Ipartner Pte Shipping Ltd & Ors v Panacore Resources Dmcc & Ors

The Claimants apply for an order under CPR Rule 81.4, that the 4^th, 5^th, and 6^th Respondents (Mr Kashyap, Mr Anand, and Mr Duggal respectively) each be committed to prison for civil contempt of court for breach of a worldwide freezing order (“the WFO”), and for permission to issue writs of sequestration against all the Respondents (although the applications against the 2^nd and 7^th Respondents were not maintained at the hearing).

The WFO was granted by Teare J. on 16 May 2014 (“the Teare J. Order”), varied by Andrews J. on 23 May 2014 (“the Andrews J. Order”) and continued by Simon Rainey QC (sitting as a Deputy Judge of the High Court) on 9 June 2014 (“the Rainey Order”).

The Claimants contend that the 1^st and 3^rd Respondents (“Resources” and “Shipping” respectively) have failed to provide adequate disclosure of documents and information in accordance with Paragraph 10 of the Teare J. Order and paragraph 10 of the Rainey Order. They further contend that Resources has also disposed of its assets in breach of paragraph 3(2) of the Teare J. Order by funding the legal expenses of the 2^nd Respondent (“Group”).

The 4^th - 6^th Respondents are (or at the material times were) directors and officers of one or more of the Defendant companies. Specifically:

The evidence relied upon by the Claimants mainly consisted of the 5^th affidavit of Mr Perrott and the 2^nd affidavit of Mr Staples and the exhibits thereto. The evidence relied upon by the represented Respondents (Group, Mr Duggal, Mr Anand and Mr Bhatia) mainly consisted of the affidavits of Mr Duggal, Mr Anand and Mr Bhatia and the exhibits thereto. Mr Duggal’s lengthy affidavit took issue with a number of fundamental issues relating to the 1^st Claimant’s claim and the basis upon which the WFO had been sought or obtained. However the Court’s orders stand unless and until they are set aside, which they have not been. Nevertheless in so far as Mr Duggal’s affidavit deals with background matters of relevance to the present applications I have to proceed on the assumption that what he says is true, without making any findings to that effect.

The 1^st to 4^th Claimants (“IPartner”, “Classic”, “Cockett” and “Louis Dreyfus” respectively) are unrelated entities which each have a contractual claim against one or more of the Respondent companies.

The essential basis for the application for the WFO was the Claimants’ allegation that a substantial debt of several million dollars owed to Resources by either Panacore Investments (“Investments”) or its wholly owned subsidiaries (“the SPVs”) was written off and seemingly treated as a debt owed by the SPVs to Panacore Investments.

It is alleged that this was a case of cynical asset stripping. Resources had lost significant sums of money in disastrous trading. So assets (the debts due to Resources) were written off, to the disadvantage of Resources and its creditors (and its 100% shareholder, Shipping) and to the advantage of Investments and its shareholders.

This is strongly disputed by the represented Respondents and in Mr Duggal’s affidavit evidence. Whilst it is acknowledged that Resources may have given short term accommodation to Investments or its SPVs to finance instalments due to pay for vessels being built for the SPVs, they contend that Resources was repaid by Investments leaving a net balance due of US$717,712, as shown in the audited consolidated accounts for Investments and the SPVs. These repayments were made from funds supplied by Jindal Steel, a multi-billion dollar Indian conglomerate, which, under loan agreements, acquired an 80% share in Investments and advanced it US$24 million. They also challenge the veracity of Mr Staples, the person behind the 1^st Claimant and, it is alleged, the orchestrator of the other claims, and of a key document produced by him in support of the 1^st Claimants’ claim.

The WFO granted by Teare J on 16 May 2014 was made against Resources, Group and Shipping, and is limited to amounts of US$3,250,000, US$2,250,000 and US$3,500,000 respectively.

Paragraph 10 provided as follows:

“PROVISION OF INFORMATION

10.1

Unless paragraph 10.4 applies the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants’ solicitors of all their assets worldwide exceeding US$5,000 in value, whether in their own names or not and whether solely or jointly owned, giving the value, location and details of all such assets. For the avoidance of doubt, such assets include, in particular, any inter-company or other loans made by the defendants to any company or other person(whether in the same group of companies or not) and any shareholdings in any other company (whether in the same group of companies or not).

