Malhotra v Malhotra & Anor

It is common ground that this court has jurisdiction to grant the injunction sought under section 37 of the Senior Courts Act 1981. At the hearing Mr Calver submitted that the primary basis of jurisdiction lay in sections 2(3) and 44(1) and (2) of the Arbitration Act 1996. This was disputed by Ms Weaver. Neither side suggests that in the present case an additional or even primary basis of jurisdiction under the 1996 Act would make any difference to the outcome. Both under the 1981 Act and under the 1996 Act the fundamental test for the grant of anti-suit injunction is whether it is in the interests of justice. In those circumstances I think it preferable to say nothing further about Mr Calver’s submission on the 1996 Act and Ms Weaver’s response.

The case advanced for Rakesh at the hearing rested on the proposition that the Indian proceedings constituted a breach by Mr Malhotra senior and Rakesh of their contractual obligation to refer to arbitration any dispute falling within clause 43.2 of the SSD. The principles applicable in a case of this kind were considered by the Court of Appeal in Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd's Rep. 87. At p. 96 Millett LJ summarised them as follows:

I … add a few observations of my own on the approach which the Courts should adopt when asked to exercise its undoubted jurisdiction to restrain a party from taking or continuing proceedings in a foreign Court in breach of an agreement to refer the dispute to arbitration.

In my judgment, the time has come to lay aside the ritual incantation that this is a jurisdiction which should only be exercised sparingly and with great caution. There have been many statements of great authority warning of the danger of giving an appearance of undue interference with the proceedings of a foreign Court. Such sensitivity to the feelings of a foreign Court has much to commend it where the injunction is sought on the ground of forum non conveniens or on the general ground that the foreign proceedings are vexatious or oppressive but where no breach of contract is involved. In the former case, great care may be needed to avoid casting doubt on the fairness or adequacy of the procedures of the foreign Court. In the latter case, the question whether proceedings are vexatious or oppressive is primarily a matter for the Court before which they are pending. But in my judgment there is no good reason for diffidence in granting an injunction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them.

…

We should, it was submitted, be careful not to usurp the function of the Italian Court except as a last resort, by which was meant, presumably, except in the event that the Italian Court mistakenly accepted jurisdiction, and possibly not even then. That submission involves the proposition that the defendant should be allowed, not only to break its contract by bringing proceedings in Italy, but to break it still further by opposing the plaintiff’s application to the Italian Court to stay those proceedings, and all on the ground that it can safely be left to the Italian Court to grant the plaintiff’s application. I find that proposition unattractive. It is also somewhat lacking in logic, for if an injunction is granted, it is not granted for fear that the foreign Court may wrongly assume jurisdiction despite the plaintiffs, but on the surer ground that the defendant promised not to put the plaintiff to the expense and trouble of applying to that Court at all. Moreover, if there should be any reluctance to grant an injunction out of sensitivity to the feelings of a foreign Court, far less offence is likely to be caused if an injunction is granted before that Court has assumed jurisdiction than afterwards, while to refrain from granting it at any stage would deprive the plaintiff of its contractual rights altogether.

In my judgment, where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law, the English Court need feel no diffidence in granting the injunction, provided that it is sought promptly and before the foreign proceedings are too far advanced. I see no difference in principle between an injunction to restrain proceedings in breach of an arbitration clause and one to restrain proceedings in breach of an exclusive jurisdiction clause as in Continental Bank N.A. v. Aeakos Compania Naviera S.A., [1994] 1 W.L.R. 588. The justification for the grant of the injunction in either case is that without it the plaintiff will be deprived of its contractual rights in a situation in which damages are manifestly an inadequate remedy. The jurisdiction is, of course, discretionary and is not exercised as a matter of course, but good reason needs to be shown why it should not be exercised in any given case.

Millett LJ’s observations in the last sentence cited above have consistently been followed. Thus when Donohue v Armco [2002] 1 Lloyds Rep. 425 reached the House of Lords it was said by Lord Scott at p. 440:

It is accepted that a contractual exclusive jurisdiction clause ought to be enforced as between the parties to the contract unless there are strong reasons not to do so. Prima facie parties should be held to their contractual bargain: see … The Angelic Grace.

Submissions at the hearing focused on two aspects of Millett LJ’s observations. The first concerned the premise for those observations: “the clear and simple ground that the defendant has promised not to bring [the foreign proceedings]”. How clear must it be that the foreign proceedings do indeed fall within the promise? I shall call this “the threshold requirement”. The second concerned the position if the court is satisfied, with the necessary degree of clarity, that the threshold requirement is met. What discretionary factors may constitute “good reason” (Millett LJ) or “strong reasons” (Lord Scott) such as would warrant a refusal to grant an injunction? I shall call this “the good reason requirement”.

In her skeleton argument Ms Weaver submitted:

The court is only justified in restraining foreign proceedings if the applicant shows to a high degree of probability that its case that it has a contractual entitlement to arbitrate the disputes or to litigate in a different forum is right (or that the foreign proceedings were vexatious or oppressive).

In support of this proposition Ms Weaver cited two authorities. The first was a decision of Christopher Clarke J sitting in the Commercial Court: Transfield Shipping Inc v Chiping Xinfa Huayu Alumina Co Ltd [2009] EWHC 3629 (Comm). It was a case where the parties had negotiated terms for carriage of a series of cargos of bauxite from India to China. There was a dispute between the parties as to whether a binding contract had been made. The London defendant (“Chiping”) had issued proceedings in the Qingdao Maritime Court asking it to adjudicate on whether there was a contract between the parties.

Christopher Clarke J observed that if the parties entered into the contract on which the London claimant (“Transfield”) relied, the commencement and continuance of proceedings in the Qingdao Maritime Court was a breach of the arbitration agreement contained in it. Transfield suggested that where there is a dispute as to whether or not there is a contract at all containing an arbitration agreement, it may be sufficient for the parties seeking anti-suit relief to demonstrate a good arguable case as to the existence of the agreement. Christopher Clarke J rejected this suggestion. His reasoning on the relevant point is at paras 51 to 58:

51 The only basis upon which the court could in this case make an anti-suit injunction is on the grounds that there is, probably is, or arguably is between the parties an agreement which binds them to have their disputes decided in London arbitration. That begs the question as to whether at the interlocutory stage what has to be shown is an arguable case, a strongly arguable case, a case with a high probability of success or a case described by some other adjective or description.

52 In my judgment, the appropriate test is whether or not the applicant has shown on the material adduced at the interlocutory hearing a high degree of probability that there was such an agreement. It is one thing to enforce a clear agreement to arbitrate or one which on an interlocutory basis can be seen to be highly likely to be established. It is another to restrain a party from litigating in a foreign country where the position is less clear than that. The effect of any such order is likely to be final in the sense that if granted until after an arbitral hearing, it will preclude the enjoined party from contending that there was no such agreement otherwise than before the arbitral tribunal and, if the tribunal rules that there was such an agreement, from disputing its existence.

53 Mr O'Sullivan submitted correctly that it is only where the English court can point with confidence to a contractual promise not to litigate elsewhere that it can be justified in interfering with a party's right to bring its claim in such other place as might accept jurisdiction. There is decided authority to that effect.

54 In American International Specialty Lines Insurance Co v Abbott Laboratories [2004] Lloyd's Insurance and Reinsurance Reports 815, Cresswell J added certain propositions to those set out in the speech of Lord Bingham in Donohue v Armco [2001] UKHL 64 in the following terms:

“6 There is no difference in principle between an injunction to restrain proceedings in breach of an arbitration clause and one to restrain proceedings in breach of an exclusive jurisdiction clause. The justification for the grant of the injunction in both cases is that without it the claimant will be deprived of its contractual rights in a situation in which damages are manifestly an inadequate remedy (see The Angelic Grace, [1995] 1 Lloyds Rep 87 at 96, Millett LJ.)

7 It would be inappropriate to grant an interlocutory injunction to restrain foreign proceedings at a time when it is no more than arguable that they were brought in breach of contract, because it could not be said that such proceedings were vexatious or oppressive (see Clarke LJ in National Westminster Bank v Utrecht-America Finance Company [2001] 3 All ER (Comm) 7).

8 On an application to restrain foreign proceedings brought in (alleged) breach of an arbitration agreement alleged to be governed by English law, the applicant must show to a high degree of probability that its case is right and that it is entitled as of right to restrain the foreign proceedings (see Colman J in Bankers Trust Co v PT Mayora Indah (20 January 1999, unreported ) and Cresswell J in Bankers Trust Co v PT Jakarta International Hotels and Development [1999] All ER (Comm) 785 ).”

55 In Midgulf International Ltd v Groupe Chimique Tunisien [2009] 2 Lloyd's Rep 411 , Teare J said:

“This is a case where an anti-suit injunction is sought at the interlocutory stage of proceedings. However, if the injunction is granted its effect is likely to be final because it will end the Tunisian proceedings and enable the arbitration proceedings to be completed. In such circumstances this court has required the applicant for an anti-suit injunction to establish ‘a high degree of probability' that its case against the respondent is right and that it is indeed entitled as of right to restrain the respondent from taking proceedings abroad.”

56 Teare J then held that Midgulf's “strongly arguable” case was not sufficient because it ultimately depended on evidence about the content of certain telephone conversations. He said:

“The court is not therefore able to reach the conclusion that Midgulf has established ‘a high degree of probability' that its case against GCT, that the July contract included a London arbitration clause, is right and that it is therefore entitled as of right to restrain GCT from taking proceedings in Tunisia. I accept that Midgulf has a strongly arguable case to that effect but that is not sufficient in the present context for the reasons stated in Bankers Trust v Jakarta and American International Speciality Lines Insurance v Abbott Laboratories. That would suggest that the anti-suit injunction granted ex parte on notice by Burton J must be refused.”

57 Teare J held, however, that on the particular facts of that case there was doubt as to whether the Tunisian court would decide the question as to whether the relevant contract contained a London arbitration clause. The reason the Tunisian was not prepared to decide that question, in a judgment it had given on GTC's application for a declaration that there was no arbitration agreement between the parties, is not entirely clear but appears to have been either on the basis that the arbitral tribunal itself must decide the question or as a result of a provision of the Tunisian Constitution that the court not decide that question in a declaratory action. In those rather unusual circumstances, Teare J held that the appropriate course on case management grounds was to order a speedy trial of the issues as to the terms on which the July contract was agreed and to continue the anti-suit injunction until then.

58 In Youell v Kara Mara Shipping Co Ltd [2000] 2 Lloyd's Rep 102, Aikens J (as he then was) adopted the good arguable case test, but the matter appears not to have been the subject of any specific argument.

59 I accept that Transfield has a good arguable case that there is a binding charter party agreement containing a London arbitration clause, but I am not persuaded that there is a high probability of it establishing that that is so.

For this and other reasons Transfield’s application for an injunction was refused.

The second authority cited by Ms Weaver was Stonehouse v Jones [2012] EWHC 1089, a decision of Newey J sitting in the Chancery Division of the High Court. It concerned an alleged breach of an exclusive jurisdiction clause rather than an arbitration clause, but it is common ground in the present case that the relevant principles are the same. Mr Stanley Hanson, on behalf of the Hanson Family Trust (“the Trust”), had invested in a UK company (“the Company”). The investments included shares in the Company. After his death the London defendants, who were at that time the trustees of the Hanson Family Trust, issued proceedings in California asserting that the investments in the Company were made in response to sales pitches in California from Mr Stonehouse and Mr Koss. They were said to have made untrue representations and failed to disclose material facts. The London claimant (“Mr Stonehouse”) said that as shareholders both he and the Trust were party to a Shareholders and Subscription Agreement (“the SSA”) containing in clause 23 an exclusive jurisdiction agreement as follows:

23.1

This Agreement and any disputes or claims arising out of or in connection with its subject matter are governed by and construed in accordance with the laws of England.

23.2

The parties irrevocably agree that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement.

Newey J refused to grant the injunction sought by Mr Stonehouse. In his judgment he said at paragraphs 10, 22 and 23:

10 Where an interim anti-suit injunction is sought on the strength of an exclusive jurisdiction clause, the applicant must show more than merely that there is a serious issue to be tried as to whether the relevant clause is applicable. He must demonstrate at least that there is a “high degree of probability” that that is the case (see Raphael, “The Anti-Suit Injunction”, at paragraphs 7.09, 13.31 and 13.32).

…

22 The interpretation of a contract involves looking at the meaning which it would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract (see Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 , at 912 to 913). Despite its use of the broad words “in connection with”, it is far from clear to me that a reasonable person would understand clause 23.2 of the SSA to apply to the claims brought in the Californian proceedings. As I have said, none of those claims is founded on or makes any reference to the SSA; the SSA simply does not feature in the Amended Complaint. There is, moreover, no suggestion that the SSA could provide Mr Stonehouse with any defence on the merits to the Trustees' claims. Further, aside from clause 11 (dealing with the subscription for shares of two of the original parties), the SSA is essentially concerned with relations between shareholders, and Mr Stonehouse is a party to it in that capacity. The Trustees, however, make no complaint about the exercise by Mr Stonehouse of his powers as a shareholder, and their claims against him do not appear to depend on his having been a shareholder.

