Malathi Latha Sriram (acting by her litigation friend, the Official Solicitor) v Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | Mullen |
| Judgment Date | 19 April 2024 |
| Neutral Citation | [2024] EWHC 853 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BR-2016-001808 |
In the matter of the Insolvency Act 1986
Re Malathi Latha Sriram (AKA Mukti Roy)
[2024] EWHC 853 (Ch)
ICC JUDGE Mullen
Case No: BR-2016-001808
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice,
Rolls Building,
Fetter Lane,
London EC4A 1NL
Ms Rachel Sleeman (instructed by Keidan Harrison LLP) for the Applicant
Mr Raj Arumugam (instructed by the Solicitor to HM Revenue and Customs) for the First Respondent
Mr Reuben Comiskey (instructed by Edwin Coe LLP) for the Second Respondent
Hearing dates: 10 th, 11 th, 12 th October 2023, 1 st December 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 19 th April 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
ICC JUDGE Mullen
Malathi Latha Sriram (“Ms Sriram”) was adjudged bankrupt on 4 th September 2017 on a petition presented by HM Revenue & Customs (“HMRC”) on 2 nd December 2016. By an application made on 25 th August 2020, she applied to annul the bankruptcy order under section 282(1)(a) of the Insolvency Act 1986, that is to say on the ground that the bankruptcy order ought not to have been made.
The application notice was amended pursuant to an order of ICC Judge Prentis dated 19 th January 2021. As amended, the application notice contends that the statutory demand and petition leading to the bankruptcy were not properly served in that attempts were made to serve, and substituted service was later effected, at addresses at which Ms Sriram did not live and that insufficient efforts were made to bring the statutory demand or the petition to her attention. It also states that Ms Sriram lacked capacity during the currency of the bankruptcy proceedings so that she was not able to appreciate the nature or implications of bankruptcy or to make decisions for herself.
In the alternative, the application contended that the bankruptcy should be annulled under section 282(1)(b) of the 1986 Act, that is to say on the ground that all the bankruptcy debts and expenses have been paid or secured to the satisfaction of the court. This was explained on the basis that the debts set out in the petition, totalling £71,577.13 and made up of unpaid assessed taxes, penalties, surcharges and interest, should be reduced to less than the £18,612 held by the trustee in bankruptcy, Ms Louise Brittain. This is no longer pursued but Ms Sriram maintains that, were the bankruptcy to be annulled, the sum due to HMRC would be much reduced and could be discharged.
HMRC opposes the application to annul. Ms Brittain is neutral on the question.
By way of background I mention that Ms Sriram is married to Mr Ravi Gupta, though they are said to be estranged. I addressed Mr Gupta's own application for an annulment of his bankruptcy in Re Ravikanth Gupta (also known as Ravikanth Borra) [2022] EWHC 1195 (Ch). I regarded Mr Gupta as dishonest and concluded that he had made separate applications to the court using two identities to try and create the impression that the target of the bankruptcy petition issued in that case was not him. I should make it clear that Ms Sriram's application is not tainted by the evidence in her husband's case. That was a case between different parties in which she had no involvement.
The earlier case is however relevant to the background of this application in that Ms Brittain is also Mr Gupta's trustee in bankruptcy and has made applications to realise properties, in which some of Ms Sriram's family claim an interest. Some of those properties were transferred to Ms Sriram shortly before or after her husband's bankruptcy on 2 nd October 2019. The beneficial ownership of those properties is not a question that I have to decide, but the contentions in respect of them are relied upon by HMRC as pointing to an opacity in Ms Sriram's affairs that, when taken with a lack of cooperation on Ms Sriram's part, militates against the annulment of the bankruptcy as a matter of the exercise of the court's discretion. I also noted in my earlier judgment that that Ms Sriram herself used the alias “Mukti Roy”. The reasons for that were not explored in that case but Ms Sriram explained in her evidence in this case, to which I shall refer below.