10.2

Unless paragraph 10.4 applies, the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants’ solicitors of any of their assets worldwide exceeding US$5,000 in value, whether in their own names or not and whether solely or jointly owned, which have been written off or sold or transferred to any company or other person (whether in the same group of companies or not) since 1 November 2013, giving full details of any such write offs, sales or transfers (including any consideration provided and the identity of any buyer or transferee) and further stating, where appropriate, what has become of any consideration provided for any such sale or transfer.

10.3

Unless paragraph 10.4 applies, the Defendants must by 4.30pm London time on 21 May 2014 and to the best of their ability (having made proper enquiry of all directors and responsible corporate officers), inform the Claimants’ solicitors of the Defendants’ immediate and ultimate legal and beneficial ownership and identify their directors (including de facto and shadow directors) and any other person or persons (whether natural persons or not) who are entitled to or have since 1 November 2012 in fact exercised control over their business, operations and activities.”

Paragraphs 10.2 and 10.3 are not usual orders. Paragraph 10.2 involves an interrogation relating to historic transactions. Paragraph 10.3 involves an interrogation relating to historic ownership and control of the Defendant companies. Neither appear to be directed at the identification and preservation of assets which might otherwise be dissipated, the usual purpose of an ancillary disclosure order.

The Teare J. Order also provided that the Defendants were not to “dispose of, deal with or diminish the value” of any of their assets (paragraph 3.2) but that this did not prohibit them doing so “in the ordinary and proper course of business” (paragraph 12.2).

The initial disclosure by Resources was given by Mr Kashyap. He was formerly Chief Operating Officer (“COO”) of the Panacore Group, but had been dismissed in the wake of a disastrous Mexican Iron ore trade. Mr Kashyap was re-appointed a director on 22 April 2014.

The Claimants contend that this disclosure failed to comply with the Teare J. Order, not least because it did not attempt to address paragraph 10.2 of that order.

The initial disclosure by Shipping was given by Mr Anand. The Claimants contend that this disclosure failed to comply with the Teare J. Order, and that it similarly did not attempt to address paragraph 10.2 of that order.

Mr Anand responded on 23 May 2014 to say that he had only recently been appointed a director and was, in short, doing his best “to give you all the information that I’m able to gather from the available records”. He went on to say that Mr Paliwal was also a director of Shipping, and was the sole person who took all decisions and actions on behalf of Shipping, but that he was not responding to Mr Anand’s emails. He also attached a bank statement from the period 30 October 2013 to 23 May 2014. Mr Anand swore an affidavit dated 27 May 2014.

Shipping has since gone into liquidation in Singapore following an application by Pacific Bulk. It is recognised that this has implications for the application for a writ of sequestration against Shipping, although the Claimants say it does not affect the previous contempt of its directors.

None of the Defendants challenged the WFO (as amended by Andrews J. in the case of Group). Mr Rainey QC continued the WFO, but imposed further disclosure obligations on both Resources and Shipping. In particular paragraph 10.1 was expanded, and specific questions were set out in schedules D and E to the order.

The time for compliance with those disclosure obligations was 4.30pm London time on 13 June 2014.

Resources has seemingly made no attempt to comply with the Rainey Order. There has been no response at all to this order or to any subsequent correspondence.

The relevant principles may be summarised as follows:

The last proposition was the subject of detailed submissions from both sides.

In A-G of Tuvalu v Philatelic Distribution Group [1990] 1 WLR 926 Woolf LJ in giving the judgment of the Court of Appeal stated as follows:

“In our view where a company is ordered not to do certain acts or gives an undertaking to like effect and a director of that company is aware of the order or undertaking he is under a duty to take reasonable steps to ensure that the order or undertaking is obeyed, and if he wilfully fails to take those steps and the order or undertaking is breached he can be punished for contempt. We use the word “wilful” to distinguish the situation where the director can reasonably believe some other director or officer is taking those steps (936E-F)

….

There must however be some culpable conduct on the part of the director before he will be liable to be subject to an order of committal under Ord. 45, r. 5 ; mere inactivity is not sufficient….(938A)

….