23 In the all the circumstances, I have not been persuaded that there is the requisite “high degree of probability” of clause 23.2 applying to the claims made in the Californian proceedings. To the contrary, I rather doubt (though I do not need to decide) whether the clause extends to the Trustees' claims.

In oral submissions Mr Calver adopted the test identified in Transfield. He urged that there was a high degree of probability, indeed he said it was certain, that the petitions in India fell within clause 43.2. Similarly as to Stonehouse v Jones, Mr Calver did not dispute the test adopted by Newey J. As noted in section F3 below, however, he identified 8 reasons why, on the facts in the present case, I should not reach the same conclusion as that which was reached by Newey J on the facts in that case.

Ms Weaver submitted that, in a case where an arbitration clause is relied upon, important considerations in the exercise of the discretion include:

Mr Calver did not dispute that these were all relevant considerations. He contended, as summarised in section F3 below, that on the facts of the present case these considerations did not give rise to a good reason for refusing to grant the injunction.

As noted in section E above, the relief sought in the Indian proceedings included orders for the setting aside, termination or modification of any dealings with the relevant company’s assets after 18 March 2011. Mr Calver in his oral submissions stressed that this would undo the transfers from the Transauto main companies to the new operating companies, transfers which formed part of the RA Agreements required by the revised transaction. In her oral submissions Ms Weaver stated on instructions that the date of 18 March 2011 was a mistake. The intention had been to refer to the period when the restructuring agreements had all been effected. There was no intention to undermine the transfers of property under those agreements – the petitions had been aimed at what had been done subsequently.

As noted in section G1 below, after the hearing Mr Malhotra senior and Rajiv gave undertakings which were said to remedy the position in relation to the date of 18 March 2011.

This part of Mr Calver’s oral submissions was prefaced with an observation based on the fact that the petitions, as noted by Ms Weaver in her skeleton argument, alleged oppression and acts of mismanagement by the directors acting under the influence of Rakesh. This, submitted Mr Calver, gave the lie to Ms Weaver’s contention that the Indian proceedings merely concerned internal matters of foreign companies.

In section E above I gave a description of the Indian proceedings which was largely derived from Ms Weaver’s skeleton argument. In his oral analysis of the Indian proceedings Mr Calver took the Unique petition (No. CP-12 of 2012 before the Mumbai Company Law Board) by way of example:

Ms Weaver submitted that the court was being asked to restrain proceedings between shareholders on the one hand and the relevant company and its directors on the other. The orders sought would leave the companies under the control of directors in whom the shareholders had no confidence. This was a family dispute, and an increasingly bitter one, as witness the allegations and counter-allegations concerning raids on the companies by the Indian police. The family dispute was being fought through the Indian companies. There was no connection with the SSD, save that this dispute had arisen following the restructuring carried out under it. The dispute was not arbitral, and therefore the court had no basis on which to grant the injunction.

After explaining the heads of relief in the Indian proceedings (see section E above) Ms Weaver commented that if the companies had entered into legally binding obligations with third parties, for which good consideration had been given, those transactions will not be able to be set aside.

Ms Weaver dealt specifically with Rakesh’s answer to the Indian proceedings that the matters complained of were known by shareholders. If so that could be said in the Indian proceedings. Moreover it could be argued in India without reference to the SSD.

At a later stage in her submissions Ms Weaver turned to parts of the petitions concerned with criticisms of the directors in relation to tax affairs of the companies and mismanagement of property unconnected with the Supermax group business. Rajiv had produced copies of penalty orders sent to VMPL and RCC by the Indian tax authorities. Attempts by Mr Malhotra senior to have these matters dealt with had received no response. A raid by the Indian Central Bureau of Investigation on the office of VMPL was thought to have concerned an allegation of corruption against one of the directors. SIPL owned a property, Malhotra House in Mumbai where there was ongoing litigation with the tenants.

Mr Calver began his oral submissions in reply by dealing with matters specifically going to the threshold requirement and the good reason requirement. They are dealt with below, but I note here a submission by Mr Calver that “minor points about not being able to see the books from time to time and tax, and so on…” should be left aside. His contention was that once the ability of Rakesh to use the Citibank accounts was arbitrated, points of this kind would fall away.

Turning to what Ms Weaver had said about the date of 18 March 2011 being a mistake, Mr Calver described as “complete nonsense” the suggestion that it was never the intention of the complaint in India to attack the restructuring agreements. This was shown by paragraphs 24 to 27 of the Unique petition (dealing with the apprehensions of the petitioners and the relief sought). Thus the dispute was about both the properties transferred and the guarantees on the assets.

The submissions on whether Rakesh’s case satisfied the threshold requirement, and those on whether there was nevertheless good reason for not granting an injunction, overlapped with each other and with the submissions described in section F2 above. Below I summarise the main points to the extent that they have not already been dealt with.

The key points advanced in Mr Calver’s opening oral submissions in this regard included those identified in section B above. He stressed that the Indian proceedings sought to undo arrangements that had been made for working capital for the restructured business. Also in his opening submissions Mr Calver advanced the contentions on the threshold requirement identified in section F1 above. The complaints by Rakesh about the Indian proceedings met the threshold requirement, it was submitted, because those proceedings were in truth a dispute between the three family members who were party to the revised transaction.

Turning to Stonehouse v Jones, Mr Calver noted that none of the Californian claims in that case was founded on the relevant agreement, nor was there any suggestion that the Californian claims could be defended on the merits. By contrast, in the present case:

Mr Calver then turned to points made by Ms Weaver in paragraphs 17 and 18 of her skeleton argument. These paragraphs need to be read with paragraph 16:

16.

It is repeatedly asserted … that [Mr Malhotra senior and Rajiv] agreed that the funds received by the [Transauto main companies] would be used to meet the Sponsors’ obligations under the SSD to inject working capital so as to meet the financial target under clause 8 and that SSD envisaged that the funds would be used in that way.

17.

However:

(a)

Despite these assertions being expressly challenged in Rajiv’s evidence, neither [Rakesh] nor Mr Bhansali have provided any detailed evidence of the alleged agreement by [Mr Malhotra senior and Rajiv] as to the use of funds belonging to the [Transauto main companies].

(b)

There is no provision in the SSD relating to the use of the funds paid to the [Transauto main companies] or requiring the [Transauto main companies] to provide any loan or other financial support to the Supermax Group.

(c)

The assertion that the Sponsors were obliged by the terms of the SSD to inject working capital in order to prevent Actis’s shareholding being increased is incorrect.

(d)

Clause 18.10 of the SSD … does not impose any such obligation.

(i)

Clause 18.10 is not linked to the achievement of the financial target or even to first year earnings. It has a different purpose: it comes into operation only if the Group has insufficient cash to run its day to day operations in the ordinary course of business in the first 15 months of operation.

(ii)

In any event, any obligation on [Mr Malhotra senior and Rajiv] under clause 18.10 would only arise if SMOH had notified the relevant parties (including [Mr Malhotra senior and Rajiv]) that a cash shortfall had arisen and Actis had made a request for the Sponsors to provide US$ cash loans. C does not allege that these conditions were ever met.

18.

The fact that [Rakesh] was appointed a sole signatory on the bank accounts into which the [Transauto main companies] paid the funds received does not support the existence of the alleged agreement that the funds would be available to support the Supermax Group. First there is a dispute as to the circumstances in which [Rakesh] became a sole signatory. Secondly, [Rakesh] became a signatory at a time when Mr Malhotra senior still reposed trust and confidence in him and relied on him to deal with his personal financial affairs including his interests in the Indian companies … . There is nothing surprising that he should be given signatory power over the accounts into which the funds were paid for the purpose of investing them. It does not follow that the funds received by the [Transauto main companies] were put at the disposal of the Supermax Group, especially since [Mr Malhotra senior and Rajiv] were to have no further involvement in the affairs of the Group. The Board Resolutions do not record any agreement or understanding to that effect. There are no documents recording or evidencing the alleged agreement in the evidence on behalf of [Rakesh].

Mr Calver’s answer to paragraph 17(a) was that it was perfectly obvious what the parties agreed in relation to the use of the funds when one looked at the chronology and what happened. As to paragraph 17(b) he acknowledged that there was no provision in the SSD relating to the use of the funds. However what happened flowed from clause 18.10: the board resolutions, the account openings, Rakesh being made sole signatory, and entering into the guarantees with Mr Malhotra senior’s approval. On paragraph 17(c) the point was that clause 18.10 required the injection of working capital if the financial targets of the business were to be met.

Turning to paragraph 17(d), on point (i) Mr Calver relied on the evidence of Rakesh and Mr Bharucha explaining that it was indeed the case here that the group had insufficient cash to run its day to day operations in the ordinary course of business in the first 15 months of operation. On point (ii) he relied on Rakesh’s third witness statement demonstrating that the relevant conditions had been met.

In reply to paragraph 18 Mr Calver denied that there was any genuine dispute about the circumstances in which Rakesh became sole signatory on the Citibank accounts. He submitted that Mr Malhotra senior and Rajiv were “entirely untruthful about this evidence, as one can see from the contemporaneous documents … they have to say that … [Rakesh] fraudulently completed … four bank signatory forms, that his brother signed each of those forms as well somehow as a result of [Rakesh’s] fraud, and that then [Rakesh] was allowed to draw funds on those accounts despite this fraud. That is totally preposterous, but actually it is completely contradicted by the evidence … [there was] a board resolution in each case of 23 December … at a time when the father states himself that he had complete control … .”

Moreover, submitted Mr Calver, the signatory power was extremely wide. He added that the chronology demonstrated that the funds were for the use of the group. In that regard he relied upon the guarantees being entered into as soon as the funds were in the Citibank accounts and at a time when, by reason of the correspondence with the consortium of banks, he knew of and consented to what was being done.

On the question whether there was good reason not to grant an injunction, he was concerned to counter any suggestion that the Indian proceedings had reached a stage where it would be undesirable to stop them. In that regard he noted that to date the Company Law Board had granted interim orders without hearing Rakesh, and had not made any order purporting to unwind any dealings thus far.

As to arbitration proceedings, Mr Calver had submitted to Gloster J that arbitration proceedings ought to be brought by Mr Malhotra senior and Rajiv. As he had explained to Gloster J, Rakesh was willing to undertake to commence arbitration proceedings in relation to these disputes if the court considered that he should give such an undertaking.

Finally in relation to “good reason” Mr Calver sought to respond to a point made in Ms Weaver’s skeleton argument concerning the dangers which Rakesh feared would arise if the existing directors of the Transauto main companies were replaced by new directors nominated by Mr Malhotra senior. Ms Weaver had observed that new directors would owe duties to act in the best interests of the companies, which would include complying with the terms of existing binding obligations. Mr Calver submitted in answer that it was clear from the Indian proceedings, particularly in paragraphs 24 to 27 of the Unique petition, that new directors were highly likely to decide that it would be in the interests of the company to bring current arrangements to an end, thereby leading to the collapse of SPCPL.

In her oral submissions Ms Weaver identified three planks by which Mr Calver sought to tie the Indian proceedings to the SSD. The first of the three planks was the complaint that the Indian proceedings sought to undo transfers of property for which the SSD made express provision. Ms Weaver’s answer to that complaint is described in section F2.1 above.

The second plank was founded on the claim that there was an agreement that assets of the relevant companies would be available to support the SuperMax group. The third plank identified by Ms Weaver was an assertion by Rakesh that all matters in dispute were either expressly provided for or contemplated by the SSD. The submissions on these two planks overlapped, and I shall deal with them together.

Ms Weaver’s first main point on these two planks was that the revised transaction contained no provision that assets of the relevant companies would be available to support the SuperMax group. Ms Weaver added:

Ms Weaver noted that Rakesh had suggested that there was no other reason to have set out in the revised transaction specific arrangements for payment to the relevant companies. The answer to this was that by making such specific arrangements the revised transaction ensured that good consideration was given for the transfers made by the relevant companies to the new operating companies.

Ms Weaver added that the relevant companies were not parties to the revised transaction. The revised transaction did not contain any obligations or restrictions on the relevant companies. The revised transaction imposed no express obligations on Mr Malhotra senior or Rajiv as to how payments are to be used once they have reached the relevant companies. It was not right, submitted Ms Weaver, to rely on clause 18.10 as establishing any agreement that funds of the relevant companies would be held available and put at the sole disposition of Rakesh to use for the business, both immediately after the restructuring and for future working capital requirements. It imposed a much more limited obligation. Her clients were aware not only of clause 18.10 but also of the provisions enabling Actis to increase its shareholding, but (contrary to what seemed to be suggested in evidence submitted on behalf of Rakesh) there was no necessary link between the two. As to the procedure under clause 18.10 described in Rakesh’s third statement, her clients had not been told of him doing any of these things. That was because Rakesh did not arrange loans in the Sponsors’ names, but went straight to the boards of the Indian companies and got them to pledge their assets in support of loans. Moreover clause 18.10 – not least because of the time limits that it contained – did not support Rakesh’s assertion that the funds were to be available to be called on by the SuperMax group whenever Rakesh thought appropriate.

