Manish Goyal v BGF Investment Management Ltd

JurisdictionEngland & Wales
JudgeMr Justice Butcher
Judgment Date26 May 2023
Neutral Citation[2023] EWHC 1180 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: CL-2021-000469
(1) Manish Goyal
(2) Jyoti Goyal
(1) BGF Investment Management Limited
(2) BGF Investments LP
(3) BGF Group Plc
(4) Alexander Neville Snodgrass
(5) Arun Balasubramaniam

[2023] EWHC 1180 (Comm)


THE HON Mr Justice Butcher

Case No: CL-2021-000469





Royal Courts of Justice

Strand, London, WC2A 2LL

Harish Salve KC, Peter Head and Chintan Chandrachud (instructed by Gresham Legal) for the Claimants

David Mumford KC and Ryan James Turner (instructed by Macfarlanes LLP) for the First to Fourth Defendants

Lesley Anderson KC and Paul Strelitz (instructed by CMS Cameron Mckenna Nabarro Olswang LLP) for the Fifth Defendant

Hearing dates: 15–17, 20–23, 27–31 March, 3–5 April 2023

Further Submissions: 11, 12 April 2023

Approved Judgment

This judgment was handed down remotely at 10.00am on 26 May 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg

Mr Justice Butcher Mr Justice Butcher The Hon

In this action, the Claimants, Manish Goyal (to whom I will refer as ‘Mr Goyal’), and his wife Jyoti Goyal (to whom I will refer as ‘Mrs Goyal’) (together ‘the Claimants’ or ‘the Goyals’) claim against the Defendants damages in deceit, damages pursuant to s. 2(1) Misrepresentation Act 1967 and damages for unlawful means conspiracy.


Mr Goyal was one of the co-founders, in 2006, of a company called Invenio Business Solutions Limited (‘IBSL’), an IT consultancy business specialising in the use of enterprise resource planning software developed by SAP AG.


The First Defendant (‘BGFIML’) and the Third Defendant (‘BGFPLC’) are companies incorporated in England and Wales. BGFPLC is a holding company for a group of companies trading under the ‘Business Growth Fund’ name, including BGFIML. I will refer to this group, when it is unnecessary to distinguish between different corporate entities within it, as ‘BGF’. BGF was founded by Barclays, HSBC, Lloyds, Standard Chartered and NatWest in order to provide equity funding for small and medium-sized enterprises.


The Second Defendant (‘BGFILP’) is a limited partnership, of which the Fourth Defendant (‘Mr Snodgrass’) is a limited partner. Mr Snodgrass is employed by a service company, BGF Services Ltd, as an ‘Investor’ on the terms of a contract of employment dated 25 November 2015. He provides services to BGFIML. He was responsible, on behalf of BGFIML, for identifying the investment opportunity relating to IBSL, and managing the process of the divestment transaction with which this case is concerned, and which I will describe below, from origination to completion.


While claims against BGFILP and BGFPLC were pleaded by the Claimants, by the end of the trial the Claimants had indicated that, given that BGFIML would be vicariously liable for any relevant wrongs of Mr Snodgrass, no claim was pressed against BGFILP or BGFPLC. On that basis, very little more needs to be said about those two companies.


The Fifth Defendant (‘Mr Balasubramaniam’) was a shareholder and director of IBSL from April 2017 and acted as its Managing Director from about 1 January 2018, and then as its CEO, which was the role he had at the time of the completion of the divestment transaction with which the case is concerned.



To understand the nature of the case, and of the transaction at its heart, it is necessary to say something more about IBSL, the principal persons involved, and the genesis of the involvement of BGF. What follows was largely uncontroversial, but it should be recorded that, insofar as it relates to matters relating to the internal affairs of IBSL, not all was apparent to those outside the senior management of the company at the time of the conclusion of the divestment transaction involving BGF.


Mr Goyal had founded IBSL, with his business partner, Sunil Kulkarni, in July 2006. The two were its original shareholders. Each of their wives, ie Mrs Goyal and Vaishali Kulkarni, was employed by IBSL in 2006, and shares in the company had been issued to them in May 2007.


By 2009, Sanjay Hiranandani (‘Sanjay’) and Naveen Agarwal (‘Naveen’) had joined the business, taking on roles with IBSL's Indian subsidiary. Sunil and Vaishali Kulkarni had exited the business, with their shares being bought out by the Goyals. Furthermore, Partha Bhattacharya (to whom I will refer, as he was generally referred to at the trial, as ‘Partho’) had joined IBSL as its Managing Director. Shares in IBSL had been issued to Naveen, Partho and Sanjay.