(that) … should not be taken as meaning that it is only where a director has actively participated in the breach of an order or undertaking that Ord. 45, r. 5 can apply. If there has been a failure to supervise or investigate or wilful blindness on the part of a director of a company his conduct can be regarded as being wilful and Ord. 45, r. 5 can apply.”(938D)

In Sectorguard v Dienne [2009] EWHC 2693 Briggs J. stated his understanding of the effect of the Tuvalu case to be as follows at [42]:

“42...an applicant for the committal of a company director who relies upon a breach by the company of an order or an undertaking must disclose in the committal application a case for the establishment of responsibility on the part of that director, either on the grounds of aiding and abetting or wilful failure to take reasonable steps to ensure that the order or undertaking is obeyed.”

This approach was cited and applied by Males J. in Westminster v Addbins [2012] EWHC 3716 (QB).

It was submitted by the Claimants that the issue of whether a failure to take reasonable steps is “wilful” only arises where the director can reasonably believe that others are taking those steps. Whilst that was the primary example given by the Court of Appeal in the Tuvalu case, I do not accept that it is limited to such a case. This is apparent from the more general statements made later in the judgment and is supported by Briggs J.’s analysis of the effect of the case.

A further issue which arises in the present case is that of causation. Is it a contempt if a director wilfully fails to take reasonable steps to comply with an order but it would have made no difference if such steps had been taken? A similar point arose in the Sectorguard case in which it was held that failure to perform an impossible undertaking is not contempt. As Briggs J. stated at [32]-[33]:

“32….The mental element required of a contemnor is not that he either intends to breach or knows that he is breaching the court order or undertaking, but only that he intended the act or omission in question, and knew the facts which made it a breach of the order: see Adam Phones v. Goldschmidt [1999] 4 All ER 486 at 492j to 494j.

33 Nonetheless, even a mental element of that modest quality assumes that the alleged contemnor had some choice whether to commit the relevant act or omission. An omission to do that which is in truth impossible involves no choice at all. Failure to comply with an order to do something, where the doing of it is impossible, may therefore be a breach of the order, but not, in my judgment, a contempt of court.”

In the present case the issue is not whether it was impossible to comply with the order at all, but whether it was impossible to comply more fully with the order. In my judgment the approach should be the same. If there was such impossibility, there may be a breach of the order but it is not a contempt.

Indeed, given the wording of paragraph 10 of the Teare J. Order, in the present case there would be no breach of the order in those circumstances. The order required the defendant companies to produce documents by a stated deadline “to the best of their ability”. If no further documents would have been produced had they so acted then there would be no breach of the order even if more steps should reasonably have been taken to ensure compliance than were in fact taken.

The first question which arises is whether Shipping was in contempt. Unless it was there can be no question of its directors being in contempt.

It is to be noted that the Order required Shipping to provide the specified disclosure “to the best of their ability (having made proper enquiry of all directors and responsible corporate officers)”. It was not an absolute obligation.

It is also to be noted that the Order required such disclosure to be provided by the stated deadline of 4.30pm London time on 21 May 2014. In my judgment that is or at least could reasonably be understood as imposing an obligation to provide such of the specified disclosure as Shipping could provide “to the best of their ability” by the stated deadline. Thereafter there was no continuing obligation of disclosure although the information so provided had to be verified by affidavit by 4.30pm on 27 May 2014. If further or different information was known by the time of the verification by affidavit then no doubt it had to be so stated, but there was no duty to continue to search for information. If such a duty is to be imposed then it needs to be clearly set out in the order; it is not and any ambiguity in a court order should be resolved in favour of the alleged contemnor.

The relevant officers for present purposes are Shipping’s directors, Mr Anand and Mr Duggal. Mr Paliwal had tendered his resignation as director on 16 May 2014, two days before the WFO. Although this resignation was not accepted, it is not suggested that Mr Annan and Mr Duggal thought that Mr Paliwal was independently taking steps to comply with the order. However, if Mr Anand and Mr Duggal acted to the “best of their ability” then so did Shipping. I reject the Claimants’ contention that one can somehow judge whether a defendant company has complied with an order to the best of its ability without reference to the conduct of the relevant persons through whom it acts.

