Sandhu v Kaur [2012] EWHC 2679 (Ch)

[2012] EWHC 2679 (Ch)Case No 5436 of 2002
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF THE INSOLVENCY ACT 1986
AND IN THE MATTER OF PALMIER PLC (IN LIQUIDATION)
Venue Rolls Building, Royal Courts of Justice,, 7 Rolls Buildings, Fetter Lane,Date 04/10/2012
London EC4A 1NL
Before
MR JUSTICE NEWEY
Between
KALVINDER SINGH SANDHUApplicantDR SUKHVENDER KAURRespondent
Mr Ian Smith (instructed by Stewarts Law LLP) for ApplicantMr Rupert Butler (instructed initially by Winckworth Sherwood LLP, later by ieLaw) for RespondentHearing Hearing dates: 20-22 & 26-28 March and 18, 20, 23 & 24 July 2012
Judgment
[1]This case involves allegations by the applicant, Mr Kalvinder Singh Sandhu, that the respondent, Dr Sukhvender Kaur, has committed contempts of Court. Mr Sandhu alleges, first, that Dr Kaur made false statements in documents verified by statements of truth (viz. witness statements of 19 August and 1 December 2009) and, secondly, that she failed to comply with an undertaking she gave to the Court on 8 December 2009.[2]The application notices include allegations not only against Dr Kaur, but against her husband, Mr Kanwaljit Singh Sidhu, who was named as first respondent. However, the applications were stayed by consent as against Mr Sidhu on 26 March of this year because issues had arisen as regards service of the application notices on him. I am therefore concerned only with the allegations directed at Dr Kaur.

