Ipartner Pte Shipping Ltd and Others (Claimant/Applicants) v Panacore Resources DMCC and Others (Defendant/Respondents) (4) Vikram Kashyap and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 05 November 2014 |
| Neutral Citation | [2014] EWHC 3608 (Comm) |
| Docket Number | Case No: 2014-591 2014-593 2014-594 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 05 November 2014 |
[2014] EWHC 3608 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC2A 1NL
Mr Justice Hamblen
Case No: 2014-591
2014-592
2014-593
2014-594
Mr R Southern QC (instructed by Holman Fenwick Willan LLP) for the Claimants/Applicants
Mr B Dye (instructed by Zaiwalla & Co. LLP) for Panacore Group PTE Ltd, Mr Rishi Anand, Mr Sunil Duggal and Mr Rajesh Bhatia.
The other respondents/defendants were not represented.
Hearing dates: 27 October 2014
Introduction
The Claimants apply for an order under CPR Rule 81.4, that the 4 th, 5 th, and 6 th Respondents (Mr Kashyap, Mr Anand, and Mr Duggal respectively) each be committed to prison for civil contempt of court for breach of a worldwide freezing order ("the WFO"), and for permission to issue writs of sequestration against all the Respondents (although the applications against the 2 nd and 7 th Respondents were not maintained at the hearing).
The WFO was granted by Teare J. on 16 May 2014 ("the Teare J. Order"), varied by Andrews J. on 23 May 2014 ("the Andrews J. Order") and continued by Simon Rainey QC (sitting as a Deputy Judge of the High Court) on 9 June 2014 ("the Rainey Order").
The Claimants contend that the 1 st and 3 rd Respondents ("Resources" and "Shipping" respectively) have failed to provide adequate disclosure of documents and information in accordance with Paragraph 10 of the Teare J. Order and paragraph 10 of the Rainey Order. They further contend that Resources has also disposed of its assets in breach of paragraph 3(2) of the Teare J. Order by funding the legal expenses of the 2 nd Respondent ("Group").
The 4 th– 6 th Respondents are (or at the material times were) directors and officers of one or more of the Defendant companies. Specifically:
(1) Mr Kashyap was, and still is, a director of Resources, who supplied such information as was given in response to the Teare J. Order by Resources
(2) Mr Anand and Mr Duggal were directors of Group and of Shipping, and still are directors of Group. Shipping is now in liquidation in Singapore. Mr Anand and Mr Duggal supplied such information as was given in response to the Teare J. Order by Shipping.
The evidence relied upon by the Claimants mainly consisted of the 5 th affidavit of Mr Perrott and the 2 nd affidavit of Mr Staples and the exhibits thereto. The evidence relied upon by the represented Respondents (Group, Mr Duggal, Mr Anand and Mr Bhatia) mainly consisted of the affidavits of Mr Duggal, Mr Anand and Mr Bhatia and the exhibits thereto. Mr Duggal's lengthy affidavit took issue with a number of fundamental issues relating to the 1 st Claimant's claim and the basis upon which the WFO had been sought or obtained. However the Court's orders stand unless and until they are set aside, which they have not been. Nevertheless in so far as Mr Duggal's affidavit deals with background matters of relevance to the present applications I have to proceed on the assumption that what he says is true, without making any findings to that effect.
General background
The 1 st to 4 th Claimants ("IPartner", "Classic", "Cockett" and "Louis Dreyfus" respectively) are unrelated entities which each have a contractual claim against one or more of the Respondent companies.
(1) IPartner has a claim for repayment of a Convertible Bond issued by Resources in respect of which IPartner says that Group for is liable pursuant to an alleged Addendum. Group has served a Defence to this claim. Resources has not advanced any defence to the claim.
(2) Classic has claims against Shipping under 4 separate charterparties (all of which provide for London arbitration) for balance of freight and demurrage due, in a total amount of just over US$1.8 million. This claim is acknowledged in Shipping's Statement of Affairs filed in its liquidation in Singapore on 11 July 2014, in the amount of US$1,719,456.
(3) Cockett has a claim against Resources under two bunker supply contracts for a total of US$794,000.
