Chowgule & Company Private Ltd v Pratap Shirke
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Dias DBE |
| Judgment Date | 09 November 2023 |
| Neutral Citation | [2023] EWHC 2815 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2023-000291 |
[2023] EWHC 2815 (Comm)
Mrs Justice Dias DBE
Case No: CL-2023-000291
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
Mr Simon Salzedo KC, Mr Edward Harrison, Mr Tom Pascoe and Mr Charles Wall (instructed by Milbank LLP) for the Claimants
Mr Harish Salve KC and Mr Rupert Hamilton (instructed by Mills & Co. Solicitors Ltd) for the First and Fourth Defendants
Hearing dates: 3–5 October 2023
This matter comes before me on the adjourned hearing of an application for a freezing injunction and ancillary relief against the First and Fourth Defendants, to whom I shall refer as “ Mr Shirke” and “ POBCUK” respectively. As rapidly became apparent, the underlying dispute is part of an ongoing feud between two rival camps of the Chowgule family in India. The camp to which the Claimants belong allege that the Defendants were guilty of masterminding a massive US$128 million fraud on the Claimant companies, while the Defendants deny any fraudulent dealing and maintain that the present application is merely an attempt to exert pressure in the context of the family dispute.
The parties
The First Claimant (“ CCPL”) is an Indian company and the parent company of the Chowgule Group, a conglomerate comprising numerous entities with wide-ranging interests, including metals, mining, shipbuilding, shipping and heavy engineering. Most, if not all, of its shares are either directly or beneficially owned by members of the Chowgule family based in Goa, of whom there are many members. Of particular relevance to the present application are the siblings, Mr Vijay Chowgule, Mr Ashok Chowgule, Mrs Sarita Shirke (née Chowgule) and Ms Padma Chowgule. Other family members who have featured in the documents before me are Mr Aditya Chowgule, Mr Arjun Chowgule, Ms Deepa Chowgule, Mr Jaywant Chowgule and Mr Umaji Chowgule. To avoid confusion and without intending any disrespect, I refer to the various Chowgule individuals by their given names.
The Second Claimant (“ Rudra”) is a wholly-owned subsidiary of CCPL which was incorporated in Guernsey on 7 July 2009. Rudra had two wholly-owned Guernsey subsidiaries, Nandi Trading Private Ltd (“ Nandi”) and Nilgiri Shipping & Trading Ltd (“ Nilgiri”).
Vijay (the Third Defendant) was a director of CCPL from 16 August 1974 to 12 January 2021. During that time, he was also Managing Director (1 January 1988 to 28 May 2019) and Chairman of the board of directors (18 November 2008 to 28 May 2019). Vijay owns some 10% of CCPL (either directly or indirectly) and is resident in India. The Second Defendant, Mr Mahatme, is a chartered accountant and a long-standing adviser and friend of Vijay, who previously acted for CCPL and the companies under its control. He was a non-executive director of CCPL from 14 February 1989 to 12 January 2021 and also is resident in India.
Both men resigned as directors of CCPL as part of the settlement of a long-running and bitter feud between rival factions of the family: Group A (which includes Padma, Ashok, Jaywant and Umaji) and Group B (which includes Vijay and Sarita). On 11 January 2021, a Family Settlement Agreement (the “ FSA”) was concluded in an attempt to resolve the dispute by effectively dividing the Chowgule Group between the two factions. As part of that settlement, CCPL and Rudra were allocated to Group A. Padma, Ashok, Arjun, Jaywant and Umaji are thus all on the current board of directors of CCPL and Padma is now Chairman and (jointly with Ashok) Managing Director of the company. She was also appointed as a director of Rudra on 9 January 2023.
The First Defendant, Mr Shirke, has had close personal and business connections with the Chowgule family since 1964. He was a friend and school contemporary of Ashok at Millfield School and has been married to Sarita for over 50 years. Sarita owns about 10% of CCPL either directly or indirectly, although Mr Shirke himself has no equity or other interest in any of the Chowgule companies except for a small shareholding in Chowgule Steamships Ltd (“ CSL”).
