Salgaocar v Radia & Ors. (MA 158/2015) [2015] SCSC 238 (13 July 2015);

IN THE SUPREME COURT OF SEYCHELLES

 

CIVIL SIDE: MA 158/2015

(arising in CC24/2015

 

 

[2015]SCSC

______________________________________________________________________________

 

In the suit:-

ANIL VASSUDEVA SALGAOCAR

Plaintiff

versus

GAUTAM DINESH RADIA                                                         

First Defendant

Ace Worldwide Management Pte. Ltd       

Second Defendant

AJAY SINGHVI                                                                  

Third Defendant

Southern Africa Resources Ltd                    

Fourth Defendant

OCRA (SEYCHELLES) LIMITED                                 

Fifth Defendant

______________________________________________________________________________

And in the matter of:-

(1)        An application for an order of interlocutory injunction, ex parte; and

 

(2)        An application to hear the said application as a matter of urgency.

EX PARTE:-

ANIL VASSUDEVA SALGAOCAR

of C/o No. 11-01, The Arcade, 11,

Collyer Quay, SINGAPORE

Applicant

______________________________________________________________________________

Counsel:          Mr. Frank Ally and Mr. Basil Hoareau for the applicant

Delivered:       13th July 2015

______________________________________________________________________________

Robinson J

 

[1]        Application

 

 

[2]        The plaintiff, Anil Vassudeva Salgaocar, has filed a plaint on the 18th May, 2015, CS: CC24/2015, against Gautam Dinesh Radia, the first defendant, ACE WORLDWIDE MANAGEMENT PTE. LTD, the second defendant, Ajay Singhvi, the third defendant, Southern Africa Resources Ltd, the fourth defendant, and OCRA (SEYCHELLES) LIMITED, the fifth defendant.

 

[3]        The plaintiff, on the 10th June, 2015, filed an ex parte application for an interlocutory prohibitory injunction. The application for an interlocutory prohibitory injunction is supported by an affidavit, and annexes exhibited thereto, affirmed by the applicant, on the 22nd May, 2015, (hereinafter referred to as the ″Affidavit of the Applicant″). The application was put before this court for hearing on the 15th June, 2015, and heard on the same date.

 

[4]        Case for applicant

 

[5]        The matter that arises is as follows. The applicant is the owner of the Salgaocar Group of Companies, which is a conglomerate of various companies (the Salgaocar Group). The Salgaocar Group is involved in the activities of ″iron - ore mining, trading and ocean transport of iron ore around the world″. The applicant has been in the iron-ore business for around 50 years. The applicant claims to have a good reputation in the international iron-ore mining and trading industry.

 

[6]        In 2010, the applicant appointed the first defendant to negotiate on his behalf with one Mr. Shanmuga Rethenam with respect to a potential iron-ore business venture in the Kingdom of Swaziland.

 

[7]        As part of the negotiations between the first defendant and Mr. Shanmuga Rethenam, it was agreed that:

 

  1. an international business company (hereinafter referred to as "IBC") would be incorporated under the Seychelles International Business Companies Act, 1994, as amended. The Seychelles International Business Companies Act, 1994, as amended, is hereinafter referred to as the "SIBC Act";

 

  1. the IBC would hold fifty percent (50 %) shares in a company to be incorporated in the Kingdom of Swaziland (hereinafter referred to as the "Swaziland Company"). The Swaziland Company was to carry out mining activities in the Kingdom of Swaziland, including iron-ore mining business. The other shareholders of the Swaziland Company were to be:

 

  1. his majesty, the King of Swaziland on trust for the Swazi Nation - twenty five percent (25 %); and

 

  1. the Government of Swaziland - twenty five percent (25 %).

