Sabyasachi Mukherjee and another v Pradeepto Kumar Biswas and another suit

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 11 December 2018
• Neutral Citation: [2018] SGHC 271
• Court: High Court (Singapore)
• Docket Number: Suit No 1270 of 2014 and Suit No 417 of 2017
• Year: 2018
• Published date: 12 December 2019
• Hearing Date: 27 November 2017,21 November 2017,16 November 2017,15 November 2017,07 November 2017,20 April 2018,24 November 2017,22 November 2017,14 November 2017,13 November 2017,30 November 2017,23 November 2017,10 November 2017,29 November 2017,28 November 2017,20 November 2017
• Plaintiff Counsel: Ng Ka Luon Eddee, Muk Chen Yeen Jonathan, Chan Yi Zhang, Sherlene Goh Shi Li and Jeremy Toh (Tan Kok Quan Partnership)
• Defendant Counsel: Liew Teck Huat, Christopher Yee and Kenneth Yap (Niru & Co LLC)
• Subject Matter: Banking,Relationship Manager,Investments,Fiduciary Duties,Tort of Deceit,Trust
• Citation: [2018] SGHC 271

Belinda Ang Saw Ean J: Introduction

In Suit No 1270 of 2014 (“Suit 1270/2014”), the plaintiffs, who are husband and wife, claim to have made various investments totalling US$4.5m on the advice and recommendation of the defendant, Pradeepto Kumar Biswas (“Pradeepto”). The first plaintiff is Dr Sabyasachi Mukherjee (“Dr Mukherjee”) and the second plaintiff is Gouri Mukherjee (“Gouri”). The plaintiffs are collectively referred to as “the Mukherjees”. The Mukherjees are alleging that the defendant, Pradeepto, a close family friend on whom they had placed complete trust and confidence as their investment adviser of more than ten years, swindled them of US$3.45m through a complex labyrinth of financial instruments. The subject matter of this action are seven investments which the Mukherjees entered into in 2011 and 2013: Swajas Air Charters Limited (“Swajas”) investment, which involves the subscription of pre-Initial Public Offering shares (“Swajas Investment”); Neodymium Holdings Limited (“Neodymium”) investment, which involves project financing (“Neodymium Investment”); Peak Commodities Inc. (“Peak”) investment, which involves project financing (“Peak Investment”); Pacatolus Growth Fund Class 6 (“Pacatolus SPV 6”) investment, which involves a growth fund (“Pacatolus Investment”); Trade Sea International Pte Ltd (“Trade Sea”) investment, which involves a trade financing (“Trade Sea Investment”); Farmlands of Africa Inc. (“Farmlands of Africa”) investment, which involves a debenture (“Farmlands of Africa Investment”); and SEW Trident Global Pte Ltd (“SEW Trident”) investment, which involves trade financing (“SEW Investment”).

The Mukherjees claim that the seven investments were inappropriate for them; that as a direct result of what Pradeepto had proposed to and told Gouri, she regarded the seven investments as appropriate for the Mukherjees but it turned out not to be the case. For now, the word “inappropriate” is used to describe the investments in the context of the Mukherjees’ risk profile, investment philosophy and objectives. Later on in the judgment, the appropriateness of the investments is reviewed from the lens of certain allegations that questioned the “authenticity” of the seven investments. In these instances, the Mukherjees have chosen to describe the investments as “shams” or “purported investments”.

According to the Mukherjees, Pradeepto and his nominated entity, Indian Ocean Enterprises Limited (“IOEL”), a British Virgin Islands incorporated entity, had used their investment monies for the benefit of various companies that he and/or IOEL had connections with or interests in. The connections and interests as described were never disclosed to the Mukherjees when they made their investments or at any time thereafter. To the Mukherjees, their investments were a means through which Pradeepto had exploited them; having treated them as his personal source of funds. The Mukherjees therefore seek recovery of the outstanding principal amounts totalling US$3.45m and reasonable returns of US$1,328,332.19. Essentially, the Mukherjees claim the rate of 7.5% per annum over a stated period to compute their reasonable returns, assuming the principal was invested in alternative investments. I will explain how this figure was arrived at below (see [52]). On this note, the Mukherjees have stated that the figures in the closing submissions supersede previous stated amounts, this judgment will proceed on the basis of the closing submissions.

The Mukherjees base their claims on three causes of action: breach of fiduciary duty, breach of trust and the tort of deceit. The first and second causes of action mentioned here are applicable to all seven investments whereas the last cause of action relates to only five out of seven investments. As part of what is termed as a breach of trust, the Mukherjees have also said that the circumstances surrounding the investments would attract the imposition of a Quistclose trust.