As to Rakesh being sole signatory on the Citibank accounts, while Ms Weaver noted Rajiv’s evidence about the Citibank account opening forms, her focus was on seeking to limit the inferences that could be drawn from Rakesh’s “sole signatory” status. Rakesh himself acknowledged that the Citibank accounts had been created specifically to receive and invest proceeds from the restructuring envisaged by the SSD. Rakesh’s sole signatory status was consistent with Rajiv’s evidence that his father permitted Rakesh to control the accounts at a time when he had trust and confidence in him. Rakesh himself gave an example of another occasion when Mr Malhotra senior placed trust in Rakesh to act as signatory on an account holding his (Mr Malhotra senior’s) money. (This was an account at Wells Fargo in Los Angeles: Rakesh said that he could not use funds in it as security for his cross-undertaking as the funds were sourced from dividend distributions of companies owned by Mr Malhotra senior.)

Summarising the position, Ms Weaver said that the alleged agreement or understanding was denied, but even if it were established it was a separate family agreement which neither arose under the SSD nor was connected with it, and concerned what would happen after the restructuring had been completed. There was nothing in the timing point: the opening of accounts in readiness to receive and invest large sums of money was nothing surprising. An agreement between father and son about assets of Indian companies held in India, even on the widest interpretation of the arbitration provision, did not fall within its scope.

In the course of argument I observed that paragraph 45 of Rajiv’s statement said that he and his father only learnt of the relevant companies’ guarantees from the email of 23 January 2012, and that neither he nor his father gave personal guarantees. This did not, however, deal with knowledge of the banks’ requests for personal guarantees. Ms Weaver accepted that it did not do so. But Rakesh’s assertions about knowledge in that regard was said to support the assertion that the companies’ guarantees were agreed and not objected to. If so, that could and should be litigated in the Indian proceedings. They were assertions about knowledge subsequent to the SSD, and subsequent to the completion of the restructuring, and did not bring the family dispute into the scope of the arbitration clause.

An additional point was made by Ms Weaver in support of the assertion that the dispute did not concern the SSD. This was that (in addition to the Transauto main subsidiaries) Emerald was one of the companies owned by Mr Malhotra senior through Transauto which had been caused by Rakesh to mortgage its assets. Yet it was not a recipient of funds under the revised transaction. Ms Weaver acknowledged that there was no petition in India concerning Emerald.

More generally in her oral submissions Ms Weaver advanced the contention noted earlier that Rakesh’s reliance upon clause 41 was not arguable to the standard that would justify an anti-suit injunction. If clause 41 were as wide as is now suggested, then it would not have been necessary for the SSD to give to Rakesh all the explicit controls which it sets out in some detail in relation to both the group and the shareholding companies. In support of her argument that a dispute about the scope of clause 41 did not need to be referred to arbitration, Ms Weaver suggested that it simply did not work to suggest that disputes in the Indian proceedings and acts done in those proceedings could be tied back into the arbitration clause. This was particularly clear as regards that part of the without notice injunction which restrained the calling of the extraordinary general meeting. Rakesh accepted in paragraph 4.20 of his witness statement that the shareholders are ordinarily entitled to requisition such meetings and to remove the directors by ordinary resolution. Rakesh claims to be entitled to the injunction because otherwise the board is likely to be changed and transactions which were allegedly authorised could be undone. The problem with that was that it is always open to shareholders to change the board of directors for whatever reason or for none, and the new board could review the transactions that the company had entered into to see if they were in the best interests of the company. The authority given by the board resolutions in relating to the opening of the Citibank accounts, for example, was not expressed to be irrevocable. It followed that in order to justify this aspect of the injunction Rakesh had to say that he had irrevocable authority to deal with the assets of the Indian companies in such a way that the shareholders were bound. Clause 41.1 was not an agreement between shareholders, and only dealt with matters provided for or contemplated by the SSD. The management of the Indian companies was something far outside the contemplation of the SSD. If directors had engaged in some entirely separate conduct which made them unsuitable to be directors, Mr Malhotra senior would be entitled to change the board, and the new board entitled to review the transactions. If they sought to undo transactions which were properly binding on the company, then that could be restrained by anyone who was affected – by litigation in India against the Indian companies and the directors if appropriate. If the concern is that the new directors will simply be puppets of Mr Malhotra senior and disregard their fiduciary obligations to the companies or their legal obligations to third parties, then SPCPL could take proceedings in India – but that had nothing to do with arbitration under the SSD.

Ms Weaver added that if the injunction were granted the position would be entirely unsatisfactory. The one thing that was not in dispute was that there has been an irretrievable breakdown in the relationship, not only between Mr Malhotra senior and Rakesh, but between Mr Malhotra senior and the directors of the companies. That has resulted in a deadlock, with each side blaming the other. This court was not called on to decide the rights and wrongs of the handling of tax matters and the other concerns as to things not being done. What they demonstrated was that management was in a state of paralysis, the shareholders had lost confidence in the directors, the directors were complaining, whether justifiably or not, that they were being harassed. It would be highly unsatisfactory if the shareholders could not take steps open to them as a matter of company law to resolve that situation by replacing the directors. Matters such as the tax penalty notices and the litigation concerning management of property needed to resolved, and the forum for resolving those issues were the company law boards in India.

Ms Weaver submitted that an arbitration could not resolve issues about the control and management of Indian companies. It would be unsatisfactory for the position in India to be frozen pending an arbitration. Even if there were an arbitration, there would still need to be proceedings in India. Accordingly India was the forum where all matters could be sorted out.

As regards the injunction against holding an extraordinary general meeting, Mr Calver submitted in reply that what was relevant was the basis upon which it was sought to remove the directors. The reason for seeking to remove them was that they had acted on Rakesh’s instructions to use the monies in the Citibank accounts and the assets in the Citibank accounts. Mr Malhotra senior had not suggested the directors should be removed for some reason unrelated to the SSD.

As to the contention that even if there is an arbitration there will still be a need to be proceedings in India, Mr Calver said that Rakesh would encourage a speedy arbitration of the dispute. This court in that way could order that the real dispute between the parties be resolved in the forum that they agreed to resolve it in.

Mr Calver stressed the reliance that Rakesh had placed in his witness statements upon clause 18.10 of the SSD. Ms Weaver had argued that there was an entitlement to be told about the notification to the Malhotra Parties and about the provision or procuring the provision of loans. That ignored clause 41. Mr Calver submitted that there was no obligation on Rakesh to inform Mr Malhotra senior and Rajiv of what had been done by him in their name. The scheme was that they would play no further part in the running of the business. Mr Malhotra senior had given Rakesh complete control over the Citibank accounts. The extension of the guarantee over funds in the Citibank account was part and parcel of Rakesh running the business. It followed that there was no obligation on Rakesh to provide information as to what he had done.

On the question of obligation to account, I pointed out that in the ordinary course if A gives to B the authority to receive notices on behalf of A or to do things on behalf of A, that normally carries with it some obligation, at least on enquiry and probably without, that B must tell A what B is doing, so that A knows what is being done in A’s name. Mr Calver’s answer was in broad terms that clause 41.1, when read in the context of the transaction as a whole and the desire of Mr Malhotra senior and Rajiv to cease to be involved in the business, ousted this normal obligation.

As to compliance with the requirements of clause 18.10 Mr Calver submitted that the evidence established such compliance. Any dispute as to such compliance was plainly a dispute under the SSD.

Mr Calver turned to Ms Weaver’s reliance upon evidence on behalf of her clients that there was no agreement to use monies paid into the Citibank accounts for the purposes of the operating companies. Rakesh’s second witness statement referred to “the understanding that I would have these funds available to satisfy the Malhotra Parties’ obligations under the SSD”. It was in that context that Rakesh had said that the Citibank accounts were created to receive and invest the proceeds from the restructuring. It would be to use those proceeds, as invested in the Citibank accounts, for the purposes of the restructured business.

I asked Mr Calver whether I was right to understand Rakesh as saying that:

To the extent that I did not do that [use money invested in the Citibank accounts for the purposes of the restructured business], I regarded these as my father’s assets and that is why I put the interest in the Wells Fargo and regarded the interest in Wells Fargo as not mine to make use of.

Mr Calver confirmed that my understanding was correct. The critical thing was the scope of Rakesh’s authority over the Citibank accounts, and it was extremely wide. Mr Malhotra senior’s knowledge of the initial guarantees given by the companies to the consortium of banks demonstrated that he knew that the purpose of the monies in the Citibank account was for use to secure SPCPL’s borrowings.

As to Emerald, Mr Calver’s answer was that it was an original guarantor under the facility which in due course was transferred to SPCPL.

In reply to a question from me as to what relief would be sought from arbitrators under the arbitration agreement, Mr Calver said that points of claim would cover what was raised in the Indian proceedings. Mr Calver added that the claim to remove the directors plainly arose out of or was connected with the SSD because Mr Malhotra senior knew that the guarantees were being transferred to SPCPL, that the money had been transferred into the Citibank accounts, and that Rakesh was given an extremely wide remit over funds in those accounts. These matters followed completely, not just chronologically, but in terms of what the parties were doing, under the SSD. They were at least connected with, and indeed many arose under, the SSD because they were tied to clause 18.10 of the SSD.

I indicated concern as to how it was that this court could prevent a shareholder in India from suing a director in India over what the director did in relation to assets of the company in India. Mr Calver replied that a claim against the companies for matters unrelated to the deed could not justify a grant of relief by the English court. The dispute, however, that was being litigated in India was a dispute between Rakesh on the one hand and Mr Malhotra senior and Rajiv on the other, arising under the arbitration agreement.

When pressed as to whether he said that Mr Malhotra senior owed an obligation to Rakesh not to say to directors of the associated companies, “you have done the wrong thing in allowing the assets to be used in this way”, Mr Calver replied that he put it slightly differently. What was sought in India was to get around the agreement to arbitrate, by an application to remove the directors based upon the very dispute that arose under the deed, so that once the directors had been removed the transactions could be unwound. The companies as well as the directors were added to the Indian proceedings as another way to get around arbitrating the dispute. Complaints about not being able to see the books from time to time, tax and so on were connected with the SSD for reasons developed in his skeleton argument – essentially, as I understand it, because Rakesh had been given control over such matters.

In any event, submitted Mr Calver, the gravamen of the dispute was use of the Citibank account. Mr Malhotra senior and Rajiv pretended that they never agreed to it, never knew about it, and all of that was untrue. It was often the case with anti-suit injunctions that a party would try and get around an exclusive jurisdiction clause or arbitration clause by commencing proceedings abroad and utilising wholly owned companies and the like. In response to an assertion that the entities used were not actually a party to the agreement, and therefore the arbitration clause did not bite, the court had to look at what was actually going on and really assess whether this was a dispute arising out of the arbitration agreement or not.

The suggestion by Ms Weaver that the Indian complaints could be argued there without any reference to the SSD was, submitted Mr Calver, “completely baffling”. There had to be a full understanding of how clause 18.10, clauses 7.2 and 8.2, clause 41, and the funds flow steps and how it worked. The board resolution for the opening of the Citibank account was in such wide terms that it could have had no intention other than to give Rakesh complete control over the funds that would be paid into that account, and that could only be because all were agreeing that Rakesh would have access to those funds for the benefit of the new business.

At the conclusion of Ms Weaver’s submissions I raised with her what might be a hypothetical question. If a particular part of the SSD had a meaning which would lead to many of the matters of complaint in the petitions becoming groundless, might the court make an order that if Mr Malhotra senior and Rajiv wish to have them resolved, they must be resolved in the arbitration, but not interfering with their ability to conduct the Indian proceedings in any other way?

Ms Weaver accepted that this might be hypothetically possible, but queried whether it was practically possible. If in practical terms there was a particular transaction between the company and a third party governed by an arbitration clause, such a course might be possible. That would be directed to the validity of the transaction, as opposed to the management of control of the company. In theory such a line could be drawn, but the court’s approach was so tied to the circumstances of the particular case that it was not possible to give an answer. Questions as to control of the company could only be resolved in India.

Mr Calver in reply submitted that it would be possible to decide that there was a discrete aspect of the Indian proceedings that was not properly characterised as a dispute arising from or connected with the revised transaction, and that therefore there was no power to restrain that discrete aspect of the Indian proceedings by injunction. However Rakesh’s primary case was that the allegations about taking instructions from him and siphoning away monies from the Citibank accounts underpinned each of the allegations in the Indian proceedings.

