Kataria (t/a Westlec) v Bandi [2017] EWHC 706 (Ch)

Claim No. 1BM30263[2017] EWHC 706 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue BIRMINGHAM DISTRICT REGISTRY
Civil Justice Centre
Priory Courts
33 Bull Street
Venue BirminghamDate Thursday, 23 rd March 2017
B4 6DS
Before
HIS HONOUR JUDGE PURLE QC
Between
RANJIT KATARIA T/A WESTLECApplicant& 14 OTHERSApplicant-v-
Between
VIJAYA BHASKAR BANDIRespondent
Transcribed from the Official Tape Recording byApple Transcription LimitedSuite 204, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ESDX: 26258 Rawtenstall – Telephone: 0845 604 5642 – Fax: 01706 870838
Solicitor-Advocate for Applicants: MR S UDDINCounsel for Respondent: MR J McCRACKEN
JUDGMENTJUDGMENTHIS HONOUR JUDGE PURLE QC
[1]This is an application for committal for contempt of court of Mr Vijaya Bhaskar Bandi, whom I shall call Mr Bandi, brought upon the application (ultimately following amendment) of Mr Ranjit Kataria, trading as Westlec, and others, all of whom are listed on the notice of hearing but whose names I shall not repeat for the sake of economy of time. All of the applicants are claimants in proceedings which were brought to judgment and succeeded against the three defendants, Orbit Talk Limited, a Mr Lal and Mr Bandi.[2]The cause of action was deceit. The claimants successfully established that they had been fraudulently induced to enter into contracts under which they purchased, so they thought, a telephony switch which would produce returns of a very handsome order indeed. I found that there were fraudulent misrepresentations which induced those contracts. The claimants sought not simply damages but also to trace the monies that they had parted with, which were substantial. I made orders both before trial (as an interim order) and following the trial, when liability was established, freezing the assets of, amongst others, Mr Bandi (though that particular order has now come to an end) and directing the provision of information and documents so as to enable, if possible, the claimants to trace the proceeds of the monies wrongly obtained from them. It is those orders for the provision of information and documents that it is said have been broken in this case.[3]The first order which is said to have been broken is that of 2nd June 2011. By that order, under paragraph 3, I ordered as follows:
“(i) The respondents are required to identify what has become of any and all of the monies they received from the claimants and to identify any assets which may have been purchased by or on behalf of the respondents or in which the respondents have any beneficial ownership with such monies... (ii) The respondents are to disclose all bank statements of the first respondent’s bank accounts from 1st October 2008 to the present date or earlier closure of such accounts insofar as are in the respondent’s possession, custody or control on or before 4pm on 16th June 2011; (iii) The respondents are to disclose all other relevant documents relating to payments out of and into the first respondent’s bank accounts from 1st October 2008 to the present date or earlier closure of such accounts, including for the avoidance of doubt payments of dividends from the first respondent to the second and third respondent, and subsequently and insofar as are in the respondent’s possession, custody or control on or before 4pm on 16th June 2011.”
For readiness of understanding the first respondent was Orbit Talk Limited, a company owned and controlled by the other respondents, the second respondent was the Mr Lal to whom I have referred and the third respondent was Mr Bandi.[4]Further on in the same order under paragraph 8 the respondents were required to:
“Disclose (save insofar as disclosure has already been made pursuant to paragraph 3 above) all relevant bank statements...”
That related to the disclosure of their own assets and assets in which they might be interested.[5]At the conclusion of the trial I made a further order on 26th January 2012. Importantly, under paragraph 3 I ordered as follows:
“The tracing orders made on... 2nd June 2011 continue to have effect.”
That is the order, part of which I have already read.[6]I should explain that at the trial there was a committal application which related to a number of matters in respect of which the claimants were alleging that Mr Bandi, as well as Mr Lal, had not complied fully with pre-trial orders, including the order of 2nd June 2011. In particular, complaint was made in relation to answers given relating to the withdrawal and ultimate destination of £100,000. This came from the first defendant Orbit Talk’s bank account on 24th March 2009, and went into a bank account initially in the name of Mr Bandi. By the time the trial came on the statements in relation to that account had been disclosed and the immediate destination of the monies from that account was broadly known. £50,000 of it had gone into an account in the name of Vijtel Limited, which was another account controlled by Mr Bandi.[7]That is by way of background. I did not, following the trial, accede to the application for committal, but I did deal with the application by making a further order, as I have just said, reaffirming the previous tracing orders, including that made on 2nd June 2011, and by making further orders to enable the claimants, as they hoped, to identify what had become of various monies. I need not go into all of the details, but I should mention that I also dealt with the costs of the committal application, which were to be paid by the respondents to that application, which included Mr Bandi.[8]I further ordered in that order as follows in paragraph 5: that subject to any claim for privilege against self-incrimination each respondent, which included Mr Bandi, was to disclose the relevant statements set out in schedule C, which included the current account in the name of Mr Bandi with HSBC, number 51778293, from November 2008 to present. A large number of other accounts were also mentioned, but that is the one that matters for present purposes.[9]Paragraph 5(iii) also provided that, subject to the same question of privilege, Mr Bandi, amongst others, was to:
“Fully particularise in the form of an affidavit the destination accounts for those payments listed in schedule F of this order and set out what the payment was made for. If the respondents are unable to do so they must explain why in the form of an affidavit by 4pm on 10th February 2012.”