The context

[3]Mr Sidhu and the Sandhu family were involved in business together, in property investment and in the clothing trade, for more than 20 years. Until they fell out, Mr Sidhu and Mr Sandhu’s father were very close friends. Mr Sandhu became a protégé of Mr Sidhu, who is 25 years or so his senior.[4]In the mid-1980s, Mr Sidhu and Mr Sandhu set up a company called Palmier plc (“Palmier”) together. They were both directors of Palmier and each owned 50% of its issued shares. The company traded from premises in London as an importer and wholesaler of women’s clothing. In December 1998, however, Palmier was placed in administrative receivership. It went into liquidation a few months later.[5]On 28 November 2005 Mr Sandhu issued proceedings against Mr Sidhu under section 212 of the Insolvency Act 1986. He alleged, first, that in May 1998 Mr Sidhu had caused a payment of £1,651,979.69 to be made by Palmier to a company Mr Sidhu controlled, Kay Ess Dee Industries Limited (“KSD”), in breach of his (Mr Sidhu’s) duties as a director of Palmier and, secondly, that Mr Sidhu had caused Palmier to make unjustified commission payments to KSD.[6]The claim came on for trial before Proudman J on 27 November 2008. The trial continued into the next year, and judgment was given on 8 May 2009. Mr Sandhu was successful. Proudman J concluded that Mr Sidhu was liable to restore the £1,651,979.69 to Palmier and also to pay £926,845.89 in respect of excess commission. She ordered Mr Sidhu to pay costs on the indemnity basis, partly because she had made findings of fraudulent breach of duty but mainly because of the obstructive and evasive manner in which Mr Sidhu had defended the case.[7]Allowing for interest, Mr Sidhu was ordered to pay a total of £5,117,624.78 by 5 June 2009. He was further required to make a payment of £350,000 on account of Mr Sandhu’s costs by 22 May 2009. No payment has yet, I understand, been made in respect of either order, although small recoveries have been made through the sale of certain assets.[8]Also on 8 May 2009 a worldwide freezing order was made against Mr Sidhu. The order contained provision for Mr Sidhu to provide information about his assets, including assets that had belonged to him in the previous six months.[9]On 12 May 2009 and (by affidavit) 21 May, Mr Sidhu gave details of his assets. Among other things, he stated that: i) He owned 72,000 shares in Wimpy International Limited (“Wimpy”); and ii) He had sold 10,000 shares in Kewal Investments Limited (“Kewal”) to his wife, Dr Kaur, on Friday 21 November 2008 for £240,387.[10]Wimpy is the Indian franchisee of the Wimpy burger chain. Kewal, an English company, owns a valuable commercial property in London. The 10,000 shares in Kewal that Mr Sidhu transferred to Dr Kaur represented 20% of the company’s issued capital.[11]On 26 May 2009, Mr Sandhu applied for a charging order to be made in respect of certain shares in English companies, including Kewal. An interim charging order was granted on 9 June, but on 13 July Dr Kaur notified Mr Sandhu that she claimed an interest in the Kewal shares. In response, Mr Sandhu gave notice that he disputed the validity of that interest and sought relief under section 423 of the Insolvency Act 1986 (“Transactions defrauding creditors”).[12]Dr Kaur dealt with the transfer to her of the Kewal shares in a witness statement dated 19 August 2009. Her explanation was to the effect that the shares had been transferred to her on 21 November 2008 in consideration of financial support she had given, and was continuing to give, to her husband, in particular in relation to legal costs. Paragraphs 54 and 55 of the statement were in these terms:
“54. During the early afternoon of the 21 November 2008 a meeting was held at J S Gulati and Co (Mr Sidhu’s accountants’ offices), attended by Mr Gulati, Mr Sidhu and myself. The purpose of the meeting was to facilitate the share transfer. A stock transfer form was executed by Mr Sidhu transferring ten thousand ordinary shares of £1 each to me. I saw Mr Sidhu sign the stock transfer form at this meeting. 55. The accountant explained that for the purpose of completing the share transfer form £240,387 would be the share transfer value on the basis that this was the value of the advances I could recall I had made to Mr Sidhu in respect of his costs. I understood that a 20% share in that company reflected the total amount owed to me in relation to both outstanding and future loans to Mr Sidhu”
. As for why stamp duty was not paid until 26 February 2009, Dr Kaur said this (in paragraphs 58 and 61 of the statement): “58. Mr Gulati did tell me that £1,205.00 stamp duty would need to be paid before the shares could be registered in my name and I had assumed that he would deal with this. I could not pay this amount at the time as I had paid £35,000 to [Thompson] and Lilley [i.e. solicitors acting for Mr Sidhu] in the preceding five days …. 61. During Mr Sidhu’s trial I attended court every day. This was a particularly emotional time for me and as well as the financial strains I was under I was also emotionally exhausted and consequently paying the stamp duty on the transfer of shares completely escaped my mind”.[13]A fortnight earlier, on 4 August 2009, Mr Sidhu had made an affidavit in which he dealt with the shares he had held in Wimpy. He explained that 2,618,250 shares in Wimpy had been allotted to him by 2000, but said that these shares had been transferred, pursuant to a share transfer dated 9 March 2001, into the joint names of himself and Dr Kaur to be held on trust for his wife as to 98% and himself as to the remaining 2%. 10,100 further shares were, Mr Sidhu said, transferred to him in 2001-2002 by a Mr Charanjit Singh, but those shares too were transferred into the joint names of himself and his wife, to be held in the proportions 2%:98%. Another 974,700 shares were allotted to Mr Sidhu and Dr Kaur jointly in 2004-2005, again to be held on trust for Dr Kaur as to 98% and Mr Sidhu as to 2%. By now, Mr Sidhu and Dr Kaur were, between them, entitled to 3,603,050 shares. In November 2007, steps were taken to divide the shares, as a result of which Mr Sidhu was left with 73,150 shares. This holding, Mr Sidhu said, “represents the extent of my current beneficial interest in the capital of Wimpy”.