In section A above I record the two items which I directed to be provided after the hearing: the undertakings which Ms Weaver had described and the draft arbitration points of claim which Mr Calver had referred to. There was a short and structured timetable for exchange of comments on each item. As appears below, neither side was content to let matters rest there.

By letter addressed to Akin Gump dated 20 June 2012 Fladgate undertook that their clients would seek to amend (by taking all necessary steps) specified paragraphs in the petitions. The paragraphs in question were those which asked the Board to set aside, terminate or modify dealings by the company in question (including agreements, payments, and transfers of assets or properties) “as may have been effected after 18 March 2011”. In their place the amended paragraphs would refer to such dealings as may have been effected “after the completion of the Restructuring Agreements [as defined in, and in accordance with, the revised transaction], adding:

For the avoidance of doubt, the Petitioners do not seek to set aside, terminate or modify any of the Restructuring Agreements …

It was obvious from this letter that Fladgate’s clients did not offer any undertaking additional to that which had been promised at the hearing.

Under cover of a letter to Fladgate dated 27 June 2012 Akin Gump submitted a note on the undertakings. The note complained of the narrow scope of the undertaking, but ignored the fact that what had been promised was an undertaking of narrow scope (see section F1 above). Thus in paragraph 2 the note listed four main areas of dispute between the parties which did not include any complaint that the Indian petitions sought to undo the Restructuring Agreements. It then complained in paragraph 3 that the undertakings did not address these four areas. There was no express recognition anywhere in the note that the purpose of the promised undertakings had nothing to do with the four areas listed in paragraph 1. Their purpose was to make clear that the dispute between the parties did not include any attempt to undo the Restructuring Agreements.

As to whether the undertakings achieved their purpose, among a host of other complaints in paragraph 3 of the note it was asserted that the petitioners would continue to be able to seek to undo any transfer or other dealing with assets or properties “as may have been effected after 18 March 2011 at [Rakesh’s] request and /or direction.” There were then identified things that were done at Rakesh’s request and/or direction, and thus are said to remain at risk of being undone despite the undertakings. Those things did not include the carrying out of the Restructuring Agreements. There is thus no contention in the Note that the undertakings fail to achieve what was promised by Ms Weaver at the hearing. In these circumstances I conclude that the undertakings given by Fladgate remove any real risk that the petitions will lead to anything which would undo the RA Agreements.

In effect, what Akin Gump did in their note was to re-argue their clients’ case on matters other than those relevant to the undertakings. There was no recognition that this went beyond what had been permitted by my order at the hearing.

Fladgate by letter dated 5 July 2012 indicated that they had no comments on Rakesh’s response to the undertakings. They added a sentence reiterating an aspect of their client’s case. For good measure they then referred to a decision of the Indian Supreme Court said to show that the right to call an Extraordinary General Meeting was “unassailable”. On the part of Fladgate, too, there was no recognition that what they had done went beyond what had been permitted by my order at the hearing.

Also under cover of the letter to Fladgate dated 27 June 2012 Akin Gump submitted draft points of claim which would set out Rakesh’s case in arbitration proceedings if he were to institute them. Fladgate requested an extension of time in which to comment upon the draft points of claim. In the event their letter of 5 July 2012 stated that their clients did not wish to make any observations on the draft points of claim.

In a letter to Akin Gump dated 11 July 2012 Fladgate inquired when a response to their single page letter of 5 July 2012 was likely to be received. They added that their clients were keen to give the court sufficient time to consider and deliver judgment before the end of term. I observe that this objective was unlikely to be assisted by their reliance in their letter of 5 July 2012 upon a decision not previously cited.

The next development was a written submission on behalf of Rakesh dated 13 July 2012. The written submission was settled by Mr Calver and ran to more than 7 pages. It explained that Indian legal advice had been obtained on the Supreme Court decision cited in Fladgate’s letter of 5 July 2012. In case the court thought it relevant, the decision in question did not show that the right to call an Extraordinary General Meeting was “unassailable”. A decision of the Madras High Court, along with an extract from a textbook, were cited in this regard.

The submission of 13 July 2012 criticised Fladgate’s clients for unexplained delay, and it made adverse comment on Fladgate’s clients’ refusal to mediate and failure to respond to the draft points of claim.

It also made adverse comment on Fladgate’s failure to answer points made in Rakesh’s note responding to the undertakings. However, for the reasons that I identify in section G1 above, there was nothing in the note which required an answer.

Finally the submission of 13 July 2012 relied on an as yet unreported Court of Appeal decision, Joint Stock Assets Management v BNP Paribas (Judgment 24 May 2012) which, it was said, “fully supports” Rakesh’s application for an anti-suit injunction.

Mr Calver’s submission of 13 July 2012 was answered by a written submission dated 17 July 2012 settled by Ms Weaver. She rightly observed, among other things, that her clients were not required by my order to draft a defence to the points of claim.

As to Indian law concerning the ability to call an extraordinary general meeting, Ms Weaver said that the Indian Supreme Court case supported the point in her skeleton argument that as majority shareholder Mr Malhotra senior had an unfettered right to remove the directors which he was entitled to exercise without reason. The Madras High Court case was concerned with a separate point concerning the validity of a requisition for an extraordinary general meeting.

Turning to Joint Stock Assets Management v BNP Paribas, Ms Weaver submitted that the issue in the foreign suit in that case was the very issue which was the subject of the arbitration. That was not true of the present case, which more closely resembled Star Reefers Pool Inc v JFC Group Ltd [2012] EWCA Civ 14.

On behalf of Rakesh, Mr Calver settled a response dated 24 July 2012. It complained that while it would have been reasonable for there to be some short submissions on Joint Stock Assets Management v BNP Paribas, it was not reasonable or fair to make a further round of wide-ranging submissions in the document dated 17 July 2012. Paragraph 5 of the response of 24 July 2012 proceeded on the premise that my order at the hearing envisaged a rebuttal of the draft points of claim. That premise was mistaken: my order envisaged only that there would be such comment on the draft points of claim as Fladgate’s clients saw fit.

At paragraph 6 the response of 24 July 2012 identified issues which were said to be defined in the draft points of claim. The first two such issues were these:

(1)

Was there an oral agreement/common understanding between the parties which formed an integral part of the restructuring under the SSD, as alleged in paragraph 12;

(2)

Was each of the steps taken in paragraphs 13-20 taken pursuant to (a) the terms of the SSD and/or (b) the oral agreement/common understanding.

They were followed by a third sub-paragraph which set out conclusions rather than issues:

(3)

If so (as [Rakesh] alleges), then:

(a)

these are issues which should be resolved by way of the agreed LCIA arbitration process and

(b)

the Company directors are entitled to act in the manner of which complaint is made in India (paragraphs 24 and 25(1)-(13) [of the draft points of claim]);

(c)

[Rakesh] is entitled to the relief sought in paragraph 27(1)-(11) [of the draft points of claim] and [Mr Malhotra senior and Rajiv] must be restrained from proceeding in India by themselves and their companies which they control.

Turning to Joint Stock Assets Management v BNP Paribas, Mr Calver submitted that there were two distinct issues:

(1)

The first issue is whether the disputes in the Indian Proceedings arise from or are at least connected with the SSD and which the Respondents (and their controlled companies) are therefore obliged to arbitrate and not litigate in India. The answer to that question is dealt with above. The Respondents (and their controlled companies) are wrongfully seeking to litigate such dispute in India and they have not been able to put up a defence to this dispute in response to the Claimant’s Points of Claim in the intended arbitration.

(2)

The second issue is whether, as in BNP Paribas, the Respondents are acting unconscionably by using companies in their common ownership and control to bring proceedings in India with a view to avoiding their contractual obligation to arbitrate these disputes, and instead are pretending that these are merely internal disputes about corporate governance (whereas the Respondents’ obvious intention is to get around the arbitration clause by seeking to have the directors removed and then seeking to unravel the contracts entered into by those directors in accordance with the instructions given to them by the Claimant under the terms of the SSD and the connected oral agreement/understanding). BNP Paribas establishes that in such circumstances the court has jurisdiction to grant the anti-suit injunction against not just the parties to the arbitration agreement (the Respondents) but also against the collusive non-parties (i.e. the Respondents’ companies). This case is a fortiori to BNP Paribas, because the Respondents are even parties to the impugned foreign proceedings (unlike Mr. Deripaska).

Mr Calver added:

9.

In short, there would be no Indian Proceedings at all were there not a dispute between the Respondents and the Claimant arising under or connected with the SSD.

10.

Contrary to the Defendants’ throw-away remark, it is plainly not a legitimate juridical advantage at all for the Respondent to litigate in India disputes which arise from and are connected with the SSD and which they specifically agreed would be referred to arbitration; and crucially the Defendants have not put in any substantive response to suggest to the contrary, despite being afforded a full opportunity by the Court to do so.

Finally in the response of 24 July 2012 Mr Calver sought to answer the points made by Ms Weaver on the Indian cases.

As the end of term approached it became clear that I would not be able to deliver judgment before going on leave. My clerk advised the parties of this. This led to an application by Fladgate. The application, the submissions on it, and the outcome, are all described in my ruling dated 1 August 2012:

1.

On 24 July 2012 my clerk advised that while I had hoped to have completed my draft judgment in this case before going on leave on Thursday 26 July, that had not been possible, in part owing to post judgment material from the parties arriving later than had been planned. She added that I would be working on the draft judgment while on leave. It would be circulated on Tuesday 18 September and hand down would be on Friday 21 September.

2.

This advice led to Fladgate LLP’s emailed letter of 25 July 2012, the claimant’s response emailed on 27 July 2012, and Fladgate LLP’s emailed letter of 30 July 2012. It is clear from this material that the defendants assert two concerns arising from the continuation, during the further period of some 7 weeks before the draft judgment will be ready, of the injunction granted by Mrs Justice Gloster on 26 March 2012. The first is that the value of the claimant’s cross-undertaking will be reduced by any dissipation or diminution in his assets during this period. The second is that it is not possible for the defendants to administer the Indian companies owned by the first defendant whilst the injunction remains in place. Below I identify the key points in relation to each concern. As will be seen, it is not necessary for me to express any view on many of the points of detail, and I do not think it desirable to do so.

3.

As regards the cross-undertaking, there has been an issue as to whether the claimant should provide security. He had said that he had very limited free assets. The defendants pointed out that he had a Wells Fargo bank account. He replied that the bank account was held jointly with the first defendant, and that he regarded the money in the bank account as the first defendant’s. A copy bank statement from that account has now been produced by Fladgate LLP showing that on 6 June 2012 it was closed and the previous balance of $1.019m was transferred from the Wells Fargo account to a new account. The claimant’s response says at paragraph 16 that the defendants “are fully aware that … the monies in the Wells Fargo account have been moved for the benefit of the [first defendant] to a much higher interest bearing account.” Fladgate LLP’s letter of 30 July 2012 does not controvert this assertion, merely pointing out that the first defendant is not a signatory to the new Wells Fargo account. I infer that the defendants did indeed know of the move to a new account prior to Fladgate LLP’s letter of 25 July 2012, although precisely when they became aware of this is not clear.

4.

Overall there appears to be no change in the claimant’s practical ability to deal with the funds held by Wells Fargo – on the previous account he had power as a joint signatory to move funds, and on the new account he continues to have power to move funds. The difference appears to be that the first defendant no longer has the ability to do the same – an ability which he never sought to exercise during the period that the funds were in the original account. An offer was made as regards the original account that it could be used to provide security if the first defendant wished, and has been repeated as regards the new account. It has not been taken up.

5.

I draw attention to two features of the way that this matter has been presented to the court. The first is that at the hearing on 15 June 2012 the claimant, and the defendants either then or later, knew that the funds had been moved from the original Wells Fargo account. Yet the court was not told this on 15 June 2012, nor were any steps taken to inform the court later. The second is that the defendants apparently caused Fladgate LLP to raise this matter with the court in the letter of 24 July 2012 without revealing what each of defendants knew about the transfer of funds and when they had known about it.

6.

In these circumstances the material before me does not warrant any further action by the court as regards security for the cross-undertaking. However it does give rise to a need for both the claimant and the defendants to consider whether the court has been kept informed of matters relevant to the issues that I must decide. I say more about this below.

7.

The second concern is that it is not possible for the defendants to administer the Indian companies owned by the first defendant whilst the injunction remains in place. The claimant identifies matters which are said to indicate that the urgency of resolving this is not as great as the defendants have suggested. I consider that these matters should be treated for present purposes as showing no more than acceptance of my proposed timetable under which I hoped to be able to give judgment before the end of term.

8.

In my view the fact that the injunction is continuing makes it important that judgment should be given as soon as possible. It is for that reason that, as explained in my clerk’s email, I shall be working on the draft judgment while on leave. Regrettably it is not the only judgment that I shall be working on while on leave: a number of urgent matters arose in the period before I went on leave, with the result that work has had to be pushed back. I am confident that – in the absence of any further unexpected development in the present case – I shall be able to circulate the draft judgment on 18 September 2012 as planned.