Included among schedule F was the NatWest account of Vijtel Limited and a number of specific payments (nine in all) which were required to be explained.[10]I turn to the application for committal. There are seven counts, but in the course of the committal hearings I directed that the first four counts should be dealt with first and the remaining counts have been stayed.[11]Count number one as drafted reads as follows:
“In an affidavit sworn on 23rd June 2011 in response to His Honour Judge Purle’s order carrying a penal notice dated 2nd June 2011 Mr Vijaya Bhaskar Bandi stated that £3,000 had been paid to José Matthews and referred to exhibit VB7 as proof of the same. The statement and the exhibit were false in that no such payment was in fact made and the said monies were instead transferred in three separate payments of £1,000 each from the said Mr Vijaya Bhaskar Bandi’s account to an account held by William Hill Plc.”
I have omitted from that narrative (as I have in relation to the further three counts to which I shall come) various cross-references to the bundle for ease of reference. The facts underpinning the first count are not disputed. Mr Bandi did explain that the sum of £3,000 had been paid to José Matthews and in the exhibit he doctored it so as to conceal the fact that there were three separate payments to William Hill.[12]I should at the same time, before commenting any further, deal with the second count which overlaps to a very small extent with the first but is more extensive. That reads as follows:
“In breach of His Honour Judge Purle’s order of 2nd June 2011 to provide ‘all relevant bank statements’ and the order of 26th January 2012 to disclose certain relevant bank statements and copy cheques, both orders including a penal notice, Mr Vijaya Bhaskar Bandi deceptively doctored and then on 22nd February 2012 served a series of forged bank statements which deliberately gave false information about the destination of payments totalling £140,245 when the said payments had in fact been made to William Hill.”
[13]In essence those facts as there asserted are not disputed subject to one minor point. It is not correct in relation to a relatively small number of those payments totalling £3,800 that Mr Bandi doctored the bank statements. In fact a page of the bank statements was simply not produced by Mr Bandi, but his failure to produce them is not part of any count before me. Accordingly the correct figure, taking off the £3,800, should not be £140,245 but £136,445. To that extent the allegation is proved. The bank statements were deliberately doctored because Mr Bandi did not wish the claimants, or the court, to know that he had spent the money on William Hill. Instead he altered every single entry so as to identify in the early stages another payee. Often those entries were quite fictitious though in the case of some, of which Mr Matthews is an example, it is said by Mr Bandi that he was placing bets on behalf of third parties, including Mr Matthews.[14]His excuse for doing that, apart from embarrassment, was that he thought the important point was to identify the ultimate beneficiary of the payments and in Mr Matthews’ case he was the ultimate beneficiary. That did not begin to justify the doctoring of the accounts, nor, when the further order that I made in January 2012 came to be made, did it justify the repetition of that exercise because in an affidavit which he then swore he repeated the same lies by exhibiting the same doctored documents. That does not form part of a separate count, but it is included in count two.[15]There is no doubt that the provision of false information in response to an order of the court requiring accurate information is a very serious matter indeed and cannot be regarded as anything other than a gross contempt of court and I do not consider that Mr Bandi’s explanations, which as given were vacillating and evasive, came anywhere near to justifying what he did.[16]The claimants have suggested that the matter is even more insidious than it appears because there are means, they say, of laundering money for the benefit of the payer through William Hill, as I understand their arguments. That is simply not made good on the evidence before me. What is made good is the charge as laid and in that respect, both in relation to count two and in relation to count one, the allegations of contempt are made good.[17]I now turn to count three, which reads as follows:
“In an affidavit sworn on 23rd June 2011 in response to His Honour Judge Purle’s order carrying a penal notice dated 2nd June 2011 Mr Vijaya Bhaskar Bandi stated that £10,000 had been paid to Raj Kumar and referred to exhibit VB7 as proof of the same. This statement and the exhibit were false and doctored by Mr Bandi respectively in that no such payment was in fact made and the said monies were instead transferred to ICICI Bank M2N11218121.”
