Kiran Global Alkali Sdn Bhd and another v Param Deep Singh

• Jurisdiction: Singapore
• Judge: Thian Yee Sze
• Judgment Date: 15 January 2024
• Neutral Citation: [2024] SGDC 5
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 189 of 2020 (Registrar’s Appeal No 50 of 2022)
• Hearing Date: 18 December 2023
• Citation: [2024] SGDC 5
• Year: 2024
• Plaintiff Counsel: Bhaskaran s/o Sivasamy (Skandan law LLC)
• Defendant Counsel: Jasmine Chan (Eldan Law LLP) (instructed)
• Subject Matter: Civil Procedure,Summary judgment
• Published date: 23 January 2024

District Judge Thian Yee Sze:

This was an appeal by the Plaintiffs against the decision of the Deputy Registrar granting unconditional leave to the Defendant to defend this action. After hearing parties’ submissions, I allowed the Plaintiffs’ appeal and granted the Defendant leave to defend the action on the condition that a security of the sum of USD150,000 be paid. These are the grounds of my decision.

Introduction

The Plaintiffs brought this action against the Defendant for the return of USD150,000 which they had transferred to his bank account, and which they claimed was meant for payment towards the purchase by the 1st Plaintiff of a piece of land in Johor but was instead wrongfully used for the Defendant’s own purposes.

Facts The parties

Kiran Global Chem Limited (“KGCL”) is an Indian company, and the parent company of several subsidiaries, including the 1st and 2nd Plaintiffs. Manmohan Singh Jain (“MS Jain”) was the Chairman and founder of KGCL. NC Rufus “(“Rufus”) is the Chief Executive Officer of KGCL. The Kiran group of companies (“Kiran group”), which includes KGCL and the 1st and 2nd Plaintiffs, is in the business of chemical manufacturing, including the manufacture of sodium silicate.

As part of the Kiran group’s plan to expand its business in Southeast Asia, Kiran Global Chemicals Sdn Bhd (“KGC”) was incorporated in Malaysia on 2 April 2013 to carry out the business of the Kiran group in Malaysia. One Timothy Shankar (“Timothy”), an employee from the Singapore subsidiary of the Kiran group, Kiran Holdings Singapore Pte Ltd (“KHS”), was tasked with finding a suitable location to build a chemical manufacturing factory in Malaysia. To this end, KGC entered into a tenancy agreement for a plot of land in Pasir Gudang, Johor on 5 May 2013 with one Kang Hock Hin (“Kang”) to develop a chemical manufacturing facility to produce sodium silicate. However, as it turned out that Kang was not the legal owner of the land, KGC withdrew from the tenancy agreement and proceeded to look for a new plot of land for their factory.

It was not disputed that the Defendant, who was a friend of MS Jain for many years, assisted in the search of the new plot of land for this purpose, although the circumstances and the terms under which he would provide this assistance were heavily disputed, and lay at the heart of the dispute between parties. The search resulted in the entering into of an agreement by KGC with Johor Corporation to purchase another plot of land in Johor for RM2,186,654, as reflected in a Letter of Offer from Johor Corporation dated 4 July 2013 (“Letter of Offer”).

The Kiran group decided to incorporate the 1st Plaintiff, Kiran Global Alkali Sdn. Bhd. (“KA”), at least in part, to “insulate any future dealings in Malaysia from potential claims from (Kang)”¹. KA was incorporated on 9 January 2014 under the laws of Malaysia and is a subsidiary of KGCL, with a paid-up capital of RM3.00, and with MS Jain, Rufus and the Defendant each allotted one share². The Defendant was a director of KA, together with MS Jain, Rufus and two others. The 2nd Plaintiff, P.T.A.L. International FZE (PTAL), another wholly owned subsidiary of KGCL, was incorporated on 6 April 2004 under the laws of the United Arab Emirates. According to the Plaintiffs, KGC is now a dormant company.

Following KA’s incorporation, to avoid potential liabilities due to the threat of intended legal proceedings by Kang against KGC, KGC sought to remove itself as the purchaser of the land. On or before 4 February 2014, through the Defendant, KGC requested that Johor Corporation sell the land to KA instead of KGC “on the same terms as the Letter of Offer, which request Johor Corporation agreed to”³. Efforts were then made to finalise and execute the sale and purchase agreement to reflect KA as the purchaser over the next few months. There were complications along the way, the details of which were relevant to the parties’ positions and would be elaborated on later. The sale and purchase agreement for the sale of the land between Johor Corporation and KA was finally entered into on 30 September 2014⁴.

Background to the dispute

The dispute between parties centred on the payment of the second tranche amounting to RM437,330.80 pursuant to the Letter of Offer. The payment schedule stipulated therein was as follows: 10% or RM218,665.40 within two weeks from the date of the Letter of Offer (“the First Tranche”); 20% or RM437,330.80 upon the signing of the sale and purchase agreement (“the Second Tranche”); 30% or RM655,996.20 on or before 30 January 2014; and 40% or RM874,661.60 on or before 30 June 2014.