9.

Fladgate LLP’s letter of 30 July 2012 seeks to explain that they had envisaged that I should give a ruling as to the result of the hearing on 15 June 2012, to be followed by reasons later. I cannot do this, for although I have been able to do some work on the draft judgment I have not reached any conclusion. Nor will I reach a conclusion until I have analysed all the material, including the material that was supplied in the period before I went on leave.

10.

Thus I conclude that the concerns raised by Fladgate LLP should not lead me, as at present advised, to take any action other than to continue to work on the draft judgment in the manner indicated in my clerk’s email of 24 July 2012. The sole respect where a change of plan may be needed concerns the point identified at paragraph 6 above. If either side considers that for the purposes of my draft judgment it is necessary to supply me with corrected or up to date information then a witness statement in that regard, made personally by the relevant party, must be filed with the court and served on the other side as soon as possible. I stress that I am not inviting the parties to re-argue the application. It is only if some matter of real importance calls for correction or updating that this course should be taken.

In a witness statement dated 31 August 2012 Mr Malhotra senior sought to answer my concern that steps had not been taken to inform the court of what had happened on the Wells Fargo account. That concern was not in itself something which called for further evidence: my ruling stressed that further evidence should be filed only if some matter of real importance called for correction or updating. However Mr Malhotra senior’s witness statement additionally sought to deploy what had been said by Rakesh in relation to the Wells Fargo account in support of arguments that I should reach three conclusions: that the cross-undertaking should be fortified, that the court should be cautious in approaching Rakesh’s evidence, and that Rakesh had failed to give complete and accurate evidence as to his financial position.

In this circumstances it seemed to me that these serious allegations should not be allowed to stand without affording Rakesh an opportunity to respond. This in turn meant that the date for handing down judgment would have to be put back. In that regard Mr Malhotra senior had needed more than four weeks in order to file his evidence on 31 August 2012, and could not in my view complain if Rakesh were afforded three weeks in order to answer it.

I have carefully considered the subsequent evidence and submissions. In the light of all the material placed before me I conclude that any inaccuracy on the part of Rakesh in what was said before and at the hearing is not so serious as to warrant any of the conclusions urged by Mr Malhotra senior.

In accordance with the principles identified in section F1 above the first main topic that I must consider is whether the threshold requirement is met: is there a high degree of probability that the bringing and continuing of the Indian petitions is contrary to the agreement to arbitrate in clause 43.1? If I conclude that the threshold requirement is met, then I must go on to consider the second main topic: is there a good reason not to grant the injunction sought?

Analysis of the threshold requirement is made more complex in the present case by the need for Rakesh to overcome the hurdle that the Indian petitions seek only limited relief against Rakesh, and the substantial relief that they seek is generally sought against others. Rakesh sought at the hearing to overcome that hurdle by saying that the claims against others were no more than “dressed-up” versions of claims which were in truth against him. I shall refer to this as “the dressing-up argument”. It seems to me convenient to start with a base question whether the Indian claims have been shown to the requisite standard to involve the determination of something which, if the Indian claim were brought against Rakesh by Mr Malhotra senior or Rajiv, would fall within clause 43.2. It is only if the base question is answered in Rakesh’s favour that the dressing-up argument can get off the ground.

On the base question I start with Mr Calver’s claim that the Indian petitions contravened clause 43.2 because they sought to undo the RA Agreements. Next, I deal with his claim that they contravened clause 43.2 because they attacked the alleged inter-sponsor agreement. In that regard I begin by examining generally how this fits in to the threshold requirement, and go on to consider what is said to have been expressly agreed, and Rakesh’s case that inferences may be drawn as to an agreement or “understanding”. I then turn to the claim that the petitions seek to undo things done by Rakesh under clauses 18.10 and 41.1.

For reasons which I explain below, I have concluded that Rakesh is unsuccessful on the base question, with the result that the dressing up argument (including the BNP Paribas case relied on by Rakesh in the written submission of 13 July 2012 and subsequently) and the good reason requirement do not need to be considered. Accordingly I deal with them only briefly.

Mr Calver’s oral opening submissions in this regard understandably placed great reliance on the date of 18 March 2011 specified in the revised petitions. Dealings after that date would include the carrying into effect of the RA Agreements, and any attempt to undo them would be contrary to the revised transaction. Mr Calver relied on paragraphs 24 to 27 in the Unique petition as demonstrating that it was always the intention to attack the restructuring agreements. It is true that paragraph 26 referred to an entitlement to have disclosure “with effect from March 2011”. Paragraph 26 then goes on to assert entitlement in certain circumstances to have contracts and liabilities set aside, terminated or modified, with no express limitation as to date. However when one looks at the Unique petition, and indeed the other petitions, as a whole it seems to be clear that the substantive complaints in the petitions concern dealings other than completion of the RA Agreements. This supports Ms Weaver’s assertion that a mistake was made when identifying the date of 18 March 2011 as the point from which transactions should be undone. I conclude on the material before me that this assertion is likely to be correct.

In any event, for the reasons given in section G1 above, I conclude that the undertakings given by Fladgate remove any real risk that the petitions will lead to anything which would undo the RA Agreements.

Rakesh’s first witness statement said that “the Sponsors” had “agreed” certain things. By the time that the draft arbitration points of claim came to be prepared an additional or alternative way of putting the matter had emerged, namely that there was a common understanding. The draft points of claim referred to the parties involved as being “the parties to the SSD” rather than “the Sponsors.” With some interpolations in italics by me, the way it is put in paragraph 12 of the draft points of claim is as follows:

12.

As described above, the parties to the SSD understood that because SPCPL which would take over the running of the Business as a new company, it would require the necessary working capital. Accordingly, as an integral part of the restructuring under the SSD, it was orally agreed between the parties to the SSD just prior to the conclusion of the SSD and/or it was their common understanding upon which they conducted themselves and upon which RM [i.e Rakesh] relied (as set out below) – such that the Respondents are estopped from denying such common understanding – (“the oral agreement/common understanding”) that:

(a)

[i] approximately 45% of the Funds Flow Monies, or US$23,775,744.44, would be deposited into new, separate interest-bearing accounts held in the names of the relevant Affiliated Companies [the term “Affiliated Companies” is defined in paragraph 2 to mean the Transauto main companies and Emerald], and that [ii] such funds would be used, at RM’s behest, for the benefit of the Group, and in particular SPCPL, in the day to day running of the Business; and/or

(b)

the aforesaid monies could therefore be used [i] for the payment of any professional fees by the Group and [ii] by way of security to enable the provision of bank lending to SPCPL under clause 18.10; and/or

(c)

the Affiliated Companies’ other assets were to be put at the disposal of the Group in the manner set out in the Transaction Documents; and/or

(d)

the security/collateral given by the Affiliated Companies (by way of guarantee) to a consortium of banks so as to secure working capital facilities from those banks for the Affiliated Companies would be extended by them to SPCPL so as to enable SPCPL to avail itself of the same working capital facilities (since it would now be running the Business).

For convenience I have identified as “[i]” and “[ii]” two distinct assertions in sub-paragraphs (a) and (b). What is said in sub-paragraphs (a)[i] and (c) was agreed by the Sponsors (and other parties to the SSD) initially in the SSD, and was modified by the SD. As so modified, it is common ground that it was carried into effect, and (as noted in section G1 above) the undertakings given by Fladgate will ensure that this is not put at risk in the Indian proceedings. Accordingly I refer below to “the disputed agreement/understanding” as meaning the matters set out at sub-paragraphs (a)[ii], (b) and (d).

Applying this analysis to Rakesh’s case as set out in paragraph 6 of the response of 24 July 2012, the first of the two issues in the draft points of claim becomes:

(1)

Was there [the disputed agreement/understanding] between the parties which formed an integral part of the restructuring under the SSD, as alleged in paragraph 12 [(a)[ii], (b) and (d)];

The Indian claims to which Rakesh objects do not on the face of the claim make any express reference to the SSD or SD. In so far as Rakesh’s case is that the claim is answered by the disputed agreement/understanding, and therefore should be arbitrated, in accordance with the principles discussed in section F1.3 above Mr Calver did not contest that he must show a high degree of probability that the disputed agreement/understanding existed and the claim in question fell within it.

The disputed agreement/understanding, and allegations about its extent, are strongly contested. Both Mr Malhotra senior and Rajiv denied Rakesh’s assertions about the alleged inter-sponsor agreement. Their case is that in accordance with the family relationship then existing Rakesh was given sole signatory powers over the Citibank accounts because the father trusted the son to manage the father’s assets. As to the evidence which is said to demonstrate either that there was such an agreement, or at least that there was such an understanding, they say that it is consistent with the family relationship that they describe.

Ms Weaver noted that while there were repeated assertions that Mr Malhotra senior and Rajiv had agreed certain things, those assertions had been challenged in Rajiv’s evidence, and no detailed evidence of the alleged agreement had been provided in reply.

A bland assertion that something was agreed is not enough to show a high degree of probability that it was. What would ordinarily be expected would be assertions, supported by evidence, about (1) whether the agreement was express or implied; (2) to the extent that it was express whether it was oral or in writing; and (3) to the extent that oral statements are relied upon, (a) by whom, (b) to whom, (c) when, (d) where, (e) in whose presence and (f) the gist of the words used.

The draft arbitration points of claim make no assertions of any of these things. In the annex to this judgment will be found extracts from evidence relevant to this and other points. The only occasion when anything approaching proper particularisation of an express agreement appears in evidence is in the last sentence of paragraph 4.7 of Rakesh’s second statement. The sentence in question contains a particularised oral statement limited to who would have signatory powers, and of what type, over “the current accounts” of the Transauto main subsidiaries :

4.7

… Indeed, I remember very clearly that we were all in the room together when [Mr Malhotra senior] told me and [Rajiv] specifically and we agreed that I would be a sole signatory on the current accounts of the Affiliated Companies [a term defined in paragraph 1.12 of Rakesh’s first witness statement to mean the Transauto main subsidiaries], and I would also be a joint signatory with [Rajiv].

Even if I were to conclude that there is a high degree of probability that this oral statement was made, this would of itself come nowhere near establishing that the disputed agreement/understanding existed, let alone that any particular claim concerned something which fell within it.

My analysis in section H3 above leads to the conclusion that in so far as Rakesh says that a particular claim in India is answered by the disputed agreement/understanding, and therefore should be arbitrated, he has not shown to a high degree of probability that there is any express oral agreement to that effect. It follows that Rakesh’s case for an injunction in relation to such claims will only be made good if inferences he derives from documents or events are so strong as to show to a high degree of probability that an implied agreement or understanding existed on relevant matters.

It is convenient to take first the matters identified at paragraph 12(a)[ii], (b)[i], and (b)[ii] of the draft arbitration points of claim. Paragraph 12 makes clear – by using the word “therefore” – that (b)[i], and (b)[ii] are simply examples of what falls within the alleged agreement/understanding at (a)[ii]. Thus we are concerned with an ability on the part of Rakesh to use funds in the accounts “for the benefit of the Group, and in particular SPCPL, in the day to day running of the Business”, examples of which are said to be using funds in the accounts “for the payment of any professional fees by the Group” and using funds “by way of security to enable the provision of bank lending to SPCPL under clause 18.10”.

I deal at the outset with Mr Calver’s submission that Mr Malhotra senior and Rajiv were “entirely untruthful” about the account opening forms. In my view this mis-reads Rajiv’s evidence. He explains what he says he was told, and that he signed relevant forms in blank. His account is that he was told of a change in what had been proposed. This appears to have been overlooked when asserting that he was being untruthful.

Mr Calver’s general assertion was that it was perfectly obvious what the parties agreed in relation to the use of the funds when one looked at the chronology and what happened. However, as to the main matters relied on by Mr Calver in this regard:

The remaining aspect of the disputed agreement/understanding is identified at paragraph 12(d) of the draft arbitration points of claim: an agreement or understanding that “the security/collateral given by [the Transauto main companies and Emerald] (by way of guarantee) to a consortium of banks so as to secure working capital facilities from those banks for the Affiliated Companies would be extended by them to SPCPL so as to enable SPCPL to avail itself of the same working capital facilities (since it would now be running the Business)”. In this regard Rakesh asserted, but has not shown on the material before the court, that Mr Malhotra senior gave a personal guarantee. Even if he had done so, however, this would not show that he was aware of the giving of guarantees by the Transauto main subsidiaries. The correspondence produced by Rakesh concerns transfer of the working capital facilities needed prior to completion by those subsidiaries to SPCL which would need them after completion. The guarantees by the subsidiaries were given after completion. In these circumstances it does not seem to me that the case for an inference of knowledge on the part of Mr Malhotra senior is made out to the requisite standard.