Mr Anand had only become a director on 22 April 2014. He is a lawyer with an Indian law firm based in Delhi.

Mr Duggal had become a director on 13 November 2013. He was brought in order to lend credibility to the company’s business and to assist in raising finance. He too is based in India.

Neither Mr Annan nor Mr Duggal had any involvement in the day to day affairs of Shipping. Shipping’s business was managed out of Dubai and, until he tendered his resignation, it was Mr Paliwal who was in charge of running the business.

Mr Annan and Mr Duggal accordingly had no personal knowledge of the disclosure sought under paragraphs 10.1 and 10.2. They had to seek the information from others. Moreover, the time in which to do so was very limited. They first learned of the Teare J. Order on the morning of Saturday, 19 May 2014. There was little that they could do over the week-end. That left the Monday and the Tuesday up to the 4.30pm deadline for the disclosure to be assembled and provided.

As it happened, a Freezing Order had been obtained against Shipping in the Singapore court on 22 April 2014. That required disclosure of assets in similar terms to paragraph 10.1 of Teare J’s order. Mr Anand had inquired of Mrs Quek and Mr Paliwal what Shipping’s assets were. They were both then directors of Shipping and the persons most likely to know this information. He was told that Shipping’s assets were the monies then in its bank account and 200 shares in Resources.

On the basis of this information Mr Anand had provided an Affidavit for the Singapore court dated 7 May 2014. There is no evidence of any suggestion being made at the time that that disclosure was inadequate. Further, on 5 May 2014 a petition had been presented to the Singapore court for the winding up of Shipping and so it was known that there could have been no further trading since then.

When the English court WFO was notified to Mr Anand and Mr Duggal the position therefore was that enquiry as to Shipping’s assets had already been made of the most relevant persons and the information so provided appeared to be sufficient for the purpose of the Singapore court Order. In those circumstances Mr Anand and Mr Duggal considered that the same information should be provided pursuant to the English court WFO, and this was done by Mr Anand’s email of 21 May 2014 which provided as follows:

“I am a Director of Panacore Shipping Pte. Ltd.

I have seen the Order made by Hon. Mr Justice Teare dated 16 May 2014 in relation to the above mentioned company.

I have set out below the list of assets which, to my knowledge and information, Panacore Shipping Pte. Ltd is required to disclose as per paragraph 10.1, 10.2 and 10.3 of the order:

1.

In compliance with paragraph 10.1 and 10.2 of the Order: As of 21 May 2014, Panacore Shipping Pte. Ltd has USD 38,874.68 that is kept in an account with DBS Bank bearing the account number 0023001005014022. Please note that a winding up petition has been filed against Panacore Shipping Pte Ltd, which is pending in the Singapore Courts and the bank accounts of Panacore Shipping Pte. Ltd has already been frozen by virtue of the Singapore Court’s injunction order. Apart from this, Panacore Shipping Pte. Owns 200 shares (100%) in Panacore Resources DMCC a company registered in Dubai, the UAE.

2.

In compliance with paragraph 10.3 of the Order:

1.

Mr Sunil Duggal was appointed on 13 November 2013 as the director;

2.

Mrs Jenny Quek was appointed on 5 September 2012 as the director and removed on 22 April 2014;

3.

Mr Mudit Paliwal was appointed on 25 September 2012 as the director; and

4.

Mr Rishi Anand was appointed on 22 April 2014 as the director”.

It is right to point out that paragraph 10.2 of the Teare Order went further than the Singapore court order and that this historic information was not addressed in the answer provided. However, Mr Anand and Mr Duggal had no personal knowledge of this as they had not been running the affairs of Shipping. Mr Duggal contacted Mrs Quek about this but was told that she did not know either. They did not have Shipping’s accounting records so they could not check for themselves. Mr Anand made enquiry of Mr Paliwal but received no response.

It is also right to point out that in relation to paragraph 10.3 of the Teare J Order disclosure was provided as to Shipping’s directors but not as to its ownership.

On 22 May 2014 HFW wrote to Mr Anand and Mr Duggal asserting that there had been non-compliance with the order and stating:

“We and our clients take the view that the information provided in your message falls woefully short of complying with the terms of the Order of the Hon. Justice Teare made on 16 May 2014 (the “Order”)

The respects in which the contents of your message are or appear to be non-compliant with the Order include, but are not limited to, the following:

1.

