Kitnasamy s/o Marudapan v Nagatheran s/o Manogar and Another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 22 March 2000
• Neutral Citation: [2000] SGCA 16
• Docket Number: Civil Appeal No 13 of 2000
• Date: 22 March 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: Sarbjit Singh and Leong Kit Wan (Lim & Lim)
• Citation: [2000] SGCA 16
• Defendant Counsel: B Ganeshamoorthy and Jayapalan (Ganesha & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether appellant entitled to relief under s 216,Companies,Appellant's name not on register of members,Injunctions,Issue of interlocutory injunction,Oppression,Relief under s 216,Breach of express or implied understanding to allow appellant to participate in management of company,Civil Procedure,Locus standi,Originating processes,Need for sufficient particulars of facts,Whether respondents can oppose petition,Claiming relief under s 216 Companies Act (Cap 50),O 7 r 3 Rules of Court (1997 Rev Ed),Sufficient particulars to identify cause of action,s 216 Companies Act (Cap 50, 1994 Rev Ed),Test of "serious question to be tried",Whether appellant can petition under s 216,Whether necessary to identify one or more of grounds in s 216,Balance of convenience

(delivering the grounds of judgment of the court): This was an expedited appeal from a decision of the High Court given in chambers on 13 January 2000 refusing the appellant`s application for an interlocutory injunction to restrain the respondents from proceeding with a proposed resolution at an extraordinary general meeting (EGM) to remove the appellant as a director of a company, JASP Construction Pte Ltd (the `company`). At the conclusion of the hearing, we allowed the appeal and granted to the appellant the interlocutory injunction prayed for. We now give our reasons.

The facts

The facts as appeared from the affidavit filed by the appellant are as follows. The appellant and the first respondent, Nagatheran s/o Manogar (`Nagan`) were friends for about some ten years. Nagan was apparently a labour supplier. The second respondent herein, Sivaprakasam s/o Petha Perumal (`Siva`), was known to be Nagan`s `Uncle`. The appellant had met Siva before.

The appellant has been a piling and civil engineering contractor since 1983 and is experienced in track laying works, having been involved in the construction of the first phase of the Singapore MRT line. Because of the appellant`s contacts and expertise, in December 1998/January 1999, Nagan approached the appellant and informed him about a project for track laying works for the new North-East MRT Line (the `project`). According to Nagan, there was a joint venture consisting of Tekken Corporation (`Tekken`), Union Construction Co Ltd and Singapore Piling and Civil Engineering Pte Ltd (the joint venture is hereinafter referred to as `TUS`), which was seeking to secure the project. Nagan asked the appellant if the latter was interested in working with TUS to carry out the project.

Thereafter, the appellant contacted his brother-in-law, one Guna, who also had the expertise in track laying work. The appellant, together with Nagan and Nagan`s brother Dave, Siva and Guna, met TUS`s Track Works Manager, David Cotterell (`Cotterell`) in Tekken`s office. The appellant and Cotterell were familiar with each other from their previous involvement in the first phase of the MRT line. Cotterell was aware of the appellant`s and Guna`s record in track laying works and mentioned to Tekken`s Senior Project Manager that the appellant and Guna were known to be experienced labour suppliers for track laying work.

After the meeting with Tekken`s personnel, Nagan, Siva and the appellant agreed that they would be equal partners if they should succeed in obtaining a sub-contract from TUS in relation to the project. Following the agreement, the appellant was made a director and shareholder in the company, which was to be used as a vehicle for carrying out the project. The company, which was then basically dormant, had 100,000 paid-up shares in the name of Siva. It was agreed that Siva would transfer 33,333 (one-third) shares to the appellant. The appellant was made to understand that the shares were so transferred to him.

We ought to state that a search done at the Registry of Companies on 11 January 2000 showed that the appellant was a director of the company but not a shareholder. The search showed that 99,999 shares were held by Siva and the remaining one share by the estate of RK Manogar (Nagan`s deceased father who first set up the company with Siva). When the appellant called the company`s auditor, one Subramaniam, he was told that the Registry of Companies would update the records after the annual returns were filed, that 33,333 shares had been issued and registered in the appellant`s name and that the share certificates were with Subramaniam for safe-keeping.

With Guna`s assistance, the appellant prepared the quotation for the project. TUS accepted the quotation and appointed the company as a sub-contractor for the project. A letter of intent was given to them in February 1999. Thereafter, further discussions on the details of the project was undertaken by the appellant with TUS. Eventually, everything was agreed with TUS and the appellant signed the sub-contract agreement on behalf of the company with TUS for the supply of labour.

In the meantime, after the letter of intent was received, the appellant proposed to Nagan and Siva that they should inject capital into the company to enable the latter to recruit persons with expertise, thereby establishing the company as a track laying company and helping it to secure future projects of this nature. The company could then also provide design and build services in addition to the supply of labour. However, Nagan and Siva were not in favour of the idea, as they were satisfied with providing only labour services.

The project was originally scheduled to commence in July 1999. The appellant, however, managed to convince TUS to delay the commencement of the project to the advantage of the company.

In June 1999, while the appellant was at a restaurant in the company of some friends, including one N Kinian (`Kinian`), Cotterell approached the appellant and asked for his assistance in sourcing for used rails. Kinian, who was a director of Estag (S) Pte Ltd (`Estag`) and had been in the aviation field for some 42 years, mentioned that he knew of certain parties who might possess such used rails. Kinian introduced a rail supplier from Malaysia to Cotterell. As a result, TUS obtained used rail cheaply and made substantial savings and thereafter used Kinian`s company, Estag, in sourcing for design and build rail equipment and materials. Kinian recruited the appellant`s brother, Thanikumaran, to help him in the company`s business. Thanikumaran became a director and minority shareholder of Estag.

Since May 1999, Kinian had approached the appellant for his assistance in relation to various projects. Even though the appellant had no beneficial interest in Estag, whatever projects were secured would benefit the appellant`s brother. Kinian also printed his company`s calling cards with the appellant`s name in order to establish the latter`s authority to negotiate with third parties.

In October 1999, Nagan, Siva and Dave asked the appellant to obtain a commission from Kinian for the materials that Estag was supplying to TUS. The appellant told them to approach Kinian directly. Apparently, Kinian declined to give them any commission.

On 1 November 1999, the appellant entered into an agreement (the `agreement`) pertaining to the project with Nagan, Siva and the company. There were discussions among the appellant, Nagan and Siva regarding the distribution of moneys which would be received by the company. Both Nagan and Siva were keen on drawing such moneys out. The appellant, however, expressed concern at this as he felt that in the circumstances, with the company having no funds and Nagan facing financial difficulties, the burden of securing the mandatory insurance bonds of $5,000 for each foreign worker was likely to fall on him. In his mind, this would be a heavy burden. The main part of the project was to begin only on 1 March 2000 requiring an estimated 184 workers, which number would later go up to 400 workers. If the company should breach the insurance bonds, the appellant would have to pay on the bonds and he would face the risk of the company being unable to reimburse him. He was thus anxious to ensure that the moneys earned by the company were kept by the company and only distributed to the shareholders at a later time.

From 3 January 2000, after the Christmas/New Year festivities, the appellant tried without success to contact Nagan. Messages left for Nagan to return the appellant`s calls were ignored. On 10 January 2000, the appellant received by post a notice dated 29 December 1999 calling...