[18]That is a relatively small complaint relating to £10,000, but is nonetheless made good. Mr Bandi’s explanation was that the ultimate beneficiary of the payment was Mr Raj Kumar. That is no excuse for having doctored the statement in the way that he did. It was open to him to explain in his affidavit that the payment to the ICICI Bank was ultimately for the benefit of Mr Kumar. What was not legitimate was for him to take it upon himself unilaterally to doctor the bank statement and to present that as a genuine copy of a bank statement when it was not. I do not know why Mr Bandi chose to act in that way. The claimants suggest that he was trying to conceal a link with another bank (ICICI Bank) which might put them on another trail of enquiry. There is, however, no evidence that there were any other significant dealings with that bank which appears, on Mr Bandi’s evidence, to have had no function other than to act as a paying agent for ultimately the recipient in much the same way as organisations like Western Union operate.[19]The problem when one doctors evidence and gives false accounts is that one does not know where truth begins and lies end. The explanations given by Mr Bandi were plausible enough taken individually, but when one looks at the totality of the doctoring which affected the bank statements in question, the doctoring can only be described as breathtaking and I am afraid to say that I have no confidence in any of the evidence that Mr Bandi gave me.[20]I should mention also that, as was his entitlement, he chose not to give any explanations in advance of the hearing of the committal application, though he was given an opportunity to put in evidence if he so wished. Nor did he seek to put in the evidence of anyone else to corroborate any of his statements. Nor, for that matter, did he seek, wisely I imagine, to cross-examine the deponent for the claimants, Mr Gangar on his affidavit.[21]Accordingly count three is also proved.[22]I then come to count four, which has been amended. I shall read it in full in its amended form. The amendment appears in the last sentence beginning “Further following …”:
“In an affidavit sworn on 23rd June 2011 in response to His Honour Judge Purle’s order dated 2nd June 2011 carrying a penal notice Mr Vijaya Bhaskar Bandi accounted for a withdrawal of £100,000 from the first defendant’s bank account on 24th March 2009. In breach of this order Mr Vijaya Bhaskar Bandi deliberately conjured and intentionally made statements and provided documents to the claimant and the court that he knew to be false in order to deceive and mislead the claimants in their attempts to trace their monies. Further following the order made on 26th January 2012, again carrying a penal notice, Mr Bandi has failed to disclose the destination of the payments in B40 from Vijtel Limited which were made from the initial £100.000.”
The whole of that relates to the sum of £100,000 that I mentioned earlier, which had been said to have been paid to Vijtel but as we know was in fact paid initially to Mr Bandi, from which £50,000 was paid to Vijtel.[23]This was one of the complaints before me following the trial when I did not make a committal order but did otherwise deal with the committal application in the ways I have explained.[24]Mr McCracken, for Mr Bandi, says that the first part of that count cannot stand because I have already dealt with the alleged breach of the order down to the date of trial. I think that must be right and accordingly the operative part is the amended part, which is that, following the order made on 26th January, Mr Bandi failed to disclose the destination of the payments in B40. B40 is the bundle reference to the schedule to the order (Schedule F) where the payments out of the Vijtel monies were set out.[25]The matter is supported by an affidavit of Mr Gangar, the sixth claimant. He summarises what is known or not known about the Vijtel monies and comments upon Mr Bandi’s explanations down to then. First, however, I should say what Mr Bandi actually did following the order of 26th January 2012. He did prepare an affidavit which was served, though at the moment there is no evidence that it was ever sworn. However, the hearing before me proceeded on the basis, which both sides adopted, that this was the affidavit which purported to comply with my order of 26th January 2012, a reasonable enough assumption because that is what the document said about itself. In paragraph 3, the document states: “This affidavit is sworn pursuant to the tracing order of His Honour Judge Purle QC dated 26th January 2012”.[26]In relation to schedule F, and in particular the Vijtel payments, it was said:
“With regards to the cheque payments from NatWest bank account for Vijtel I am awaiting for copies of cheques from the Bank as the account has been closed and not in operation since the end of April 2010.”