Mr Shirke is a successful businessman in his own right, initially in the construction sector, and he remains on the board of his family company, BG Shirke Construction Technology Ptd Ltd in India. His first real involvement in shipping was in 1987 when he was asked by Mr Chowgule senior to supervise the running of the overseas Chowgule shipping interests alongside his own businesses. In 1997, a Guernsey company, Panoceanic Bulk Carriers Limited (“ POBC”), was incorporated as a joint venture with Royal Maritime Corporation (an arm of Marubeni) to purchase six Panamax bulk carriers. The vessels were eventually sold in 2007 at which time Royal Maritime Corporation exited POBC. POBC remained in existence as a subsidiary of another Guernsey company, Pan Gulf Group Ltd (“ PGG”), until it was dissolved on 24 December 2018.
The Fourth Defendant, POBCUK, was incorporated in the UK on 4 March 1999 as a wholly owned subsidiary of POBC until the latter's dissolution, at which time ownership was transferred to a Panamanian company, Natlata Holding Corporation. POBCUK carried on business providing commercial chartering and ship management services until it ceased trading in 2020.
PGG and Natlata were owned by a trust, the Wadi Foundation, of which Mr Shirke is one of a number of discretionary beneficiaries. However, it is not in dispute that Mr Shirke controlled both companies and their subsidiaries and that he remains a director of POBCUK.
Other companies which featured prominently in this application are ASP Ship Management Pte Ltd (“ ASP”) and ASP Holdings Ltd (“ ASP Holdings”). ASP's core business was technical vessel management and it was acquired in 1997 by PGG. The ASP group expanded over the years and a significant portion of the business was the subject of a management buy-out in 2018. However, ASP Holdings (of which Mr Shirke is a director and which is also indirectly owned by the Wadi Foundation through PGG) still retains some of the ASP businesses. Again it is not in dispute that Mr Shirke controlled ASP and ASP Holdings at all material times.
In 1984, Mr Shirke and Sarita moved to the UK, and have been resident at the same address in Surrey since that date. Although Mr Shirke remains an Overseas Citizen of India and has substantial business interests and family connections there, he also has substantial ties to this jurisdiction. He was a director of the Newcastle P&I Club from 1994 and, following its merger with North P&I Club, became Club Chairman from 2011–2021. He continues to chair various of its committees and subsidiaries, positions which require approval from the financial regulatory authorities in the UK and Ireland. He was a governor of Sevenoaks School from 2007 to 2018 and remains a trustee of the Sevenoaks School Foundation.
Unfortunately, the FSA has not been successful in attaining its objective and I was informed that there are currently multiple other sets of proceedings ongoing in India between Group A and Group B members in India, including an arbitration commenced by Group B against Group A to enforce the terms of the FSA, a complaint against Mr Mahatme filed with the Disciplinary Committee of the Institute of Chartered Accountants in India and a criminal complaint filed in Goa against Vijay, Mr Mahatme and various other Group B members.
As already stated, the present proceedings are brought against Mr Shirke, Mr Mahatme, Vijay and POBCUK alleging that they were all party to a conspiracy to defraud CCPL and Rudra of sums totalling some US$128 million. Since Mr Shirke is domiciled in England and POBCUK is an English company, proceedings were served on them within the jurisdiction and permission was obtained to serve Vijay and Mr Mahatme in India on the basis that they are necessary and proper parties to the claims against Mr Shirke and POBCUK. It is suggested on behalf of Mr Shirke that he and POBCUK have only been included in these proceedings as nominal anchor defendants in order to secure jurisdiction over Vijay and Mr Mahatme who would not otherwise be susceptible to English jurisdiction, being Indian residents with no connection to the UK. This is, of course, hotly denied by the Claimants.
At all events, all four Defendants are applying to have the proceedings either set aside (Vijay) or stayed (Mr Shirke, Mr Mahatme and POBCUK) on the grounds that India and not England is the appropriate forum for the resolution of the dispute. The stay application is currently listed to be heard on 11–12 December 2023 and nothing I say in this judgment should be taken as expressing any view on the merits of that application one way or the other.
The alleged fraud in outline
It is the Claimants' case in general terms that the Defendants were party to a conspiracy over a number of years to divert substantial sums of the Claimants' money to entities connected to the Defendants and/or to use the Claimants' money for the benefit of such entities to the detriment of the Claimants. It is said that effective management of CCPL was predominantly vested in Vijay and Mr Mahatme and that the first three Defendants (the “ Individual Defendants”) were also shadow and/or de facto directors of Rudra who effectively controlled not only the management of Rudra and its subsidiaries but also the information that was made available to the board of CCPL. It was therefore only after the change in control of CCPL following the FSA that the conspiracy came to light.
More specifically, it is alleged that over a...
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