Pradeepto denies any wrongdoing. He contends that the Mukherjees, at the trial and in their closing submissions, have strayed beyond their pleaded case and have also failed to prove the very serious allegations against him. Pradeepto was critical of the seriousness of the Mukherjees’ complaints; particularly, when they dropped their pleaded claim in respect of a supposed investment called Free Zone Enterprise at trial. Further, evidential shortcomings exist despite the Anton Pillar search order that had resulted in the production of voluminous bundles of documents before this court. Pradeepto contends that the allegations are speculative or conjectures, and that the Mukherjees had to resort to expert evidence to shore up their evidential deficiencies. As it turned out, their expert, so the argument develops, based his opinion on speculative and non-existence facts.¹ In sum, Pradeepto submits that the Mukherjees have failed to discharge their burden of proof in respect of the various causes of action, and the action should be dismissed with costs.

A related action is Suit No 417 of 2017 (“Suit 417/2017”). The plaintiff is Indian Ocean Group Pte Ltd (“IOGPL”) and the defendant is Gouri. In this action, IOGPL is suing Gouri to recover a loan purportedly made to Gouri by IOEL in 2012. According to IOGPL, it has the right to sue; having assumed the rights and liabilities of IOEL. The loan amount is said to be around US$1.6m. Gouri denies the loan. IOGPL’s title to sue is also disputed.

Pursuant to an Order of Court dated 29 August 2017, both actions were listed for hearing before this court and Suit 417/2017 proceeded immediately after Suit 1270/2014. In Suit 1270/2014, the Mukherjees are represented by counsel, Mr Eddee Ng (“Mr Ng”), and counsel for Pradeepto is Mr Liew Teck Huat (“Mr Liew”). Mr Liew also represents IOGPL in Suit 417/2017 and Gouri’s counsel is Mr Ng.

In relation to Suit 1270/2014, the discussions will focus on the question of what obligations Pradeepto owed the Mukherjees with reference to the various causes of action in the pleadings. This judgment will also discuss whether Pradeepto practiced deceit on the Mukherjees in relation to five investments and whether a trust ought to be imposed in the present circumstances. In relation to Suit 417/2017, the central question is whether the purported loan is indeed a loan to Gouri or whether the flow of funds was merely pursuant to Gouri’s instructions to have Pradeepto transfer the Mukherjees’ funds from one account to another.

It is appropriate to explain at the outset that there is some duplication in the parties’ treatment of related issues even though they are brought under different causes of action. Many arguments advanced before this court that are peripheral will not be discussed at all in this judgment unless they are relevant in that they would shed light upon the central issues to be resolved. The approach taken in this judgment is to discuss factual issues, and to make findings upon them that this court considers are important to resolve the central issues in the respective actions. The same approach is adopted in respect of the many authorities cited by the parties.

This judgment is the court’s decision in respect of Suit 1270/2014 and Suit 417/2017. I will deal with Suit 1270/2014 first.

Suit 1270/2014 Overview of Suit 1270/2014

Before dealing with the central issues in this action, I should say something by way of an overview. It is important to keep in mind that the parties had known each other for over ten years and the Mukherjees have not disputed Pradeepto’s testimony that over the same period of time, there were as many as 700 investments that went through Pradeepto, and that by and large, the Mukherjees had made money on most of their investments. Against this background of hundreds of prior investments, an obvious difficulty with this case is that the parties’ oral testimony in court was based on the recollection of events that occurred several years ago. What the witnesses recall of particular conversations and events, with passage of time, can be unreliable and the truth of the evidence becomes more difficult to gauge. It is better to base factual findings on inferences drawn for the contemporaneous documentary evidence, if any, and known or probable facts. In this vein, a number of the factual issues were matters within Pradeepto’s knowledge. While the legal burden of having to prove their claims lie on the Mukherjees throughout, where the Mukherjees have sufficiently established their prima facie case, the evidential burden of proof shifts to Pradeepto to rebut the Mukherjees (see Gimpex Ltd v Unity Holdings Business Ltd and other and another appeal [2015] 2 SLR 686 at [67]).

One objection raised by Mr Liew is the absence of an affidavit of evidence-in-chief from the first plaintiff, Dr Mukherjee, who also did not testify at the trial. The position Mr Liew takes is not unexpected. He argues that since there is no evidence from Dr Mukherjee, the latter’s claims against Pradeepto should be dismissed. Mr Ng explains that it is unnecessary for the Dr Mukherjee to testify because Gouri represented the interests of both plaintiffs in her dealings with Pradeepto and her testimony at the trial is for the plaintiffs. Besides, the factual events involving Dr Mukherjee are limited, largely uncontroversial and undisputed by Pradeepto. With these matters in mind and in the context of the alleged false representations, I agree with Mr Ng that if representations made to Gouri were intended to be communicated to Dr Mukherjee through Gouri, and if duly conveyed, all that should suffice as a matter of law (see Gary Chan and Lee Pey Woan, The Law of Torts in Singapore (Academy Publishing, 2nd Ed, 2017) at para 14-016). There is merit to Mr Ng’s contention that the investments were for the couple, seeing that the funds for the investments came from them, and Pradeepto has not...