[14]On 20 August 2009 Mr Sandhu’s solicitors wrote asking, among other things, “whether it is also [Dr Kaur’s] case that she received 98% of Mr Sidhu’s Wimpy shares”. On 27 August Dr Kaur was ordered to “serve Part 18 replies and/or provide specific disclosure” in response to this and other requests that Mr Sandhu’s solicitors had made. Dr Kaur’s replies were given in a letter from her solicitors dated 25 September. With regard to the question set out in the first sentence of this paragraph, the answer given was “Yes”. The letter also stated: “Our client confirms that the transfer of the Wimpy shares in 2001 was made in respect of financial support and assistance given prior to the transfer date of those shares and not after. Her assistance to Mr Sidhu dates back over 40 years and she has shown incredible generosity and loyalty to him throughout. She has supported him financially and assisted him in many ways over the years at a great cost. Although she finds it distasteful to put a value on what she has done she has no doubts that it is well in excess of what she has received in return”.[15]By an application notice dated 26 October 2009, Mr Sandhu applied for specific disclosure of the documents by which the shares in Wimpy and Kewal were said to have been transferred. The application extended to electronic copies of stock transfer forms and “any other document or documents relating to such transfer (including any which contain, evidence or refer to advice, whether legal or otherwise, and whether or not privileged)”.[16]Dr Kaur made a further witness statement, dated 1 December 2009, in response to Mr Sandhu’s application. At paragraph 15 of this, she said:
“Therefore, the only relevant documents that I have in my possession, or am aware of existing, and which I am entitled to obtain are the following …: a. copy of share transfer form dated 9 March 2001; b. copy of letter signed by myself and my husband addressed to Wimpy dated 5 September 2001; c. copy of letter signed by myself and my husband addressed to Wimpy dated 8 December 2004; d. copy of segregation form, dated 6 November 2007; e. copy of share transfer form dated 26 August 2001”
. Dr Kaur had said this in paragraph 13(c) of her statement: “On the 17 and 18 of November 2009 I spoke to my nephew G S Khatra …. He is a director of [Wimpy] and he witnessed the first share transfer form on 9 March 2001 at which my sister was also present. This was an internal routine transfer and he has confirmed to me that everything was approved by the Board of Directors and all share transfers, allotments and segregation of shares complied with the applicable law and procedures and were duly approved in Board of Director’s meetings. All relevant returns were filed with the Registrar of Companies”.[17]Mr Sandhu’s application for disclosure came before Registrar Simmonds on 8 December 2009. The order made recorded that Dr Kaur had given an undertaking encompassing the documents she had referred to in paragraph 15 of her recent witness statement (“the Disputed Documents”). The undertaking was in these terms: “by 24 December 2009(i) to use reasonable endeavours to procure from Wimpy International Limited and disclose copies of documents relating to the matters set out in paragraph 1 b i an[d] 1 b ii below (including, without limitation, the relevant board approvals and returns sent to the Indian Companies Registry) and(ii) make available for inspection the originals of the documents so disclosed including: i. the share transfer forms dated 9 March 2001 and 26 August 2001; ii. the letters signed by Dr Kaur and Mr Sidhu addressed to Wimpy dated 5 September 2001 and 8 December 2004; and iii. the share segregation form dated 6 November 2007”.[18]In a letter to Mr Sandhu’s solicitors dated 19 May 2010, Dr Kaur’s solicitors said that their client had now obtained certified copies of a number of documents relating to Wimpy and that those were enclosed. The letter ended: “With respect to the proposed inspection of original records of Wimpy International Limited in India, you or your client will need to write to Wimpy International Limited directly”.[19]On 8 June 2010, Mr Sandhu issued an application for an order that, unless Dr Kaur complied with her undertakings to the Court of 8 December 2009, her opposition to Mr Sandhu’s application for a final charging order over the Kewal shares be struck out. The witness statement in support of the application included this: “7. Relevantly, Dr Kaur undertook in the Order [of 8 December 2009] to ‘(i) use reasonable endeavours to procure from Wimpy…and disclose copies of documents relating to [the share transfers]...and (ii) to make available for inspection the originals of the documents so disclosed..’. Dr Kaur also consented to an order that she disclose the documents in her possession relating to the alleged share transfers. I observe that:7.1 undertaking (ii) is an absolute (not a reasonable endeavours undertaking); and7.2 inspection of the original documents was required because of the very strong indications that the alleged share transfers had been fabricated and backdated after judgment had been entered against Mr Sidhu …. 8. I now produce this witness statement because … Dr Kaur has failed to comply with her undertaking in the Order (she has not procured inspection of the Wimpy documents) and, indeed, she appears to be adopting a strategy designed to frustrate attempts to view the original Wimpy share transfer documents. This statement is therefore produced in support of an application that unless Dr Kaur comply with her undertaking forthwith her opposition to the granting of the final charging order be struck out …”.[20]Soon afterwards, Dr Kaur withdrew her opposition to the making of a final charging order. Such an order was accordingly made by consent.[21]The applications now before me were initiated by application notices issued on 6 April and 24 May 2011. Mr Sandhu initially represented himself, but he has latterly had the benefit of representation by solicitors and counsel.[22]It is worth noting two further points. First, Dr Kaur is said to have been estranged from her husband for some time. Secondly, disputes between Mr Sidhu and the Sandhu family have spawned litigation in India as well as this country.