That is all he said directly about the actual payments. He said elsewhere that he had requested cheque copies for Vijtel and was still waiting for them as they had to be retrieved. They have been retrieved, or at least some of them have, and were provided not by Mr Bandi but by the bank itself who provided them to the claimants pursuant to an order I made against them upon the application of the claimants.[27]On the face of it therefore there has been no attempt at all to disclose the destination of the payments in B40. However, Mr Bandi had, as the original count recognised, sought to deal with them in his earlier affidavit of 23rd June 2011 and there can be no doubt that if I were persuaded that what he said in that affidavit complied with what I subsequently ordered him to do I could hardly find him guilty of contempt if he had already carried out the obligation prior to the order being made. However, I am far from satisfied that that is the case and, had it not been for the fact that I had dealt with the contempt said to arise out of that affidavit at the trial by making further orders, I would have found the earlier part of the charge proved because I am satisfied that he did make intentionally false statements in his affidavit of 23rd June.[28]In that affidavit he stated:
“I will now account for the £100,000 Pashori and me paid Vijtel Limited.”
He then exhibited bank statements which showed, as is the fact, that only £50,000 was paid to Vijtel and that was on 14th April 2009. There were then a number of cheque payments identified and Mr Bandi asserted that payments were made to Qicomm and others on various dates. Qicomm is a company which had something to do, so it was said, with the maintenance and charges for the switches that were supposedly bought. Mr Bandi had previously produced bank statements, (not bank statements which are said to have been doctored) which identified the payments forming the basis of schedule F.[29]I will mention the following payments. There are payments of 24th April 2009 and 7th May 2009 for which no corresponding cheque has been produced by either side. I cannot blame Mr Bandi for that as he did say that he had sought all outstanding cheques but had not received them. There was also a cheque for £7,000 on 10th August 2009, which Mr Bandi claimed was a Qicomm payment of some sort. That has not been shown to be wrong. I have my doubts about it, but I have to be satisfied so that I am sure that Mr Bandi is not telling me the truth about that and I am not so satisfied as regards that particular cheque. Nor is it mentioned in B40 (Schedule F).[30]There is a cheque of 12th October 2009 which appears on the bank statement, which was the payment of school fees of Mr Bandi’s son. He never explained that anywhere in his evidence. More importantly are cheques for 5th November and 30th November totalling £9,000 and cheques for 29th December of £5,000 and 3rd February and 1st May of £5,000 and £4,000 respectively. They all appear to have been cash payments to Mr Bandi, as he accepted. One was actually made payable to himself, the others were made payable to cash. He did not explain any of that in his affidavit. In fact he gave the explanations that I have mentioned referring to Qicomm (or in one case UK Soft Solutions). He also gave evidence about a payment of $56,200 having been made to Swindev Communications and produced an invoice for that. But as the invoice was dated 25th February 2009 and Vijtel was not incorporated then and the account was not opened until April 2009 that was simply a red herring and did not form part of the payments out of the Vijtel account.[31]Accordingly the charge that remains by amendment, that Mr Bandi has failed to disclose the destination of the payments in B40, is made good to the extent that those cash payments were made to himself (totalling £23,000) and the school fees (£2,194.66). I am satisfied so that I am sure that Mr Bandi must have known that these were payments for his benefit and he chose to cover that up when giving the answers that he did give. Whether or not the cash or some of it was in fact paid to Qicomm or some other legitimate business activity I am unable to say. The problem, as I mentioned earlier, when one is faced with a witness who decides to be less than truthful is that one does not know where truth begins, or ends for that matter, and where lies begin or end.[32]I am satisfied that Mr Bandi failed to deal with the schedule F payments because to do so would mean that he would have to reveal his previous false statements. He chose to leave those statements uncorrected until he came to give evidence in the witness box, though their falsity was revealed by the claimants as a result of post-judgment third party disclosure, and not to explain them before then. The explanations that he has given are not explanations which convince me and do not excuse the failure (which I regard as deliberate) to disclose the true destination of the payments in question, which were in the first instance payments to himself or for school fees Accordingly I find Mr Bandi guilty of contempt under this count also.[33]In summary the Respondent VIJAYA BHASKAR BANDI is guilty under all four counts as follows:(i) Breach of the order dated 2nd June 2011 by making a false statement and exhibiting a false document in that payment of £3,000 was made to William Hill in 3 separate payments and not to Jose Mathews;(ii) Breaches of the orders dated 2nd June 2011 and 26th January 2012 by disclosing deceptively doctored bank statements giving false information about the destination of payments totaling £136,445 to William Hill;(iii) Breach of the order dated 2nd June 2011 by making a false statement and exhibiting a false document in that payment of £10,000 was made to ICICI BANK M2N11218121 and not to Raj Kumar;(iv) Breach of the order dated 26th January 2012 by failing to disclose the destination of certain of the payments listed in Schedule F to the said Order having previously given false evidence about some of those payments.