 

 

The applicant claimed that the above arrangements regarding the Swaziland Company and a mining lease agreement were reached on the strength of his reputation and experience in the iron-ore mining industry and on the basis of his ability to finance the said project;

 

  1. the initial legal shareholder of the IBC was to be Mr. Shanmuga Rethenam, who was to:

 

  1. own twenty percent (20 %) of the shares of the IBC; and

 

  1. hold eighty percent (80 %) of the shares on trust for the applicant and/or as his nominee and for his account and beneficial ownership;

 

(d)       Mr. Shanmuga Rethenam would subsequently, upon his direct instructions or through the first defendant, transfer the eighty percent (80 %) shares in the fourth defendant in the name of one of his companies, namely Salgaocar Asia Pte Ltd, which was then a hundred per cent (100 %) subsidiary of his Indian flagship company, Salgaocar Mining Industries Pvt. Ltd.

 

[8]        On the 5th August, 2010, the fourth defendant was incorporated as an IBC in terms of the SIBC Act. The initial name of the fourth defendant was Salgaocar Resources Africa Limited. Salgaocar Resources Africa Limited was changed to Southern Africa Resources Limited on the 1st July, 2014.

 

[9]        The fourth defendant was incorporated with an initial share capital of United States Dollars one million made up of one class and series of shares divided into five million (5000000/-) shares of United States Dollars zero point twenty (US$0.20) par value.  All the said shares were registered in the name of Mr. Shanmuga Rethenam who:

 

  1. owned one million (1000000/-) of the shares; and

 

  1. held four million (4000000/-) of the shares on trust for the applicant and/or as his nominee and for his account and beneficial ownership, (the four million (4000000/-) shares are hereinafter referred to as "the Four Million Shares").

 

[10]      The Swaziland Company was incorporated on the 30th September, 2010, initially under the name of Salgaocar Swaziland (Pty) Limited. On the 4th November, 2014, Salgaocar Swaziland (Pty) Limited changed its name to SG Iron-Ore Mining (Pty) Limited. The fourth defendant owned fifty percent (50 %) of the shares in SG Iron-Ore Mining (Pty) Limited. His Majesty the King of Swaziland, on trust for the Swazi Nation, owns twenty five percent (25 %) of the shares in SG Iron-Ore Mining (Pty) Limited. The Government of Swaziland owns twenty five percent (25 %) of the shares in SG Iron-Ore Mining (Pty) Limited. 

 

[11]      In view of certain difficulties to transfer the Four Million Shares into the name of SG Iron-Ore Mining (Pty) Limited, the applicant agreed with the first defendant to have the Four Million Shares transferred in the name of the first defendant, which Four Million Shares the first defendant was to hold on trust for him and/or as his nominee and for his account and beneficial ownership. It was further agreed between the first defendant and the applicant that the former would:

 

  1. be appointed as a director of the fourth defendant;

 

  1. act in accordance with the instructions and advice in respect of the shareholding and/or directorship of, the fourth defendant;

 

  1. at all times protect his interest and rights both in respect of the shareholding in and/or directorship of, the fourth defendant;

 

  1. not resign as a director of the fourth defendant without prior notice to him; and/or

 

  1. not to consent to the appointment of and/or appoint, any new director of the fourth defendant without his consent and approval.

 

[12]      On or around the 3rd April, 2012, Mr. Shanmuga Rethenam transferred the Four Million Shares into the name of the first defendant, which Four Million Shares the first defendant was to hold on trust for the applicant and/or as his nominee and for his account and beneficial ownership.

 

[13]      The applicant further averred that the first defendant was appointed as a director of the fourth defendant on the 11 November, 2011.

 

[14]      The applicant averred that without his consent, authority and knowledge and/or in breach of the terms and conditions referred to in para [11], of this order, the first defendant —

 

  1. resigned as a director of the fourth defendant on the 4th March, 2014;

 

  1. consented to and appointed one Nirmal Rajaram as a director of the fourth defendant  by document dated the 4th March, 2014;

 

  1. consented to, and/or did not oppose the appointment of the 3rd Defendant, as a director of the fourth defendant on the 24th June, 2014;

 

  1. On the 25th June, 2014, transferred the Four Million Shares into the name of the second defendant purportedly held on trust for the first defendant.