The allegations

[23]The allegations made against Dr Kaur are as follows: i) She knowingly produced a false witness statement containing a statement of truth dated 19 August 2009, with deliberate intent to disobey and frustrate the judgment given against Mr Sidhu on 8 May 2009 and the freezing order made against him on the same date; ii) She knowingly produced a false statement of truth dated 1 December 2009, with deliberate intent to disobey and frustrate the judgment of 8 May 2009; and iii) She has with deliberate intent disobeyed the order made on 8 December 2009, by failing to comply with her obligations as to specific disclosure.[24]The allegations are detailed in an “Alleged offences list”. The relevant allegations are to be found in that list as allegations 7, 11 and 12.[25]I shall take the allegations in turn.

The witness statement of 19 August 2009 (Allegation 7)

[26]It is Mr Sandhu’s case that Dr Kaur was knowingly untruthful in her witness statement of 19 August 2009 about the transfer to her of the Kewal shares. As already mentioned (paragraph 12 above), Dr Kaur said in that witness statement(a) that the shares had been transferred to her on 21 November 2008 and(b) that the need to pay the stamp duty on the transfer had escaped her mind. Mr Sandhu contends that Dr Kaur knew each of these claims to be false.[27]It is common ground that the Kewal shares had been transferred to Dr Kaur by early 2009. The transfer was effected by a share transfer form bearing the date 21 November 2008. Mr Sandhu maintains that this form was backdated. He alleges that the form was not created or executed on the date given, but later, probably in February 2009 shortly after the trial before Proudman J had been completed.[28]Mr Sandhu relies on evidence from two sources: Walkers, a firm of solicitors who acted for Mr Sidhu in 2009; and remarks made to Mr Sean Upson, a solicitor acting for Mr Sandhu, by a Mr Graham Wiseman, who appears to have given Mr Sidhu insolvency advice.[29]Walkers were instructed by Mr Sidhu on 13 January 2009. Their “File Opening Instruction” identifies their client as Mr Sidhu and gives the matter as “Claim against Kewal Investments Ltd”. Also on 13 January, Walkers wrote to Coffin Mew LLP, a firm of solicitors acting for Kewal and members of the Sandhu family, stating:
“As we understand the position, our client has a shareholding of 20% of the Shares in [Kewal]”
. In response to a request from Coffin Mew LLP for the position to be confirmed, Walkers said in a letter of 16 January:
“So far as concerns the shareholding in Kewal Investments Limited, when we met our client, he indicated to us that he owned 20% of the Company”
. They also said: “Those shares are unencumbered as we have explained to our client that unless he actually disposes of all or any part of the shares, he cannot encumber them in any other way as it is unlikely that any Bank will advance monies on the strength of a shareholding which could at any time be sold to a third party and leave the Bank without any security”.[30]So far as Mr Wiseman is concerned, Mr Upson explained in evidence that he had been telephoned by Mr Wiseman on 3 August 2009. In the course of their conversation, Mr Wiseman said words to the following effect:
“I told them [i.e. Mr Sidhu and Dr Kaur] that they were going to lose in court; so I told her to buy the [Kewal] shares. I even gave her the stock transfer form and I said ‘buy the shares’. They nevertheless went to an Indian accountant who said that they should back-date it by 2 months because then it looks more genuine. I said ‘it is genuine’”
. Mr Wiseman also said, among other things, that Mr Sidhu was “completely mad”, that “everyone is fed up with him [i.e. Mr Sidhu]” and that Mr Sidhu blamed him for his losing the proceedings.[31]In a later email to Mr Upson, Mr Wiseman said this:
“I told them that they MIGHT lose in Court. I had no knowledge of the details of the action to venture an opinion. I gave them a stock transfer form, which I already had, (probably downloaded but I have no record now) and I believe this was in February. They subsequently told me (I cannot remember when) that they had registered the transfer earlier. I replied that there was no necessity to do that”
. In a further email, Mr Wiseman said: “I am fairly certain that I downloaded the transfer form because a) I usually do and b) I do not remember obtaining one from elsewhere. I provided it blank to Mr. Sidhu. I did not know it had been backdated until the matter was raised at a later date. I asked Mr. Sidhu/Dr Kaur WHY it had been backdated as, in my opinion, Dr. Kaur had been paying the legal costs and the transaction was genuine. Their answer was confused but they had seen ‘an accountant’ who had suggested doing so …. I suggested the Share transfer even before November but until February I had no knowledge of it being done or not”.[32]This version of events stands in stark contrast to the account given by Mr Jutinder Singh, an accountant also known by the name “Gulati” who practises as “J S Gulati & Co”. In both written and oral evidence, Mr Singh maintained that the transfer form in respect of the Kewal shares had been signed in his presence on the date it bears, 21 November 2008. According to Mr Singh, Mr Sidhu and Dr Kaur came to his offices on 21 November 2008 and he saw Mr Sidhu sign the transfer form during that meeting. Mr Singh said that he thought he had himself typed up the form (less the date, which was entered in manuscript). He also said that he had told Dr Kaur at the meeting that stamp duty of £1,205 would need to be paid; that he had telephoned Mr Sidhu in February 2009 about the fact that the stamp duty had not yet been paid; and that his firm had sent the transfer form to the relevant Stamp Office later that month.[33]Mr Ian Smith, who appeared for Mr Sandhu, argued that I should reject Mr Singh’s evidence. He submitted that Mr Singh had “ducked and dived” during cross-examination and was unconvincing. He highlighted the fact that the date on the transfer form is handwritten, something for which (so Mr Smith contended) no plausible explanation has been given.[34]In my view, however, the allegations relating to the Kewal shares have not been proved. My reasons include these: i) Allegations of contempt need to be proved to the criminal standard, i.e. beyond reasonable doubt; ii) Mr Singh was the only witness on either side to give direct evidence about the key events. The evidence on which Mr Sandhu relies (viz. what Mr Sidhu told Walkers and what Mr Wiseman said to Mr Upson) is hearsay. That fact is the more significant since(a) Mr Sandhu himself alleges that Mr Sidhu has been untruthful in other contexts and(b) Mr Wiseman told Mr Upson that he (in common apparently with others) was “fed up with [Mr Sidhu]”; iii) Mr Singh adhered to his account in cross-examination and was not, in my view, shown to be an obviously untruthful witness; and iv) Mr Singh is known to have carried out company searches on Kewal on 13 October 2008. That indicates that Kewal was being thought about before 21 November, when the share transfer was purportedly executed.

The witness statement of 1 December 2009 (Allegation 11)

