Jhaveri Darsan Jitendra and others v Salgaocar Anil Vassudeva and others

• Jurisdiction: Singapore
• Judge: Kannan Ramesh J
• Judgment Date: 31 January 2018
• Neutral Citation: [2018] SGHC 24
• Plaintiff Counsel: Ang Cheng Hock SC, Ramesh Kumar s/o Ramasamy Koh Zhen-Xi Benjamin and Soon Shao Wei, Jerald (Allen & Gledhill LLP)
• Docket Number: Originating Summonses Nos 727 and 945 of 2015
• Date: 31 January 2018
• Hearing Date: 04 May 2017,27 July 2017,07 September 2017,20 April 2017,22 May 2017,08 June 2017,26 July 2017,17 October 2017,16 October 2017
• Subject Matter: Companies,Reverse piercing,Caveats,Lifting corporate veil,Incorporation of companies,Land
• Year: 2018
• Defendant Counsel: Yap Han Ming Jonathan and Cai Zhenyang Daniel (Drew & Napier LLC),Liew Teck Huat, Kanapathi Pillai Nirumalan and Dafril Phua Izzad (Niru & Co LLC)
• Court: High Court (Singapore)
• Citation: [2018] SGHC 24
• Published date: 14 November 2018

Kannan Ramesh J:

By Originating Summonses Nos 727 and 945 of 2015 (“OS 727” and “OS 945”), the plaintiffs applied under s 127(1) of the Land Titles Act (Cap 157, 2004 Rev Ed) (“the Land Titles Act”) for the removal of caveats (“the Caveats”) that were lodged by the first defendant (“Salgaocar”) against several properties (“the Properties”). On 16 October 2017, I allowed the plaintiffs’ applications in OS 727 and OS 945 and delivered detailed oral grounds. The defendants have now appealed. These are the full grounds of my decision.

Facts The parties

The plaintiffs in OS 727 are Mr Jhaveri Darsan Jitendra (“Darsan”), a businessman based in Hong Kong, and his wife. They are the registered proprietors of six units in Newton Imperial (“the Newton Imperial Units”), a condominium development. The Newton Imperial Units form the subject matter of OS 727.

The plaintiffs in OS 945 are three Singapore-incorporated companies (“the Companies”). Darsan is the sole shareholder of the third plaintiff in OS 945 and of Singapore Star Properties Pte Ltd, which is the sole shareholder of the first and second plaintiffs in OS 945. Darsan is also the managing director of the Companies. Collectively, the Companies are the registered proprietors of 11 units in Waterford Residence (“the Waterford Units”), a condominium development, and 12 units in WCEGA Tower (“the WCEGA Units”), a commercial property development. Specifically, the first and second plaintiffs in OS 945 are the registered proprietors of three and eight of the Waterford Units respectively while the third plaintiff in OS 945 is the registered proprietor of the WCEGA Units. The Waterford Units and the WCEGA Units form the subject matter of OS 945.

The lodging of the Caveats and the commencement of OS 727 and OS 945

On 2 July 2015, Salgaocar lodged the Caveats.

On 5 August 2015, the plaintiffs in OS 727 instituted OS 727, applying for the removal of the caveats lodged against the Newton Imperial Units. On 15 October 2015, the Companies commenced OS 945, applying for the removal of the caveats lodged against the Waterford Units and the WCEGA Units.

Suit 821

On 11 August 2015, Salgaocar commenced Suit No 821 of 2015 (“Suit 821”) against Darsan. The claim in Suit 821 was critical to the assessment of the merits of OS 727 and OS 945. This was because Salgaocar’s case was that he had lodged the Caveats to preserve his alleged interests in the Properties pending the determination of the claim in Suit 821. In other words, the basis of the Caveats was Salgaocar’s claim in Suit 821.

In Suit 821, Salgaocar sought, inter alia, a declaration that Darsan held assets, including the Properties, on trust for him and an order that Darsan convey the Properties to him. Salgaocar’s claim in Suit 821 centred on an alleged agreement he reached in or around December 2003 with Darsan in Hong Kong (“the December 2003 Agreement”). The crucial elements of the December 2003 Agreement were as follows: Salgaocar would establish special purpose vehicles (“SPVs”) in, inter alia, the British Virgin Islands (“the BVI” and “the BVI SPVs”), to conduct businesses and hold assets. He would provide all the funding for the SPVs’ activities, including the acquisition of assets, the making of investments and operational expenses, and would completely control their businesses and finances. Darsan would be the shareholder and/or director of the SPVs and hold the shares in the SPVs as Salgaocar’s nominee shareholder and/or on trust for Salgaocar. Darsan would comply with all of Salgaocar’s instructions relating to the SPVs and their assets. Salgaocar would be the sole beneficial owner of all of the shares in the SPVs and/or any assets held by the SPVs.