By the end of 2011, Sanjay left the business and his shares were cancelled. Mr Balasubramaniam joined the business, as COO, in March 2013. He was initially located in India. In March 2015, he was issued 2% of the shares in IBSL.


During the second half of 2016, relationships between senior management in IBSL became strained. This was in part as a result of the failure of IBSL to win a contract for the provision of services relating to the tax system in Dubai. Mr Goyal apparently blamed Naveen for the failure, and was upset with Partho for not taking Naveen sufficiently to task about it. There was a meeting in the Hilltop Hotel, Mumbai. At that meeting, according to the evidence of Partho and Mr Balasubramaniam, which I accept, Mr Goyal told Partho in angry terms that he, Mr Goyal, wanted Partho to leave the business. When Partho said that he would leave, Mr Balasubramaniam and Naveen said that they would leave too. This led to a decision, including on the part of Mr Goyal, that the business had to be sold. It was decided that Mr Balasubramaniam should step up to the role of Managing Director; and that there should be an approximately 18-month period in which Partho should hand over to Mr Balasubramaniam, the business should be run more aggressively to maximise its sale value, and that there should then be a sale.


As a result, Mr Balasubramaniam relocated to the UK, and started the transition from Partho to himself of the role of Managing Director. He was appointed as a director in April 2017. 2017 proved to be a successful year, financially, for the company. At the end of the year, at Christmas time, there was a Board meeting. At this meeting, Mr Goyal indicated that he now did not wish to sell his shares in the company. Partho continued to wish to exit. Mr Balasubramaniam and Naveen agreed that they would continue to work for the company, but Naveen wished to sell half his shares. The upshot was that it was agreed that Partho would cease to be Managing Director, and Mr Balasubramaniam would take over, which he did in January 2018. Partho moved to the position of Non-Executive Chairman. It was further agreed that, instead of a sale of all the shares in the company, there should be a divestment only of Partho's shares and of half of Naveen's.

The Divestment Transaction


IBSL instructed PwC to market a minority investment opportunity in March 2018. The process of finding an investor was given the name ‘Project Ipala’. Vendor due diligence had to be carried out. For this to be performed, the company's financial data needed to be put into a form which would permit the appointed accountants, RSM, to produce a due diligence report. A consultant, Peter Lukac, was engaged to perform a detailed analysis of the historical monthly management accounts, and while this was done the Project Ipala process was paused.


Marketing of IBSL by PwC commenced properly on 4 September 2018, on which date the Information Memorandum was finalised and shared with interested parties. 14 potential investors were invited into the process, including BGF. In September and the first half of October 2018 there was a process of Bidder Questions and Answers and of management meetings. The round 1 bid deadline, as extended, was 18 October 2018. By that date, non-binding indicative offers had been received from five bidders: Three Hills Capital Partners (‘THCP’), MML Capital Partners, BGFIML, Sovereign Capital Partners and Growth Capital Partners LLP.


RSM's Vendor Due Diligence Report (or ‘VDDR’) was finalised on 29 October 2018. On 31 October 2018 it was received by BGF, and shared by it with HSBC, a potential funder. On 7 November 2018 a second management presentation by IBSL to BGF occurred.


BGF's Deal Memo, a document for internal consumption summarising the potential transaction, was finalised on 9 November 2018. That Deal Memo contained a ‘big picture’ description of the potential deal, including the following:

‘Invenio [ie IBSL] is a fast-growing provider of complex technology solutions with an impressive client base and a pipeline of new business that is currently running ahead of the company's ability to service. The management team is mature and well-rounded with a strong track record.

• Invenio is a technology solution provider with deep domain knowledge within three very clearly defined verticals: Tax and Revenue Management (“TRM”), Media, and Manufacturing & Logistics. The company is strategically aligned with SAP, the leading software ecosystem in these verticals, but has also developed substantial, bespoke capabilities in-house and also incorporates best-of-breed software from other vendors to meet client requirements.

• Founded in 2006 by Manish Goyal (CFO), the business has grown organically (41% CAGR over last 2 years) with operations in 6 countries, employing 600+ FTEs, including a back-office operation in India. New business momentum is very strong – recent wins and advanced pipeline largely underpin forecasts. Scaling to meet demand is the challenge.

• The deal has been catalysed by the need to replace retiring NXC [ie Partho] and provide 50% cash out to the CTO [ie Naveen] (to support his brother's...

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