[35]The specific complaints made about Dr Kaur’s witness statement of 1 December 2009 are, so far as relevant, to the following effect: i) Dr Kaur exhibited five documents (viz. the Disputed Documents) purporting to show beneficial transfer of shares in Wimpy. The documents in question had, however, been backdated. The aim was to defeat Proudman J’s judgment of 8 May 2009. A particular point on which Mr Sandhu relies is that the version of the letter dated 5 September 2001 is not identical to the version of the document that was sent by Dr Kaur’s then solicitors as a certified copy on 19 May 2010; ii) Dr Kaur asserted in the witness statement that “[a]ll relevant returns had been filed with the Registrar of Companies”. That was not in fact the case.[36]Mr Sandhu accepts that the bulk of Mr Sidhu’s shares in Wimpy had been transferred by Mr Sidhu into the joint names of himself and his wife by 1 March 2004, when Wimpy’s 2003 annual return was filed. He argues, however, that the transaction was not effected in 2001, as certain of the Disputed Documents purport to show. He further alleges that it was not until far later that the idea of splitting beneficial ownership on a 98%:2% basis arose. According to Mr Sandhu: “at some point after the commencement of his claim against Mr [Sidhu], and most likely after Judgment was given on 08.05.09, Mr [Sidhu] created the story which is now being questioned by [Mr Sandhu] in relation to the 2% and 98% split in beneficial ownership as between Mr [Sidhu] and [Dr Kaur]”.[37]Three of the Disputed Documents purportedly date from 2001. They are: i) A form dated 9 March 2001 by which 2,618,250 shares in Wimpy were purportedly transferred to Mr Sidhu and Dr Kaur jointly with beneficial ownership divided on a 2%:98% basis. The form appears to be signed by both Mr Sidhu and Dr Kaur, and also by Mr G.S. Khatra, a nephew of Dr Kaur, as a witness; ii) A form dated 26 August 2001 by which 10,100 shares in Wimpy were purportedly transferred to Mr Sidhu and Dr Kaur jointly with beneficial ownership divided on a 2%:98% basis. The form appears to be signed by both Mr Sidhu and Dr Kaur, and also by a Mrs Rajinder Kaur Khatra, a sister of Dr Kaur, as a witness; and iii) A letter to Wimpy dated 5 September 2001 in which Mr Sidhu and Dr Kaur say this:
“Please convert the following 10100 equity shares … held by me, in the joint name of myself (2% share) and in the name of my wife, Dr. (Mrs.) Sukhvender Kaur (98%) share). The said equity shall be held by us in the joint name(s) in the manner and proportion as above. Share Certificate No. WIL/002, Distinctive Nos. 101-200. Total 100 equity shares Share certificate No. WIL/022, Distinctive Nos. 736551-746550. Total 10000 equity shares This letter is being signed by both the proposed undersigned joint shareholder(s) towards the said instructions in terms of their mutual arrangement / consent. Duly executed share transfer deed is enclosed herewith. The original share certificates are already on record in context with the transfer of the same from Mr Charanjit Singh to Mr Kanwaljit Singh Sidhu”
. The letter appears to be signed by both Mr Sidhu and Dr Kaur. Share Certificate No. WIL/002, Distinctive Nos. 101-200. Total 100 equity shares

Share certificate No. WIL/022, Distinctive Nos. 736551-746550. Total 10000 equity shares

[38]The other Disputed Documents are: i) A letter to Wimpy dated 8 December 2004 in which Mr Sidhu and Dr Kaur ask for 974,700 shares to be allotted in their joint names in the following manner:
“Dr. (Mrs.) Sukhvender Kaur (98% share) jointly with Mr. Kanwaljit Singh Sidhu (2% share)”
. The letter appears to be signed by both Mr Sidhu and Dr Kaur; ii) A “share segregation form” dated 6 November 2007 by which 73,150 shares in Wimpy were purportedly transferred into the sole name of Mr Sidhu. The form appears to be signed by both Mr Sidhu and Dr Kaur, and also by a Dr R.S. Pandya of New Malden, Surrey as a witness. The signatures of Mr Sidhu and Dr Kaur are seemingly confirmed by a Mr Harsuhinder Brar of Thompson & Lilley, a firm of solicitors in Mayfair, London.[39]Mr Smith placed particular stress on Wimpy’s annual returns. As he pointed out, the returns to 29 September 2001 and 30 September 2002, each of which was signed by Mr Sidhu, recorded Mr Sidhu as the holder of 2,618,250 shares in the company and Dr Kaur as holding just 14,000 shares. Mr Smith argued that, had Mr Sidhu’s shares been transferred to himself and his wife as alleged, that would have been reflected in the returns. Mr Smith also noted that, while the 2008 return reflects the share segregation that is said to have taken place in 2007, the return was not filed with the Registrar of Companies until 31 August 2009, after Proudman J had given judgment.[40]There are, however, various documents that are consistent with the Disputed Documents. Thus: i) A document purporting to be a letter to Wimpy from Mr Sidhu and Dr Kaur dated 9 March 2001 reads:
“Please convert 2618250 equity shares of Rs. 10/- each, fully paid-up, held by me, as per the details as per annexure, in the joint name of myself (2% share) and in the name of my wife, Dr. (Mrs.) Sukhvender Kaur (98% share). Henceforth the said entire equity shall be held by us in the joint name(s) in the manner and proportion above. This letter is being signed by both the said joint shareholder(s) towards the said instructions in terms of their mutual arrangement/consent. Duly executed share transfer deed along with the original share certificates, as per the details contained in annexure, are enclosed herewith for the needful”; ii) Wimpy’s minute books contain what purport to be minutes of a board meeting on 17 March 2001 at which the transfer of 2,618,250 shares into the joint names of Mr Sidhu and Dr Kaur was approved; iii) There are also to be found in Wimpy’s minute books what purport to be minutes of a board meeting on 4 October 2001 at which approval was given to the 10,100 shares referred to in the letter dated 5 September 2001 being converted into a joint shareholding; iv) A document purporting to be a letter to Wimpy from Mr Sidhu and Dr Kaur dated 3 October 2002 refers to the letter dated 5 September 2001 and states: “It is once again requested to please record the conversion of 2628350 equity shares of Rs. 10/- each, fully paid-up, held by me, as per the details as per annexure, in the joint names of myself (2% share) and the name of my wife, Dr. (Mrs.) Sukhvender Kaur (98% share).