Here, too, the Indian claims to which Rakesh objects do not on the face of the claim make any express reference to the SSD or SD. In so far as Rakesh’s case is that the claim is answered by an entitlement to rely on clauses 18.10 and 41.1, and therefore should be arbitrated, in accordance with the principles discussed in section F1.3 above Mr Calver did not contest that he must show a high degree of probability that either or both of clause 18.10 or clause 41.1 are engaged and either alone or together justify the conduct which the relevant claim calls into question.

Mr Calver in argument sought to rely upon these clauses in various respects. Two of his points discussed in section F3 appear to me to be fundamental to his argument. Below I summarise them in quotation marks before commenting on them:

Ms Weaver submits that Rakesh’s authority under clause 41.1 is limited in two ways (a) to taking actions and doing things provided for in or contemplated by the SSD (as extended) and (b) to taking action and doing things to be performed by a Malhotra Party. I do not understand Mr Calver to dispute either of these points. I agree with Ms Weaver that it is impossible to construe the actions alleged in the Indian petitions in relation to the management of the relevant companies as actions “provided for in or contemplated by” the revised transaction.

For the reasons given in sections H1 to H5 above I conclude that the threshold requirement is not met as regards the base question whether the Indian claims have been shown to a high degree of probability to involve the determination of something which, if the Indian claims had all been brought against Rakesh by Mr Malhotra senior or Rajiv, falls within clause 43.2. It follows that I do not need to determine issues arising in relation to the dressing up argument (including the BNP Paribas case relied on by Rakesh in the written submission of 13 July 2012 and subsequently) and the good reason requirement. Accordingly I deal with them below only briefly.

In my view Rakesh’s dressing up argument, as advanced at the hearing, involved real difficulty. The first point to note is that the argument which succeeded in the BNP Paribas case was not the argument advanced at the hearing. In the BNP Paribas case both Blair J and the Court of Appeal held, in effect, that the litigation in Russia was vexatious and oppressive because it was a blatant attempt to circumvent the arbitration clause. By contrast at the hearing in the present case Mr Calver relied on principles applicable in cases where the foreign litigation was a breach (as opposed to a circumvention) of an arbitration clause.

It seems to me that as a matter of principle the dressing up argument could only succeed if the test identified in the BNP Paribas case were met. Unless the claims against the other respondents in India were vexatious or oppressive, the Indian petitioners would in my view be fully entitled to say that as between them and the relevant respondent there was no agreement to arbitrate.

I do not consider that the claims against the other respondents in India were vexatious or oppressive. The evidence that the directors were acting under the influence of Rakesh was strong. Particularly alarming in that regard was the refusal of the directors to provide the shareholders with information about what the company was doing, thus preventing the shareholders from even querying whether a transaction proposed by Rakesh was one which they were obliged to acquiesce in. Even taking at face value Rakesh’s evidence as to the bitterness of the family dispute, and accepting for present purposes that the Indian petitions formed part of a concerted attack on his ability to keep the business afloat, it seems to me that it would be wrong to condemn as illegitimate a claim designed to enable the shareholders to regain control of the companies they owned. As Ms Weaver pointed out, the appropriate place to make such a claim was before the Company Law Board, and in so far as the company had entered into transactions which the shareholders were not entitled to complain about the Company Law Board is a judicial body with jurisdiction to determine whether that is the case.

For similar reasons I would have concluded that even if the threshold requirement were met, for example as regards the claims made in the petitions agaist Rakesh personally, the facts of the present case provide good reason for not granting an injunction. In reaching this conclusion I do not need to resolve any question as to ability to call an extraordinary general meeting under Indian Company Law. My essential reasoning is that the dispute between the petitioners and the directors has resulted in a deadlock which, as Ms Weaver forcefully submits, needs to be resolved – whatever the rights or wrongs. The Company Law Board is the appropriate judicial tribunal in which to resolve it. To the extent that the questions which arise overlap with disputes between the Sponsors arising from or connected with the revised transaction, the entirety of the overlapping disputes can be determined by the Company Law Board. There is no suggestion of any dispute with Actis which would need to be resolved by arbitration even if other disputes were determined in India. Mr Calver repeatedly asserted that if the disputes between the Sponsors were determined by arbitration then that would effectively resolve the Indian petitions one way or the other. I confess that I have not understood how that is so. If, for example, the arbitration found against Rakesh, that would merely mean that one line of defence to the petitions (i.e. consent by the shareholders to the transactions complained of) would become impossible, or at least very difficult, to run. It would not determine the outcome of other issues before the Company Law Board. The tax questions raised in the petition similarly seem to me to be questions which will not be resolved by the proposed arbitration. Mr Calver urged that they could simply be dismissed as spurious. Rakesh’s reply evidence was that the directors had attempted to deal with tax matters, but had been prevented from doing so by Mr Malhotra senior and his agents, and that in fact Mr Goyal had been appearing at hearings on these matters and defending the tax claims. These assertions do not provide me with a sufficiently strong basis for saying that the tax claims can be dismissed out of hand. The same is true of the property mismanagement allegations.

I do not rule out the possibility that this court might grant an injunction restraining Mr Malhotra senior and Rajiv from raising certain issues only in the Indian petitions. As it seems to me, however, in the ordinary course it would be for the Company Law Board to reach a decision as a matter of case management on what issues it would determine and when. Such a decision would be case-specific and highly fact-sensitive. In the absence of particularly strong reason justifying this court in doing so, it seems to me that it would be inappropriate for this court to do so when exercising its own jurisdiction for the purpose of enforcing an English law agreement to arbitrate.

For completeness I record here some comments on Rakesh’s analysis of the Unique petition. For this purpose I take the numbered sub-paragraphs in section F2.2 above, either in groups or alone, and set out my comments after a dash (–):

Also for completeness I record here some comments on matters relied on by Rakesh in order to distinguish Stonehouse v Jones. Mr Calver asserted that none of the Californian claims in that case was founded on the relevant agreement: that seems to be equally true of the Indian claims in the present case. Mr Calver added that there was no suggestion that the Californian claims could be defended on the merits. To my mind that had little if any relevance to the decision. As to the matters identified by Mr Calver in his eight specific points of distinction, I deal with them in the same way as in the preceding section:

For the reasons given above I conclude that, having regard (among other things) to the undertakings referred to in paragraph 128 above, Rakesh’s application should be refused. It follows that the without notice injunction must be discharged.

A/ 2. Rakesh’s first witness statement included the following:

1.4… RKM [i.e. Mr Malhotra senior] and RJM [i.e. Rajiv] were fully aware from the outset of the important features of the proposed deal with Actis London from the terms of the LOI and the term sheet, which contained crucial financial targets which the business had to reach to ensure that Actis was not entitled to an increased stake in the SuperMax group business. Therefore RKM and RJM were fully aware from the outset that it was necessary to ensure that the relevant corporate entities within the group had sufficient funding to enable the financial targets to be met.

…

1.8

The SSD and the other transaction documents ensured a guaranteed return to Actis. …if [relevant] targets were not met, Actis would increase its ownership interest in the SuperMax group to the […] the indirect detriment of the Sponsors. Once again, RKM and RJM were therefore fully aware of this critical fact.

1.9

Importantly, and as RKM and RJM were therefore fully aware, Clause 18 of the SSD requires each of the Sponsors to ensure that each company in the SuperMax group has sufficient cash to carry out its day to day activities…

[Clause 18.10 was then set out.]

1.10… It made sense, … that to enable the Sponsors to comply with [relevant] obligations, and to take any other actions under the SSD, the Malhotra Parties irrevocably appointed me as their sole reprewentative to act for all purposes under the SSD. In this capacity, I was authorised by each of the Malhotra Parties to take all actions contemplated by the SSD on their behalf, including under Clause 18.10. To this end, Clause 41.1 provided:

[Clause 41.1 was then set out.]

1.11

In the circumstances, the Sponsors (and I in particular, as the MP Representative) had to ensure that there were sufficient assets available which could be used to fulfil the various obligations of the Malhotra Parties under the SSD. Accordingly, the Sponsors agreed on the Subscription Fund Flow at the time when the SSD was completed (see Clause 6.8 of the SSD at page 31, Clause 11.5 at page 36 of Tab 2 and the Revised Funds Flow Steps at Annex A of the Supplemental Deed …) that the monies received in payment for Actis’ …[subscription]… in the SuperMax group, would be used, in part, to fund the various companies which were affiliated with RKM and RJM, particularly as these companies had entered into various agreements with SPCPL, the newly incorporated Indian entity, as part of the restructuring needed for the Actis Investment. RKM and RJM were, therefore, fully aware of this from the outset. The flow of these funds thus was applied in accordance with the contractually agreed Subscription Fund Flow…

1.12

Accordingly, as expressly envisaged under the SSD and as was known to RKM and RJM, …[a specific sum]… was paid to VMPL, RCC, Unique and SIPL (“Affiliated Companies”), of which …[ a proportion]… was deposited into newly opened bank accounts with Citibank. The funds were deposited into interest-bearing mutual funds so as to maintain liquidity in case they were needed to satisfy the Malhotra Parties’ obligations under the SSD. As I was irrevocably appointed by the Malhotra Parties pursuant to Clause 41.1 to undertake any act contemplated by the SSD, the Sponsors agreed that I be given signatory rights over the Citibank accounts despite the fact that I owned no shareholding interest in any of the Affiliated Companies (other than one share in VMPL), directly or indirectly. Again, therefore, RKM and RJM were fully aware of this from the outset, agreed to it and facilitated it. It was agreed that I should be the single signatory on the following accounts:

(a)

SIPL’s current bank account with Citibank, as authorised by the SIPL Board Resolution dated 23 December 2010. This bank account was opened on 17 January 2011. A copy of the relevant extracts from the SIPL resolution and the bank opening forms appointing me as a signatory are at Tabs 6 and 7 respectively.

(b)

VMPL’s current account with Citibank, as authorised by the VMPL Board Resolution dated 23 December 2010. This bank account was opened on 17 January 2011. A copy of the relevant extracts form this resolution and the bank opening forms appointing me as a signatory are at Tabs 8 and 9 respectively.

(c)

RCC current account with Citibank, as authorised by the RCC Board Resolution dated 23 December 2010. This bank account was opened on 17 January 2011. A copy of the relevant extracts from this resolution and the bank opening forms appointing me as a signatory are at Tabs 10 and 11 respectively.

(d)

Unique’s current bank account with Citibank as authorised by the Unique Board Resolution dated 23 December 2010. This bank account was opened on 2 February 2011. A copy of the relevant extracts from this resolution and the bank opening forms appointing me as a signatory are at Tabs 12 and 13 respectively.

1.13

In relation to the SIPL, VMPL and RCC accounts, the bank account opening forms also name RJM (the Second Respondent) as a “First Joint Applicant”. Likewise, in relation to the Unique account, RJM was named as a “Second Signatory” on the bank account opening forms. The Board resolutions clarify that RJM was named as a joint signatory on these accounts, together with me, whilst I was also appointed as a single signatory. RJM’s signatures confirming his identity and appointment alongside my appointment can be seen on all four bank account opening forms and was fully known to (and indeed facilitated by) RKM and, obviously, RJM.

1.14

The above resolutions of the Boards of Directors of each of the Affiliated Companies were passed after the execution of the SSD and other transaction documents, and prior to performance of the various requirements under the SSD in order to facilitate completion. Further, in order to maintain continuity, the Sponsors decided to retain the same directors for each of the companies.

A/ 3. Rakesh’s first witness statement added:

4.3

So far as the specific matters raised in the Indian Proceedings are concerned, I should make the following further observations.

4.4

Pursuant to Clause 41.1, I had the irrevocable authority of the Malhotra Parties, including RKM and RJM, to take any action under the SSD on their behalf and to do any and all things provided n or contemplated by the SSD. Furthermore, the SSD expressly contemplates the need for additional working capital by companies within the SuperMax group (as set out in detail in 1.8 to 1.9 above). It specifically obligates the Sponsors to loan or to procure loans to any company in the SuperMax group if such was needed to allow the company to carry out their day to day activities, as set out in Clause 18.10. As detailed above, SPCPL had such need as of autumn 2011, when it found itself already at the limit of its existing letter of credit facility, and unable to pay its suppliers or to secure an additional facility on its own balance sheet. Accordingly, SPCPL negotiated an agreement with HDFC, which agreement was expressly approved by the Board of Directors of SPCPL.

4.5

This new credit facility was conditioned upon the corporate guarantees and pledges of collateral which could only be provided by the Affiliated Companies as they had themselves been funded from the Actis Investment specifically for this purpose. As such, it was entirely appropriate and expressly contemplated by Clause 41.1 of the SSD that I would approach the Boards of the Affiliated Companies and request that they guarantee the credit facility and pledge assets to secure it, which is precisely what happened. I should add that I was expressly excluded by Clause 14.6 of the SSD from receiving any profit from the Actis Investment.