You have listed only two of the company’s assets. Paragraph 10.1 of the Order requires you to inform us all the company’s assets worldwide exceeding US$5,000 in value, whether or not they are in Panacore Shipping Pte ltd’s name and whether solely or jointly owned. As stated in the order “assets” would include any loans made by the company to any other company or person, including related companies. We would be extremely surprised if a trading company such as Panacore Shipping Pte Ltd had no assets other than some shares in subsidiary and cash in one bank account. We anticipate, for example, that it must be owed some trade debts. It therefore appears that you may not have provided us with all the information you were required to provide under paragraph 10.1 of the Order.

2.

You have not provided us with any historical information on the company’s assets going back to 1 November 2013. Paragraph 10.2 of the order quite clearly requires you to inform us if any assets which have been written off, sold or transferred to any other company since 1 November 2013, giving full details of such write offs, sales or transfers. You have therefore failed to comply with paragraph 10.2 of the Order.

3.

You have not provided us with any information on the company’s immediate legal and ultimate beneficial ownership. You are required to do so by paragraph 10.3 of the Order.

4.

You have not identified any persons other than the company’s directors as persons who are entitled to or have in fact exercised control over the business, operations and activities of the company since 1 November 2013. You are required to do so by paragraph 10.3 of the order. You have therefore failed to comply with paragraph 10.3 of the order.

5.

Further, the information you have provided to us regarding the company’s directors appears to be inaccurate. We understand, for example, that Mr Paliwal resigned as a director of the company a week or more ago. It therefore appears that you have failed to properly comply with paragraph 10.3 of the Order.

Our clients reserve all rights in respect of Panacore Shipping Pte Ltd’s failure to comply with the Order, including the right to bring these points to the attention of the court and to bring contempt proceedings against the company and its current directors in due course”.

Meanwhile Mrs Quek told Mr Anand and Mr Duggal that she had been able to access Shipping’s bank statements online and 6 ½ months of bank statements were provided by Mr Anand to HFW on 23 May 2014. He stated that:

“I refer to you email message of yesterday.

I would like to bring it to your knowledge that I’ve recently been appointed as a director on the board of Panacore Shipping Pte.Ltd and have provided the information available to me. I respect the Order of the Hon Mr. Justice Teare made on 16 may 2014 and I’m trying my very best to give you all the information that I’m able to gather from the available records.

As desired please find enclosed the bank statement of Panacore Shipping Pte. Ltd for the period between 30 October 2013 and until yesterday 23^rd May 2014, showing all banking transactions that were undertaken by the company between 1 November 2013 and until yesterday. In addition, please note that 60% shares of Panacore Shipping Pte. Ltd are owned by Panacore Group Pte. Ltd and 40% shares of Panacore Shipping Pte. Ltd is owned by Jindal Steel and Power Ltd., Mauritius. I believe this information is freely available on ACRA website.

It is pertinent to mention that, I’ve been informed that Mr Mudit Paliwal, who is also a director of Panacore shipping Pte Ltd was the sole person who took all decisions and actions on behalf of Panacore shipping Pte. Ltd. Please note that, at present Mr Mudit Paliwal is not responding to my emails and most of the data regarding the company is available with him, which apparently is also not available and is under investigation. Further, please note that Mr. Mudit Paliwal has sent his resignation letter last week, which so far hasn’t been accepted by the other directors of the company. I am investigating the actions of the company in the past, resulting in such huge losses and will inform you as soon as we find out something.”

The bank statements gave details of transferors and transferees, including intercompany transfers. It did not provide details of any write offs which there may have been. However, Mr Anand stated that he was investigating and that he was trying his best to give all the information that he could gather.

On 27 May 2014 Mr Anand provided an Affidavit confirming that the details set out in his emails of 21 May and 23 May 2014 were true.

On 30 May 2014 the Singapore court granted the winding up petition and, as is accepted, thereafter the provision of information to the Claimants was the responsibility of the Liquidator rather than the directors.

The Liquidator had his own demands for information and Mr Anand provided assistance to him.