(s) in the manner and proportion as above”

. It is said that, “although the … conversion in the joint names was approved in the board of director’s meeting held on 17.03.2001 and 04.10.2001”, “the entries of said conversion were not recorded due to clerical oversight”. A “[d]uly executed share transfer deed” is stated to be enclosed “once again for the needful”; v) A form dated 9 October 2002 purports to transfer 2,628,350 shares in Wimpy to Mr Sidhu and Dr Kaur jointly with beneficial ownership divided on a 2%:98% basis. The form appears to be signed by both Mr Sidhu and Dr Kaur, and also by a Mr Suresh Gupta as a witness; vi) Wimpy’s minute books include what purport to be minutes of a board meeting on 25 November 2002 at which it was resolved that “the effect of the conversion be once again taken on record and be incorporated in the returns to be filed to the concerned Registrar and also so recorded in the resp. share certificates”; vii) A document purporting to be a letter from Wimpy to the Registrar of Companies dated 29 June 2004 states: “We are sending herewith the revised annual returns of the Company made up to 30.09.2002 and 31.12.2003 for your perusal and record. The annual return made up to 30.09.2002 has been revised to include the details of transfer of share effected by the company in October, 2001, which was not given effect in the original return, due to clerical oversight. The consequent effect has also been given in the annual return made up to 31.12.2003”; viii) Wimpy’s minute books include what purport to be minutes of a board meeting on 21 December 2004 at which it was resolved that 974,700 shares be allotted to “Mrs. (Dr.) Sukhvender Kaur (98% share)/ Mr. Kanwaljit Singh Sidhu (2% share)”; and ix) Wimpy’s minute books include what purport to be minutes of a board meeting on 21 November 2007 at which approval was given to the segregation of shares formerly held in the joint names of Mr Sidhu and Dr Kaur.[41]It is also to be noted that Mrs Khatra, who is a director of Wimpy as well as a sister of Dr Kaur, has stated in an affidavit that the Disputed Documents are “the integral and important legal documents of the company”. For my part, however, I do not think that this evidence carries any real weight. Mrs Khatra’s affidavit did not include detailed comments on the Disputed Documents. Her evidence is, moreover, hearsay. Although(a) other witnesses gave evidence from India by videolink and(b) Mr Sandhu offered to pay Mrs Khatra’s expenses of coming to London, Mrs Khatra did not give oral evidence.[42]As regards the documents mentioned in paragraph 40 above, Mr Smith’s position was essentially that they, like the Disputed Documents, are fabricated. Amongst the matters on which he relied were these: i) Mr Arun K Gupta, a forensic document examiner of great experience who gave careful evidence, concluded that Mr Sidhu’s signatures on the Disputed Documents identified in paragraphs 37 and 38(i) above, and also some of the documents referred to in paragraph 40,date from 2007 or later and not from the period during which the documents in question were purportedly created (viz. between March 2001 and December 2004). Mr Gupta based this conclusion principally on the evidence of tremor he perceived in the relevant signatures. The essence of his reasoning can be found in the following passages from his report:
“A study of these signatures reveals that KSS [i.e. Mr Sidhu] was having free and fluent writing movement till 2006. He started showing debility of movement and hampering of muscular control resulting in appearance/onset of slight tremors in his signatures of 2007 … which got aggravated as seen in the signature of 2008 …. The deterioration in his writing skill became highly pronounced subsequently as seen in the signature of 2009 … so much so that he could not even properly write the word ‘Director’ below his signature. The highly pronounced nature of tremor in 2009 indicates that KSS has aged significantly and/or suffered from severe illness in the intervening period of 2007 to 2009. … [A]ll the questioned signatures/initials of KSS, which are purported to be of the period March 2001 to November 2007 … show presence of tremors in their strokes throughout, which are not seen at all in the standard signatures of KSS … pertaining to the period 2000 to 2006”; ii) Mr Charanjit Singh, who was a director of Wimpy until 2001 or 2002, said that he believed certain of the documents mentioned in paragraph 40 above to be “false and back-dated documents”