(4) Louis Dreyfus has a claim against Shipping under voyage charters for balance of freight and demurrage, in a total amount of US$1.45 million. This claim is acknowledged in Shipping's Statement of Affairs filed in its liquidation in Singapore on 11 July 2014, in the amount of US$1,449,127.
The essential basis for the application for the WFO was the Claimants' allegation that a substantial debt of several million dollars owed to Resources by either Panacore Investments ("Investments") or its wholly owned subsidiaries ("the SPVs") was written off and seemingly treated as a debt owed by the SPVs to Panacore Investments.
It is alleged that this was a case of cynical asset stripping. Resources had lost significant sums of money in disastrous trading. So assets (the debts due to Resources) were written off, to the disadvantage of Resources and its creditors (and its 100% shareholder, Shipping) and to the advantage of Investments and its shareholders.
This is strongly disputed by the represented Respondents and in Mr Duggal's affidavit evidence. Whilst it is acknowledged that Resources may have given short term accommodation to Investments or its SPVs to finance instalments due to pay for vessels being built for the SPVs, they contend that Resources was repaid by Investments leaving a net balance due of US$717,712, as shown in the audited consolidated accounts for Investments and the SPVs. These repayments were made from funds supplied by Jindal Steel, a multi-billion dollar Indian conglomerate, which, under loan agreements, acquired an 80% share in Investments and advanced it US$24 million. They also challenge the veracity of Mr Staples, the person behind the 1 st Claimant and, it is alleged, the orchestrator of the other claims, and of a key document produced by him in support of the 1 st Claimants' claim.
The WFO
The WFO granted by Teare J on 16 May 2014 was made against Resources, Group and Shipping, and is limited to amounts of US$3,250,000, US$2,250,000 and US$3,500,000 respectively.
Paragraph 10 provided as follows:
"PROVISION OF INFORMATION
10.1 Unless paragraph 10.4 applies the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants' solicitors of all their assets worldwide exceeding US$5,000 in value, whether in their own names or not and whether solely or jointly owned, giving the value, location and details of all such assets. For the avoidance of doubt, such assets include, in particular, any inter-company or other loans made by the defendants to any company or other person(whether in the same group of companies or not) and any shareholdings in any other company (whether in the same group of companies or not).
10.2 Unless paragraph 10.4 applies, the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants' solicitors of any of their assets worldwide exceeding US$5,000 in value, whether in their own names or not and whether solely or jointly owned, which have been written off or sold or transferred to any company or other person (whether in the same group of companies or not) since 1 November 2013, giving full details of any such write offs, sales or transfers (including any consideration provided and the identity of any buyer or transferee) and further stating, where appropriate, what has become of any consideration provided for any such sale or transfer.
10.3 Unless paragraph 10.4 applies, the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants' solicitors of the Defendants' immediate and ultimate legal and beneficial ownership and identify their directors (including de facto and shadow directors) and any other person or persons (whether natural persons or not) who are entitled to or have since 1 November 2012 in fact exercised control over their business, operations and activities."
Paragraphs 10.2 and 10.3 are not usual orders. Paragraph 10.2 involves an interrogation relating to historic transactions. Paragraph 10.3 involves an interrogation relating to historic ownership and control of the Defendant companies. Neither appear to be directed at the identification and preservation of assets which might otherwise be dissipated, the usual purpose of an ancillary disclosure order.
The Teare J. Order also provided that the Defendants were not to "dispose of, deal with or diminish the value" of any of their assets (paragraph 3.2) but that this did not prohibit them doing so "in the ordinary and proper course of business" (paragraph 12.2).
The initial disclosure by Resources was given by Mr Kashyap. He was formerly Chief Operating Officer ("COO") of the Panacore Group, but had been dismissed in the wake of a disastrous Mexican Iron ore trade. Mr Kashyap was re-appointed a director on 22 April 2014.
The Claimants contend that this disclosure failed to comply with the Teare J. Order, not least because it did not attempt to address paragraph 10.2 of that order.
The initial disclosure by Shipping was given by Mr Anand. The Claimants contend that this disclosure failed to comply with the Teare J....
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