[34]I shall now hear submissions as to the consequences of my rulings. [Submissions on the Judge’s ruling follow][35]I now have to consider: what is the appropriate response to my finding that Mr Bandi has been in contempt of court in the respects which I have mentioned.[36]In my judgment, looking at those counts individually and cumulatively these are serious contempts which suggest the appropriateness of an immediate custodial sentence. The effect upon the administration of justice of people who deliberately tender false and, in this case, doctored documents, combined with false witness statements and the continuing failure to explain what the court has ordered should be explained are sufficiently serious to justify imprisonment. I do not consider, whether for those reasons or for any of the grounds put forward by Mr Bandi’s counsel, that a suspended sentence would be the appropriate response.[37]However, this is not, though very serious, the most serious of cases that have come before the courts. There is no evidence that there is currently remaining, stashed away somewhere out of the claimants’ reach, assets which Mr Bandi is clinging onto illegitimately. The lies that he told, which he says were in the main to prevent embarrassment or to complete the tracing exercise omitting intermediate steps, were serious ones, but they were not covering up the existence of assets. I can well see that what may have been a motivation originally was not to give the claimants and the court more ammunition with which he might be met at trial. Someone who was shown to have frittered away substantial sums on gambling or to have withdrawn unexplained cash sums might well have been faced with a cross-examination as to his motive and Mr Bandi candidly acknowledged that once he had told his lies he had to stick to them when he came to put in his further evidence post-trial.[38]He is entitled to some credit for the fact that he did not dispute the essential facts. On the other hand, the essential facts, once revealed, were wholly incapable of being disputed because the genuine bank statements came from a source that could not realistically be disputed, namely, the banks themselves. Accordingly candour in the light of being caught red handed is not quite the same as candour which avoids protracted investigation. That is what the claimants have been put to, and that is what the court has had to face up to and deal with.[39]In my judgment this behaviour justifies a custodial sentence of twelve months imprisonment and I so order. I have taken into account, though I do not consider that they are especially material, the circumstances of Mr Bandi’s life. He has a wife and child, all of whose lives will be disrupted by this sentence, and his ability to get back onto his feet following a series of business disasters will not be helped by this. He is not unique in that and those do not have a great impact, though they have some, on my sense of mercy.[40]There will be an order for indemnity costs in favour of the claimants with the usual legal aid limitation. MR UDDIN: Thank you, my lord. THE JUDGE: Is there anything else? MR UDDIN: Yes. Your honour, it is my application that your lordship refer this matter to the Attorney General. THE JUDGE: I am not going refer it to anyone. I have dealt with it. MR UDDIN: Not necessarily in the sense that there is an affidavit that he lied in on 23rd June 2011. That is in fact a criminal contempt which, in my respectful submission, can be referred to the Attorney General. THE JUDGE: I am not going to. MR UDDIN: All right. THE JUDGE: I have dealt with it. I mean, the contempts have been dealt with and I have dealt with, amongst other things, what I have found to be his lying affidavit. MR UDDIN: So be it, my lord. THE JUDGE: You can refer it if you wish to, but I am not going to. MR UDDIN: We can, obviously. THE JUDGE: What happens is there is power under the rules to bring contempt proceedings with the necessary permission purely based on false evidence. As it happens, you have an order you can pin it on to, so there is breach of a court order as well and contempt proceedings for breach of a court order do not require anyone’s consent. But I have punished him for that. That is why, as a belt and braces, the original claim form asked (unnecessarily) for permission to bring contempt proceedings. What I think the rules say is that you can do it with the permission of the Attorney General or the court. The Attorney General as a rule leaves it to the court. MR UDDIN: Yes. But my instructions are to make the application. THE JUDGE: Yes, thank you. Yes. MR UDDIN: Thank you, my lord. THE JUDGE: Yes, you had better go and get the warrant sorted. [A short adjournment follows] 41. I also would like some guidance. I have given a global sentence for all four counts. I think I ought to have sentenced separately on each count. MR McCRACKEN: I think that is probably right. THE JUDGE: It comes to the same thing. MR McCRACKEN: I think that is right. THE JUDGE: But what I would do is I will grant twelve month sentences on counts two and four as amended, to run concurrently, and on count one, which is in one sense part of two, albeit a much smaller part, I would grant, a month’s imprisonment to run concurrently, on count three another month. They are all running concurrently, so it is still twelve months. MR McCRACKEN: Two twelve month sentences on two and four and one month on each on one and three, everything concurrent. THE JUDGE: It is one month, twelve months, one month, twelve months. All concurrent. MR McCRACKEN: Yes. THE JUDGE: Thank you. MR McCRACKEN: Thank you. MR UDDIN: My lord, you do not want me to draw up the order, do you? THE JUDGE: No, I am going to do it now. MR UDDIN: I am grateful, my lord. THE JUDGE: Thank you. [Hearing ends]