Why the December 2003 Agreement was reached is explained by the events that unfolded thereafter. Salgaocar was a man of substantial means and stature. He had major business interests in India and was a prominent politician in the state of Goa. According to him, in or around April 2004, he procured Salgaocar Mining Industries Pvt Ltd, a company incorporated in India which owned several mines there, and which Salgaocar controlled, to sell iron ore to the BVI SPVs. In turn, the BVI SPVs sold the iron ore to entities in China at much higher prices and thus reaped substantial trading profits in the region of US$690m. Salgaocar then incorporated several SPVs, some of which in Singapore (“the Singapore SPVs”). Part of the trading profits earned by the BVI SPVs were channelled to the Singapore SPVs for the purpose of undertaking investments and various businesses. The profits were used, inter alia, to develop Newton Imperial and purchase units in WCEGA Tower and Waterford Residence.

In Suit 821, Salgaocar claimed that Darsan committed breach of trust and fiduciary duties in, inter alia, the following ways: by transferring the Newton Imperial Units from Great Newton Properties Pte Ltd (“Great Newton”), one of the Singapore SPVs and the developer of Newton Imperial, to Darsan and Darsan’s wife; and by failing to procure the return of, inter alia, the Waterford and WCEGA Units to Salgaocar, upon his demand for the return of the same.

Events after the filing of Suit 821

As mentioned earlier, on 15 October 2015, the Companies commenced OS 945, applying for the removal of the caveats lodged against the Waterford Units and the WCEGA Units.

On 28 December 2015, Darsan applied to strike out Suit 821.

On 1 January 2016, Salgaocar unfortunately passed away. It would seem he left no will.

On 23 June 2016, the plaintiffs obtained an order that Salgaocar’s widow (“Lakshmi”) and four children be joined as parties to OS 727 and OS 945. No letters of administration had been obtained in respect of his estate at that stage.

Thereafter, on about 29 June 2016, an alleged dispute arose between Lakshmi and her elder daughter (“Chandana”) over who should represent Salgaocar’s estate. After Lakshmi had applied for the grant of letters of administration, Chandana commenced an action in the Family Justice Courts to challenge Lakshmi’s entitlement to the grant of letters of administration (“the FJC Action”). The following events then transpired: On 13 March 2017, Lakshmi applied to stay OS 727 and OS 945 pending the determination of the FJC Action, and the grant of letters of administration for Salgaocar’s estate. On the same day, Lakshmi also applied to convert OS 727 and OS 945 to writ actions. On 20 April 2017, I directed Lakshmi and Chandana to each file an affidavit in relation to the FJC Action within two weeks, ie, by 4 May 2017. The affidavit was to exhibit the pleadings in the FJC Action, describe the status of the same and include a list of directions made in the FJC Action for the furtherance of the proceedings. On 4 May 2017, Lakshmi and Chandana sought permission not to file the pleadings in the FJC Action. Their solicitors confirmed that they would file affidavits setting out the background to the FJC Action and the directions made therein. After considering the matter, I ordered Lakshmi and Chandana to provide drafts of the text of the affidavits to the court and the plaintiffs by 15 May 2017. Subject to the undertaking given by the plaintiffs’ counsel, Mr Ang Cheng Hock SC (“Mr Ang”), that the content of the pleadings in the FJC Action would not be disclosed to the plaintiffs, I ordered Lakshmi and Chandana to make available the pleadings to the court and the solicitors for the plaintiffs by 15 May 2017. However, Lakshmi and Chandana did not comply with my directions. On 22 May 2017, the parties appeared before me and counsel for Lakshmi and Chandana explained that this was because they were on the brink of settling their alleged dispute in the FJC Action after mediation. I directed Lakshmi and Chandana to file affidavits by 8 June 2017 setting out the status of the mediation and, in the event that a settlement was reached, timelines for securing letters of administration for Salgaocar’s estate. On 8 June 2017, the parties appeared before me once more and I made further directions to move the matter forward. I also made clear that no further extensions of time or indulgence would be granted to Lakshmi and Chandana. On 20 June 2017, Lakshmi applied for OS 727 and OS 945 to be consolidated with Suit 821. Finally, on 3 July 2017, Lakshmi was appointed the sole administratrix of the estate of Salgaocar. On 26 July 2017, I allowed Lakshmi’s application to withdraw her application to stay OS 727 and OS 945. I also allowed the plaintiffs’ application to withdraw OS 727 and OS 945 against all the defendants except for Salgaocar and Lakshmi. I did not make any orders on Lakshmi’s application for consolidation of proceedings but proceeded to hear the parties on the merits of OS 727 and OS 945.

I now turn to the parties’ submissions.

The parties’ submissions

The parties did not dispute the law governing the removal of caveats and their submissions proceeded from this common ground. In Tan Yow Kon v Tan Swat Ping and others [2006] 3 SLR(R) 881 at [77], Sundaresh Menon JC (as he then was) cited with approval Lord Diplock’s statement of the relevant principles in Eng Mee Yong and Others v V Letchumanan s/o Velayutham [1980] AC 331 (“Eng Mee Yong”), an appeal to the Privy Council from Malaysia. In that case, Lord Diplock held at 337D that the caveator has the onus of meeting the following two requirements to maintain the caveat: First, the caveator must establish that “on the evidence … his claim to an interest in the property does raise a serious question to be tried” [emphasis added]. Secondly, the caveator must then establish that the balance of convenience favours maintaining the caveat. In this regard, Lord Diplock noted that a caveat operates in much the same way as an interlocutory injunction and brings into play the same principles.

The plaintiffs submitted as follows: First, Salgaocar’s...