On 12 June 2014 Mr Anand travelled to Singapore to assist but was unable to locate any management accounts or accounting books and records. On 22 June 2014 Mr Paliwal and Mr Kashyap were asked whether they could help locate them in Resources’ Dubai office. On 27 June 2014 a list of creditors was received from Mr Singh, an accountant with Resources. Mr Anand continued to chase Mr Paliwal, Mr Kashyap and Mr Singh for further documents, but without success. In the event they instructed accountants to prepare a Statement of Affairs for the Liquidators from such primary documents as they had. Such a Statement was produced on 11 July 2014.

Despite chasing from Mr Anand and the Liquidator, no further documents were provided by Mr Paliwal, Mr Kashyap or Mr Singh until 22 August 2014 when Mr Singh provided some accounting books and records. No management accounts were ever provided.

It is against the above factual background that the allegation of contempt has to be considered.

In my judgment it has not been proved to the criminal standard that Shipping failed to provide disclosure under paragraphs 10.1 and 10.2 of the Teare J. Order “to the best of their ability”. Mr Anand and Mr Duggal were in a difficult position. They had no knowledge of the day to day affairs of Shipping or of the details of its historic business operations. They were reliant on others to provide information. They had made inquiry of Mr Paliwal and Mrs Quek. Mr Paliwal, in particular, would have been expected to know what the position was. He and Mrs Quek had provided information as to Shipping’s assets which had seemingly proved sufficient for the Singapore court. Although the Teare J. Order went further, enquiry was made of both Mr Paliwal and Mrs Quek as to the historic position. This led to the production of the bank statements, but no further information or documentation. In my judgment, whether one focuses on the period up to 4.30pm on 21 May 2014 or the period up to 30 May 2014, it has not been proved that Mr Anand, Mr Duggal and Shipping failed to make proper enquiry and has not been proved that they failed to provide disclosure “to the best of their ability” within the time available.

It was submitted by the Claimants that Mr Anand and Mr Duggal should have done more. In particular they should have gone out to Singapore and/or Dubai in order to search for documents. Further or alternatively, they should have made inquiry of Mr Singh earlier than they did. Assuming that this case is open to the Claimants (which was disputed on the basis that it went beyond the particularised grounds of contempt) I am not satisfied that in the circumstances of this case these further steps were required at that time. What was required was proper enquiry; enquiry was made of the most relevant people, Mr Paliwal and Mrs Quek, and all information provided by them was passed on. The accounting role of Mr Singh was not then known.

Further, even if further steps had been taken by Mr Anand and Mr Duggal they would not have yielded further information within the relevant timeframe, even if that be up until 30 May 2014. Whilst they were eventually able to produce a Statement of Affairs, that was only after Mr Anand had gone to Singapore, gathered together primary documentation, instructed accountants and obtained their report – all of which took time. Further, despite all the chasing done by the Liquidator and Mr Anand in June, July and August 2014, it was not until 22 August 2014 that the accounting books and records were provided, and no management accounts were ever provided.

In relation to paragraph 10.3 of the Teare J. Order information was provided as to directorship and thereby control by the 21 May 2014 deadline, but not as to ownership. Ownership information was, however, provided shortly thereafter. Although the Claimants complained that this information did not address issues of “ultimate legal and beneficial ownership” it is not clear how a company, which is the relevant defendant, could provide that information. In all the circumstances I consider that there was no substantial non-compliance, and such non-compliance as there may have been was cured.

I accordingly conclude that the Claimants have not proved their contempt case against Shipping. It follows that they have also not proved their contempt case against Mr Anand and Mr Duggal. If it had been necessary to consider their position separately, I would have found, for the reasons set out above, that it had not been proved that they had failed to take reasonable steps to ensure that the order was complied with, wilfully or otherwise.

Mr Kashyap was and is a director of Resources. He is the relevant officer of Resources for present purposes. Mr Kashyap is the person who took the responsibility for compliance with those orders. There is no evidence that he reasonably supposed someone else was dealing with them.

Mr Kashyap provided disclosure on 21 May 2014 stating as follows:

“I am a Director of Panacore Resources DMCC

I have seen the Order made by Hon. Mr Justice Teare dated 16 May 2014 in relation to the above mentioned company.