 

[15]      The evidence is that on the 8th December, 2014, the first defendant purportedly transferred the Four Million Shares to the second defendant, represented by the third defendant, for the consideration price of United States Dollars one hundred and sixty thousand (US$160000/-), by which purported transfer the absolute ownership (legal and beneficial) of the Four Million Shares was supposed to have been vested in the second defendant.

 

[16]      The plaintiff claimed that the said purported transfer of the Four Million Shares by the first defendant to the second defendant is a "simulation”.

           

[17]      In the alternative to the plaintiff’s substantive claim of "simulation", the plaintiff claimed that, if proven that the first defendant has genuinely transferred the Four Million Shares to the second defendant for the consideration price of United States Dollars one hundred and sixty thousand (US$16000/-), which he denies is genuine, the said transfer constitutes a fraud on his rights by virtue of which the said transfer ought to be cancelled and annulled and/or rescinded on the basis of, a "fraud paulienne".

 

[18]      In light of the above, the plaintiff averred that moral damages in the sum of United States Dollars one million only (US$1000000/-) has been caused to, and suffered by him.

 

[19]      Pending the determination of CS: CC 24/2015, the plaintiff is seeking relief from this court, ex parte, as a matter of extreme urgency, as follows:

 

  1. to issue an interlocutory prohibitory injunction against:

 

  1. the third defendant, the fourth defendant and/or the fifth defendant in the principal suit prohibiting them from:

 

  1. amending the Register of Directors of the fourth defendant so as to register any new person(s) as director(s) of the fourth defendant; and/or

 

  1. treating and/or representing any person(s) other than the third defendant and Mr. Shanmuga Rethenam as the directors of the fourth defendant;

 

  1. the second defendant and/or the third defendant prohibiting them from transferring the Four Million Shares in the fourth defendant that are presently registered in the name of the second defendant, to any person(s) other than the plaintiff;

 

  1. the third defendant, fourth defendant and/or the fifth  defendant prohibiting them from amending the Share Register of the fourth defendant so as to allow and/or facilitate the second defendant to transfer the Four Million Shares to any person(s), other than the plaintiff;

 

  1. the second defendant in his capacity as a shareholder and/or the third defendant as a director of, the fourth defendant prohibiting them from taking any decisions, steps and/or actions whatsoever that may adversely affect the interest and rights of the fourth defendant and/or the value of and the rights attached to, the Four Million Shares, including but limited to —

 

  1. amending the Memorandum and/or Articles of Associatin of the fourth defendant so as to increase or reduce the authoriseed capital of the fourth defendant in any manner whatsoever; and/or

 

  1. disposing or otherwise compromising any of the assets of the 4th Defendant,

 

until the final disposal of the principal suit or until any other order of this court and this for the reasons set forth in the Affidavit of the Applicant; and

 

  1. upon the interlocutory order having been made for the matter to be fixed interpartes by the court on a returnable date.

 

 

[20]      Submission of counsel and discussion

 

[21]      At the hearing of this application, Mr. Frank Ally relied on the Affidavit of the Applicant and submitted orally for him.

 

[22]      Mr. Frank Ally stressed the urgency of the matter and moved that the application be heard ex parte for reasons contained in the Affidavit of the Applicant.

 

[23]      The issue for the determination of this court is whether or not it should grant the application, ex parte, for an interlocutory prohibitory injunction against the second defendant, the third defendant, the fourth defendant and the fifth defendant. Mr. Frank Ally has submitted, on the authority of the American Cyanamid Co v. Ethicon [1975] 1 All ER 504 case, that:

 

  1. the applicant has shown that there is a serious issue to be tried;

 

  1. the applicant has satisfied this court that he will suffer irreparable harm if the interlocutory prohibitory injunction do not issue; and

 

  1. the balance of convenience must favour the interlocutory prohibitory injunction.

 

[24]      This court has considered fully the Affidavit of the Applicant in light of the oral submissions of counsel.