. A particular point he made was that he had not himself transferred his 10,100 shares by 2001, when they were purportedly transferred on to Mr Sidhu and Dr Kaur. Mr Singh accepted that he had stated in an affidavit sworn on 1 September 2001 that he had “resigned as Director of [Wimpy] w.e.f. 01.09.2001 and … transferred [his] entire share holding in the said company”, but said that no transfer had been intended to take effect until he received payment for the shares, which did not happen. Mr Singh said that he had given his affidavit to a Colonel Kalyan Singh, who was looking after Wimpy’s affairs on a day-to-day basis, so that he (Mr Charanjit Singh) would be in a position to say that he had dissociated himself from the company, which appeared to have been engaging in improper activities; iii) Mr Pawan Sharma, who is an expert in company secretarial matters, gave evidence that he had personally conducted a physical inspection of the Wimpy files at the Office of the Registrar of Companies and found that they did not contain either the letter from Wimpy dated 29 June 2004 (see paragraph 40(vii) above) or the revised returns supposedly enclosed with it; iv) Mr Gaganpreet Singh Puri, a partner in KPMG, explained that he would normally expect the Registrar of Companies to provide a stamped acknowledgment in such cases, and the copy of the letter dated 29 June 2004 has on the face of it been stamped twice by the Office of the Registrar. Wimpy could thus be expected to hold a version of the letter bearing one or more original stamps. Nonetheless, no document with an original stamp has been produced; v) Not only are the revised returns allegedly sent to the Office of the Registrar not to be found there, but they are not available in any form. Not even copies have been produced; vi) Dr Kaur neither gave evidence herself nor called anyone else with direct personal knowledge of the relevant events; vii) A number of the documents mentioned in paragraph 40 above did not emerge until they were exhibited to the report of Justice Vijender Jain, a former Chief Justice of the Punjab and Haryana High Court, that was served shortly before the start of the hearing; and viii) The copy of the letter of 5 September 2001 that Dr Kaur exhibited to her witness statement of 1 December 2009 is not identical to the certified copy disclosed in May 2010. While the text of the letter has not changed, the signatures can be seen to be different.[43]Taken together, there is considerable force in these points. On the other hand: i) While he said that he had been kept informed as to the company’s affairs by Colonel Singh, Mr Charanjit Singh said that did not think he had attended any Wimpy board meetings after April 2000, when his son had an accident. It is also potentially relevant that he has himself been concerned in Indian legal proceedings relating to Wimpy for some years; ii) Tremor can arise not only from ageing but from illness or medication; as Mr Gupta accepted, antidepressant drugs, in particular, may impair some people’s muscular coordination. As a result, the extent to which a person’s signatures show signs of tremor may decrease as well as increase over time (if e.g. the person recovers from an illness or ceases to take a medication). That means that a signature showing signs of tremor will not necessarily post-date one that is free of tremor; in fact, Mr Gupta noted that signatures of Mr Sidhu dating from 2010 and 2012 have shown a lesser degree of tremor than earlier signatures. In the present case, there is evidence that Mr Sidhu was taking drugs for both hypertension and, perhaps more significantly, depression in the years after 1999. It is conceivable that the tremor Mr Gupta observed in the signatures at issue could be attributable to Mr Sidhu’s health and/or treatment. Mr Gupta’s evidence is also weakened slightly – through no fault of his own – by the fact that he did not have available to him samples of Mr Sidhu’s signature dating from 2003 or 2004; iii) Dr Subhash Mittal, a forensic document examiner called on behalf of Dr Kaur, expressed the view that the fluorescence of documents at issue tends to confirm that they are of the dates attributed to them. Mr Gupta disputed the value of fluorescence evidence in the present context, but I do not think I can dismiss Dr Mittal’s views as clearly without foundation; and iv) As was pointed out by Mr Rupert Butler, who appeared for Dr Kaur, it is possible to conceive of circumstances in which two copies of the letter of 5 September 2001 might have been signed at the time.[44]With a degree of hesitation, I have ultimately concluded that Mr Sandhu’s complaints in respect of the witness statement of 1 December 2009 have not been made out to the relevant standard. Mr Sandhu is alleging very serious misconduct: the dishonest concoction of a large number of documents. In the end, I do not think the evidence is strong enough to prove such misconduct beyond reasonable doubt. In other words, I cannot feel sure that Mr Sandhu’s complaints are well-founded.