4.6

As mentioned in 1.12 above, pursuant to the restructuring under the SSD, and in order to allow me to carry out my obligations as the Malhotra Parties’ representative under Clause 41.1 of the SSD, I was named a single signatory in relation to the accounts specifically mentioned in the Indian Proceedings, …

4.7

As noted in 1.13 above, despite providing affidavits in support of each of the Indian Proceedings, RJM (the Second Respondent and one of the Indian petitioners) was also named as a signatory to the accounts listed above. RJM’s signature appears on the bank account opening forms, alongside my appointment as a single signatory on the bank accounts. …

4.8

This illustrates that my appointment was made with the sign-off and consent of RJM, who also has a shareholding (1 share) in Sapphire, RSM and RCC. RKM was fully aware of this.

4.9

In addition to the Sponsor’s obligation to inject additional working capital into SuperMax group companies as needed, my authority as representative of the Malhotra Parties included taking action to protect the Malhotra Parties’ interests under the SSD. These interests were substantial. As detailed above, the SSD contained express terms by which the Malhotra Parties could be compelled to disgorge a portion of their share ownership if certain financial targets were not met. Further, the Affiliated Companies received certain funds specifically to be used for the purposes of discharging the Malhotra family’s responsibilities under the SSD (as set out in 1.11 above). It was thus specifically contemplated by the SSD that I might need to take action to ensure that the financial targets were satisfied and the Malhotra Parties’ interests protected. It was thus entirely just and proper for me to approach the directors of the Affiliated Companies and request that they guarantee the credit facility needed by SPCPL and pledge assets to secure it.

4.10

Similarly, the payment of professional fees to Allegro was agreed in advance, in 2008, as part of the restructuring in relation to the SSD, as Allegro was charged with finding an investor for the SuperMax group (as evident from the Allegro’s engagement letter dated 27 October 2008 at Tab 1), which it duly did in the shape of Actis. The terms of the engagement letters – and Allegro’s fee structure – were known and explicitly agreed to by RKM himself. Any request by me to the Affiliated Companies to pay the invoices for Allegro’s fees was entirely legitimate and plainly within the terms of Clause 41.1 of the SSD. Indeed, non-payment of these fees could obviously have resulted in claims brought against the SuperMax group under the Allegro engagement letters.

…

4.12

Each of the petitions in the Indian Proceedings expressly state that the Indian petitioners’ relationship with the Board of Directors was previously a good one, and that the Board of Directors “used to consult and act as per the advice of [RKM] in respect of all important business and financial matters”, and RKM was “always kept informed of the affairs of the Company”, meaning that he “effectively participated in and monitored the affairs of the Company withal the information relating to the Company being made available” to him. It is then stated in each case that this relationship broke down in “the recent past”. Accordingly, prior to the “recent past”, which I know to have started in mid-January 2012, when my relationship with RKM broke down, RKM was aware of and indeed dictated and/or approved all of the concerned companies’ dealings and transactions.

4.13

Accordingly, at the time of (i) my appointment as a signatory to the bank accounts of the Affiliated Companies, (ii) payment of Allegro’s fees, (iii) grant of the guarantees by VMPL, RCC, Unique and Emerald (as set out in 2.1 above) and (iv) all of the other transactions which took place prior to the “recent past” of January 2012, RKM had both a good relationship with the Board of Directors and full knowledge of the Board’s business, and accordingly each of these transactions took place with his knowledge and consent.

4.14

Finally, the NOCs granted by the Bank Consortium (referred to in paragraph 2.1 above) required, expressly or by reference, the personal guarantees of RKM and RJM in order to grant the credit facility to SPCPL. Thus, it is unconscionable for RKM to now try and avoid or bring into question in India (i) security by way of the Affiliated Companies’ guarantees of which RKM was at all times fully aware and which was made pursuant to the SSD Clause 41.1 and (ii) the payment of Allegro’s professional fees which were agreed originally in 2008 with RKM’s full knowledge and consent.

4.15

Each of the petitions in the Indian Proceedings also alleges that the Affiliate Companies’ and Trasauto’s records were not made available to RKM upon his request. There is a very good (and legitimate) reason for this. As noted in 2.6 above, RKM had started illegitimately interfering with the ordinary business of SPCPL, and with my appointment under Clause 41.1 of the SSD, attempting to incite labour strikes and issuing threats to the directors and employees of SPCPL, thereby threatening to prevent the Affiliated Companies, Transauto, myself and, by extension, the Malhotra Parties themselves from carrying out their obligations under the SSD. In these circumstances it was entirely appropriate and indeed necessary for me, acting under the authority of Clause 41.1 of the SSD, to ask the directors of the Affiliated Companies and Transauto to prevent RKM’s access to the relevant companies’ books.

A/ 4. Also lodged in support of the application for the without notice injunction was a witness statement of Amit Bhansali. Mr Bhansali explained that he had been appointed chief financial officer for the Supermax group of companies in July 2009, and a director of SPCPL on 11 April 2011. At paragraph 1.4 of his statement he said this:

1.4

It was agreed that the funds which were used to pay the Affiliated Companies for these businesses, land leases and IP rights were to be deposited into newly opened accounts of each, which accounts would be placed at the disposal of RM to be used, if required, to support the SuperMax group operations. In this regard, RM was authorised by the relevant Boards of Directors to be the signatory on the accounts along with RJM. This is evident from opening paperwork at the bank as the RM and RJM are also joint signing authorities on the bank account opening forms (see Tabs 7, 9, 11 and 13). As RM and RJM were often travelling outside of India, in June 2011 I was added as a signatory to the bank accounts of the Affiliated Companies in order to be able to operate the accounts in their absence. All of this was done with the full knowledge and consent of RKM and RJM under the terms of the Subscription and Shareholders’ Deed which they entered into on 4 November 2010 (the “SSD”).

A/ 5. In response to the without notice injunction a witness statement was made by Rajiv. This included the following:

9.

Before the breakdown in our relationship, in keeping with Hindu family culture, Rakesh as the eldest son of the family held an important and trusted position. He had an important role in running the Supermax business. My father trusted him implicitly to deal with financial matters, both for the Supermax group and for my father’s personal finances and assets (including his interests in the RKM Companies) which are separate from the Supermax business.

…

18.

The Acquisition Payments were mainly invested in mutual funds and other securities held with Citibank. In the case of RCC, about Rs. 11 crores were invested with Citibank and the balance was put on a fixed deposit with Andhra Bank.

19.

These investments were made by the various boards of the Transferring RKM Companies [i.e. the Transauto main subsidiaries] at the request of Rakesh. At the time that the Acquisition Payments were received and the accounts with Citibank were opened, the relationship between Rakesh and my father and me was still good and my father, who trusted Rakesh, was content for him to make the arrangements in conjunction with the various boards of directors for the investment of the Acquisition Payments.

20.

Our intention was that after the restructuring, my father and I would pursue other business opportunities, probably engineering related, through the RKM Companies. In addition to its shareholdings in the Transferring RKM Companies, Transauto owns two valuable properties:

a.

land and industrial premises at AB/14B, Nandanvan Co-operative Industrial Estate, Thane, India

b.

premises at Plot No A-292, Road No 16, Lane 2, Wagle Industrial Estate, Thane, India

c.

Vidyut [i.e. VMPL], Unique and SIPL also own substantial real estate. My father plans to develop these properties in due course.

21.

When the business of the Transferring RKM Companies were transferred into the Supermax group, the employees also transferred to work for the group and became employees of SPCPL. That included the directors of the RKM Companies. However because the directors of the RKM Companies were long-standing and trusted directors employees of their respective companies, my father was content for them to remain as directors.

22.

Several of the employees of the Transferring RKM Companies were then transferred to work for a company called VRM which is owned by our father and mother which was to manage assets owned by the RKM Companies. However the retirement and other benefits of these employees were still being contolled by SPCPL. Rakesh was able to exploit that situation to get the employees to leave VRM and move back to SPCPL. They left in a great rush, taking documents and files including bank records and office equipment with them. These employees also deleted data from computers and disconnected the email access which my father and I had been using. They also took the books and records for the RKM Companies with them. That left my father and me without any secretarial or office support or assistance.

23.

The result is that the directors of the RKM Companies and the other individual respondents who are signatories on the RKM Companies’ bank accounts are now all either employed by SPCPL or other group companies or have positions as consultants. Unfortunately, as I will explain there has been a complete breakdown in the relationship between my father and me with the directors of the RKM Companies and Rakesh. It is that breakdown in relationships (due to mismanagement and breaches of duty by the directors) which has resulted in the Indian Proceedings.

24.

As I have said, before the restructuring, the Transferring RKM Companies provided goods and services to the Supermax group or held land or other assets for the benefit of the group. Although my father and other members of the family were the shareholders (directly and indirectly), we were not directors of any of the RKM Companies. However, it was the custom and practice of the directors of the various boards of the RKM Companies to consult with and take advice from my father in relation to all major business decisions. Although he was not a director, he was given access to all the books, records and accounts of the company. He was kept informed of everything that was going at the RKM Companies and the other companies.

25.

However since the restructuring took place and the employees of the RKM Companies transferred to work for the group, the situation has changed. The directors of the RKM Companies do not keep my father informed of what is happening or the decisions which they are taking and have denied him access to the books and records. In addition, as set out in the petitions in the Indian Proceedings, my father is concerned about various transactions which the directors of the Transferring RKM Companies have entered into. The basic reason for concern is that the transactions do not appear to be for the benefit of the Transferring RKM Company concerned but rather for the benefit of the Supermax Group or other RKM Companies. My father and I believe that now that the directors of the RKM Companies are all working for the Supermax group, they are under the influence of Rakesh and acting at his behest rather than in the interests of the RKM Companies as separate companies outside the Supermax group. We believe that Rakesh is using his influence over them as employees with the Supermax group as a means of getting them to act as he directs.

…

29.

These issues arise between the shareholders and directors of Indian companies and concern the internal management of those companies. The remedies claimed are against the directors of Transauto and the Transferring RKM Companies, none of whom are parties to the SSD. We wish to pursue our remedies against the directors as soon as we can.

30.

The only claim made against Rakesh is for an interim injunction retraining him, along with the directors and other signatories on the companies’ bank accounts, from dealing with the company’s assets and books and records.

31.

My father and I do consider that these matters do not have anything to do with the rights and obligations under the SSD and are not within the arbitration agreement in the SSD. That is why the arbitration agreement is not mentioned in the Indian Proceedings.

…

37.

In paragraph 1.9 of his witness statement, Rakesh refers to clause 18 of the SSD. My father and I, of course, agree that we were aware of and accepted this obligation. However, I want to emphasise that the obligation under clause 18 is imposed on the Sponsors ie Rakesh, my father and myself and no-one else. Clause 18 sets out a procedure to be followed if there is a cash shortfall ie notification by the holding company to the management, the Malhotra Parties and the holding company directors and a request by Actis to the Sponsors.

38.

We also accept that under the terms of the SSD that Rakesh would be the full time chairman of the Supermax Group and would have control over and the voting rights in the companies and entities which held the 70.83% of the shares not acquired by Actis and Rakesh had rights to appoint a certain number of members of the Advisory Board which was to be the principal governing body of the group and a certain number of directors of the holding company and the subsidiaries. These provisions are all entirely consistent with the fact that after the restructuring, my father and I were not going to play any part in the Group business and that the restructuring provided an exit for us by which the Transferring RKM Companies would receive substantial payments for the transfer of their business and assets. In contrast, Rakesh did not receive any of the proceeds of any of the transactions under the restructuring.

39.

It is completely wrong for Rakesh to say in paragraph 1.10 that he was authorised by me and my father to take all actions contemplated by the SSD on our behalf including under clause 18.10. I never agreed that Rakesh would have the sort of authority that would enable him to raise loans in my name or on my behalf and pay them over to the Supermax group. My father has confirmed to me that he never made such an agreement or gave that authority to Rakesh.

40.

Rakesh relies on clause 41.1 as giving him some general authority to act on behalf of my father and me and in particular authorising him to deal with and procure the RKM Transferring Companies to enter into transactions by which they paid away or charged their assets for the benefit of the Supermax group. I have been told that the meaning and effect of clause 41.1 is not something to be dealt with in evidence. However, as part of the background, I want to say that there was no discussion between Rakesh, me and my father about appointing him to act for us generally or about clause 41.1.

41.

It is correct that sums were paid to Vidyut, RCC, Unique and SIPL as set out in paragraph 1.11(a) to (d) (“the Acquisition Funds”). The dollar amounts referred to are the same as the rupee amounts in paragraph 17 above. I do not understand what Rakesh means when he says in paragraph 1.11 that the Sponsors had to agree that there were sufficient funds available to fulfil the various obligations of the Malhotra Parties and therefore agreed on the Subscription Fund Flow and Revised Fund Flow. The payment of the Acquisition Funds was provided for by the SSD as one of the elements of the restructuring. If he is saying that the Acquisition Funds were earmarked or ring-fenced to meet any obligations arising under clause 18.10 (which is what he seems to be asserting in paragraph 1.12) then I disagree.

42.

