]02-11, Satnam House. In the light of the third defendant`s resumed business at Serangoon Road under an unknown entity I am left with no illusion that the defendants singly or jointly as the case may be, hand over to other, (not excluding the new unknown entity, any or all the assets aforesaid with intent to obstruct or delay the execution of any judgment or order that may be made against the defendants.

14 Considering the cumulative effect of the circumstance aforesaid, that it is irresistable, but to draw the inference that the third defendant`s actions are inconsistent with prompt settlement of the debts or at all. There is no compulsion on the defendants, to retain the status quo of their assets for the purposes of fulfillment of any judgment.

15 Unless the property more particularly described in the Schedule to this application herein is seized by the Bailiff of this honourable court as a surety to answer the just demand of the plaintiffs, until the hearing of this action or satisfaction of any judgment that may be made against the defendants, I have no doubt that the defendants with intent to obstruct or delay have concealed and make away with their movable and immovable property.

16 I have been advised that this honourable court may at anytime on reasonable cause having shown release the property seized and of the consequence of improper attachment and I humbly pray for an order-in-terms of this application.

The ex parte summons-in-chambers was fixed for hearing before me at 10 am on 16 February 2000. Mr Darshan Singh Purain who attended the hearing as counsel for the 15 present defendants informed me that he was applying under s 17(1)(a) and (c) Debtors Act. I granted him the orders sought.

On 21 February 2000, the present plaintiffs applied by SIC 600852/2000 for leave to intervene in Suit 600156/2000 and for the attachment order made on 16 February 2000 to be discharged. The respective solicitors for the present plaintiffs, the present defendants and the debtors appeared before a judge on 24 February 2000 when the application was adjourned one week because of another application on 28 February 2000 which could resolve the matters raised.

The matter fixed for hearing on 28 February 2000 was an application for judgment by admission. Only the solicitors for the present defendants and for the debtors attended before the senior assistant registrar. The matter was not contested and judgment was entered for the amount claimed and for costs of $4,000.

On 9 March 2000, the application for leave to intervene was heard by a judge. Counsel for the said three parties attended. An order in the following terms was made:

1 Leave be granted to withdraw the applicants` application;

2 No costs be payable by the applicants unless fresh proceedings relating to the same matter are instituted by the applicants. In such an event, cost of this application will be considered and will follow the event.

The `applicants` referred to in the above order are the present plaintiffs in this originating summons.

The present plaintiffs and present defendants failed to resolve their differences and on 22 March 2000, the present plaintiffs commenced this originating summons against the 15 defendants for the following orders:

(1) The ex parte attachment order dated 16 February 2000 obtained in Suit 600156/2000 by the defendants (the plaintiffs in Suit 600156/2000) against (the debtors) be discharged and/or be set aside;

(2) a declaration that the plaintiffs have priority of the sale proceeds pursuant to the WSS 51324/2000 filed in DC Suit 51250/99;

(3) the Sheriff be directed to retain the sale proceeds or part thereof until the...