It was not disputed that the First Tranche was duly paid on 30 August 2013, and that the Defendant agreed to receive and did receive the monies for the First Tranche from the Kiran group as KGC did not have a Malaysian bank account at the time, which was then paid by the Defendant to Johor Corporation on the instructions of MS Jain. The funds for the First Tranche were transferred to the Defendant in two tranches: SGD38,400 on 14 July 2013 from the 2nd Plaintiff, PTAL, to the Defendant, and SGD128,400 from PTAL to the Defendant on 11 August 2023⁵. According to the Plaintiffs, the remainder of the funds from the two tranches of funds transferred to the Defendant was used to offset the Defendant’s expenses incurred in carrying out work for the Kiran group. The Defendant did not deny that part of the funds was used to reimburse his expenses.

As stated earlier, to insulate the purchase of the land from potential claims from Kang, an agreement was reached with Johor Corporation to change the name of the purchaser from KGC to the newly-incorporated KA⁶. However, complications arose in respect of the terms of the sale and purchase agreement, including the fact that the draft sale and purchase agreement issued by Johor Corporation reflected KGC as the purchaser, not KA. On 1 March 2014, about 2 months after KA’s incorporation and a few weeks after KGC requested that the land be sold to KA instead of KGC, PTAL transferred a sum of USD150,000 to the Defendant – this transfer was evidenced by an Application for Telegraphic Transfer dated 27 February 2014, in which it was stated that the purpose of the remittance was “Internal Business Transaction”⁷. According to the Plaintiffs, the transfer was made in order for payment of the second tranche to be made to Johor Corporation as it was immediately due upon the signing of the sale and purchase agreement.

However, the Defendant did not use the sum transferred to him to make the Second Tranche payment. According to the Plaintiff’s pleaded case, the Defendant initially informed MS Jain and Rufus that he would pay the Second Tranche after Johor Corporation issued the correct sale and purchase agreement to reflect KA as the purchaser instead of KGC⁸.

After an exchange of email correspondence between KGC and Johor Corporation, which was fronted by the Defendant⁹, in response to the Defendant’s email dated 4 August 2014, Johor Corporation sent a letter dated 17 August 2014 to KGC¹⁰, stating that the amendment to the name of the purchaser from KGC to JA in the sale and purchase agreement would be made after they received the documents which they had requested for in their letter of 4 February 2014 when they agreed to the request to the change of the purchaser’s name. An ultimatum to pay the Second Tranche by 31 August 2014 together with the execution of the sale and purchase agreement was also given in the letter:

As this matter has been pending for quite sometimes (sic) and in order not to prolong it and to be fair to both parties, we are giving you until 31st. August, 2014 to execute the Sale and Purchase Agreement and to pay the 20% payment amounting to RM437,330-80 failing which we may assume that you are no longer able to proceed with purchase the above said land (sic) and will leave us with no other option but to terminate our Letter Of Offer dated 4th. July, 2013 and to forfeit the 10 percent payment amounting to RM218,665-40 without further notice. [emphasis added]

The Plaintiffs stated that upon the receipt of the letter from Johor Corporation, the Defendant was again asked to transfer the sum of USD150,000 to Johor Corporation. However, this time, the Defendant informed the Plaintiffs that he was unable to do so as he had used the funds for his own business¹¹. In the circumstances, KA had to raised funds again to make the Second Tranche payment to Johor Corporation, which it did on 2 October 2014¹². As mentioned at [7] above, the sale and purchase agreement for the sale of the land between Johor Corporation and KA was finally entered into on 30 September 2014.

According to the Plaintiffs, after Rufus made multiple demands to the Defendant over the years to return the sum of USD150,000 to no avail, they commenced the present action to seek the return of the sum.

The Defendant accepted that he received the sum of USD150,000, and that it was paid to his personal account¹³. However, he denied that it was for the purpose of making the Second Tranche payment to Johor Corporation. In the Defence and Counterclaim (Amendment No. 1), the Defendant averred that the sum was transferred to him on the instructions of MS Jain to pay for his salary and to reimburse him for expenses he had incurred¹⁴. This was pursuant to MS Jain’s agreement that he would be paid USD6,500 a month with effect from April 2013 for his services rendered to KGC and KA, as well as to reimburse him for all the expenses which he incurred for the Kiran group of companies, including KGC, KA and KHS¹⁵. The Defendant stated that contrary to what the Plaintiffs averred at [14] of the Statement of Claim (Amendment No. 1), the Plaintiffs did not make any demands for the return of the said sum as “KA was aware that the sum of US$150,000.00 was not to be utilized as payment for the 2nd Tranche” (at...