I have set out below the list of assets which, to my knowledge and information, Panacore Resources DMCC is required to disclose as per Paragraph 10.1, 10.2 and 10.3 of the Order

1.

In compliance with paragraph 10.1 and 10.2 of the Order;

a.

The bank statement of Panacore Resources DMCC has been enclosed with this email;

b.

Panacore DMCC is the legal and beneficial owner of 100% (one hundred per cent.) shares of each of Panacore Europe limited (UK) Panacore Resources Pte.Ltd. (Sydney) and Panacore Resources Pte.Ltd, Hong Kong: and

c.

List of assets has been enclosed with this email

2.

In compliance with paragraph 10.3 of the Order, please note that 100% shares of Panacore Resources DMCC are owned by Panacore Shipping Pte. Ltd Singapore and the following are the details of the directorship:

(a)

Mr Sunil Duggal was appointed on 22 September 2013 as the director and resigned on 22 April 2014;

(b)

Mr Mudit Paliwal was appointed on 10 October 2011 as the director; and

(c)

Mr Vikram Kashyap was appointed on 22 April 2014.”

HFW responded the following day pointing out various alleged deficiencies in the disclosure provided as follows:

“We refer to your message of yesterday below.

We and our client’s take the view that the information provided in your message falls woefully short of complying with the terms of the Order of the Hon. Mr Justice Teare made on 16 May 2014 (the “Order”).

The respects in which the contents of your message are or appear to be non-compliant with the Order include, but are not limited to, the following:

1.

You do not appear to have provided us with up-to-date information on the company’s assets. Paragraph 10.1 requires the company to make proper enquiry of all directors and responsible corporate officers as to the company’s assets worldwide exceeding US$5,000 in value. The only information you have provided us with relating to the company’s assets is:

1.

A spreadsheet which appears to show the company’s asset position as at 31 March 2014; and

2.

Two bank account reports covering the period 1 May 2014 to 21 May 2014.

These documents do not provide us with any historical information on the company’s current asset position. Accordingly, it appears you have failed to comply with paragraph 10.1 of the order.

2.

You have not provided us with a full and complete picture of the company’s assets going back to 1 November 2013, other than:

1.

A spreadsheet which appears to show the company’s asset position as at 31 March 2014; and

2.

the very limited information in the two bank accounts between 1 May 2014 and 21 May 2014.

Paragraph 10.2 of the Order quite clearly requires you to inform us of any assets which have been written off, sold or transferred to any other company or person since 1 November 2013, giving full details of such write offs, sales or transfers. You have therefore failed to comply with paragraph 10.2 of the Order.

Mr Kashyap did not respond to the points raised. On 27 May 2014 he provided an affidavit verifying the truth of the disclosure provided on 21 May 2014.

No response of any kind was received from Mr Kashyap or Resources to the Rainey Order.

The Claimants contend that Mr Kashyap wilfully failed to take reasonable steps to ensure the orders are complied with and that Resources thereby failed to comply with the orders to the best of its ability. He was informed by HFW that the disclosure provided on 21 May was inadequate because it did not properly address paragraph 10.1 and did not at all address paragraph 10.2 and 10.3 of the Teare J. Order. Nevertheless he then swore an affidavit which only confirmed his previous, inadequate, response.

The Claimants point out that Mr Kashyap would no doubt say that he did not have access to all Resources’ books and records, and did not have personal knowledge of what transpired after he was dismissed as COO. He would therefore say that he was not in a position to give the disclosure ordered. However, the Claimants contend that reasonable efforts on Mr Kashyap’s part required him to obtain access to the company’s books and records so that he can give the necessary disclosure. It cannot be difficult for a director of a company to do so, or at least to explain why he is not able to do so. The court can therefore safely infer, to the required standard, that Mr Kashyap has not made reasonable efforts to obtain access to the company’s books and records so that he can give the necessary disclosure but instead has wilfully chosen to maintain a state of ignorance.