 

[25]      I state that it is neither part of this court’s function at this stage of the case to decide the claim on the Affidavit of the Applicant, nor to decide difficult questions of law which call for detailed argument and mature consideration: See the American Cyanamid Co case, supra.

 

[26]      Serious issue to be tried

 

[27]      I consider that to decide on this application for an interlocutory injunctive relief, it is important to determine whether or not the applicant has put forward an arguable claim that he has a serious issue to be tried, an applicant’s first hurdle.

 

[28]       Claim of ″simulation″, or in the alternative ″fraude paulienne″

 

[29]      Regarding the claim for ″simulation″, Mr. Frank Ally for the applicant, outlined the issues as follows. Mr. Frank Ally submitted, that the purported transfer of the Four Million Shares from the first defendant to the second defendant, on the 8th December, 2014, was fictitious and a sham and as such was not a genuine, legal and/or valid transfer. Further, he submitted that the first defendant, the second defendant and the third defendant have acted in "cahoots" and fraudulently in order to defraud the plaintiff of the Four Million shares so that the first defendant may evade his obligation to transfer the Four Million Shares to the applicant.

 

[30]      Mr. Frank Ally submitted that the evidence is telling in that respect. To this court the evidence seems to establish that the plaintiff should be regarded as having no knowledge of the fact that the first defendant had purportedly transferred the Four Million Shares to the second defendant on the 25th June, 2014. The applicant, after gaining knowledge of the purported transfer, through counsel, Haridass Ho and Partners, wrote to the first defendant, on the 1st August, 2014, (A18), asking him to, ″transfer the shares held by [the first defendant] on trust to [the applicant] without further delay.″.  As is apparent from the great number of documents that are before this court, there has been correspondence after the notice dated the 1st August, 2014.

 

[31]      On the 8th December, 2014, the first defendant purportedly transferred the Four Million Shares to the second defendant. Again there has been an exchange of correspondence about the purported transfer of the Four Million Shares. As this court understands it, Mr. Shanmuga Rethenam had no knowledge of the fact that the Four Million Shares had been purportedly transferred to the second defendant. Mr. Shanmuga Rethenam stated in an email dated the 8th December, 2014, to the first defendant and the third defendant copied to one Mukesh Saglani, that, ″[t]he transaction below is a surprise to me, neither was I informed earlier nor consulted regarding this matter. [...]″. In the email dated the 8th December, 2014, by the first defendant to the third defendant copied to Camelia Ang and Mr. Shanmuga Rethenam, it would seem that the first defendant had presumed that the third defendant, ″[had] confirmed the transfer with Mr. Shanmuga Rethenam″. In the email dated the 8th December, 2014, by the third Defendant to the first defendant, copied to Mr. Shanmuga Rethenam and one Mukesh Saglani, the third defendant admitted that, ″[he] had not spoken with Shan in weeks. However, Mr. Mukesh Saglani, representative of Mr. Anil V Salgaocar, came in on the Jet flight from Goa this morning and met me in my office. I was told by him that Mr. Shan is on board with this transaction.″.

 

[32]      In an email dated the 16th December, 2014, by the third defendant to one Mukesh Saglani, the third defendant requested the assistance of Mukesh Saglani to sell the shares of the fourth defendant, (A22). In the aforesaid email the third defendant indicated that he, ″will not sell to Mr. A.V. Salgaocar, SMI or any other entity controlled by the AVS group.

 

[33]      Regarding the claim for ″fraude paulienne″, the position of the plaintiff is that the first defendant, second defendant, and third defendant had knowledge, prior to the supposed share transfer of the absolute ownership of the Four Million Shares to the second defendant by the first defendant, that he was the beneficial and real owner of the Four Million Shares and was entitled to the said shares and had requested that the said shares be transferred in his name. On the same issue, the applicant averred that he had made a claim to the Four Million Shares to the effect that he was the beneficial and real owner of the Four Million Shares and as such he had requested the first defendant for the Four Million Shares to be transferred to him, (A18, A19, A20 and A21). Further, the position of the plaintiff is that the supposed transfer of the Four Million Shares is a transaction that is fraudulent and was perpetrated by the first defendant, second defendant and third defendant who acted in cahoots and in connivance with each other, with the intention to defraud him of his rights of ownership of the Four Million Shares.