Mr Gupta and Ms Sriram are connected to a number of addresses to which I shall refer in this judgment. They are:
i) 11 Westfields Avenue, London SW13 0AT (“11 Westfields Avenue”). This property was purchased in 2012 and registered in the name of Ms Sriram. It was later transferred to Mr Gupta and transferred back to Ms Sriram, using the name Mukti Roy, by a transfer dated 30 th September 2019. She and her brother, Mr Shoban Sriram, now say that the beneficial interest in this property was vested in Mr Shoban Sriram. This property was sold by Ms Brittain in 2020 and there is an ongoing dispute as to the entitlement to the proceeds of sale. The statutory demand was served at this address.
ii) Flat B, 4 Gloucester Crescent, London NW1 7DS (“4 Gloucester Crescent”). This property was purchased in 2016 and registered in Ms Sriram's name. It was transferred to Mr Gupta in August 2017, although Ms Sriram said that she did not sign the transfer deed on the date that the transfer bears, and was undergoing treatment in India at the time. She became the registered proprietor again, this time under the name Mukti Roy, pursuant to a transfer dated 16 th October 2019. She gave 4 Gloucester Crescent as her address for service on the proprietorship register. Again, she and her brother contend that this property is owned beneficially by Mr Shoban Sriram.
iii) 2 Nicolson Street, London SE1 0XP (“2 Nicolson Street”). This property was purchased in 2012 and registered in the name of Ms Sriram. It was transferred to Mr Gupta in 2016 and transferred back to Ms Sriram, using the name Mukti Roy, pursuant to a transfer dated 16 th October 2019. She and her father, Mohan Gupta Sriram (“Mr Sriram senior”), contend that the beneficial interest is vested in him, though Ms Sriram was to be entitled to a percentage of the gain on sale.
iv) 3 Stamford Road, East Ham, London E6 1LP (“3 Stamford Road”). This address was lived in by Ms Sriram but she says that she ceased living at this address since she moved to Sweden in May 2012.
v) 480 Upper Richmond Road, London SW15 5JG (“480 Upper Richmond Road”). This property was purchased in 2014 and registered in the name of Mr Gupta (whose address as entered into the proprietorship register was 106 Woking Close, London SW15 5LB). It was transferred into the name of Ms Sriram, using the name Mukti Roy, by a transfer dated 30 th September 2019. Her address was given as 480 Upper Richmond Road. She and Mr Sriram senior contend that the beneficial interest is vested in Mr Sriram senior though, again, Ms Sriram was to be entitled to a percentage of the gain on sale. This is the address at which Ms Sriram was served with the petition by way of substituted service.
vi) Flat 4, Dickinson Court, Brewhouse Yard, London EC1V 4JX (“Dickinson Court”). This was registered to Mr Gupta (under the name Ravikanth Borra) in 2014. Ms Sriram was registered as the proprietor of this property, under the name Mukti Roy, pursuant to a transfer dated 30 th September 2019. She gave Dickinson Court as her address for service in the proprietorship register. Ms Sriram's friend, Mamatha Gowda (“Ms Gowda”), claims to be the beneficial owner of this property.
vii) 36-08 North Tower, Aykon Building, Nine Elms Lane, London SW8 5BE (“the Aykon Building”). This was a property that Mr Gupta and, on the face of it, Ms Sriram, were corresponding with conveyancing solicitors about between 2016 and 2020.
viii) Apartment 92, 3 Riverlight Quay. This property was registered in the name of Mr Gupta in 2016, but HMRC assessed Ms Sriram for stamp duty land tax on the purchase in the sum of £57,200 which is included in the proof of debt.
Two further properties that will feature in this judgment are 106 Woking Close, London SW15 5LD (“106 Woking Close”) and 111 Woking Close, London SW15 5LD (“111 Woking Close”). These properties are owned by Ms Gowda. 106 Woking Close was given by Ms Sriram as an address to HMRC on a number of occasions, most recently in 2016.
Background to the petition, the course of the petition and the application to annul
The following is an uncontentious summary of the events which led to, and followed, the bankruptcy.
Between 2008 to 2011, Ms Sriram worked as an IT contractor. She says that her payroll company used a tax planning scheme, which provided for her income to be paid in two parts, the first being a salary as conventionally understood and the second being in the form of an allowance, which in reality was a loan. HMRC regarded this as a disguised remuneration scheme designed to avoid tax.
On 7 th February 2013, HMRC wrote to Ms Sriram enclosing a notice of assessment to income tax for the tax year 2008–09 in the sum of £8,217.80. The assessment was sent to 3 Stamford Road, the address then recorded on HMRC's Taxpayer Business Service, or “TBS”, system. This is a database that maintains details of taxpayers, including their address. No response was received from Ms Sriram, on her case because she was living in Sweden at the time.
On 25 th September 2013, Ms Sriram's address was changed to 2 Nicholson Street. HMRC's internal records record a call from “cust”, which I infer is an abbreviation of “customer”, on 23 rd September 2013 to give this address. Ms Sriram's evidence is that, although she cannot remember informing HMRC...
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