Whilst I recognise the force of the Claimants’ contentions, given the tight deadline for compliance with the Teare J. Order (4.30pm on 21 May 2014), Mr Kashyap’s limited recent involvement in Resources’ affairs and his attempts at compliance, I am not satisfied to the criminal standard that Resources and Mr Kashyap acted in contempt of the Teare J. Order. Considerable efforts were clearly made to respond with information by the stated deadline. I am, however, satisfied to the criminal standard that they acted in contempt of the Rainey Order. There is no evidence of any attempt being made to comply with that Order, whether to the best of Resources’ ability or otherwise. The inescapable inference is that this reflected a deliberate decision on the part of Mr Kashyap and Resources. In relation to Mr Kashyap I am satisfied to the criminal standard that there was a wilful failure to take reasonable steps to ensure that the order was obeyed.

The Claimants further contend that Resources and Mr Kashyap were in breach of paragraph 3.2 of the Teare J. Order in misusing Resources assets by making a remittance for the purpose of funding Group’s legal expenses.

By an email dated 21 May 2014 Mr Kashyap as a director of Resources gave notice that “we are appointing legal representative and representation. Therefore will be making an on account payment to the law firm of 90,000 from Panacore Resources DMCC bank account”.

On the same day Zaiwalla gave notice that they were instructed by Group (and only by Group) in this matter. After some discussion about how and by whom Zaiwalla would be paid, Zaiwalla confirmed that they would be paid by an Indian law firm, Gnarus Partners, and that they understood that Gnarus was paid by Panacore Resources from its account at Standard Chartered Bank.

Zaiwalla by its letter dated 13 August 2014 state that their professional fees for representing Group have not in fact at any time been paid by Gnarus Partners nor have been paid from funds belonging to Resources whether held by Gnarus Partners or by Resources directly. The letter goes on to say that the information in their email of 22 May 2014 was given on the basis of their understanding at the time (the initial stages of the litigation) and subsequently transpired to be incorrect. The letter states that Zaiwalla’s fees for representing Group have been paid through a payment by Group from its own bank account and were only paid after the WFO had been discharged against Group. Consequently, it is said, the assertion that Resources has paid the legal fees of Panacore Group is wrong as a matter of fact.

I accept that evidence. It follows that the evidence shows that monies were paid for the apparent purpose of paying Group’s legal fees but were not in fact used for that purpose. What in fact happened to the monies is unclear on the evidence.

That might support an allegation of breach by Resources of the Teare J Order in dealing with assets rather than disposing of them. However, no case of dealing with assets is put in the particularised grounds of contempt and it is not open to the Claimant to expand their case at the contempt hearing. The only ground alleged is disposal of the assets and this is not proved on the evidence.

Orders may not generally be enforced by way of committal for contempt of court unless there has been personal service on the Respondent: CPR 81.5, 81.6. Likewise committal applications and supporting evidence must generally be served personally: CPR 81.10(4).

However, these safeguards are subject to specific powers to permit service by alternative methods or to dispense with personal service if the court thinks it just to do so: CPR 81.8(2) (in respect of orders to be enforced) and CPR 81.10(5) (in respect of the committal application and evidence).

In this case:

On 7 August 2014 Popplewell J. ordered that the Claimants may serve the Committal Application on the 4^th - 7^th Respondents out of the jurisdiction, and do so by email to the addresses specified. Paragraph 15 (and Schedule C) of the Rainey Order already permitted service on the Defendants by email. Service was duly effected in this manner.

Notice of the adjournment of the hearing on 29 August 2014 and of the new date of 27 October 2014 was also given to all the unrepresented Respondents on 26 August 2014 and 5 September 2014. A reminder was sent to them on 20 October 2014.

I am satisfied that the remaining requirements of CPR 81 part 2 have all been complied with.

I have found contempt proved against Resources and Mr Kashyap for non-compliance with paragraph 10 of the Rainey Order. Neither of them are represented. In all the circumstances I propose to give them a final opportunity to purge their contempt before proceeding to sentence and shall give directions accordingly. I propose to give them a further 14 days for compliance from the time of having notice of this judgment. Mr Kashyap should understand that a sentence of imprisonment is a very real possibility if there is continued non-compliance.

The contempt applications against Shipping and the represented Respondents, namely Panacore Group Pte Ltd, Sunil Duggal, Rishi Anand and Mr Rajesh Bhatia, are dismissed.