 

[34]      Overall I conclude that there is a serious issue to be tried.

 

[35]       Damages an adequate remedy

 

[36]      I turn to the next Cyanamid issue: on a prima facie view of the motion, are damages an adequate remedy for the plaintiff, or if he proves ultimately to be wrong, for the defendants? The applicant averred that the best possible remedy for him is to recover the Four Million Shares and have them registered in his name. The applicant further averred that if he is unable to recover the Four Million Shares it would cause him great mental distress and inconvenience in that he has injected his time, energy and substantial funds into the fourth defendant and its subsidiary company, namely SG Iron-Ore Mining (Pty) Limited. As such the mental distress and inconvenience are not capable of being adequately compensated by damages.

 

[37]      Should I withhold the injunction, then there is a real risk that the third defendant will dispose of the Four Million Shares and thereby render the motion nugatory. Consequently, even the principal suit would be seriously affected or rendered nugatory. On a prima facie view of the motion this court is satisfied that any such transfer of the Four Million Shares would cause the applicant great mental distress and inconvenience that are not capable of being adequately compensated by damages.

 

[38]      As to the position of the second defendant, third defendant, fourth defendant and fifth defendant, the evidence seems to establish that any inconvenience that may be caused to them by the granting of the interlocutory prohibitory injunction may be compensated by damages.

 

[39]      Delay and status quo

 

[40]      Finally, there is the point that I raised about delay. In Halsbury’s Laws of England, 4th Edition (1991 Reissue), Vol 24, on Injunctions, paragraph 862, I read the following:

 

            ″A party must be able to show that he has not been guilty of improper delay in applying to the court, for delay, even if not amounting to acquiescence, may deprive him of the right to an interlocutory injunction.″.

 

[41]      Mr. Basil Hoareau, for the applicant, addressed this court on the question of delay. He contended that the applicant has not been guilty of improper delay. He went on to say that the length of the delay and the nature of the acts undertaken during the interval become important considerations for the grant of the prohibitory interlocutory injunction. He pointed out that the applicant, through counsel, wrote to the first defendant on the 1st August, 2014, requesting for the return of the Four Million Shares. Thereafter, there were further exchange of correspondence and emails about the purported transfer of the Four Million Shares, which came to nothing. Admittedly, the present application was submitted about six months after the purported transfer of the Four Million Shares to the second defendant, on the 8th December, 2014. Mr. Basil Hoareau contended that this is a situation where the plaintiff took effective action with regard to this matter. He urged this court to take the following factors into account when considering the question of delay in this case:

 

  1. the plaintiff is not a resident of Seychelles;

 

  1. the plaintiff had to instruct counsel in Seychelles;

 

  1. the time it took for the plaintiff to instruct Mr. Frank Ally and himself;

 

  1. the great number of documents in this case;

 

  1. overall, the time it took for Mr. Frank Ally and himself to prepare this case on account of the factors listed above.

 

[42]      Mr. Basil Hoareau went on to refer this court to the case of Shepherd Homes Ltd. v Sandham [1969 S. No. 6523], wherein Megarry J considered authorities and expressed opinions on the important differences between mandatory injunction and prohibitory injunction. Mr. Basil Hoareau relying on the authority of Shepherd Homes Ltd, supra, submitted that the court will be more reluctant to grant mandatory injunctions on motion, where there has been delay in bringing the motion and it was unclear whether a mandatory injunction would be granted at trial. I read the following in Shepherd Homes Ltd, supra, 347, 348, about the important differences between mandatory and prohibitory injunction:

                        "By granting a prohibitory injunction, the court does no more than prevent for the future the continuance or repetition of the conduct of which the plaintiff complains. The injunction does not attempt to deal with what has happened in the past; that is left for the trial, to be dealt with by damages or otherwise. On the other hand, a mandatory injunction tends at least in part to look to the past, in that it is often a means of undoing what has already been done, so far as is possible. Furthermore, whereas a prohibitory injunction merely requires abstention from acting, a mandatory injunction requires the taking of positive steps, and may (as in the present case) require the dismantling or destruction of something already erected or constructed … Another aspect of the point is that if a mandatory injunction is granted on motion there will normally be no question of granting a further mandatory injunction at the trial; what is done is done, and the plaintiff has on motion obtained once and for all, the demolition or destruction that he seeks. Where the injunction is prohibitory, however, there will often still be question at the trial whether the injunction should be dissolved or continued; except in relation to transcient events, there will usually be no question of the plaintiff having obtained on motion all that he seeks. I may add that I do not think that any question arises of the court refusing to grant an injunction on motion merely because that, in effect, constitutes the sole relief claimed, for there is no rule against making such a grant : see Woodword v. Smith [1970] 1 W.L.R. 806, 817, 818.

 

                        The subject is not one which it is possible to draw firm lines or impose any rigid classification. Nevertheless it is plain that in most circumstances a mandatory injunction is likely, among other things being equal, to be more drastic in its effect than a prohibitory injunction. At the trial of the case, the court will, of course grant such injunctions as the justice of the case requires; but at the interlocutory stage, when the final result of the case cannot be known and the court has to do the best it can, I think that the case has to be usually strong and clear before a mandatory injunction will be granted, …".

                       

[43]      On a prima facie view of this case as a whole, and in light of the submissions of counsel, this court is satisfied that the plaintiff took effective action in building his case on a sound legal basis, including a cogent explanation for the delay in submitting the motion. Overall this court is satisfied that the Affidavit of the Applicant provides enough evidence of the gravity and urgency of this case. The situation is such that justice would be served, in my view, by the preservation of the status quo until any other order of this court.

 

[44]      Decision

 

[45]      This court grants an interlocutory prohibitory injunction, ex parte, against:

 

  1. the third defendant, the fourth defendant and/or the fifth defendant in the principal suit prohibiting them from:

 

  1. amending the Register of Directors of the fourth  defendant so as to register any new person(s) as director(s) of the fourth defendant; and/or

 

  1. treating and/or representing any person(s) other than the third defendant and Mr. Shanmuga Rethenam as the directors of the fourth defendant;

 

  1. the second defendant and/or the third defendant prohibiting them from transferring the Four Million Shares in the fourth defendant that are presently registered in the name of the second defendant, to any person(s) other than the plaintiff;

 

  1. the third defendant, fourth defendant and/or the fifth  defendant prohibiting them from amending the Share Register of the fourth defendant so as to allow and/or facilitate the second defendant to transfer the Four Million Shares to any person(s), other than the plaintiff;

 

  1. the second defendant in his capacity as a shareholder and/or the third defendant as a director of, the fourth defendant prohibiting them from taking any decisions, steps and/or actions whatsoever that may adversely affect the interest and rights of the fourth defendant and/or the value of and the rights attached to, the Four Million Shares, including but limited to:

 

  1. amending the Memorandum and/or Articles of Association of the fourth defendant so as to increase or reduce the authorised capital of the fourth defendant in any manner whatsoever; and/or

 

  1. disposing or otherwise compromising any of the assets of the 4th Defendant,

 

until any other order of this court.

[46] I fix this motion interpartes, for the defendants to take a stand, on the 31st July, 2015, at 1:45.

[47]      The Registrar of the Supreme Court shall send a copy of this order, MA158/2015 arising in CS: CC24/2015, to the first defendant, second defendant, third defendant and fourth defendant by international courier, at the cost of the plaintiff. The Registrar shall send a copy of MA158/2015 arising in CS: CC24/2015 to the fifth defendant.

`

[48]      I certify as to counsel.

 

 

 

Signed dated and delivered at Ile Du Port on the 13th July, 2015.

 

 

 

 

 

Fiona Robinson

Judge of Supreme Court