The order of 8 December 2009 (Allegation 12)

[45]The final allegation against Dr Kaur is of failure to comply with the undertaking she gave to the Court on 8 December 2009. The essential complaint is that original documents were not made available for inspection in accordance with the undertaking.[46]The terms of the undertaking are set out in paragraph 17 above. It will be seen that it provided for Dr Kaur to “make available for inspection” by 24 December 2009 the originals of certain documents, including the Disputed Documents.[47]On 26 January 2010, Mr Sandhu’s solicitors wrote to Dr Kaur’s then solicitors pressing for confirmation that the documents were available for inspection or, if not, full details of Dr Kaur’s endeavours to obtain the documents. Responding on 11 February, Dr Kaur’s solicitors referred to a letter from Wimpy to Dr Kaur dated 18 December 2009 that reads as follows:
“This is with reference to your two letters both dt. 11.12.2009 wherein you have asked the company to hand you over the originals of certain share transfer deed (s), certain instructions / letters in context with and forming part of share transfer deed (s) / share allotments and some annual returns for certain years and certain records as mentioned in the said letter. You would please appreciate that the original records are the property of the company and it is a statutory obligations of the company to have such records in its possession. Therefore, the original (s) cannot be given to any shareholder in specific. Please let us know in case certified copies of any such documents are desired which would be provided with reasonable notice”
. In their own letter, Dr Kaur’s solicitors said: “You will note that Wimpy is under a statutory duty not to release original company documentation and can only provide certified copies. Our client has requested these and we shall provide copies to you as soon as these are available”.[48]Writing to Dr Kaur’s solicitors again on 7 April 2010, Mr Sandhu’s solicitors said: “Turning to your letter of 11 February 2010, we note that you say Wimpy is unable to release original documentation. We observe, however, that the 8 December 2009 Order refers to inspection of documents which can be arranged in India. We have also been advised that our client (or his representative) is entitled to inspect the original records of Wimpy during its business hours and can take extracts of the relevant information once inspected (section 163 of the Companies Act 1956). Accordingly, our client’s representatives will attend at Wimpy’s offices in the week commencing 19 April 2010 to inspect the original documents in respect of the alleged share transfer to Dr Kaur. Please confirm that, pursuant to her undertaking, Dr Kaur has (as a director) arranged for such inspection to take place. In the interim, please provide us with the certified copies of the original company documentation referred to in your letter as soon as possible”.[49]Dr Kaur’s solicitors replied on 16 April 2010. They said: “Your request to attend the offices of Wimpy in India is refused. It appears that your client is seeking to obtain advantage in the Indian litigation through the use of the UK proceedings. There are only a handful of documents our client has agreed to procure relating to Wimpy which our client will allow you inspection of here in the UK. You or your client or their agents have no express authority from our client with regards to attendance at the Wimpy offices. There are Company procedures that need to be adhered to”.[50]On 6 May 2010, Mr Sandhu’s solicitors urged Dr Kaur to re-consider her position. They said in their letter: “We find it extraordinary that Dr Kaur refuses to: i) disclose copies of the Wimpy records and ii) make available for inspection the original of those records. Dr Kaur gave an undertaking to the Court (enshrined in the 8 December 2009 Order) in respect of these matters yet Dr Kaur is now flatly refusing to abide by her undertaking. Dr Kaur is in contempt of court”.[51]It was at this stage that Dr Kaur’s solicitors sent, under cover of a letter dated 19 May 2010, “certified copies” of various documents. As already mentioned (paragraph 18 above), the letter concluded: “With respect to the proposed inspection of original records of Wimpy International Limited in India, you or your client will need to write to Wimpy International Limited directly”.[52]Thereafter, Grant Thornton sought to make arrangements with Wimpy for them to inspect the relevant documents on Mr Sandhu’s behalf. They were, however, rebuffed.[53]There is an issue between the parties as to how the undertaking embodied in the 8 December 2009 order should be construed. Mr Smith argued that Dr Kaur undertook an unqualified obligation to make the originals of the Disputed Documents (among others) available for inspection and that it was therefore necessary to prove no more than that they had not been made available for inspection to establish contempt. In contrast, Mr Butler submitted that the “(i)” in the undertaking should be moved to follow rather than precede the words “reasonable endeavours”, with the implication that Mr Sandhu had to prove that Dr Kaur had failed to use “reasonable endeavours” to make the documents available for inspection.[54]While the result for which Mr Butler contended is not without attraction, I cannot reconcile it with the terms of the undertaking. It seems to me that the undertaking was unambiguous. The first part of it was qualified by the words “reasonable endeavours”, but the second was not. There was thus an absolute requirement to make original documents available for inspection. A possible explanation for the unqualified nature of the undertaking is that Dr Kaur knew that she was in a position to ensure that the documents were produced.[55]In any case, the evidence before me is, in my judgment, such as to establish beyond reasonable doubt that Dr Kaur did not use reasonable endeavours to make the relevant documents available for inspection. There is really no significant evidence to the contrary. Although Mr Butler suggested that it is easy to see why Dr Kaur was struggling to get the documents released, there is no evidence to that effect before me from Dr Kaur; she preferred not to attend the hearing or to expose herself to cross-examination. Further, the contemporary correspondence indicates that Dr Kaur was not making proper efforts to ensure that the documents could be inspected. When, for example, a request to attend Wimpy’s offices in India was “refused” on 16 April 2010, the key concern seems to have been that Mr Sandhu was “seeking to obtain advantage in the Indian litigation through the use of the UK proceedings”, not that Dr Kaur was unable to procure access; later, Dr Kaur’s solicitors said that Mr Sandhu or his solicitors “will need to write to Wimpy International Limited directly” even though she had assumed a personal responsibility to make the documents available for inspection. There is, moreover, no compelling reason to think that it was not in Dr Kaur’s power to achieve the production of the documents if she wished. Not only was she herself a director of Wimpy, but two of the other three directors during this period were members of her family. If what Mr Sanjay Sharma was told by a Mr Pandey when he visited Wimpy’s premises is correct (and no one has given evidence to gainsay it), Dr Kaur was looking after all the affairs of the company as its managing director. In any case, by her own account Dr Kaur had a controlling interest in the company: some 84% of the issued shares. If needs be, Dr Kaur could doubtless have removed from Wimpy’s board any director who was not prepared to allow the documents at issue to be inspected.[56]In all the circumstances, I find this allegation proved.

Conclusion

[57]In my judgment, the allegations arising out of Dr Kaur’s witness statements of 19 August and 1 December 2009 have not been proved, but Mr Sandhu has established breach of the undertaking Dr Kaur gave to the Court on 8 December 2009. I shall hear further submissions as to what penalty (if any) should be imposed in respect of that contempt of Court.

Cited in 1 later judgment