The SSD does not address the issue of what is to happen to the Acquisition Funds after they were paid to the Transferring RKM Companies. There is no provision for them to be retained or otherwise made available to meet any obligation under clause 18.10 or any other provision of the SSD. I did not make any agreement or arrangement with Rakesh as to how any obligation under clause 18.10 would be met if it arose. My father tells me that he did not have any such agreement with Rakesh. He has also confirmed that he did not agree with Rakesh that the Acquisition Funds received by the Transferring RKM Companies would be kept available to meet any obligation under clause 18.10.

43.

It is not correct that my father and I agreed that Rakesh should be the single signatory on the Citibank accounts. What happened was this. Before the breakdown of the relationship, it was our family practice that my father, my mother, Rakesh and me would be each be sole signatories on bank accounts holding family money as we trusted each other. As I have said my father left to Rakesh to make the arrangements in relation to the Acquisition Funds and assumed that he would follow the usual practice. I was asked by the directors of the RKM Companies to give specimen signatures for the bank account opening forms and gave me the bank account opening forms to sign in blank. Seeing the words “First Applicant” “Joint Applicant”, I asked what was intended about signatories. The directors told me that given the very large amounts involved, they thought that Rakesh and I should be joint signatories. I therefore signed the form in blank. It was not until later that my father and I discovered that the forms had been completed to make Rakesh the only sole signatory on these accounts with me only a joint signatory. I believe that I found out shortly before we wrote the letters to Citibank and Andhra Bank on 19 January 2012 asking them to freeze the accounts (which is exhibited by Rakesh as Annexure 4 to CP 14 of 2012 at tab 26 to his witness statement). I was told by Mr Goyal, a tax consultant for our family, who learnt it from Mr Kakade, one of the employees who deserted VRM as I have mentioned.

44.

In paragraph 1.16, Rakesh refers to the arbitration clause in the SSD. My father and I accept that there is an arbitration agreement which binds us in relation to disputes arising from or connected with the SSD and the Supplemental Deed. We have never threatened to start proceedings in breach of the arbitration agreement. As Rakesh says we recognise the advantage of confidentiality which comes with arbitration. However we never agreed that the arbitration clause would prevent us from exercising our rights as shareholders in relation to the RKM Companies and their affairs.

45.

Contrary to what Rakesh says, my father and I were not aware of the guarantees entered into by Vidyut, RCC, Emerald and Unique (referred to in paragraph 2.1 of his witness statement) at the time that they were given. Rakesh tries to make the point that since my father used to be consulted by the directors before the breakdown in the relationship he must have known what was going on. That is not correct. First, as I have said my father was mostly outside India between June 2010 and August 2011. He was given some information from time to time but did not know that he was not being given the full picture. We were not consulted about or informed of the guarantees. We only learnt of the guarantees from the email dated 23 January 2012 exhibited to the Company Petitions relating to those companies (a copy is at tab 24 page 95 of “RM1”). Rakesh claims that we were aware of the guarantees because they were subject to No Objection Certificates. Those Certificates have not been exhibited and I do not understand how they evidence the fact that we were aware of the guarantees. My father has confirmed that he did not give any personal guarantee to support lending to SPCPL. I did not give a guarantee. We were also not told about the Allegro invoice dated 1 June 2011.

A/ 6. Rakesh made a second witness statement in reply to what had been said by Rajiv. He noted that Rajiv had referred to a belief that the directors of relevant companies were under the influence of Rakesh, and continued:

1.3

As I set out in my first witness statement, this so-called “influence” over the boards of the Affiliated Companies consists of nothing more than me exercising the authority which the Respondents have specifically granted to me pursuant to the express provisions of Clause 41.1 of the SSD to take any and all acts provided in or contemplated by the SSD to be performed by any Malhotra Party (as defined in the SSD and which includes the Respondents), and granted to me by related (and agreed) board resolutions (for, example, the 23 December 2010 board resolutions which name me as a single signatory on the current accounts of the Affiliated Companies, at Tabs 6, 8, 10 and 12 of RM1). It was specifically agreed by my father and brother that the funds which were transferred to the Affiliated Companies upon the sale of their businesses under the restructuring would be used to satisfy the Sponsors’ obligations under the SSD. There could be no other reason why the funds should have been deposited into newly opened accounts of each of the Affiliated Companies over which I was made a sole signatory, pursuant to specific board resolutions of each of the Affiliated Companies and with my father’s consent. Thus, the essence of the dispute and the real complaint in the Indian Proceedings is whether the grant of authority given to me in the SSD extends to the acts I have taken in relation to the Affiliated Companies.

A/ 7. Later in his second statement Rakesh said, among other things:

4.6

There are numerous documents which show that my father was actively involved in the SSD negotiations. …

…

Any suggestion that the Respondents and my father in particular were not fully involved in the negotiations concerning the SSD or that they were not aware of the terms of the SSD is simply incorrect.

4.7

It is equally false to suggest that each of the Malhotra Parties did not discuss (a) the use of the proceeds paid to the companies at issue in the Indian Proceedings to support our obligations under the SSD once it was executed on 4 November 2010, or (b) that I was to be named sole signatory on the company accounts precisely so as to allow me to fulfil our obligations under the SSD. RKM, RJM and I discussed and agreed both the use of the current accounts of the Affiliated Companies for this very purpose and that I would therefore be sole signatory on them. We all understood that the SSD obligated us to do several things before completion of the transaction and thereafter. We needed to restructure the group so that all of the business operations were within the one structure, and then we needed to ensure that SuperMax could satisfy its financial targets or else the share capital of Actis would be increased thereby diluting the other shareholders’ stake. Indeed, I remember very clearly that we were all in the room together when RKM told me and RJM specifically and we agreed that I would be a sole signatory on the current accounts of the Affiliated Companies, and I would also be a joint signatory with RJM.

4.8

After this agreement was reached, I was accordingly authorised by the board of these companies to be a sole signatory of the bank accounts by all of the boards of the Affiliated Companies, copies of which are at Tabs 6, 8, 10 and 12 of RM1, this being at a time when Respondents admit the boards acted pursuant to the instructions of RKM. These resolutions were passed with the full knowledge and consent of Respondents, as a direct result of the execution of the SSD, and with the understanding that I would have these funds available to satisfy Malhotra Parties’ obligations under the SSD. Otherwise, there was no reason why almost immediately after execution of the SSD I should be authorised by company board resolutions to have sole signatory rights over these accounts. Bear in mind that I was made sole signatory immediately after execution of the SSD, but prior to completion of the corporate structuring needed to complete the transaction and for any funds to be paid into these accounts. The creation of these accounts was done specifically to receive and invest proceeds from the restructuring envisioned by the SSD.

4.9

I note that the Respondents fail entirely to acknowledge the companies’ boards’ resolutions in their reply, and instead make the very serious and unfounded allegation that I acted without their knowledge in becoming the sole signatory on the accounts despite the fact that RJM co-signed the account opening forms acknowledging that I am to be the sole signatory on them. To seek to explain away this inconvenient fact, he falsely alleges that he signed the forms in blank and that I filled them in subsequently without his knowledge (see RJM’s witness statement, at paragraph 43). This is wholly false as RJM knows. The falsity can easily be demonstrated: if this were true, without the board resolutions authorising me to so act, I could easily have been removed as sole signatory. It would have been impossible for me to remain sole signatory without this board approval. But I never was, because it was agreed by RJM and RKM that I should indeed be sole signatory on these accounts for the purposes of the SSD.

4.10

Further, although the Affiliated Companies are not parties to the SSD, the SSD envisages important roles for them in support of SPCPL after completion of the restructuring, such as:

(a)

the leasing or sale of property owned by the Affiliated Companies to SPCPL which are discussed above together with others like the lease of RCC’s property to SPCPL,

(b)

the leasing of certain equipment;

(c)

a job work arrangement between SPCPL by which VMPL was to carry out certain job handling activities for SPCPL at VMPL Plant 2 property. As VMPL was litigating on the title deed of the land in relation to Plant 2, which forbade subletting or disposal of the property, these premises could not be conveyed or sublet to SPCPL. Therefore to retain these premises and allow SPCPL to have the benefit of the same, VMPL were assigned as job workers to get around this issue; and

(d)

a secondment arrangement between SPCPL and VMPL in respect of the secondment of certain SPCPL employees to VMPL at Plant 2 to work under the job work arrangement as set out in (c) above, also in order to allow SPCPL’s full enjoyment of Plant 2 whilst VMPL resolved the legal issues relating to it.

4.11

Many of these arrangements are specifically referred to in the SSD within the definition of Restructuring Transactions and in the Supplemental SSD at Clause 2.2.10 at pages 6 and 7 of Tab 3 of RM1.

4.12

Moreover, neither Respondent complained about this irrevocable power when it was given to me, but only later after they became angry at me for excluding them from the SuperMax business and not agreeing to join them in setting up a competing business. In paragraph 45 of RJM’s witness statement, it is suggested that the Respondents did not know about the guarantees granted by the Affiliated Companies when they were made. In my first witness statement, I had pointed out that the Respondents surely knew about them at the time, as this was done in a period of time when RKM has said that the directors of the Affiliated Companies always kept him informed of their acts. Now, when faced with this obvious contradiction, RJM states that RKM never knew whether his directors gave him the full picture between June 2010 and August 2010.

4.13

in the same paragraph 45 of his statement, RJM also questions my statement that the Respondents knew of the guarantees because they were subject to No Objection Certificates which were not appended to my first statement. I have appended these certificates here at Tab 14 of RM2. By way of background, as explained in paragraph 2.1 of Amit Bhansali’s first witness statement, the facility granted to SPCPL by the Bank Consortium was not a new facility, but a transfer of the facilities which had already been granted by the Bank Consortium to VMPL and RCC, since SPCPL was taking over the entire businesses of VMPL and RCC, so that VMPL and RCC no longer needed the facilities once their businesses were sold to SPCPL. The No Objection Certificates (“NOC”) from the Bank Consortium in relation to this, therefore, addressed both the permission for the business sale to SPCPL by VMPL and RCC, and the transfer of the existing facilities provided by Punjab National Bank (“PNB”) and Oriental Bank of Commerce (“OBC”) to VMPL, and Andhra Bank to RCC.

4.14

The terms and the size of the facility (including securities) remained the same both pre and post the sale to SPCPL. Emerald and Unique were the guarantors of the original facility utilised (or “availed by”) VMPL, which is dated 10 March 2010 and entitled Twelfth Supplemental Working Capital Agreement (“Original VMPL Facility”) (see paragraph (d) at page 7 of Tab 15 of RM2) (as is evidenced by page 4 of the Deed of Guarantee given by Unique to Emerald, at Tab 17 of TM1). Emerald and Unique were therefore also asked to be the guarantors for the transferred facility to SPCPL. The terms of the Original VMPL Facility were at all material times fully known to RKM and RJM, as it falls under the definition of “Restructuring” within the SSD (being included as a document “set out in the Restructuring Disclosure Data Disc” in sub-paragraph (e) of the definition, see page 19 of Tab 2 of RM1).

4.15

The Bank Consortium also wanted guarantees from the owners of the properties offered as collateral (i.e. VMPL and RCC as the owners of the plant and machinery leased to SPCPL as part of the overall restructuring and the sale of their businesses to SPCPL). The desire for these personal guarantees from RKM, RJM, myself and Veena Malhotra, who is RKM’s wife and my and RJM’s mother is reflected in the NOCs (see Tab 14 of RM2). I assume that the Bank Consortium no doubt sent the request for personal guarantees to RKM, RJM and my mother as they did with my own.

A/ 8. Mr Bhansali also prepared a second witness statement. It included the following:

1.2

So far as the allegations set out in paragraph 67 of RJM’s witness statement are concerned, it was always understood by everyone concerned that the funds which were used to pay the Affiliated Companies for the sale of their businesses, land leases and other agreements contemplated under the restructuring (which funds were deposotied into newly opened accounts of each of the Affiliated Companies and for which accounts RM was made a sole signatory, pursuant to both the authorisation by the board resolutions of the directors of each of the Affiliated Companies and indeed by RKM himself), would be used to satisfy the Sponsors’ obligations under the SSD (i.e. RKM, RJM and RM). The point is simply this: There was no other reason for RM to be a sole signatory to those newly opened accounts other than to be able to direct that the proceeds received from the investment should be used as required under the restructuring pursuant to RM’s role as the MP Representative under the SSD. Indeed, I not that this is even confirmed in paragraph 19 of RJM’s witness statement itself in which he says:

At the time that the Acquisition Payments were received and the accounts with Citibank were opened, the relationship between Rakesh and my father and me was still good and my father, who trusted Rakesh, was content for him to make the arrangements in conjunction with the various boards of directors for the investment of the Acquisition Payments.

1.3

Indeed, RKM was more than merely content with this; he actively agreed to and encouraged it. It is only now that his relationship with RM has broken down that he wrongly seeks to renege on this agreement and unravel these arrangements.